zkSync V31 Upgrade Analysis: How Cross-Chain Interoperability and Token Burn Mechanisms Reshape the ZK Value Capture Model

Layer 2 tokens' value capture is one of the most enduring and disappointing narratives in the crypto industry. Over the past three years, almost all native tokens of Ethereum scaling solutions have fallen into the same dilemma: holders have voting rights but cannot derive direct economic returns from protocol growth. Governance rights themselves are not scarce, and when governance discussions are weakly linked to token holder interests, the phrase "governance token" becomes a mild irony.

On April 27, 2026, Matter Labs officially submitted the V31 protocol upgrade proposal to the ZK Nation governance forum in the form of ZIP-16. The deep meaning of this technical document goes far beyond its surface—it for the first time embeds a consumption mechanism directly linked to network usage into ZK tokens: each cross-chain interoperability call consumes ZK tokens, which are directly sent to a burn channel via the Fee Flow system. This marks the shift of ZKsync's token economics from "governance-first" to "utility-first," and provides a new example worth examining for value capture across the entire Layer 2 track.

Against the backdrop of industry narrative fatigue and widespread pressure on L2 tokens, the discussion triggered by this upgrade has far exceeded the ZKsync ecosystem itself.

What exactly has the V31 upgrade proposal changed?

Core content of ZIP-16 proposal

On April 27, 2026, Matter Labs submitted the V31 protocol upgrade draft to the ZK Nation governance forum in the form of ZIP-16, with three main points:

First, it introduces native interoperability (Native Interop), enabling asset transfers and contract calls between different chains within the ZKsync ecosystem through Interop Calls and Bundles mechanisms. Unlike the previous version V29, which only supported message passing, V31 allows for meaningful asset transfers and composable calls between chains. The proposal adopts ERC-7786 and ERC-7930 as standards for cross-chain messaging interoperability.

Second, it establishes a cross-chain fee system (Interop Fees). Each cross-chain call requires payment in ZK tokens, but the ZIP-16 proposal itself does not specify exact fee rates. Discussions from the community and industry media suggest an initial reference fee of 10 ZK per call, with the final rate to be determined through governance. The fee system includes both user-side and operator-side dimensions.

Third, it provides Stage 1 support for L1 settlement chains, introducing a Priority Mode to enhance censorship resistance, and completes broad compatibility upgrades for ZKsync OS. Protocol version 30 is used for the ZKsync OS chain but has not been deployed on the Era mainnet, so Era directly upgrades from V29 to V31.

Fee flow path: from collection to burn

The cross-chain fee mechanism in V31 is not isolated but embedded within a more comprehensive fee flow system. On May 6, 2026, the governance forum released the ZK Token Fee Flow System v1.0, which constructs a clear fee flow path:

Fees collected by the protocol (non-ZK assets) first enter the Fee Flow contract pool, where anyone can claim these assets by providing a fixed amount of ZK tokens to the contract. The ZK tokens entering the system then go into the Splitter contract, which distributes them according to governance-set parameters—initially set at 100% burn, with no other recipients. This means that under current parameters, every cross-chain call consumes ZK tokens that are permanently removed from circulation. Governance can adjust the burn ratio or introduce other distribution paths through standard ZIP and GAP processes, but the current design prioritizes deflation.

zkSync's 2026 strategic overview

From the exit of ZKsync Lite to the formation of Elastic Network

The V31 upgrade is not an isolated event but a facet of ZKsync’s systemic strategic shift in 2026. To understand its significance, we need to look at three parallel timelines.

On February 27, 2026, ZKsync officially announced that it would fully shut down ZKsync Lite (formerly ZKsync 1.0) on May 4, 2026. The network would stop producing blocks and permanently freeze the final state to ensure balances are not altered after shutdown. As of closure, about $33.9 million worth of assets remain in bridges, including approximately $24.9 million in stablecoins and $8.4 million in ETH. The team stated that at least one year of read-only API access would be maintained to support historical data queries, and unclaimed funds could be claimed later. Launched in June 2020, ZKsync Lite was regarded as Ethereum’s first zero-knowledge rollup, supporting token transfers, atomic swaps, and NFT minting, but lacking smart contract functionality. The team shifted all resources to Prividium and Elastic Network development.

In January 2026, ZKsync released an annual roadmap centered on privacy, institutional compliance, and native interoperability. It explicitly positioned Prividium as a pillar for institutional adoption and promoted ZK Stack’s evolution from a single scaling tool to an enterprise-grade application chain deployment platform. According to recent references from users, Matter Labs announced on April 21, 2026, that it joined the Linux Foundation Decentralized Trust, collaborating with multiple central banks and global financial institutions to develop open standards.

