ZKsync approves proposal to distribute 325 million ZK tokens to boost liquidity across chains

Key Takeaways

• ZKsync's Ignite program will distribute 325 million ZK tokens to establish a DeFi liquidity hub.
• The initiative aims to boost ZKsync Era's declining metrics by enhancing DeFi liquidity.

The ZKsync community has approved the ZKsync Ignite Program, which will distribute 325 million ZK tokens to establish a DeFi liquidity hub on the ZKsync Era network. The program aims to enhance the total value locked (TVL) of ZKsync Era’s DeFi sector and improve liquidity across all interoperable chains within its Elastic Chain ecosystem.

“The goal of the Ignite Program is to establish a robust, unified source of liquidity on ZKsync Era in service of builders and users across the Elastic Chain who can access this liquidity via native interoperability,” according to the proposal .

As part of the program, 300 million ZK tokens will be allocated to native DeFi protocols over nine months. The remaining 25 million ZK tokens will be used to cover administrative costs.

As noted, OpenBlock Labs, the program’s analytics provider, will review applications and determine token distributions every two weeks. Recipients can claim allocated funds weekly. A DeFi Steering Committee (DSC) comprising five members will review OpenBlock Labs’ selected applicants and maintain veto power over key program decisions.

The program also seeks to minimize slippage during trades, thereby increasing fees earned by liquidity providers.

The initiative aims to generate $5 to $10 in native DeFi liquidity for every $1 in incentives allocated, while targeting $3 in liquidity provider fees. It seeks to maintain $0.6 worth of liquidity for each dollar distributed after its conclusion.

The move comes as ZKsync Era faces declining metrics. Daily transactions have fallen over 89% from a year-to-date peak of 1.75 million in February to 182,790.

Active users dropped 91% from June’s 400,000 to around 41,100. Total value locked (TVL) decreased from $1.5 billion in June to $983 million, while DeFi TVL declined from $190 million in May to around $79 million.