Project Review — zkLink

A Thousand Blockchains & Rollups, Aggregated

Published in

morningstar-ventures

9 min readApr 12, 2024

In the past, Ethereum has faced issues such as slow transaction processing and high fees. This has led to the emergence of “Layer2” networks, which solve these problems. One such solution is “Rollups,” which include Zero-Knowledge Rollups (ZK-Rollups) and Optimistic Rollups. ZK-Rollups use advanced cryptography to enable efficient and private transactions, allowing faster fund withdrawals than Optimistic Rollups. Layer 2 solutions such as Scroll, Polygon, StarkNet, and zkSync have helped to improve scalability and reduce fees, but they face challenges such as liquidity fragmentation.

Morningstar Ventures portfolio company zkLink aims to tackle the issue of liquidity fragmentation and slow transactions by building the first ZK aggregated Layer 3 and accessing limitless liquidity with a middleware solution that consolidates liquidity.

This month’s review will cover everything from the founding team to fundraising and the two products, zkLink Nova and zkLink X. It will end with an analysis of what we like about zkLink and where we see potential challenges for the project.

What is zkLink Nova and zkLink X

The zkLink team has built two proprietary products, zkLink Nova and zkLink X.

zkLink Nova is the first Aggregated Layer 3 zkEVM Rollup network in the industry and is built upon zkSync’s ZK Stack and zkLink Nexus technology. It integrates liquidity and assets from both Ethereum and Layer 2 rollups onto a single interoperable platform, offering developers an EVM-compatible environment for decentralized application (dApp) deployment.

The team created the product because Ethereum and Layer 2 networks are incompatible, resulting in fragmented assets and liquidity. Because of this, users resort to bridging assets across networks with third-party protocols, risking security and enduring inefficiencies.

zkLink Nova, therefore, aims to utilize zero-knowledge proofs to access combined liquidity from Ethereum and Layer 2 networks without bridging assets. The team built an ecosystem with over 60 partners that help steer the Layer 3:

The team also recently announced its “Aggregation Parade”, a campaign incentivizing users to switch to the Layer 3 Nova mainnet by providing attractive rewards in various crypto tokens like ETH, L2 Natives, Stables, LSTs & LRTs. Starting from March 14, 2024, and running until May 14, 2024, the campaign offers users a two-month opportunity to benefit from these rewards.Learn how to onboard and join the campaign here: Aggregation Parade Onboarding Guide

On the other hand, zkLink X addresses the challenges of blockchain interoperability and standardization. By leveraging zero-knowledge proof technology, zkLink X offers an aggregated rollup infrastructure to simplify multi-chain dApp deployment and resolve liquidity fragmentation. This infrastructure enables quick multi-chain product deployment, multi-chain liquidity aggregation, and high-throughput, low-cost trading solutions for financial applications like Order Book DEX.

Key features include:

Native asset aggregation, where tokens from various L1 blockchains and L2 rollups are unified into a single token, eliminating the need for cross-chain asset bridges and simplifying wallet management.
Liquidity unification, which ensures that tokens of the same kind but issued on different chains are merged into one, enhancing liquidity aggregation.
Additionally, zkLink X provides customizable app rollup deployment, allowing developers to tailor components to meet diverse use case demands. These include network collections, settlement layers, execution environments, and decentralized sequencers.

The campaign also features the Nova Lynks NFT collection. These NFTs are integral to the campaign, granting holders a share of a 10,000,000 $ZKL token prize pool. Additionally, the campaign has seven other opportunities to earn rewards, making it one of the most ambitious in the crypto space.

Participants in the campaign’s first season will earn Nova Points, which are convertible into zkLink merchandise and ZKL tokens in the future. So far, the team has already reached $400,000,000 TVL from participants.

Learn how to onboard and join the campaign here: Aggregation Parade Onboarding Guide

Key features include:

Native asset aggregation, where tokens from various L1 blockchains and L2 rollups are unified into a single token, eliminating the need for cross-chain asset bridges and simplifying wallet management.
Liquidity unification, which ensures that tokens of the same kind but issued on different chains are merged into one, enhancing liquidity aggregation.
Additionally, zkLink X provides customizable app rollup deployment, allowing developers to tailor components to meet diverse use case demands. These include network collections, settlement layers, execution environments, and decentralized sequencers.

The live Alpha Mainnet has had over 2 million transactions and 500k unique addresses using its technology.

Tokenomics

zkLink’s token, $ZKL, is set to be released in 2024, though the exact date is still unknown. $ZKL will allow users to use zkLink’s rollup infrastructure service and give token holders a say in the zkLink project’s decisions.

Here are some of its planned uses:

Staking: Provers staking $ZKL can access zkLink’s proof generation market. Here, they can complete tasks related to proof services to earn $ZKL rewards.
Payments: $ZKL will be the main payment token in zkLink’s proof market. dApps using zkLink’s infrastructure will pay provers in $ZKL for their proof services. Also, when dApps build their rollups using zkLink’s infrastructure, they’ll pay fees in $ZKL to zkLink DAO, the project’s governing organization. These dApps might also use ZKL for in-app fees.
Governance: In the future, through zkLink DAO, ZKL holders will be able to use governance rights to participate in the project’s decision-making process.