On February 9, 2026, the first season of the ZKnomics staking pilot launched, introducing the "Delegate-to-Stake" mechanism, requiring stakers to delegate voting rights to active representatives to earn rewards. The program, built jointly with Tally, has a total reward cap of 37.5 million ZK, split over two seasons: the first with a cap of 10 million ZK, the second with 25 million ZK. The initial annualized yield target was 3%, with a maximum of 10% depending on participation. According to recent user references, the first season ended on May 11, 2026, with a peak staked amount of 355 million ZK (87% of the 400 million target), and actual rewards distributed were 5.3 million ZK, with net active delegations reaching 205 million ZK. Cross-referencing mid-term data from the third week, about 188 million ZK were staked, roughly 50% of the cap. Staking requires no lock-up period, and participants can exit at any time.

Practical progress of institutional adoption

Alongside infrastructure iterations, ZKsync’s institutional adoption is transitioning from proof of concept to production deployment. Prividium—a privacy-focused enterprise-level Validium architecture blockchain platform—serves as the core vehicle for this transformation. Its design is clear: transaction data and state are fully stored within the institution’s own infrastructure, only the state root and zero-knowledge proof are submitted to Ethereum, achieving "privacy by default with auditability." The platform includes built-in tools for KYC, KYB, and AML, providing privacy protection while maintaining regulatory oversight.

Institutions currently deploying or piloting on Prividium include:

• Deutsche Bank: Building the DAMA 2 platform via Memento Blockchain for tokenized fund issuance, distribution, and custody. Part of the Singapore MAS Project Guardian, involving 24 financial institutions exploring blockchain-based asset tokenization. Memento ZK Chain is the first production deployment of Prividium, aiming to fully on-chain fund services.
• UBS: Completing privacy-preserving proof-of-concept for its Key4 Gold product, exploring on-chain fractional gold investment.
• Cari Network: A tokenized deposit network formed by five US regional banks (Huntington, First Horizon, M&T, KeyCorp, Old National Bancorp), announced on March 16, 2026, choosing Prividium as its infrastructure. The network aims to be a secure, private, compliant infrastructure, with tokenized deposits as bank liabilities, meeting FDIC insurance standards, serving banks with over $8 trillion in assets.
• ADI Chain: An institutional Layer-2 blockchain developed by Abu Dhabi ADI Foundation, hosting the CBUAE-approved DDSC Dirham stablecoin. The stablecoin was jointly issued by IHC, Sirius International Holding, and First Abu Dhabi Bank (FAB), approved for launch on February 11, 2026.

Key milestones on the roadmap

The following timeline is compiled from publicly available governance documents and official announcements, with some nodes inferred from proposal planning and industry conventions:

| Date | Event | | --- | --- | | Jan 2026 | ZKsync 2026 roadmap released, Prividium as core pillar | | Feb 9, 2026 | ZKnomics season 1 staking pilot launched | | Feb 13, 2026 | CBUAE approves DDSC stablecoin on ADI Chain | | Feb 27, 2026 | ZKsync announces Lite shutdown on May 4 | | Mar 16, 2026 | Cari Network chooses Prividium for tokenized deposit network | | Apr 21, 2026 | Matter Labs joins Linux Foundation Decentralized Trust | | Apr 27, 2026 | ZIP-16 (V31 upgrade) submitted to governance forum | | May 4, 2026 | ZKsync Lite ceases block production | | May 6, 2026 | ZK Token Fee Flow System v1.0 released, initial burn rate 100% | | May 11, 2026 | End of season 1, peak staked 355 million ZK, based on user references | | Q2-Q3 2026 (expected) | V31 audit completed, on-chain voting | | Q3-Q4 2026 (expected) | V31 mainnet deployment, cross-chain burn mechanism activated |

ZK’s burn demand model

Burn formula and core parameters

The core logic of the V31 cross-chain consumption mechanism can be expressed with a simple formula:

Daily ZK consumption = Total daily cross-chain calls × ZK per call consumption × current burn ratio

This formula involves three key variables: call count, consumption rate, and burn ratio. The ZK Token Fee Flow System v1.0 explicitly sets the current burn ratio at 100%, adjustable by governance. The final amount of ZK consumed per call also requires governance approval.

