ZKsync Ignite Final Program Report

Token Mechanics Ignite Program
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ZK Nation Community -

The ZKsync Ignite DeFi incentive program for ZKsync Era concluded on March 31, 2025, at the end of its first season. Launched on January 6, 2025, Ignite was originally envisioned as a three-season initiative to establish ZKsync Era as a DeFi liquidity hub. However, the DeFi Steering Committee (DSC), after consultation with delegates and industry experts, decided to sunset the program after Season 1, effective March 17, 2025, due to shifting priorities toward the Elastic Network, delays in native interoperability, and challenging market conditions (see full rationale here).

This closing report evaluates the program’s performance—its achievements, shortcomings, and the governance insights gained to shape future Token Assembly (TA) initiatives. We present these findings below, informed by data and community dialogue, to ensure transparency and guide our collective path forward.

(Link to Closing Report from OpenBlock Labs)

Lessons from Ignite

What Worked Well:

  • DeFi TVL Took Off: DeFi TVL surged from $96.6M on January 1 to a peak of $273M by February 1—nearly double our $137M S1 target. Even amidst a market downturn, price-adjusted TVL concluded at 2.6x the baseline (see Appendix 6), reflecting robust growth when accounting for price volatility, with a 50% increase from program start despite a raw DeFi TVL decline to $77M by March 31.
  • Stablecoin Slippage Exceeded Expectations: Slippage on $1M trades for USDC-USDC.e fell from 2.83 bps to 0.1 bps by March 2, and USDC-USDT dropped from 1.94 bps to 1.05 bps, surpassing our 5 bps goal. Liquidity for these pairs also improved post-Ignite (e.g., USDC-USDT at ~$800k vs. $550k pre-Ignite), enabling larger trades and better execution for smaller transactions (see Appendix 1).
  • Native USDC Adoption Soared: Native USDC assets grew over 7x, from $10M to $77M (+670% from program start), overtaking bridged USDC.e by early February and contributing to a total USDC adoption of $114M on Era (+75% overall). The Jumper campaign drove over $15M in inflows, including $20M net in week one, cementing Era’s stablecoin foundation (see Appendix 3).
  • Community Crushed It: Fifteen protocols participated, with SyncSwap leading DEXs (up to 16% of allocation) and Aave and Venus excelling in lending, the latter showing the highest TVL efficiency per $1 spent (Appendix 8). Early focus on primary assets (e.g., ETH, ZK, stables) in Period 1, with >50% APRs for stable LP, established a strong baseline for growth (see Appendix 10).
  • Sticky ZK Usage: Post-Ignite, ZK locked in lending protocols held at 300M ZK Tokens (3x pre-Ignite levels) and DEXes at ~66M ZK (2x the 33M start). Of the 45.1M ZK distributed, 36% (16.2M ZK) was redeployed into DeFi—far exceeding Arbitrum STIP’s ~3%—demonstrating Ignite’s success in fostering lasting ZK engagement (see Appendix 2).
  • Strategic Iteration Paid Off: The shift from TVL growth in Period 1 to slippage optimization in Period 2 (e.g., 7x incentive increase for USDC-USDT) and pool consolidation in later periods (e.g., removing 19 pools in Period 4) showcased adaptive allocation, driving efficiency gains despite conservative spending of only 45M ZK from a 300M budget (see Appendix 10).

Program Challenges:

  • Volatile Pair Slippage Underperformed: Slippage on $1M USDC-ETH trades rose from 187 bps at the start of the program to 680 bps by March 17 (peaking at 780 bps by March 31), and ETH-ZK increased from 213 bps to 450 bps (510 bps by March 31)—well above our 175 bps target. Efforts to reduce slippage in Period 4 (e.g., increased ZK allocations) were undermined by market volatility (see Appendix 10).
  • DeFi TVL Drop-Off: After peaking at $273M (in USD terms), DeFi TVL fell to $132M by March 17 when incentives paused, then to $77M by March 31 (-23% from program start). This drop was heavily influenced by the declining price of both ETH & ZK as market conditions soured. Stablecoins like USDC and USDT have reverted to pre-Ignite levels, while ETH followed suit, highlighting reliance on incentives absent sufficient volume (Appendix 9).
  • Looping Diluted Program Impact: Looped supply in lending reached 40% by Period 4 (up from 33% in Period 1), despite initial intent to attract outside capital. Mitigation in Period 5 (e.g., blacklisting) cut it to 14%, but delayed action allowed ~$1.3M (16.6M ZK) in sales, diluting impact (Appendix 4).
  • Perps Underperformed: Perpetual protocols, allocated ~2% of funds, showed negligible TVL growth and the lowest efficiency among verticals (Appendix 1). Their struggles persisted despite increased incentives in Period 4, indicating a poor fit for Ignite’s goals.
  • Market Timing: A bearish market which saw ETH drop -51% throughout the course of Ignite shrunk raw TVL gains from 3.4x to 1.4x the baseline, amplifying external pressures that incentives couldn’t offset (Appendix 6).
  • Inflow Struggles Limited Reach: Despite marketing efforts with Jumper bridging $30M from Arbitrum and Optimism and the engagement with Hype, most TVL came from existing Era funds rather than new ecosystems. Only 1% ($0.3M) of bridged assets bought ZK, underscoring weak external adoption (Appendix 5).

