Ethereum has had issues in the past with slow transaction processing and high fees. To address these problems, "Layer2" networks have emerged. One of the solutions is "Rollups," which include Zero-Knowledge Rollups (ZK-Rollups) and Optimistic Rollups. ZK-Rollups use advanced cryptography to enable efficient and private transactions, allowing faster fund withdrawals than Optimistic Rollups. Layer 2 solutions such as Scroll, Polygon, StarkNet, and zkSync have helped improve scalability and reduce fees. However, they face challenges such as liquidity fragmentation.
zkLink aims to tackle the issue of liquidity fragmentation and slow transactions by building the first ZK aggregated Layer 3 and accessing limitless liquidity with a middleware solution that consolidates liquidity.
For this month's review, we will be covering a range of topics related to zkLink, including its founding team, fundraising efforts, and the two products, zkLink Nova and zkLink X. Our review will conclude with an analysis of what we appreciate about zkLink and where we anticipate potential challenges for the project.
What is zkLink Nova and zkLink X
The zkLink team has developed two unique products, namely zkLink Nova and zkLink X.
zkLink Nova is the first Aggregated Layer 3 zkEVM Rollup network in the industry, which is built on zkSync's ZK Stack and zkLink Nexus technology. It integrates liquidity and assets from both Ethereum and Layer 2 rollups into a single interoperable platform, enabling developers to deploy decentralized applications (dApps) in an EVM-compatible environment.
The team created this product to address the issue of Ethereum and Layer 2 networks being incompatible, which results in fragmented assets and liquidity. Users often use third-party protocols to bridge assets across networks, which poses security risks and inefficiencies.
zkLink Nova aims to use zero-knowledge proofs to access combined liquidity from Ethereum and Layer 2 networks without requiring asset bridging. The team has built an ecosystem with over 60 partners to steer the Layer 3.
On the other hand, zkLink X is a solution to the challenges of blockchain interoperability and standardization. It utilizes zero-knowledge proof technology to offer an aggregated rollup infrastructure that simplifies multi-chain dApp deployment and resolves liquidity fragmentation. This infrastructure enables fast multi-chain product deployment, multi-chain liquidity aggregation, and provides high-throughput, low-cost trading solutions for financial applications like Order Book DEX.
Key features include;
- Native asset aggregation, where tokens from various L1 blockchains and L2 rollups are unified into a single token, eliminating the need for cross-chain asset bridges and simplifying wallet management.
- Liquidity unification, which ensures that tokens of the same kind but issued on different chains are merged into one, enhancing liquidity aggregation.
- Additionally, zkLink X provides customizable app rollup deployment, allowing developers to tailor components to meet diverse use case demands. These include network collections, settlement layers, execution environments, and decentralized sequencers.
Using its technology, the live Alpha Mainnet has had over 2 million transactions and 500k unique addresses.
Tokenomics
zkLink plans to release its token, $ZKL, in 2024, enabling users to leverage its rollup infrastructure service. Token holders will also have voting rights on zkLink project decisions.
Here are some of its planned uses:
- Staking: Provers staking $ZKL can access zkLink’s proof generation market. Here, they can complete tasks related to proof services to earn $ZKL rewards.
- Payments: $ZKL will be the main payment token in zkLink’s proof market. dApps using zkLink’s infrastructure will pay provers in $ZKL for their proof services. Also, when dApps build their rollups using zkLink’s infrastructure, they’ll pay fees in $ZKL to zkLink DAO, the project’s governing organization. These dApps might also use ZKL for in-app fees.
- Governance: In the future, through zkLink DAO, ZKL holders will be able to use governance rights to participate in the project's decision-making process.
ZKL will launch with a maximum token supply of 1 billion without inflation. Approximately 18% of the token supply will be released at TGE followed by a linear vesting period of 42 months. The token’s allocation is as follows:
Community Treasury (~29.88%): The community treasury governed by the future zkLink DAO will control the most significant portion of the total token supply. About 20.75% of this allocation will be released at TGE and distributed as rewards to early adopters and as community development and bug bounty rewards to contributing developers. An additional ~9.37% reserved for bug bounties will vest monthly over a year. The remaining ~79.25% will be distributed in the future at the discretion of the DAO.
Ecosystem development (22.5%): Dedicated to ecosystem development and will be used to fund growth initiatives and development programs. Of this allocation, 20% will be released at TGE, while the remaining 80% will vest monthly for two years.
Early Private Purchasers (20.55%): To be distributed to private investors across all funding rounds. About 38.93% of this allocation is reserved for pre-seed inventors and is subject to a 5-month lock-up, and a 27-month linear vesting schedule. Another ~37.98% of this allocation is reserved for seed round investors and is subject to a 4-month lock-up and a 27-month linear vesting schedule. The remaining, ~22.87% is reserved for private round participants and is subject to a 3-month lock-up and a 27-month linear vesting schedule.
