Overview
Chaos Labs supports listing USDC, USDT, WETH, and wstETH as the initial assets on the proposed zkSync Era deployment of Aave V3.
We are also considering weETH, USDe, sUSDe, GHO and ZK for future listing once these tokens have become live and liquid on zkSync.
Below is a general overview of DeFi markets on zkSync Era as well as our asset listing and risk parameter recommendations for community visibility.
Market Overview
- TVL: $132M
- TVL has held steady at $120M - $200M since Era’s public launch on March 24th, 2023.
- Weekly DEX volume: $100M-$1B
- DEX volumes peaked in March 2024 and have steadily declined since, but remain above $1B in monthly terms.
- Among DEXes on zkSync Era, SyncSwap currently leads in TVL and weekly volume, though Maverick and PancakeSwap both maintain large and at times dominant shares.
- SyncSwap supports three pool types:
- Uniswap v2-style CPMM pools (”Classic”),
- Curve-esque CSMM/CPMM hybrid pools (”Stable”),
- and Uniswap v3-equivalent concentrated liquidity pools (”Aqua”), but with added dynamic fee functionality beyond the traditional 0.05%, 0.3%, 1.0% v3 model
- Maverick describes itself as a Dynamic Distribution AMM, a concentrated liquidity pool model with additional position resizing customizability for LPs
- SyncSwap supports three pool types:
- Lending protocols and derivatives exchanges also have a presence on Era.
- The chain’s respective category leaders are ZeroLend (an Aave V3 fork with $16M in supply TVL) and HoldStation (a perpetuals DEX that touts up to 500x leverage).
- These two categories together draw 40K-100K weekly active addresses according to Matter Lab’s DeFi Ecosystem Dashboard.
Liquidity
The majority of liquidity for the assets in question — USDC, USDT, WETH, and wstETH — is on SyncSwap. (As mentioned before, $ZK has not yet executed its TGE.) The largest pool is USDC.e/WETH, with $23M TVL and $2M daily volume.
Pools for the newly added native USDC ($4.48M circulating) are the least liquid among the assets we recommend for listing.
As a consequence, USDC also has high slippage relative to the other assets we recommend. However, we expect its liquidity conditions to improve as Circle and its partners continue to conduct outreach to zkSync Era’s protocols.
| Symbol | Cost of 2% DEX Slippage | Cost of 5% DEX Slippage | Cost of 25% DEX Slippage |
|---|---|---|---|
| USDC | $340K (to WETH) | $390K (to WETH) | $525K (to WETH) |
| USDT | $1.3M (to USDC.e) | $1.5M (to USDC.e) | $2.5M (to USDC.e) |
| WETH | $900K (to USDC.e) | $1.6M (to USDC.e) | $3.5M (to USDC.e) |
| wstETH | $680K (to WETH) | $880K (to WETH) | $1.6M (to WETH) |
We do not recommend listing bridged alternatives — such as USDC.e — because of the inherent risks associated with bridging.
Recommendations
Enable Borrow & Collateral
We support listing all assets as borrowable and collateralizable under reasonable limits. We do not observe a significant risk to the protocol by allowing this, as long as it is bound by a cap.
Supply Cap, Borrow Cap, and Liquidation Bonus
As described in our Metis and BNB Chain deployment recommendations, we recommend setting the Supply Cap at 2x the liquidity available under the Liquidation Bonus price impact. The Liquidation Bonus is aligned with similar assets on different deployments.
Other
We recommend aligning the Reserve Factor, Liquidation Protocol Fee, and Interest Rate curves with other deployments.
Full Recommendations
Following the above analysis, we recommend the following parameters:
| USDC | USDT | WETH | wstETH | ZK | |
|---|---|---|---|---|---|
| Isolation Mode | NO | NO | NO | NO | YES |
| Enable Borrow | YES | YES | YES | YES | YES |
| Enable Collateral | YES | YES | YES | YES | YES |
| E-Mode Category | N/A | N/A | ETH Correlated | ETH Correlated | N/A |
| Loan To Value | 75% | 75% | 75% | 71% | 40% |
| Liquidation Threshold | 78% | 78% | 78% | 76% | 45% |
| Liquidation Bonus | 5% | 5% | 6% | 7% | 10% |
| Reserve Factor | 10% | 10% | 15% | 5% | 20% |
| Liquidation Protocol Fee | 10% | 10% | 10% | 10% | 20% |
| Borrow Cap | 900,000 | 2,700,000 | 900 | 30 | 10,000,000 |
| Supply Cap | 1,000,000 | 3,000,000 | 1,000 | 300 | 18,000,000 |
| Debt Ceiling | N/A | N/A | N/A | N/A | $800,000 |
| uOptimal | 90% | 90% | 90% | 45% | 45% |
| Base | 0% | 0% | 0% | 0% | 0% |
| Slope1 | 5.5% | 5.5% | 2.7% | 4.5% | 9% |
| Slope2 | 60% | 60% | 80% | 80% | 300% |
| Stable Borrowing | Disabled | Disabled | Disabled | Disabled | Disabled |
| Flashloanable | YES | YES | YES | YES | YES |
| Siloed Borrowing | NO | NO | NO | NO | NO |
| Borrowable in Isolation | YES | YES | NO | NO | NO |
Capo
| maxYearlyRatioGrowthPercent | ratioReferenceTime | MINIMUM_SNAPSHOT_DELAY |
|---|---|---|
| 9.68% | monthly | 7 days |
E-Mode Parameters
| LTV | LT | Liquidation Penalty |
|---|---|---|
| 90% | 93% | 1% |