ZkSync Era's TVL dilemma

Author: @0xNing0x Source: Vernacular Blockchain

**Is the L2 track wide enough to accommodate the 3rd and 4th L2 giants? This is a real question at the moment. **

Looking at the on-chain TVL curves of DefiLlama statistics, we can describe 2018.8~2021.11 as an incremental development period, and 2021.12 to now as a decremental development period.

During the incremental development period, the TVL on the chain increased from US$7,000 to US$174.91 billion, and during the decremental development period, the TVL on the chain decreased from US$174.91 billion to US$42.12 billion.

The main reasons for the TVL on the chain to enter the period of decrement development are:

-- The Fed's epic monetary tightening cycle. Since March 2022, it took only 15 months for the Federal Reserve to increase the federal benchmark interest rate from 0 to 0.25 by 500 basis points. The spectacle of the DeFi platform’s U.S. dollar stablecoin lending rate and U.S. bond yield rate being inverted, MakerDAO even invests in U.S. debt in the form of RWA to enhance the income of the agreement, which is completely unimaginable in the era of incremental development of DeFi.

-- On-chain financial alchemy bubble burst. The Federal Reserve’s aggressive interest rate hike has led to the rapid bursting of the algorithmic stablecoin and CeFi lending bubbles that created TVL’s two major weapons. Just take the algorithmic stablecoin project Luna and the CeFi lending project Celsius as examples. **These two together easily wiped out 300 On-chain TVL of over US$100 million. **

-- Three major U.S. crypto-friendly banks go bankrupt and close. During the U.S. banking crisis in March 23, the three major crypto-friendly banks in the U.S., SilverGate, Silicon Valley Bank, and Signature Bank, all went bankrupt and closed, and ordinary U.S. institutions and retail investors basically lost their deposit channels. If you want to expand TVL, you must seize the TVL share of L2 (Arbitrum, Optimism) and new public chains (Aptos, SUI) that have the first-mover advantage. But the data of the new L2 is obviously not very ideal. The following are the latest King-level L2 and the new TVL data of the public chain:

--Arbitrum One TVL: $2.08 billion

-- Optimism TVL: $771 million

--ZkSync Era TVL: $157 million

--Starknet TVL: $13 million

--Aptos TVL: $43 million

--SUI TVL: USD 12 million

Although the performance of ZkSync Era is not bad compared to other Newbies, it is still far from the TVL scale of Arbitrum and Optimism.

Moreover, since June, the TVL growth rate of ZkSync Era has dropped significantly, and the TVL scale has only increased by 10% within 20 days.

In addition, there are three major problems in the ZkSync Era ecosystem:

--High Rug rate of the first batch of ecological projects

--Lack of diversity in original assets, the original assets of stars are mainly MeMe coins, and $CHEEMS is the only one

--Mainstream DeFi protocols and mainstream trading platforms have not yet connected to ZkSync Era

The reason for this situation is that in addition to market environment factors, the timing of the ZkSync Era mainnet launch is not good, and the choice to launch at the end of the spring market is also an important reason for this situation. The way to break the game Facing the current predicament, ZkSync has two options: --Learn the cynical realism of Aptos and Sui, lay flat in the bear market technically, and temporarily abandon the growth goals of TVL and UAW Then, grasp the moment when the market sentiment is high in a round of cyclical market, quickly complete the process of issuing coins, airdrops, and listing coins, and then design a token economy with high FDV and low MCap, and negotiate cooperation with market makers and trading platforms. Keep the currency price at a high level, and finally cooperate with the VC organization to unlock and sell the goods indefinitely Until the bull market is reached, then carry out vigorous marketing and enjoy the dividends of the overflow of Ethereum's ecological liquidity --Learn from the idealistic Build route of Arbitrum and Optimism, adhere to the Build ecology in the bear market, and pursue healthy TVL and UAW growth But it's a hard road But observing the information flow of ZkSync's official push, the ZkSync team is more inclined to take this path, which deserves praise from the encryption community As a perpetually teary-eyed crypto maximalist, here's some actionable advice for them: -- Establish a clear and specific market positioning Arbitrum's market positioning is an on-chain derivatives trading chain, and its core product is GMX and a series of GMX Lego protocols The market positioning of Optimism is To B’s business cooperation chain. Its core product is the OP Stack of L2 with one click. The ecological projects on the chain are also dominated by mainstream DeFi protocols. Their market positioning is clear and specific Even the recently announced Polygon 2.0 has a clear and specific market positioning: One L2 Rule Them All (L2 cross-chain interoperability) And what about ZkSync Era? In the hearts of ordinary users now, the market positioning for ZkSync Era is probably either the Lumao chain or the MeMe chain ZkSync Era needs a specific market positioning, not an abstract grand narrative. --Start 1 round of Odyssey event without hesitation Last week, the ZkSync community circulated the news that the official Odyssey was about to start, which aroused some disgust in the public opinion of the encryption community. This was because Linea’s infinite task PUA made everyone feel resistant to similar activities. The ZkSync team subsequently denied the authenticity of the news . But reviewing the growth curves of Arbitrum and Optimism, we will find that the Odyssey event is one of the key drivers of their TVL growth This is because the prosperity and self-growth of the ecology on the L2 chain requires the TX and TVL on the chain to break through a certain threshold. The Odyssey event is a convenient way to quickly break through this threshold --Kowtow to the trading platform to open up the encrypted economic cycle In the encrypted world, although the trading platform is higher than the public chain in the food chain, the tonality of the public chain team is higher than that of the trading platform team. Many developers despise speculators from the bottom of their hearts But now the ZkSync team needs to curb their arrogance and have the courage to kowtow to the trading platform. It is time to spend money, exchange resources and exchange resources, and strive to access mainstream trading platforms as soon as possible, realize the listing of ZkSync’s native assets on CEX, and create a wealth effect --Qianjin City Horse Bone, promoting the developer Grant plan In addition to TVL and UAW, another key factor for the success or failure of L2 is the developers. At this point, Starknet is very smart. At the moment when the tokens are not yet tradable, the Token rewards have been distributed to the developers of ecological projects. When allocating developer reward Tokens, the principle of swallowing a boat is a leak should be upheld, with wide-ranging incentives. You know, in 2018, TRON successfully introduced a large number of developers in the bear market by virtue of this strategy, and once overwhelmed Ethereum and EOS, becoming the most ecologically active public chain on the chain that's all.