How will the Zeta Markets L2 Bullet and flagship DApp Zeta X work? Will it diminish the utility of the ZEX token?

Written by Karen, Foresight News

The potential of decentralized derivatives markets is self-evident. However, on Solana, the full prosperity of the derivatives market has yet to be fully realized, mainly due to the current constraints of on-chain performance limitations, response delays, and user experience bottlenecks. To meet these challenges, Zeta Markets is injecting new vitality into the Solana ecosystem through its upcoming Solana Layer2 project Bullet and perpetual CLOB platform Zeta X.

At the recently concluded Solana Breakpoint conference, Zeta Markets co-founder Tristan Frizza revealed that Zeta Markets is incubating and developing the Solana ecosystem real-time L2 project Bullet. The project is expected to release a testnet in the fourth quarter of 2024 and a mainnet in the first quarter of 2025. The first DApp in the Bullet ecosystem, the perpetual CLOB platform Zeta X, will also provide early access opportunities for ZEX stakers.

Bullet’s History

Initially, Zeta Markets planned to build its Layer2 as a closed application chain focused on the perpetual contract order book model. However, after extensive feedback from the Solana Foundation, partners, users, and ecosystem developers, Zeta Markets realized that the potential of this Layer2 goes far beyond this. In the future, this Layer2 may cover options, spot trading, games, and other high-throughput applications, becoming a more diversified and powerful platform. Therefore, Bullet came into being.

What is Bullet?

So, what exactly is Bullet? Bullet is a Rollup that uses Solana L1 as its settlement layer and data availability layer, using ZK fraud proofs for verifiable on-chain settlement, and can take full advantage of Solana's security and transparency. Using zero-knowledge proofs and verifiable off-chain computation, Bullet places latency-critical components of the system off-chain while still maintaining verifiability and censorship resistance.

@Tristan0x, a member of the Zeta Markets team, said, “This allows us to get near-instant 5 millisecond soft confirmation latency, thousands of TPS, and provide high leverage in a secure way through a sophisticated risk engine that is not limited by on-chain computation. In addition, Zeta Markets also plans to enable an SVM module that will allow permissionless sandbox smart contracts to run on top of it and be able to leverage Zeta’s existing perpetual, lending, and spot liquidity.”

At the same time, Sovereign Labs also provides Bullet with experience in building secure and interoperable ZK-Rollups on a shared data availability layer, providing a key framework for Bullet's scalability.

How does Zeta X work? What are its features?

At present, the architecture and process of Zeta X are roughly the same as those designed before. That is, on the Zeta X platform, users first deposit their collateral assets into the Solana smart contract that holds the escrow funds. At this time, the full node responsible for listening to the Solana Block Headers information will parse the transaction and generate a deposit certificate. This certificate will be submitted to the sorter, which will update the user's balance record in the Rollup. Once these steps are completed, users can trade freely on Zeta X. When published to the DA smart contract, the sorter will include the transaction in future blocks. Zeta Markets team members said they are confident that the deposit speed can be reduced to less than 15 seconds.

When interacting with ZX, users sign transactions with their wallets to generate session keys for smooth and seamless transactions. These transactions are sent to the sorter to be sorted and processed through the state transition function (STF). Users will receive soft commitment transaction receipts within milliseconds. Once the transaction is sorted and executed, the sorter generates a ZX blob and publishes it to the Solana DA smart contract. Once the block becomes available from the DA component, the settlement process is initiated, where the full node executes each transaction to calculate the latest state root.

Zeta Markets team member @0xjcaa revealed the functions and features that can be implemented in Zeta X:

  • Near-instant soft acknowledgments (3-5 milliseconds);

  • Seamless one-click signing/easy social login via session keys;

  • 50x+ leverage using multiple assets as collateral;

  • Deep liquidity and seamless market making conditions with REST/Websocket API and CEX-like latency.

  • Fully transparent and verifiable, with a relatively trustless dispute mechanism.

Is there a plan to issue coins?

Regarding the coin issuance plan, Zeta Markets team member @PDAnimol said that Bullet currently has no coin issuance plan. Zeta Markets plans to test the Zeta X network within a month. Zeta X will use the Bullet core infrastructure and become the first super application on Bullet to provide a more liquid and reliable trading experience. Zeta X will provide early access to ZEX stakers.

However, it is worth noting that Zeta X will be powered by the Z token, as Zeta Markets previously tweeted when announcing the Zeta X (ZX) Litepaper in May 2024. The Z token will serve as the native gas token for transactions on the ZX Rollup and as an incentive mechanism to reward stakeholders (including sequencers) for performing key operations on Zeta X.

However, in the Zeta X Litepaper document updated 3 months ago, the ZEX token was positioned as the governance token of the Zeta Markets protocol, providing long-term stakeholders holding ZEX with additional utility (such as exclusive fee tiers) and further use on Zeta X.

According to the latest confirmation from @imranfaststart, Zeta X is still the focus of the Zeta Markets team and will be launched on Bullet as the flagship DApp. At the same time, some members of the Zeta team will also shift their attention to the Bullet project, working with Sovereign Labs to introduce L2 expansion to Solana. In addition, ZEX will continue to be the core token in the Zeta Markets ecosystem. Rewards will still be distributed in ZEX, and ZEX stakers will retain the benefits of additional rewards and governance rights. @imranfaststart explicitly mentioned that the launch of Zeta X on Bullet will not interrupt or weaken the utility and governance of ZEX.

As to whether Bullet will launch new tokens in the future, it is not yet known. Foresight News will continue to track it.