Estimations of daily consumption under different transaction volumes

The following estimates are based on the community-discussed reference rate of 10 ZK per call, simulating daily ZK token consumption under different cross-chain activity levels. It’s important to note that the fee rate has not yet been finalized in the ZIP-16 proposal; these are structural scenario analyses, not predictions.

| Average daily cross-chain calls | Daily ZK consumption | Monthly ZK consumption | Annual ZK consumption | Annual burn proportion | Annual deflation rate | | --- | --- | --- | --- | --- | --- | | 1,000 | 10,000 | 300,000 | 3,650,000 | 0.0017% | negligible | | 10,000 | 100k | 3,000,000 | 36,500,000 | 0.017% | negligible | | 100,000 | 1,000,000 | 30,000,000 | 365M | 0.17% | light | | 500,000 | 5,000,000 | 150,000,000 | 1,825,000,000 | 0.87% | perceptible | | 1,000,000 | 10M | 300,000,000 | 3,650,000,000 | 1.74% | significant | | 5,000,000 | 50,000,000 | 1,500,000,000 | 18,250,000,000 | 8.69% | intense |

From the table, at low activity levels (around 1,000 calls per day), the deflation effect is almost negligible. But when cross-chain calls reach around one million per day, annual consumption exceeds 3.65 billion ZK, accounting for 1.74% of the total supply of 21 billion. If ZKsync’s institutional adoption continues at the current momentum—high-frequency cross-chain settlements between Deutsche Bank, UBS, Cari Network, and others—daily million-level calls are not impossible.

It’s crucial to emphasize that the 10 ZK per call fee rate used in the table is a community-discussed reference; the final rate will be determined through governance. Future adjustments to the burn ratio or fee distribution to stakers and other ecosystem participants are also possible.

Synergy with staking mechanisms

The burn mechanism is not the sole dimension of ZK token value capture; it must be understood in conjunction with the staking pilot. Data from the first season shows initial supply and demand effects:

On the supply side, the staking mechanism locks hundreds of millions of ZK, temporarily reducing tradable circulating supply. When the burn mechanism activates, circulating supply will shrink at the consumption rate, and staking demand may further increase. By the end of the first season, staking reached 188 million ZK, with peak data from user references at 355 million ZK (87% of the 400 million target). The combined effect of both mechanisms is expected to tighten supply and demand from both ends.

On the demand side, the "Delegate-to-Stake" model deepens the link between token holding and governance participation. The first season saw significant growth in active delegations, indicating that incentive design effectively encourages "sleeping tokens" to participate in governance. When the V31 cross-chain burn mechanism activates, holding ZK is no longer just about waiting for proposals and voting; it also gains a new value dimension—deflationary effect directly related to network usage.

What is the community debating?

ZK tokens finally have an "income model"

Supporters of the V31 upgrade dominate governance forums and social platforms. The core logic is straightforward: ZK tokens have long only served as "governance rights"—holders can vote, but all value generated by the network has not flowed back to the token itself. The cross-chain call fee mechanism in V31 turns network usage into token demand for the first time, establishing a "burn flywheel" positively correlated with protocol activity. The Fee Flow System’s design allows governance to control fee flow and burn ratios, providing token holders with a clear on-chain value return path.

Burn-to-earn narratives are highly compelling and attractive in crypto markets. Supporters argue that if institutional applications of ZKsync—such as Deutsche Bank, UBS, Cari Network—generate real and sustained cross-chain settlement demand, then the burn rate of ZK tokens will grow in tandem with institutional activity, creating a positive feedback loop where "the more prosperous the network, the scarcer the token."

Are fee rates sufficiently economically modeled?

Not all community members fully embrace this upgrade. Cautious discussions focus on fee rate setting.

A key concern is whether the fee rate has been sufficiently economically modeled. At the current price of $0.01550, 10 ZK is about $0.155, which seems reasonable for a single cross-chain call. But if ZK’s price surges to $0.10 or higher in the future, a fixed fee of 10 ZK would mean a per-call cost of $1 or more—potentially creating significant friction in high-frequency scenarios.

This concern is valid. Community discussions point out that a fixed fee rate may be unattractive when ZK is low-priced (insufficient burn volume), and may inhibit cross-chain activity when prices rise sharply (costs too high). Some members suggest dynamic fee adjustments, but the current ZIP-16 proposal does not include such a mechanism.

Can cross-chain transaction volume reach "meaningful burn" levels?

A more fundamental doubt concerns demand forecasts. Skeptics note that current cross-chain activity is mainly retail and arbitrage, with institutional cross-chain settlement yet to reach scale. For example, around 100,000 calls per day would only burn about 80k ZK annually, representing 0.17% of total supply—almost imperceptible at macro level.

Additionally, some believe that inter-chain communication among institutions may not require high frequency. Bank fund settlements or cross-border payments might operate on "end-of-day batch" rather than "real-time high frequency," implying that daily calls could remain low for a long time. Without explosive growth in cross-chain activity, the "burn flywheel" may turn far slower than optimistic expectations.

