Gauntlet Risk Recommendations
Simple Summary
zkSync Era is a Layer-2 scaling solution for Ethereum using Zero-Knowledge tech to dramatically scale Ethereum, allowing cheaper transactions and storage. Its full alpha launch was on March 24th, and its TVL has increased to $261M in the month since then. Should market conditions change meaningfully, it would be prudent to revisit these figures.
From a market risk perspective, we recommend launching Aave on zkSync Era with conservative supply and borrow caps in line with its current TVL and liquidity.
Recommended initial parameters
| Risk Parameter | WETH | USDC |
|---|---|---|
| Isolation Mode | NO | NO |
| Enable Borrow | NO | YES |
| Borrowable in Isolation | NO | YES (for future isolated assets) |
| Enable Collateral | YES | YES |
| Loan To Value | 80% | 80% |
| Liquidation Threshold | 82.5% | 85% |
| Liquidation Bonus | 5% | 5% |
| Reserve Factor | 15% | 10% |
| Liquidation Protocol Fee | 10% | 10% |
| Borrow Cap | N/A | 10,000,000 |
| Supply Cap | 5,700 | 10,000,000 |
| Debt Ceiling | N/A | N/A |
| Base | 1% | 0% |
| Slope1 | 3.8% | 4% |
| Uoptimal | 80% | 90% |
| Slope2 | 80% | 60% |
For supply and borrow caps, we follow Gauntlet’s supply and borrow cap methodology. For all other parameters, we match the values on Optimism, as it has the most conservative parameters of the other L2s.
Liquidity comparison with other L2s
The following table shows the 25% depth in tokens on each chain, using 1inch to swap to the other token.
| Asset | zkSync Era | Optimism | Arbitrum | Polygon |
|---|---|---|---|---|
| WETH | 5,700 | 18,500 | 44,000 | 15,500 |
| USDC | 10,000,000 | 30,000,000 | 45,000,000 | 25,000,000 |
zkSync Era Chain Summary Statistics
The below graphs demonstrate the shape of growth on zkSync Era:
TVL: ~$261M
Transactions: 10.7M
Users: 463K
zkSync Era Ecosystem dApps
If Aave v3 is deployed on zkEVM, it can interact with other DeFi protocols for lending, borrowing, and liquidity provision. According to DefiLlama, most of the TVL on zkSync is concentrated in DEX, with $46.8M in the largest DEX, SyncSwap.
The largest lending protocol on zkSync Era is ReactorFusion, a Compound fork with $7M TVL.
Asset Overview
Following is a breakdown of the top 3 assets on zkSync Era:
| Symbol | Address | TVL | # Txns |
|---|---|---|---|
| ETH | 0x0000000000000000000000000000000000000000 | $152M | 588,547 |
| USDC | 0x3355df6D4c9C3035724Fd0e3914dE96A5a83aaf4 | $100M | 1,489,160 |
| MUTE | 0x0e97C7a0F8B2C9885C8ac9fC6136e829CbC21d42 | $9M | 66,576 |
There are several smaller assets with much lower TVL. Notably, many large tokens (including USDT and WBTC) have not yet been bridged to zkSync Era.