ZKsync’s total value locked rises as it allocates 300 million tokens for DeFi incentives

ZKsync saw its total value locked on its Layer 2 network surge as it began its Ignite program — allocating 300 million ZK tokens ($60 million) over nine months for liquidity incentives.

Ignite is divided into multiple seasons. Season 1 runs from Jan. 6 to Mar. 31 — and distributes up to 100 million ZK tokens ($20 million) to DeFi users who provide liquidity across selected decentralized exchanges, lending platforms and derivatives trading platforms on the ZKsync Era network. Subsequent seasons are set to distribute the remaining 200 million tokens.

This includes DEXs like SyncSwap, Uniswap, and PancakeSwap, perpetual platforms such as Holdstation, and lending platforms like Aave.

The incentive program appears to have helped ZKsync’s total value lock surge by nearly 90%, from $97 million to $184 million in the first week of January, per DeFiLlama data . 

ZKsync is a Layer 2 scaling solution that scales Ethereum-based dapps by increasing transaction throughput and reducing associated costs. It utilizes ZK rollups, a technology that bundles multiple transactions and processes them off-chain.

Following a token airdrop in June, with 3.6 billion tokens distributed to eligible addresses, ZKsync saw user activity and the total value locked drop drastically. While highly anticipated, the airdrop triggered a mass exodus of users and liquidity from the network, with daily transactions dropping from its peak.

The 7-day moving average of active addresses fell from over 200,000 in July 2024 to just 30,000 by the end of December. ZK rollup chains, such as Linea, Scroll and Starknet, also experienced similar declines.

According to The Block's data dashboard , Linea currently leads in active user addresses among the ZK rollups.