[TEMP CHECK] Aave V3 Deployment on zkSync Era Mainnet

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.

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