ZKsync Ignite Program Update From OpenBlock Labs - Saturday Jan. 4th 2024

[0xk3y]

Happy New Year ZKNation! Below are our latest updates on the ZKsync Ignite Program.

Program Timeline

The official launch time of Ignite is scheduled for Monday, January 6th 2025 at 1PM UTC!

Round 1 Allocations

The first bi-weekly period ZK allocations have been approved by the DeFi Steering Committee (DSC) at the recommendation of OpenBlock.

Summary Stats

• Lending Budget: 2,802,449.83 ZK (40.4%)
• Dex Budget: 2,638,922.28 ZK (38.0%)
• Perps Budget: 600,554.03 ZK (8.7%)

Bonus Budgets

• LayerSwap Bonus Budget: ~500,000 ZK (7.2%)
• Jumper Exchange Budget: ~400,000 ZK (5.8%)

Total Budget: 6,941,926.15 ZK

The LayerSwap and Jumper bonus scale with the USD value bridged so these are estimates for the spend.

Full details of the lending, dex, and perps allocations can be found here.

Discussion

In the initial Ignite grant periods (each 2 weeks) the primary objectives are driving TVL growth across primary asset pools and collecting valuable data to optimize future allocations. This includes analyzing key factors such as individual pool APR elasticity, pool preference, asset performance, and user behavior to test our early assumptions regarding equilibrium APRs and expected growth.

In this first phase, we are incentivizing similar pools and assets across participating protocols within a standardized structure to identify high-growth candidates and optimize our strategy moving forward. Pool performance will be assessed through a variety of metrics (comparable pool APRs, TVL growth per $1 of incentives, fee generation, share of aggregator swap paths, etc…) with weights adjusted to emphasize evolving priorities throughout the program (initially TVL growth then sustainability, etc…). Using the data we gather from initial allocations, we will refine our approach based on data-driven decisions for future allocations.

In addition to the primary asset pools, we are allocating ZK to incentivize the bridging of funds to ZKsync Era. Specifically, the Jumper Exchange allocation will be used to encourage users to bridge funds to ZKsync Era and deposit them into incentivized pools. Simultaneously, the LayerSwap allocation will target users holding funds on ZKsync Lite, incentivizing them to bridge these funds to ZKsync Era.

Next Steps

1. Publish public dashboards for tracking key metrics and measuring incentive activity.

Thank you for your continued support and we are looking forward to Ignition!

[Lisanc]

Thanks for the update.

Full details of the lending, dex, and perps allocations can be found here.

The “here” hyperlink doesn’t work! @0xk3y

[Ryne]

Well, the problem is that according to the design at the beginning, 300M will be distributed evenly over 9 months, so that a bi-week will have an average of 16.666M ZK allocation

But your allocation is only 7M ZK, can you explain what is going on?

Also what is the relevance of LayerSwap and Jumper Exchange for increasing TVL and network activity?

Also I would like to know if ZK holders are rewarded with greater weighting? For example in Lending Budget ZK’s are rewarded with more weight than something like USD and ETH, and if not what incentive is there to make sure that users don’t immediately sell their incentivized ZK’s once they get them?. If the user gets the incentive of ZK and sells it immediately, is this considered a token unlock in disguise?

[Golem]

1. It was never said that every bi-weekly period would have the same amount of $ZK issued, simply that 300M $ZK has been allocated to the program.

Logically speaking, if you would like to keep APY rates competitive, then you start with a lower amount of $ZK issued at first, and gradually increase the amount of $ZK issued as TVL increases; this ensures that you can have stable, competitive APY rates over the long term. This is a 9 month program after all.

Example: for a pool that has $1 million TVL to have a 10% apy vs a pool with $10 million TVL to have a 10% apy; 10x more ZK tokens are needed to be emitted to keep the $10m TVL pool at a 10% APY > the $1m pool.

2. The relevance of LayerSwap is to incentivize users with $ on ZKsync Lite (~50m+ TVL) to bridge their funds over to ZKsync Era + deposit it into DeFi protocols participating in Ignite.

3. The relevance of Jumper is that Jumper is the official bridge partner of ZKsync Ignite. This is the main way that users from other chains are encouraged to utilize to bridge their funds from other chains (ETH, Base, etc) to ZKsync Era to participate in Ignite. Which of course, directly affects the DeFi TVL & users on ZKsync Era.