Team and Advisors (20.00%): For the project team operating as zkLink Labs and the project’s advisors. This allocation is subject to a 6-month lock-up and a monthly linear vesting schedule for 3 years.
Liquidity Reserve (4.00%): Will be locked in a liquidity pool at TGE. 50.00% of this allocation will be released at TGE and a monthly linear vesting for a year.
CoinList Sale (~3.13%): For zkLink’s CoinList Community Sale participants. 30.00% unlock of this allocation will be released at TGE, followed by a 9-month linear vesting.
Team, Fundraising, and Ecosystem
In terms of funding, zkLink raised $10 million in a strategic funding round from a line of investors, including Coinbase Ventures, Ascensive Assets, SIG DTI, BigBrain Holdings, Efficient Frontier, and others. This funding brought the infrastructure's funding to $18.5 million, with previous investors including Morningstar Ventures, Arrington Capital, Huobi Capital, and more.
The team behind Nova protocol has secured a total funding of $23.1 million, including $4.6 million from a CoinList community sale in January. The primary objective of this funding is to enhance the development of the Nova protocol.
The co-founders of Nova protocol, Vince Yang (CEO) and Evan Zhang (CTO), started their crypto journey in 2020. They built their first multi-chain DEX and learned about the security and efficiency challenges of cross-chain transactions. After experiencing these difficulties, they pivoted to creating zkLink Labs, which aimed to aggregate fragmented liquidity and create a unified ecosystem. Today, they lead a diverse team of more than 50 individuals with experience in the crypto industry.
Our Analysis:
Strengths:
- zkLink is a company that focuses on developing liquidity solutions for the Web3 ecosystem. They aim to create a seamless integration of bridges, assets, and pricing to streamline accessibility, enhance capital efficiency, and enable innovative business models.
- The chain abstraction and interoperability features of zkLink make it an attractive environment for developers who want to scale multi-chain applications. This means that developers can deploy only once and access the liquidity and users from multiple chains, saving time and resources in the development cycle.
- Recently, the Aggregation Parade campaign showed strong community engagement, with over 2 million Total Value Locked (TVL). This positive response demonstrates the project's potential for widespread adoption and impact.
- zkLink X is a pioneering solution to solve blockchain interoperability and standardization challenges. By developing an aggregated rollup infrastructure, the project simplifies the deployment of multi-chain dApps while mitigating liquidity fragmentation. The use of zero-knowledge-proof technology ensures high throughput, cost-effectiveness, and robust security, positioning zkLink X as a market leader in dApp deployment.
Challenges:
- Creating partnerships with dApps is still a challenge for the wider ecosystem. To expand reach and functionality, it's essential to build a diverse network of partners. Therefore, zkLink will need to onboard more applications into the ecosystem strategically. The platform will also need to educate and incentivize users to engage with it to increase usage.
- Layer 2 solutions are a significant focus in the crypto industry this year. To remain ahead of other projects, zkLink must adapt and integrate emerging technologies proactively. This process needs to be ongoing to ensure that zkLink remains adaptable and can meet evolving market demands.
What’s Next for zkLink
While the zkLink team prepares for its upcoming TGE, they continue to improve their offering to both developers and users multilaterally. According to their technical roadmap, they intend to integrate a modular DA for the Nova network and a decentralized sequencer service. The integration of these services looks to improve further the security and cost benefits of Nova and X.
On the ecosystem side, the team is incentivizing the growth of their ecosystem through an ongoing Ecosystem grants program, distributing milestone grants of up to $50,000 ZKL per project. The grants program is currently open to all types of projects emphasizing DeFi models such as DEXs.
zkLink, a blockchain-based platform, is participating in OKX Cryptopedia's Season 15 campaign. In this campaign, users can engage with decentralized applications (dApps) and receive airdrops in return. The learn-to-earn initiative offers $300,000 worth of ZKL token rewards to users who participate. Additionally, zkLink will launch Phase 2 of the Aggregation Parade, which rewards users with Nova Points for interacting with Nova protocol dApps.
Learn more about zkLink
🌐 Official Website: https://zk.link/
🐦 Official Twitter: https://twitter.com/zkLink_Official
🕹️ Discord channel: https://discord.gg/zklink
🌐 Official Website zkLink Nova: https://zklink.io/
🐦 Official Twitter zkLink Nova: https://twitter.com/zkLinkNova
📜 Documentation zkLink Nova: https://docs.zklink.io/
📜 Documentation zkLink X: https://docs.zk.link/