Summary of positions

| Position | Core logic | Evidence / Doubts | | --- | --- | --- | | Optimistic | Burn mechanism creates a revenue model for ZK tokens | ZIP-16 submitted, Fee Flow system released | | Cautious | Fee rates may fail under price volatility | Final rates not yet governance-approved; economic modeling uncertain | | Skeptical | Short-term cross-chain volume insufficient for meaningful deflation | Institutional cross-chain activity still early; daily call volume hard to predict |

Industry impact analysis: from token utility to L2 value capture paradigm

The temporal perspective on the ZK token value capture dilemma

The structural root of Ethereum L2 token value capture issues lies in fundamental design. Taking Arbitrum’s ARB token as an example: ARB’s value proposition is almost entirely based on governance rights. In May 2026, Arbitrum DAO unlocked about $71 million worth of frozen ETH, demonstrating the real power boundary of governance tokens, but governance itself does not generate direct economic returns for token holders.

Optimism’s OP token, via the RetroPGF mechanism, allocates part of protocol revenue to public goods funding, indirectly establishing a "revenue redistribution" value basis. But this model still relies on governance to decide fund flows, not a direct link between token and network activity.

ZKsync V31’s design follows a third path: embedding tokens directly into protocol operation layers, making them an essential resource for network operation. This concept is similar in logic to Ethereum’s Gas mechanism—using the network consumes native tokens—but this is the first time such a model is implemented at the L2 layer via the Fee Flow system.

ZK vs ARB: structural comparison of value capture mechanisms

The comparison below is based on publicly available token economic models and governance frameworks:

| Dimension | ZKsync (post-V31) | Arbitrum | | --- | --- | --- | | Core token functions | Governance + protocol fee consumption + staking | Governance | | Demand sources | Cross-chain callers (mandatory) + stakers (revenue-driven) | Governance participants (voluntary) | | Value flow method | Direct burn (deflation) + staking rewards | No direct flow mechanism | | Supply management | Burn reduces circulation + staking lock-up + fixed total supply of 21 billion | No built-in supply management + total of 10 billion + continuous unlocking | | Institutional application focus | Prividium production-level deployment (Deutsche Bank, UBS, Cari Network, etc.) | General L2 DeFi ecosystem | | Governance token incentives | Delegate-to-stake, active participants rewarded | Pure governance voting |

ZKsync’s design has a clear advantage in utility: cross-chain calls create a non-speculative demand for the token, and the burn mechanism exerts ongoing downward pressure on circulating supply. In contrast, ARB, with a larger market cap, faces the fundamental question of how holders benefit directly from protocol growth.

However, ARB also has notable advantages: as the leading L2 by TVL, it boasts a more mature DeFi ecosystem and deeper liquidity. The real value of governance rights was validated in key proposals (such as the $71 million ETH unlock). Moreover, ARB has not yet introduced a fee mechanism like V31, leaving room for future economic model upgrades.

Potential impact on the L2 track’s competitive landscape

The design of ZKsync V31 could set a precedent for broader L2 token economic models. If the burn mechanism proves effective in establishing a positive feedback loop between token value and network activity, other L2 protocols may face pressure to follow suit. Especially given the current long-term downtrend of L2 tokens and growing community skepticism about utility, any model that successfully creates real demand could trigger competitive imitation.

It’s also worth noting that the introduction of standards ERC-7786 and ERC-7930 in the ZIP-16 proposal for cross-chain messaging could lead to wider adoption. If these standards gain traction, ZKsync’s cross-chain fee model might not be limited to its Elastic Network but could become a universal fee model for cross-L2 interoperability—amplifying the impact of the V31 upgrade industry-wide.

Conclusion: When "governance tokens" are finally more than just governance

The discussion triggered by ZKsync V31 goes beyond a technical upgrade; it touches on the industry’s most fundamental question: when the value of scaling infrastructure is locked in governance tokens but cannot be unlocked, how can the industry escape the dilemma of "network without value"?

V31 offers a structural answer: instead of sharing protocol revenue with token holders, it makes tokens an indispensable part of protocol operation. The logic is clear: if every cross-chain call consumes ZK tokens, then every network expansion creates demand for the token. The initial 100% burn ratio in the Fee Flow System concretely implements this "usage equals burn" mechanism.

But structural elegance does not guarantee practical success. Whether the burn flywheel can truly spin depends on a key unanswered question: will cross-chain calls really reach hundreds of thousands of daily active transactions? The answer lies not in governance forum discussions but in the actual cross-chain settlement flows among bank chains, payment chains, and asset chains running on Prividium over the next 12-18 months. The completion of the V31 audit and on-chain voting results will be the first critical milestones in this structural experiment.

As of May 21, 2026, according to Gate data, ZK token’s price is $0.01550, down 77.32% from a year ago. The price chart shows that the market has not priced in any form of "burn flywheel" narrative in advance. The final fee rate determination, governance voting process, and institutional application scale on Prividium will jointly decide whether this narrative can move from community discussion to on-chain reality.