The emergence of Layer 2 scaling solutions has led to many cryptocurrency enthusiasts flocking to these networks, attracted by their high speed and low transaction fees. One such scaling solution is zkSync Era, host to the most anticipated airdrop in the crypto community.
zkSync is a Layer-2 scaling solution for Ethereum that aims to improve the network’s speed and scalability while reducing transaction costs. It is based on zero-knowledge proofs, a cryptographic method that allows for privacy-preserving transactions without revealing sensitive information.
Despite zkSync still in its infant stage, early whales appear to be betting big on the Layer 2 network, according to a report by Nansen Research. The report revealed several early adopters are seen securing an average of 32% of their crypto holdings on the network.
Significant Amount of Idle Capital on ZkSync
According to the report from Nansen Research, the top 25 early whale bridgers to zkSync Era have an average of 32% of their total holdings on zkSync. Holdings of these early adopters comprised mainly of spot Ethereum token (ETH), stablecoin USDC, and a distant third of MUTE, a new privacy-focused cryptocurrency.
The high percentage of holdings on the platform suggests that these investors have a significant amount of idle capital waiting to be deployed, according to Nansen Research.
According to the report, the majority of the activity on zkSync is centered on decentralized exchanges (DEX), particularly liquidity providers (LPs) on SyncSwap, Izumi Finance, Mute, and Velocorexyz.
The Nansen report further notes that the LPs are mostly in the ETH/USDC pools, while Pool 2s and altcoins (alts) make up a very negligible position, “indicating a lack of interest in zkSync alts.” This suggests that the early adopters are mainly focused on liquidity provision on the platform, and are not yet willing to invest in altcoins on the network.
Profitable Investment Opportunities in the Near Term
The report notes that although there are opportunities for profitable investments in the short term, users should be careful when engaging with zkSync protocols. The analytics firm pointed out that there have been numerous rug pulls on the platform and advises the crypto community to exercise caution before interacting with any protocols.
In light of this warning, it is crucial to keep track of new product launches, such as upcoming derivatives apps like UniDex Finance and Derivio, which are currently in testnet.
Notably, the data from the Nansen report paints a positive picture of early adopters’ use of zkSync, with a high percentage of holdings on the network suggesting that they have confidence in the platform’s capabilities to deliver value in the long run.
However, the report’s warning on rug pulls is a reminder that even established platforms can still have risks associated with them.
While the zkSync native token is yet to launch, the global crypto market has been in an uptrend in the past few days expressing indulgence in new tokens. In the last day, the global crypto market cap rose by nearly 1% with a value above $1.2 trillion.
Featured image from Unsplash, Chart from TradingView