James Richardson
ZKsync, a leading Ethereum Layer 2 scaling solution, has seen its total value locked (TVL) skyrocket following the launch of its Ignite program, designed to boost liquidity. Over the next nine months, the initiative will allocate 300 million ZK tokens (equivalent to $60 million) to reward decentralized finance (DeFi) participants.
The program is structured into several phases, with Season 1 running from January 6 to March 31, offering up to 100 million ZK tokens ($20 million) to users who provide liquidity across various DeFi protocols on the ZKsync Era network. The remaining 200 million tokens will be distributed during subsequent seasons.
Participating platforms include top decentralized exchanges (DEXs) like SyncSwap, Uniswap, and PancakeSwap, as well as lending protocols such as Aave and perpetual trading platforms like Holdstation.
TVL Surges Nearly 90% in January
The Ignite program has already significantly impacted ZKsyncโs ecosystem. According to DeFiLlama, the networkโs TVL surged by nearly 90%, climbing from $97 million to $184 million within the first week of January.
ZKsync employs ZK rollup technology, a solution that batches multiple transactions for processing off-chain, enhancing scalability and reducing fees for Ethereum-based applications.
The Ignite initiative comes after ZKsync experienced a sharp drop in user activity and liquidity following a highly anticipated airdrop in June 2024, which distributed 3.6 billion ZK tokens to eligible addresses.
While the airdrop initially generated excitement, it also led to a significant outflow of users and funds. Daily transactions and the 7-day moving average of active addresses fell from over 200,000 in July 2024 to just 30,000 by December.
Competition Among ZK Rollup Networks
ZKsync is not alone in facing challenges; other ZK rollup networks, including Linea, Scroll, and Starknet, have also seen declines in activity. Despite this, Linea currently leads in active user addresses among ZK rollup solutions, according to PRIMEโs data dashboard.
By launching Ignite, ZKsync aims to reignite interest in its network, attract liquidity, and strengthen its position in the competitive Layer 2 ecosystem. With significant funding and strategic partnerships, the program underscores ZKsyncโs commitment to fostering DeFi innovation and improving user engagement.
