ZkSync's Token (ZK) Is Finally Here! Here's What You Need to Know!

By Michael @ CryptoEQ | CryptoEQ | 12 Jun 2024


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The Airdrop

Eligible recipients of ZK tokens can now verify their eligibility, with the majority able to claim their allocations from next week until January 3, 2025. However, contributors working on specific projects will face a delay, with their tokens becoming available on June 24, 2024. Thanks to ZKsync's account abstraction feature, recipients will claim their ZK tokens without incurring transaction fees. All airdropped ZK tokens, regardless of allocation type or size, will be fully liquid, granting recipients full discretion over their usage.

Post-claim, ZK holders have the option to delegate their tokens for governance participation, which may lead to future airdrop allocations. Alternatively, they can liquidate their holdings by swapping to another token and bridging out of the ecosystem.

Distribution of ZK Tokens

Token distribution often struggles to satisfy all stakeholders, with teams typically prioritizing insiders. However, ZKsync aims to prioritize the community by allocating two-thirds of the total ZK supply to them and distributing 17.5% of the total supply in the initial airdrop. This amount surpasses the individual allocations reserved for the ZKsync team and investors. Despite the substantial power retained by team and insider allocations, which are subject to a one-year lockup followed by a three-year vesting period, this distribution strategy ensures the community remains the largest holder of liquid tokens, granting significant autonomy in protocol governance.

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The ZKsync Foundation will receive 19.9% of the total ZK token supply for ecosystem incentives, opening the door to future airdrop rounds. Governance, or the Token Assembly, will receive the remaining 29.3% of the tokens.

Additional Recipients of the ZK Airdrop

The final 11% of the ZK airdrop, not allocated to users, has been distributed among various groups that contributed to the ZKsync ecosystem. More than half of this—5.8% of the total ZK supply—was allocated to protocols building on ZKsync. Like other recipients, these protocols can use their tokens as they see fit.

This allocation tier also includes ZK tokens for contributors to key Ethereum infrastructure, significant ZKsync GitHub repositories, community educators, researchers, broader open-source software developers, code audit contest participants, and various ZKsync community members, including in-person event attendees. Additionally, 0.4875% of the total ZK supply is allocated to participants in experimental onchain communities, including DEGEN and BONSAI airdrop recipients, Crypto the Game players, and holders of Pudgy Penguin and Milady NFTs.

zkSync Design Choices

zkSync's emphasis on EVM compatibility is a crucial design decision, one that other ZK rollups, like current industry-leader Starkware, chose not to pursue. Beyond simply aiming for EVM compatibility, zkSync also looks to align itself more closely to Ethereum in other respects as well, including maintaining open-source libraries, pricing gas in ETH, and supporting Solidity.

The team has also prioritized security, conducting seven independent security audits, three internal audits, and two public security contests. zkSync also has an ongoing bug bounty program.

zkSync is compatible with the EVM at the language level. This means that zkVM compiles EVM languages, such as Solidity, into a VM that is compatible with SNARK. ZkSync achieves EVM compatibility by translating Solidity, the primary smart contract language on Ethereum, to Yul. Yul is an interim language that can be turned into bytecode for many virtual machines. The Yul code is then recompiled with the LLVM compiler framework into a proprietary, circuit-compatible set of zkEVM-specific bytecode.

This introduces a compiler risk into the protocol but also eliminates the need for validity proofs across the EVM execution steps, which should help when trying to decentralize the prover/protocol in the future. In terms of security, a bytecode-level zkEVM is the optimal solution but it comes with its own complexities and issues for developers. zkSync asserts that ~99% of L1 Solidity code may be deployed immediately to zkSync 2.0 without modification.

zkSync 2.0 supports EVM programming languages, such as Solidity, Yul, Vyper, Rust, and Zinc (2022). While Zinc is zkSync’s own specific “optimized” programming language, it isn’t required.

zkEVM Compiler. Source: Matter Labs zkEVM Compiler. Source: Matter Labs

Another feature of zkSync’s zkEVM is the dynamic fee architecture. In an L2 rollup, the transaction cost is based on two values: (1) the computation cost required to complete the transaction and generate the validity proof, and (2) the amount of L1 gas required to finalize the transaction. zkSync 2.0 aims to give users more control over both aspects.

