ZKsync Ignite, the ecosystem incentive program for projects on ZKsync, will officially stop distributing rewards starting March 17. Despite being only about one-third of the way through its planned duration, the development team has decided to end Season 1 early. However, remaining rewards will still be fully distributed to projects until March 30.
Reasons for Ending ZKsync Ignite Early
The decision to discontinue the program was based on three key factors:
1. Shift in Focus to Elastic Network (ZKsync’s Layer 3 Solution)
Originally, ZKsync Ignite was launched to support growth on ZKsync Era (Layer 2). However, the development team is now prioritizing the expansion of Elastic Network—a Layer 3 solution similar to Optimism's ($OP) Superchain model. Elastic Network is expected to enhance the ZKsync ecosystem by providing better scalability and a foundation for more complex decentralized applications.
2. Technology Limitations in Cross-ZK Chain Interoperability
While Zero-Knowledge Proof (ZK) technology is considered a leading solution for blockchain scalability, interoperability between different ZK chains has not yet reached optimal levels. This limitation has reduced the effectiveness of support programs like Ignite. The development team needs more time to refine the technical infrastructure before launching similar initiatives in the future.
3. Financial Strategy Adjustments Amid a Bear Market
With the crypto market in a downturn, many projects are reassessing financial strategies to ensure long-term sustainability. Continuing a large-scale incentive program like ZKsync Ignite may not be the most efficient use of resources at this time. Instead, the team is redirecting funds toward long-term growth opportunities, such as Elastic Network and Layer 3 initiatives.
Impact on the ZKsync Ecosystem
ZKsync Ignite played a crucial role in boosting ZKsync Era’s Total Value Locked (TVL), which reached an all-time high (ATH) in early February, according to DeFiLlama data. However, after the announcement of the program's early termination, ZKsync Era’s TVL dropped nearly 50%, highlighting significant liquidity and confidence concerns among developers and investors.
Despite challenges in traditional DeFi, ZKsync has experienced notable growth in the tokenized real-world assets (RWA) sector. Currently, ZKsync holds a 27% market share in RWA, making it the second-largest blockchain ecosystem in this sector, behind only Ethereum (52.8%). This indicates a promising direction for ZKsync in applying blockchain technology to traditional assets such as securities, real estate, and financial products.