TL;DR
ZKsync has launched the recently approved Ignite program to promote DeFi liquidity on its network by distributing 325 million ZK tokens.
Ignite aims to increase the total value locked (TVL) in the ZKsync ecosystem and reduce slippage in transactions to benefit both traders and liquidity providers.
Spanning nine months, the program will allocate 300 million tokens to native DeFi protocols and 25 million to administrative expenses.
ZKsync, the layer-2 scaling platform focused on enhancing network interoperability within the blockchain ecosystem, has launched the recently approved Ignite program.
This program will distribute 325 million ZK tokens, equivalent to approximately $48.5 million, to boost DeFi liquidity on its network. Through this program, ZKsync aims to increase the total value locked (TVL) within its ecosystem and improve the user experience by reducing slippage in transactions, benefiting both traders and liquidity providers.
The funds will be distributed over a nine-month period, with 300 million ZK tokens earmarked for native DeFi protocols and the remaining 25 million reserved to cover administrative and unforeseen expenses.
OpenBlock Labs, the program’s analytics provider, will evaluate project applications every two weeks for access to these assets and will publish quarterly reports to maintain transparency. Additionally, an independent advisory committee known as the DeFi Steering Committee (DSC) will review and approve project applications, with veto powers to ensure the appropriate allocation of funds.
What Are ZKsync’s Goals?
Ignite has specific impact goals for the ZKsync ecosystem. For each dollar in incentives, the program seeks to increase native DeFi liquidity by between $5 and $10 and generate $3 in fees for liquidity providers. Furthermore, it aims to retain $0.60 of liquidity for every dollar distributed at the program’s conclusion. In terms of slippage reduction, Ignite aims to limit it to 5 basis points for stablecoin-to-stablecoin trades up to $1 million and between 35 and 120 basis points for stablecoin pairings with volatile assets, such as ETH/USDC, depending on the trade size.
Negative Metrics
On the other hand, Ignite is closely tied to activity on the ZKsync Era network, which has experienced a significant decline from its highs earlier this year. Recent data indicates an 89.6% decrease in daily transactions and a 91% drop in active users.
Similarly, the platform’s TVL decreased from $1.54 billion in June to the current $983 million. Despite these adverse metrics, the ZK token has seen a 4.6% increase in value over the past week, suggesting a certain level of interest in the project remains
