How zkSync Era Grew To 1m Users in Record Time (Growth Notes and Full Recording)
Key points, full interview and some alpha...
Yesterday, I sat down with Sebastian and Sam from the zkSync ecosystem team and two key projects, Eralend and Derivio, to uncover how the chain grew to 1m users so fast. If you missed the live Twitter Spaces you can catch the notes (thank you Justin!) and full recording below.
Zksync’s strategy:
Combination of time to market and building a vibrant Defi ecosystem. Optimistic rollups (arbitrum and Optimism) did really well to grow their ecosystem with both deploying bluechips and building native defi; but the zksync team believes that zero-knowledge scaling solutions are the end game.
Zksync lite went to market a couple of years ago (Sending gitcoin grants); then Zkysnc was the first chain to launch zkEVM; which promises to deliver speed, efficiency, and cost efficiency beyond other chains.
Incentivising native projects to start building on Zksync testnet as early as possible.
How can projects go to market on Zksync:
Derivio team had the experience of working with Luna and Near; and realised a lot of it comes down to timing. Protocols need to have a plan on how to help users and the ecosystem, and how can the ecosystem help you. This puts an emphasis on how you position yourself in the market and which chain you chose.
Protocols should try to be helpful to other projects - If you think about well-known names (uniswap, Aave) they are brands; started from projects known for their main product but eventually known by their brands that help lift up a whole ecosystem through interoperability.
Eralend thinks Zksync is a fantastic platform; since Shanghai layer 2 blockchains have been hyped which brings the community; and has the best developers. Support is timely.
How important is Defi Ecosystem for growth of the chain:
The playbook is the following, building defi attracts 1) native users who are sophisticated and interact with ecosystem projects; 2) Liquidity on-chain so other projects build out on the chain. Therefore Defi is number one for Zksync.
Supply and Demand Strategies: You need users and interesting projects; Zksync is working hard to attract the newest projects; important to have a go-to DEX, go-to platform.
Zksync is working with larger protocols (Bluechips) - But native projects are also extremely important since they are differentiators of chains.
Why zkSync : Speed, low fees and future performance.
Orderbook dexes haven't been able to succeed on other platforms but on Zksync they are more viable due to zk-technology.
Zksync is also unique since you can bridge funds in 15 minutes so liquidity is improved; no bridge middle man is needed.
What makes people excited about building with Zksync:
Zksync uses state difference rather than call data - protocols that demand high throughput of transactions and need oracle data can access it easier. Ex: Pinging your oracle and getting a tick and it can be 10-100x cheaper than a rollup which uses call data.
Zksync uses a compiler; so they can compile RUST, C++, and language which is not in solidity. This allows them to scale and support a wide range of projects.
A lot of the defi protocols that are looking to build for the future and front run this to position themselves early on zkSync. The market hasn't completely realized the potential, but the ones that get it get it.
How do hyper chains benefit applications:
As seen with Optimism and arbitrum or AVAX subnets a lot of chains/networks have published plans for appchain ecosystems but the problem is the app chain is very singular; it only lets 1 protocol build on it and needs to be routed back to the layer 1: adding costs, time, burden - No more trustlessness and composability.
Zksync has fractal scaling and routing through the layer 2 instead of the layer 1. Users agree to a set of factors that allow them to trustlessly bridge. With this you can start to build very composable app chain ecosystems. Every app is an app chain that hyper connects to another chain (example apple, PayPal, visa 3 separate networks built composably) that thinking is what you can achieve with hyper chains.
Much harder to build trustless apps on an optimistic rollup.
What are the most popular apps now and what will be the most popular in 3 years:
Eralend: Eralend as a powerhouse in the coming years.
Derivio: they want to be the derivative platform on Zksync - want to go beyond what's being done; they want to offer digital options. In the context of crypto not many chains do this - especially EVM apps only buffer finance which can pay 70% to users. This cant compete with CEX which pays 90% - fees. That's why they created proprietary software to create to enable users who have a strong conviction to trade digital futures and earn 95% fees. The question is not can you provide a better user experience than web3 competitors, but can you provide the best experience overall. Derivio believes the fundamental idea is neutrality. They did an analysis of different chains and believe Zksync is the most able to facilitate neutrality.
How Zksync wants to grow to 10 million users.
Attract native and blue-chip projects, that will naturally attract new users.
They are going to be working with liquidity providers (funds, market makers, whales) - which make Zksync a vibrant blockchain. You need economic activity. Market makers can offer deeper spreads due to better ticks (oracles).
Zkysync have incentives to bring on projects without tokens yet; they want projects with aligned incentives that chose zksync as their Chain not one of the chains.
They have $200m that is going to strategically invest in newer projects. With a data scientist they looked at the success of traditional ecosystem funds and they realised it's not a great use of capital and it's not historically profitable. While it attracts short-term liquidity once rewards run out liquidity leaves the ecosystem. Instead they are trying to build for the long term and create stickiness.
NFTs:
Zkysnc understands usecase for NFTs in community building. While Finance is just numbers art can be esoteric, and NFTs can really bring out the creativity.
Alpha:
Eralend is creating a 1 spot liquidity hotspot; which presents an opportunity to democratize access to a wide range of lending and leverage products.
Derivio is going through an audit and wants to launch within 1 and 2 months after the launch.
Zksync network is going to go through a lot of upgrades in the next one or two months. They are onboarding multisig, chainlink, block timestamps which a lot of projects are dependant on. Once those are ready a large amount of protocols will launch on zksync. Position yourself early to benefit.
Right in the bull's-eye!
Great article and insight into zkSync, I already sent you a private message on Twitter.