ZKL will launch with a maximum token supply of 1 billion without inflation. Approximately 18% of the token supply will be released at TGE followed by a linear vesting period of 42 months. The token’s allocation is as follows:

Community Treasury (~29.88%): The community treasury governed by the future zkLink DAO will control the most significant portion of the total token supply. About 20.75% of this allocation will be released at TGE and distributed as rewards to early adopters and as community development and bug bounty rewards to contributing developers. An additional ~9.37% reserved for bug bounties will vest monthly over a year. The remaining ~79.25% will be distributed in the future at the discretion of the DAO.
Ecosystem development (22.5%): Dedicated to ecosystem development and will be used to fund growth initiatives and development programs. Of this allocation, 20% will be released at TGE, while the remaining 80% will vest monthly for two years.
Early Private Purchasers (20.55%): To be distributed to private investors across all funding rounds. About 38.93% of this allocation is reserved for pre-seed inventors and is subject to a 5-month lock-up, and a 27-month linear vesting schedule. Another ~37.98% of this allocation is reserved for seed round investors and is subject to a 4-month lock-up and a 27-month linear vesting schedule. The remaining, ~22.87% is reserved for private round participants and is subject to a 3-month lock-up and a 27-month linear vesting schedule.
Team and Advisors (20.00%): For the project team operating as zkLink Labs and the project’s advisors. This allocation is subject to a 6-month lock-up and a monthly linear vesting schedule for 3 years.
Liquidity Reserve (4.00%): Will be locked in a liquidity pool at TGE. 50.00% of this allocation will be released at TGE and a monthly linear vesting for a year.
CoinList Sale (~3.13%): For zkLink’s CoinList Community Sale participants. 30.00% unlock of this allocation will be released at TGE, followed by a 9-month linear vesting.

Team, Fundraising, and Ecosystem

In terms of funding, zkLink raised $10 million in a strategic funding round from a line of investors, including Coinbase Ventures, Ascensive Assets, SIG DTI, BigBrain Holdings, Efficient Frontier, and others. This funding brought the infrastructure’s funding to $18.5 million, with previous investors including Morningstar Ventures, Arrington Capital, Huobi Capital, and more.

Furthermore, the team raised $4.6M from a CoinList community sale in January bringing its total funding to $23.1M to further grow the Nova protocol.

The co-founders, CEO Vince Yang and CTO Evan Zhang, started their entrepreneurial journey into crypto earlier in 2020 where they built their first multi-chain DEX. During then, they experienced the fundamental security and efficiency challenges of cross-chain transactions, before deciding to pivot into building zkLink Labs to aggregate fragmented liquidity and to build a unified ecosystem. Today, they lead a global team consisting of over 50 individuals from diverse backgrounds with crypto industry experience.

Our Analysis

Strengths:

Addressing a significant challenge within Web3, zkLink is dedicated to developing liquidity solutions that seamlessly integrate bridges, assets, and pricing into a unified offering. This approach streamlines accessibility, enhances capital efficiency and opens up innovative novel business models within the ecosystem.
The chain abstraction and interoperability properties of zkLink make it an attractive environment for developers intending to scale multi-chain. This essentially allows developers to deploy only once and access the liquidity and users from tens of chains, saving time and resources in the development cycle.
The recent Aggregation Parade garnered strong community engagement, with over 2 million Total Value Locked (TVL). This positive response shows the project has a strong community and has potential for widespread adoption and impact.
zkLink X is a pioneering solution to solve blockchain interoperability and standardization challenges. By developing an aggregated rollup infrastructure, the project simplifies the deployment of multi-chain dApps while mitigating liquidity fragmentation. Leveraging zero-knowledge-proof technology ensures high throughput, cost-effectiveness, and robust security, establishing zkLink x as a market leader in dApp deployment.

Challenges:

On the other hand, creating partnerships with dApps is still a challenge within the wider ecosystem. Building a diverse network of partners is essential for expanding reach and functionality, necessitating strategic efforts to onboard more applications into the ecosystem. zkLink will need to educate and incentivize users to engage with the platform to drive usage.
Layer 2 solutions are a strong narrative within crypto this year. To remain at the forefront and ahead of other projects, zkLink must proactively adapt and integrate emerging technologies. This ongoing process ensures that zkLink remains adaptable and can meet evolving market demands.

What’s Next for zkLink

While the zkLink team prepares for its upcoming TGE, they continue to multilaterally improve their offering to both developers and users. According to their technical roadmap, they intend to integrate a modular DA for the Nova network, followed by integrating a decentralized sequencer service. The integration of these services look to improve further the security as well as the cost benefits of Nova and X.

On the ecosystem side, the team is incentivizing the growth of their ecosystem through an ongoing Ecosystem grants program, distributing milestone grants of up to $50,000 ZKL per project. The grants program is currently open to all types of projects with an emphasis on DeFi models such as DEXs.

Additional social campaigns also sees zkLink’s participation in the OKX Cryptopedia’s Season 15 campaign, where users interact with dApps in exchange for airdrops. The learn-to-earn campaign promises $300,000 in ZKL token rewards to users. zkLink also plans to launch its Phase 2 of the Aggregation Parade, where users interacting with Nova protocol dApps are awarded Nova Points.

Learn more about zkLink:

🌐 Official Website: https://zk.link

🐦 Official Twitter: https://twitter.com/zkLink_Official

🕹️ Discord channel: https://discord.gg/zklink

🌐 Official Website zkLink Nova: https://zklink.io

🐦 Official Twitter zkLink Nova: https://twitter.com/zkLinkNova

📜 Documentation zkLink Nova: https://docs.zklink.io

📜 Documentation zkLink X: https://docs.zk.link

About Morningstar Ventures

We are a proprietary investment firm specializing in digital assets and blockchain technology.

We are a global entity primarily based in Dubai. Under the leadership of founder Danilo S. Carlucci, our team consists of seasoned professionals with years of experience in various fields, such as technology, marketing, growth strategy, design, UI/UX, and more.

We are not only investors but also builders and have established several subsidiary projects since our inception, such as our art gallery 37xDubai, our consulting firm MSV Studio, our software platform Atlas Technologies, and our guild MSV GG.