A significant portion of the overall transaction cost associated with rollups comes from part two: the data published to the L1 to ensure data availability. High congestion on the Mainnet will increase the rollup costs as well. However, zkSync 2.0 has added an option that restricts the amount of gas consumed per byte of calldata delivered to L1 to ensure the transaction won’t be conducted above a certain threshold. With this, transaction fees are predicted based on the anticipated system resources required and charged based on the actual system resources used. 

zk comparisons Source

Future Outlook for ZKsync

While no token distribution can perfectly cater to all participants, the ZK allocation grants a substantial amount of tokens to the community, promising significant rewards for all ecosystem participants to a moderate extent. Zero-knowledge rollups, such as those developed by ZKsync, are viewed as the ultimate solution for Ethereum scaling. Despite the enhanced security benefits over optimistic rollups, the crypto community has been slow to adopt this standard, even with airdrop incentives.

Throughout ZKsync's development, a significant portion of onchain activity has been attributed to airdrop farmers. With this airdrop now complete, the crypto industry will gain a clearer understanding of how much of the transaction activity was driven by legitimate use versus speculative farming.

This has not deterred the zkSync team, as they have outlined a four-stage plan to decentralize the project over time, stating:

"PHASE 1: Ignition

  • Initial audits have been completed
  • Code 4rena contest for L1 has been completed
  • Code is open-sourced
  • Bug bounties are available
  • The team can immediately upgrade contracts
  • Deposits of up to 10 ETH are allowed for whitelisted users
  • 2FA via whitelisted sequencer is at 2/10

PHASE 2: Ascent This phase will begin with the Full Launch Alpha.

  • Code 4rena contest for L2 has been completed
  • The team can still immediately upgrade contracts
  • Withdrawals are capped at 10% of the total token value per day; larger amounts require manual approval at 3/10

PHASE 3: Apex This phase will start after months of stable operation.

  • Secondary audits have been completed
  • Instant upgrades require the Security Council
  • Permissionless priority queue is on
  • 2FA via whitelisted sequencer is off if priority operations are censored
  • The "Alpha/Beta" label is removed at 4/9

PHASE 4: Outer Space

  • 2FA is switched to PoS-secured consensus
  • The Security Council is replaced with a fully trustless mechanism
  • The priority queue is fully permissionless at 5/9"

To release this new PoS system, Matter Labs must introduce a new zkSync token and two new specialized roles: Validators and Guardians. Validators produce the blocks and generate the proofs, while the Guardians’ role is to ensure the rollup remains censorship-resistant.

To do this, Guardians will maintain the state on zkPorter by confirming the data availability of zkPorter accounts. If there's any failure of data availability, the Guardians will get slashed (economic penalty). Users in a Guardian-led system can always exit the system with their data, so long as at least one-third of participating validators remain honest. 

A critical feature of the zkSync PoS system is that, unlike in alt-L1s or sidechains, Guardians can't steal funds, only freeze the zkPorter state. And in doing so, they freeze their stake. Even if this were to occur, due to the ZKR design, users would still be able to withdraw their funds. Conversely, ORs that are successfully attacked can lose user funds. This is a significant advantage of the zkPorter system.

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Michael @ CryptoEQ
Michael @ CryptoEQ

I am a Co-Founder and Lead Analyst at CryptoEQ. Gain the market insights you need to grow your cryptocurrency portfolio. Our team's supportive and interactive approach helps you refine your crypto investing and trading strategies.


CryptoEQ
CryptoEQ

Gain the market insights you need to grow your cryptocurrency portfolio. Our team's supportive and interactive approach helps you refine your crypto investing and trading strategies.

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