Program Budget Review

  • ZKsync Ignite User Rewards Distribution
    • 300M ZK tokens were allocated for user rewards distribution
    • During the first season, 45,115,700 ZK was distributed to Ignite participants, accounting for 15.03% of the total rewards supply
    • NOTE: There is currently 4,258,421 ZK waiting to be claimed by Ignite participants. Please claim your rewards by June 30th, 2025. All unclaimed ZK after June 30th, 2025 will be returned to the TA to be used for future governance initiatives.
  • ZKsync Ignite Admin Costs Distribution
    • 25M ZK tokens were allocated for administrative purposes
    • During the first season, 9,092,517 ZK was distributed to service providers, accounting for 36.37% of the total admin supply
    • Service provider costs are as follows: Merkl = 3,834,843 ZK; OBL = 2,625,972 ZK; Hype = 947,764 ZK; Factory Labs = 779,920 ZK; ZKGPS = 433,000 ZK; DSC = 270,000 ZK; SPCE = 201,018 ZK
  • Total ZKsync Ignite Cost Breakdown
    • 325M ZK tokens were allocated for Ignite
    • User rewards (45,116,700 ZK) + Admin costs (9,092,517 ZK) = 54,208,217 ZK was used, accounting for 16.67% program budget
    • All of the unused ZK tokens will remain unminted and be available for future TPPs via governance

Biggest Lessons for the DAO

  • Build Adaptive Governance Frameworks
    • Ignite’s flexibility—using only 45M ZK of a 300M budget and ending early—allowed the DSC to respond to market shifts and misalignment with Elastic Network goals. Future governance proposals should embed similar adaptability, with clear provisions for mid-course corrections (e.g., bi-weekly reviews or early termination clauses), ensuring resources align with evolving priorities across all program types, not just DeFi.
  • Automate Payments & Transactions For Future TPPs to Streamline Operations
    • Due to the nature of how this TPP was designed the DSC had to sign multiple transactions bi-weekly which lead to bottlenecks in payments and approvals. The 6/8 multi-sig signing threshold was good for security reasons but between approving campaign changes bi-weekly, minting new tokens to fund campaigns and making payments to service providers, managing all of these transactions & chasing down signers took a lot of time and hassle. To better streamline operations for future TPPs, the DSC approved the funding of automation processes by Factory Labs.
  • Strengthen Transparency and Delegate Engagement
    • While the DSC consulted delegates informally (e.g., at ETH Denver), the decision to end Ignite surprised many due to limited real-time visibility. Going forward, governance processes should formalize delegate involvement—via recurring updates (e.g., bi-weekly calls) or delegate representation on steering committees—to enhance trust and reduce uncertainty, applicable to any Token Assembly (TA) initiative.
  • Align Programs with Long-Term Ecosystem Vision
    • Ignite’s pivot away from Season 2 stemmed from its disconnect with the Elastic Network timeline and native interoperability delays. All future proposals—whether for infrastructure, community grants, or tokenomics—must be rigorously tied to ZKsync’s strategic roadmap, with measurable goals and contingency plans to avoid resource waste when priorities shift.

Looking Forward

The conclusion of Ignite marks a deliberate shift in focus toward realizing the Elastic Network vision, as outlined in our 2025 roadmap.

Moving forward, we are focused on unlocking EVM-equivalence, refining tokenomics, accelerating native interoperability, and exploring new initiatives to empower builders and token holders alike. The lessons from Ignite will inform smarter, more transparent governance frameworks, and we encourage the community to explore the full (ZKsync Ignite Closing Report) and share your insights on the forums. Together, we will continue to evolve ZKsync into a resilient, interoperable ecosystem.

Thank you for your engagement and contributions throughout this journey.

Best Regards,
The ZKsync Ignite Team

2 Likes
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For me, this is really contradictory and sad. We’re trying to create an ecosystem where fees and costs are negligible so the end user receives the greatest benefit, yet we designed a program where we paid 9 million ZK to a couple of intermediaries just to allocate 45 million ZK.

I don’t want to make wood from a fallen tree, as this has already ended, but we need to be more diligent and learn from this experience.

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Gabe - appreciate the reply. Few mitigating factors to note here:

  1. The 1:5 ratio (9M ZK to providers for 45M ZK of user rewards) is mis-leading. We were intentionally conservative with user reward spend and paused the program before the end of S1, yet had fixed costs for admin. The fact that we spent 16.67% of the budget for 33% of the program duration is the better metric to look at.
  2. Roughly ~10% of the ~9M ZK paid to service providers were for upfront work (ignite website, custom integrations, etc) that we planned to amortize over the 9 months. This was further exacerbated by a lower ZK price.
  3. Another ~10% of the 9M ZK paid to service providers were to invest in core infra needed to more efficiently run TPPs (ZKGPS + Factory Labs) that are not Ignite specific.