Top 5 Early-stage Projects on ZkSync with a Great Upside Potential

ZkSync is one of the most promising scaling solutions for Ethereum in the near future. Zero-proof cryptography tools seem to be the key ingredient for maintaining security, while still providing scaling possibilities. However, the implementation of Zk proofs is quite complicated compared to regular optimistic rollups, which is why just now are we seeing the first functioning projects.

While ZkSync does not have its own token yet, here are a few promising protocols building on its Zk infrastructure. Read on and learn how to benefit from the rising Zk narrative.

Quick Recap on ZkSync and why is it unique

zkSync is a technology that helps to reduce transaction costs and improve the speed of Ethereum transactions. It uses zero-knowledge proofs to process transactions off-chain and store data off-chain, reducing the need for third-party involvement and increasing security.

zkSync is fully compatible with Ethereum and allows smart contracts to interact with each other, creating new possibilities for developers. A new Layer 3 (HyperChain) testnet is being released in early 2023 to test and experiment with new ideas and concepts. This will help developers to build more advanced applications on top of zkSync.

Decentralized Exchanges (DEXs)

Upon creation of every chain, the first wave of protocols that arrive are the decentralized exchanges. They provide the basis for chain utility and attract liquidity through incentives. DEXs on ZkSync are in an early phase, running on testnet, but once ZkSync mainnet is fully launched, these may be the leading projects

ZigZag

ZigZag is the first case of bigger adoption on a Zk-rollup. It offers decentralized exchange with implemented orderbook and minimal fees. The environment and trading process is said to replicate the experience of a centralized exchange.

The exchange has its own token with the symbol ZZ, the utility of which is unknown at this time. It will probably serve as an incentive token to reward providers in liquidity pools.

ZigZag is currently live on ZkSync 1.0 - recently renamed to ZkSync lite. After the launch of the full alpha of ZkSync, ZigZag will be available with all its currently projected functionality (liquidity pools)

• First functioning DEX on ZkSync with orderbook and minimal fees
• Native token ZZ, with yet unknown utility
• Swaps are live and will be joined by liquidity pools in the near future

Mute

Mute is designed to be the concentrated liquidity hub helping other protocols on ZkSync incentivize liquidity properly. Their core app Mute.switch is an AMM DEX with limit orders and yield farming platform. The utility and governance token of the platform is called MUTE.

A key concept of Mute is the creation of Bonds. Essentially trading MUTE-ETH LP tokens for more MUTE than users would get on the market. The goal behind this is to increase protocol-owned liquidity, which can again be provided elsewhere.

The Mute amplifier program enables other protocols to sign in and receive a portion of MUTE to attract liquidity for their cause. This helps new projects establish themselves.

• Potential Liquidity hub of ZkSync used by other protocols
• Mute.switch is a DEX with limit orders and liquidity mining functionality
• Mute offers the creation of bonds to increase the portion of community-owned liquidity
• Platform has its native token MUTE

SyncSwap

SyncSwap is a classical decentralized exchange already functioning on the ZkSync ERA testnet. It offers swapping from asset to asset, as well, as providing liquidity to liquidity pools. Thanks to Zk scaling technology, all trades are smooth, efficient, and cheap.

SyncSwap also uses next-generation multi-pools, which contain more than two assets, to ensure convenient routing paths. The protocol strives to be completely community owned in the future and help the mass adoption of crypto by providing user-friendly and intuitive services.

• Intuitive and simple UI with smooth trades
• Next generation multi pools for efficient routing
• Big focus on community-owned liquidity and governance

Trustless finance

The Trustless protocol is creating the first truly decentralized and censorship-resistant stablecoin HUE. It works similarly to Maker protocol - the issues of DAI, but with a few key differences, which cover the imperfections of DAI.

Trustless finance allows users to enter collateralized debt positions that generate new HUE tokens. The positions are backed solely by ETH (no centralized stablecoins like USDC). More than 80 % of the protocol is owned by the community and is governed by Trustless DAO.

• Offers Collateralized debt positions to generate HUE
• HUE is the first truly decentralized and censorship-resistant stablecoin backed by ETH
• The majority of the protocol is owned by the community and Trustless DAO
• Automatic adjustment of interest rates based on demand to maintain the peg

Orbiter Bridge

Orbiter is an easy and lightweight bridge that allows users to transfer Ethereum-native assets between Ethereum L1 and rollups, as well, as across different rollups. It works by implanting a series of nodes on each side of the bridge. Nodes then hold assets that are either locked or released on corresponding sides.

As of this time, Orbiter Bridge supports the following networks: Ethereum, StarkNet, zkSync, Loopring, Arbitrum, Arbitrum Nova, Optimism, Polygon, BNB Chain, ZKSpace, Immutable X, dYdX, Metis, and Boba.

• Simple transfer between Ethereum and rollups
• A large variety of supported networks
• Users may participate and act as nodes of the bridge

Final Thoughts

All of these projects are in a very early stage of development. Before deciding whether to invest in an early-stage project, always do your own throughout research and remember that it is built on experimental technology.

With that said, zero-knowledge cryptography remains one of the most promising ways to scale Ethereum. What we see now may be the mere beginning of what is possible.