4. All ZK pools participating in the program are generously supplied as you can see in the sheet above. You will see the APY’s when the program goes live.

It is up to individuals whether they see the potential of hodling ZK & participating more or selling. This program was designed to maximize user Freedom & rewards. ZK tokens are earned hourly & can be claimed weekly. A much better system than the rampant points-farming grift’s we’ve seen in the space over the past year.

“token unlock in disguise”? lol what does that even mean. The program is very upfront. The people getting rewarded tokens are the people participating in the program, how is any of this “in disguise”? It’s quite transparent if you ask me.

[aalimsahin]

When I check the address 0xaf08a9d918f16332f22cf8dc9abe9d9e14ddcbc2 for HoldStation, it holds USDC.e, not USDC. However, the Excel sheet indicates an incentive for USDC. Could there be an issue with the address, or is the token name incorrect?

[Golem]

not an error, Holdstation’s vault is USDC.e (bridged USDC).

On ZKsync Era there is USDC (native USDC) & USDC.e (bridged USDC).

[Ryne]

Thank you! My questions were well answered. It makes a lot of sense to start with a relatively small amount of ZK.

But I’m still curious about three things👇

1. Reward Distribution Between USDC and ZK

I noticed that in the lending budget, $1 USDC seems to receive a higher reward than $1 ZK.

For example, on Venus, $6M USDC.e is allocated 383k ZK (0.06392 ZK per $1 USDC.e), while $10.55M ZK is allocated only 575k ZK (0.05453 ZK per $1 ZK).

• What is the rationale behind this allocation strategy?
• Will future Ignite campaigns consider giving ZK a higher incentive weighting?
  This is crucial for the community’s decision on whether to buy and hold ZK in the long term.

2. Anti-Sybil Protection for Bridging Activities

Is there any mechanism in place to prevent Sybil attacks during the bridge-related incentives? For example, one could repeatedly transfer funds into zkSync Era, withdraw to an exchange, and reload them from the base chain to zkSync Era, incurring minimal costs in the process.

How does the system prevent this kind of behavior and ensure fair distribution of rewards?

3. Clarification on the Fund Movement via Wintermute

There has been some discussion around a particular thread: x.com

• Are the funds in question owned by Ignite or the zkSync team?

• If so, why were they transferred through a centralized exchange (CEX) via Wintermute?

Looking forward to your insights on these points. Thank you again!

[Ryne]

@Golem

Example: for a pool that has $1 million TVL to have a 10% apy vs a pool with $10 million TVL to have a 10% apy; 10x more ZK tokens are needed to be emitted to keep the $10m TVL pool at a 10% APY > the $1m pool.

Can I default to using the first month’s APY as a reference for the following nine months, considering that as TVL increases, more ZK will be allocated to maintain balance?

[barbarianmax.eth]

@Golem

not an error, Holdstation’s vault is USDC.e (bridged USDC).

On ZKsync Era there is USDC (native USDC) & USDC.e (bridged USDC).

thanks bro i understand

[Lisanc]

SyncSwap Community Builder mentions
SyncSwap Description also includes ZK-ETH Range
Both classic and Range (V3) are rewarded.
Does Ignite Period 1 Target need an update? Or is syncswap tagging the wrong pool?

[ismailemin]

@0xk3y

Bonus Budgets

• LayerSwap Bonus Budget: ~500,000 ZK (7.2%)
• Jumper Exchange Budget: ~400,000 ZK (5.8%)

Hey, what are the conditions of those bonus rewards?

[Benido]

Thank you for this last update.

One question since now we see the detailed breakdown: Both in the DEX and lending categories ZK pairs/ deposits are incentivized. ZK in AAVE even has the highest allocation.

This will likely have a positive impact on ZK liquidity, but might also have a negative impact on governance, because people that are delegating now might pool/ deposit and hence delegates will lose voting power.

Is this being measured/ monitored?
If so: Is there a point where this trade off is too extreme and you would react to it?

