December 1, 2022
ZK Sync, a startup that provides scaling solutions for blockchains, recently raised $200 million in their Series C. They are open-sourcing their technology under the MIT license. Their token is likely to be airdropped to those who interact with the main net or popular decentralized applications (DAPPs). ZK Sync has good adoption and presents opportunities for upside potential. However, there are a couple of reasons to be cautious and not oversold on the prospects of major funding announcements such as this one.
ZK Sync’s recent $200 million raise in their Series C proves that they are a project to be reckoned with. They have some of the biggest names in the space as investors including Pantera Capital, Polychain, and Parallel Ventures. ZK Sync’s value proposition is that they provide scaling solutions for blockchains. Their solution is a layer-2 technology that utilizes zero-knowledge proof constructions to enable the secure execution of smart contracts off-chain. This allows for huge scalability gains as transactions can be processed incredibly quickly without congesting the network. In addition, their platform is generalized so that it can be used on any smart contract-enabled blockchain such as Ethereum, Binance Smart Chain, Solana, and more. As DAPPs become more popular, ZK Sync presents an opportunity for massive upside potential.
Another positive sign for ZK Sync is that they are open-sourcing their technology under the MIT license. Open-source software allows anyone to fork or modify the codebase which leads to more collaboration and less centralization. Furthermore, it instills trust as the code is available for anyone to audit. The fact that they are using the permissive MIT license indicates that they want their technology to be widely adopted and used by as many people as possible. This is a good sign as it shows that they are not trying to hoard power but rather build something great that will be used by many.
Lastly, their token is likely to be airdropped to those who interact with the main net or popular DAPPs built on top of it. Airdrops are when a project sends free tokens to users as a way to promote adoption and engagement. This is a positive sign as it shows that the team is focused on building adoption rather than making quick profits. Here is a link to a guide on how to become eligible for the token airdrop if one comes.
Although there are many positives surrounding ZK Sync, there are also some negatives that should not be ignored. Firstly, large funding raises are important for any crypto project to progress and maintain a runway for sustained development, but it’s important not to be oversold by these types of announcements considering recent events. FTX and other major crypto projects have raised similar amounts yet have gone bankrupt recently which should make investors wary.
Always ensure the founding organizations remain transparent and authentic with the community that supports them. These considerations are not a direct attack on ZKSync itself, but rather a conditional response the entire market needs to adopt in order to identify potential bad actors within the web3 ecosystem.
Secondly, their technology is unproven as it has not been battle-tested yet. It remains to be seen if their platform can handle the same volume as Ethereum or other major blockchains. There are several flashy metrics being touted by ZKSync themself and those who support them, but as always we won’t know the full validity of network performance until the deployment of hundreds of live applications are running in tandem.
In conclusion, ZK sync presents an interesting opportunity but also comes with some challenges and risks that should not be ignored. Their Layer-2 solution has the potential to solve many of Ethereum’s scaling issues but remains unproven at this point in time. Furthermore, their decision to open source their technology under the MIT license indicates that they want wide adoption which bodes well for the future of the project. Overall, Zk sync presents an opportunity worth taking a closer look at but also doing additional due diligence given the challenges mentioned in this blog post.
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