Due to the nature of the oracle project, the Pyth network has garnered attention from various projects, indicating that staking PYTH could lead to potential airdrops. As of February 14th, over 1 billion PYTH tokens have been staked, with the number of staking addresses surpassing 175,000. Among those vying for PYTH stakers, ZeroLend is one contender.

On January 30th, the lending protocol based on zkSync, ZeroLend, announced airdrops to Pyth Network stakers. It’s reported that users need to bind their EVM address on Pyth Network in advance. ZeroLend will distribute PT points based on the amount of PYTH staked, with 1 PT point awarded for each PYTH staked. These points will be linked to ZeroLend’s upcoming native token, ZERO, which is expected to launch in the first quarter of 2024.

Recently, on February 21st, ZeroLend completed a $3 million seed round at a $25 million valuation, with investments from Momentum 6, Blockchain Founders Fund, Morning Star Ventures, Banter Capital, Newman Capital, dVdT, Transform Capital, Cypher Capital, Bison Fund, Ozaru Ventures, iAngels, Krypital, Genblock, viaBTC, GBV, and Asteroid Capital.

Since the announcement of the airdrop, ZeroLend’s TVL (Total Value Locked) has been on the rise. According to the official website, as of this writing, ZeroLend’s TVL has exceeded $55.7 million.

According to official documentation, ZeroLend, as the largest lending protocol on zkSync, is about to issue its tokens. In addition to PYTH stakers being able to receive airdrops, those who use ZeroLend for mining also have the chance to obtain airdrops from the protocol itself, zkSync, and LayerZero.

Lending protocol built on zkSync and Manta

ZeroLend is a dynamic lending protocol built on zkSync and Manta. Its ecosystem consists of DeFi lending, the stablecoin ONEZ, the governance token ZERO, support for real-world assets, account abstraction, and a privacy layer using zkStack. Among these, DeFi lending and account abstraction functions have already been deployed, with the core product being a decentralized non-custodial liquidity market.

It’s noteworthy that ZeroLend is the only lending protocol on zkSync that possesses its own insurance fund. A certain proportion of the fees generated by the platform is allocated to this fund to ensure its growth over time. In the event of significant issues, such as smart contract vulnerabilities or unforeseen system failures, the insurance fund can be used to compensate affected users.

Furthermore, ZeroLend has integrated various native zkSync account abstraction features. Vitalik once described account abstraction as allowing Ethereum accounts to be controlled by smart contract code rather than private keys. His vision is that people will switch from current EOA wallets to smart contract-based wallets in the future. If successful, managing cryptocurrency wallets would become as simple as managing email accounts.

In recent years, significant progress has been made in account abstraction, permeating various parts of the Ethereum ecosystem, including applications, infrastructure, users, and developers. zkSync has also launched its native account abstraction solution, while ZeroLend has integrated various native zkSync account abstraction features through Paymasters, social logins, other authentication options, and delegated transactions.

Paymasters allow protocols to subsidize or permit users to pay transaction fees with ERC20 tokens without holding any ETH in their wallets. Social logins and other authentication options enable users to have a wallet that controls their secure enclave devices (Face ID, fingerprint scanners, etc.). Delegated transactions allow users to authorize ZeroLend to perform limited operations on their behalf without losing custody of their funds.

Stablecoin Lending

Due to ZeroLend being developed as a fork of the original Aave protocol, it is very similar to Aave V3. Its lending also offers efficient mode and isolated mode, the operation of which can be referred to in “Aave V3 Officially Launches, A Look at the New Version’s Four Major Features.” On this basis, ZeroLend has added a credit delegation mode, which allows depositors to deposit funds into ZeroLend to earn interest, while delegating their borrowing capacity (credit) to other users. The loan terms are agreed upon between the depositor and borrower through smart contracts on-chain.

ZeroLend plans to launch its stablecoin ONEZ this year, created by users who provide selected assets such as ETH and USDC as collateral. ONEZ aims to obtain native yields from the lending protocol and has the ability to self-repay loans, currently operating on the zkSync and Manta networks.

ONEZ is always designed to be valued at one dollar. When the market value exceeds the peg, users can mint 1 dollar of ONEZ with 1 dollar of debt, and sell the excess part above the fixed value. This increases the supply of ONEZ, lowering the asset price. Conversely, if the market value falls below the peg, minters can buy 1 ONEZ at a price lower than 1 dollar, offsetting 1 dollar of debt, shrinking the supply of ONEZ, and raising the asset price.

ONEZ ensures that each token is supported by collateral worth more than 1 dollar through an over-collateralization model, with a collateral ratio designed at 150%, meaning the value of the collateral must be 1.5 times the value of the loaned or minted asset. This additional collateral is a safety measure to ensure there is enough value to repay the loan in case the value of the collateral drops.

Moreover, using ONEZ stablecoins enables mining on veSync, a community-driven ve(3,3) DEX built on zkSync. The core of veSync is the VS token, with which users can exchange for veVS, vote on emissions, and receive rewards.

L3 Hyperchains and Ve-Token Economics

As the first phase of the project launch, ZeroLend will introduce the ZERO token on zkSync, which will serve as the native currency of the chain and can also be used to pay transaction fees.

