TL;DR
- ZKsync DAO ends the Ignite program ahead of schedule, avoiding the second season of rewards for DeFi projects due to market conditions and a more conservative strategic approach.
- The decision aligns with the priority of developing the Elastic Network, a multichain ecosystem within ZKsync that aims to enhance interoperability and efficiency in decentralized finance.
- The total value locked (TVL) in ZKsync has fluctuated dramatically, rising from $100 million to $400 million with Ignite, but dropping back to $200 million following the announcement.
ZKsync DAO’s DeFi Steering Committee announced on Thursday that it has decided not to renew the Ignite rewards program for a second season and will proceed with its early termination. The official suspension will begin on March 17, when rewards for the sixth period will be turned off. This initiative, initially planned to run for three seasons over nine months, is being cut short, reflecting the evolving strategic focus of ZKsync in the blockchain ecosystem.
Ignite was designed to distribute 300 million ZK tokens as liquidity incentives within its DeFi ecosystem. The first season, launched in January, allocated 100 million tokens, initially valued at $20 million, though they are now worth only $7 million due to the drop in the ZK token price. With the cancellation of subsequent seasons, the remaining 200 million tokens will no longer be distributed, reshaping the platform’s growth strategy.
Multichain Expansion: A More Ambitious Future
The committee argues that this shift is necessary to concentrate resources on developing the Elastic Network, a multichain infrastructure that will allow ZKsync to establish itself as a DeFi liquidity hub with native interoperability. The vision for this ecosystem is to strengthen the main chain, ZKsync Era, and improve the integration of various Layer 2 chains using Zero-Knowledge Rollups.
Another key factor in this decision is the bearish market environment. Karthik Senthil, a member of the Ignite DeFi Steering Committee, explained that it is time to be more conservative with spending given the current market conditions. Additionally, the technological advancements required to ensure efficient interoperability within the Elastic Network have faced delays, making Ignite’s continuation less viable at this stage.
A New Phase for ZKsync
Despite the TVL drop from $400 million to $200 million, the ZKsync team remains confident that this multichain approach will ensure more sustainable growth. Its native token, ZK, currently trades at $0.07, having fallen 60% since the start of the year, although its fully diluted valuation remains at $1.47 billion.
ZKsync continues to advance as one of the most innovative scalability solutions for Ethereum, and its strategic transition toward the Elastic Network could set a new standard in the DeFi ecosystem, reinforcing efficiency and security in multichain transactions.