[zook]

Proposal:
I would love to see wBTC included in the Ignite program.
Only M-BTC is included as a Bitcoin asset. I have much higher trust owning WBTC than M-BTC.
WBTC is the largest wrapped Bitcoin, so it would make sense to incentivize it.

A easy way to include wBTC would be to incentivize the ZeroLend wBTC lending pool.

Thank you for your consideration.

[Ryne]

Do you have any response to these questions?
@Golem

[Gabriel]

Should protocols mention boosts in any way or display them on the platform (e.g., a small logo)? I’m asking because Venus Protocol doesn’t seem to show anything, not even the correct APY. Maybe I’m mistaken…

[Golem]

Should protocols mention boosts in any way or display them on the platform (e.g., a small logo)? I’m asking because Venus Protocol doesn’t seem to show anything, not even the correct APY. Maybe I’m mistaken…

Most protocols do mention the ignite rewards on their front end, the ones that don’t are working on getting the Ignite APR’s integrated into their front ends this week

From what you’re seeing, the Venus frontend is showing their personal APR, if it is an ignite pool it is earning Venus APR + Ignite APR = total APR

[Golem]

SyncSwap Community Builder mentions
SyncSwap Description also includes ZK-ETH Range
Both classic and Range (V3) are rewarded.
Does Ignite Period 1 Target need an update? Or is syncswap tagging the wrong pool? @Lisanc

It is not tagging the wrong pool; both v2 (aqua) and v3 pools for ETH / ZK are incentivized for Ignite

Hey, what are the conditions of those bonus rewards? @ismailemin

Users must use bridge from Zksync Lite → Zksync Era for layerswap & deposit into an Ignite pool. Users must use Jumper bridge (any chain) → ZKsync Era & deposit into an ignite pool to qualify.

Thank you for this last update. One question since now we see the detailed breakdown: Both in the DEX and lending categories ZK pairs/ deposits are incentivized. ZK in AAVE even has the highest allocation. This will likely have a positive impact on ZK liquidity, but might also have a negative impact on governance, because people that are delegating now might pool/ deposit and hence delegates will lose voting power. Is this being measured/ monitored? If so: Is there a point where this trade off is too extreme and you would react to it? @Benido

This is a good point. As users deposit ZK into pools, they lose their delegation until the ZK returns to their wallets. I will flag this for the association.

Proposal:
I would love to see wBTC included in the Ignite program.
Only M-BTC is included as a Bitcoin asset. I have much higher trust owning WBTC than M-BTC.
WBTC is the largest wrapped Bitcoin, so it would make sense to incentivize it.
A easy way to include wBTC would be to incentivize the ZeroLend wBTC lending pool.
Thank you for your consideration. @zook

wBTC is included in the Ignite program; you have m-BTC:wBTC pools. Will bring up to OBL that users want to see wBTC supported by Ignite on Lending protocols as well.

[Benido]

@Golem

This is a good point. As users deposit ZK into pools, they lose their delegation until the ZK returns to their wallets. I will flag this for the association.

After receiving the ZK back, do they have to delegate again or is the old association “restored” and they don’t have to do anything?

[Golem]

After receiving the ZK back, do they have to delegate again or is the old association “restored” and they don’t have to do anything?

The delegation is based on the wallet address, so when the ZK goes back to the wallet the original delegation is re-applied, whether the amount of ZK in wallet has stayed the same, increased or decreased.

[Benido]

@Golem

This is a good point. As users deposit ZK into pools, they lose their delegation until the ZK returns to their wallets. I will flag this for the association.

Just some quick numbers after more or less one week of the program based on this → Name of delegate (ZK delegated on January 1st | ZK delegated today

• Syncswap: 137M | 97M (-40M)
• L2beat: 96M | 87M (-9M)
• StableLab-ZKSync: 62M | 62M (+/-0)
• PGov: 57M | 57M (+/-0)
• Baki Er: 61M | 54M (-7M)

I just voted for GAP-1 and noticed my ZK delegated were down (though tbh I have no perfect idea where they were on Jan 1st, but gut feeling is >2M and now 1.5M), so I checked the top5 and they are either down (significantly in the case of Syncswap, but that might have different reasons) or stable. Obviously the recent down trend after a nice rallye might have led to some selling and hence undelegating, so it’s not necessarily Ignite related.