ZERO holders will govern Hyperchains. These are hyper-scalable, interoperable custom zk chains that run on L1 or L2 networks while maintaining key connections to the main chain (L1) to ensure security and finality. Hyperchains are the ZK version of the OP Stacks superchain, developed using ZkStack.

Hyperchains can be strategically designed as L3 dApps, offering functionalities such as infinite scalability, faster message passing from L1 to L2 and then to L3, and maintaining interoperability within the broader zkSync ecosystem. ZeroLend plans to introduce a privacy layer for hyperchains in early 2025, prioritizing user-level privacy within ZeroLend.

Image source: ZeroLend documentation

The ve-token economics mentioned above are also applied to the ZeroLend economic structure, divided into Single Stake and dLP (Dynamic Liquidity Provision) models.

Single Staking allows stakers to receive veZERO by staking the native token ZERO, with the amount received directly related to the duration of the token lock. The dLP model is designed for users contributing to liquidity pools. When users stake dLP tokens, the value of their ZERO portion effectively doubles for staking purposes.

Suppose a user’s dLP tokens consist of 50% ZERO and 50% ETH. In that case, the weighting mechanism will consider the ZERO portion as a 100% contribution, meaning the ZERO’s dLP weight will be considered twice its amount in the dLP tokens when staked. Additionally, veZERO will also influence ZERO’s secondary emission.

The total supply of ZERO is 100 billion, acting both as a utility and governance token within the ecosystem. The core of ve-token economics is participants locking ZERO tokens for a predetermined time, receiving ve (voting escrow) tokens in return. These ve tokens represent the user’s stake and proportionally enhance their yield based on the lock-up period.

Image source: ZeroLend documentation

The TGE (Token Generation Event) is expected to begin in Q1 2024, during which a certain portion of the ZERO supply will be released to the market and available for trading. Given the initial FDV (Fully Diluted Valuation) of the project is set at $25 million, and the TGE’s initial circulating supply is 18.8%, the initial circulating market cap is approximately $4.7 million.

To ensure the long-term sustainability of the ZERO token’s economics, most of the token inflation (from liquidity, finance, private sales, etc.) will end within the first year. By the end of the first year, about 78% of the token supply will be in circulation. Afterward, the emission rate will halve every year, with the remaining 22% released over time in an exponentially decaying ma

ZeroLend Interaction Tutorial

According to the official documentation, ZeroLend, as the largest lending protocol on zkSync, is on the verge of issuing its tokens. Apart from PYTH stakers being eligible for an airdrop, those who mine using ZeroLend also stand a chance to receive airdrops from the protocol itself, zkSync, and LayerZero. PYTH holders can stake on the official website, and apart from the project’s short positions, stakers can participate in the voting of Pyth Dao.

ZeroLend’s airdrop plan, Zero Gravity, adopts a point system. On the airdrop official website, after linking your wallet, completing tasks in sequence will accumulate points. If a user accumulates 1% of all reward points, they will be entitled to 1% of the entire $ZERO token supply, which is 3%.

Joining and getting verified on Discord can earn 100 points, and speaking in Discord’s GM channel daily can earn 10 points.

After opening the lending market and linking your wallet, select a specified asset and click “Details” on the right. Assets can be transferred to zkSync using only the official cross-chain bridge.

Providing collateral to the lending market and providing liquidity over $100, users can earn 1 point per day for every $1 provided. Borrowing assets from the lending protocol, users can earn 4 points per day for every $1 borrowed.

According to the Zero Gravity plan, which is not yet open, besides PYTH stakers, stakers of MAHA, AAV, and LQTY/LUSD also have the opportunity to earn points.

Moreover, any user who interacts with the lending protocol will be eligible to receive a predetermined amount of ZERO tokens as rewards. To allow mining before the TGE (Token Generation Event), users providing liquidity can claim earlyZERO, a non-transferable ERC20 token, from the farming portal before TGE.

Development Roadmap

The roadmap of the ZeroLend protocol consists of 6 unique phases. Currently, Phase 0 has been completed, and it is in the second phase, Phase 1, launching the lending protocol on zkSync and starting the pre-mining of tokens.

In Phase 2, ZeroLend will initiate public and private sales as well as a Token Generation Event (TGE), after which ZERO can be traded on DEXes and CEXes. During this phase, various incentive mechanisms will start to take effect. This includes staking, liquidity mining, etc., to further develop the protocol. This phase is scheduled to take place in the first quarter of 2024.

Throughout the remainder of 2024, ZeroLend plans to achieve Phase 3 and Phase 4, focusing on integrating Real World Assets (RWA) such as treasury bonds, bonds, and real estate, thereby merging traditional financial assets with the efficiency and accessibility of DeFi lending. Following this, based on account abstraction and zk-rollups, it aims to achieve low gas fees and enhanced user privacy, aligning with the vision of providing an economically efficient and secure DeFi environment.

In 2025, ZeroLend will focus on global expansion, aiming to position itself as a strong competitor to traditional banking by entering international markets and expanding its DeFi services globally.

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