The emergence of Layer 2 scaling solutions has led many cryptocurrency enthusiasts to flock to these networks, attracted by their high speed and low transaction fees. One such scaling solution is zkSync Era, which hosts the crypto community’s most anticipated airdrop.
zkSync is a Layer 2 scaling solution for Ethereum which aims to improve network speed and scalability while reducing transaction costs. It is based on zero-knowledge proofs, a cryptographic method that enables privacy-preserving transactions without revealing sensitive information.
Although zkSync is still in its infancy, early whales seem to be betting big on Layer 2 networking, according to a report by Nansen Research. The report revealed that several early adopters secure an average of 32% of their crypto holdings on the network.
Significant amount of idle capital on ZkSync
According to the Nansen Research report, the top 25 whale bridges to zkSync Era have an average of 32% of their total holdings on zkSync. The holdings of these early adopters consisted mainly of cash securities Ethereum token (ETH)stablecoin USDC and a distant third to MUTE, a new privacy-focused cryptocurrency.
According Nansen Research.
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According to the report, the majority of activity on zkSync is centered on decentralized exchanges (DEXs), particularly liquidity providers (LPs) on SyncSwap, Izumi Finance, Mute, and Velocorexyz.
The Nansen report further notes that LPs are mostly found in ETH/USDC pools, while Pool 2 and altcoins (alts) constitute a very negligible position, “indicating a lack of interest in zkSync alts”. This suggests that early adopters are mainly focused on providing liquidity on the platform and are not yet willing to invest in altcoins on the network.
Profitable investment opportunities in the short term
The report notes that although there are opportunities for profitable short-term investments, users should be careful when using zkSync protocols. The analytics firm pointed out that there have been numerous all-in pulls on the platform and advises the crypto community to exercise caution before interacting with protocols.
In light of this warning, it is crucial to keep track of new product launches, such as upcoming derivative apps like UniDex Finance and Derivio, which are currently in testnet.
Notably, data from the Nansen report paints a positive picture of early adopters’ use of zkSync, with a high percentage of network holdings suggesting they have confidence in the platform’s abilities to deliver value to long term.
However, the report’s warning about rug pulls is a reminder that even established platforms can still have risks associated with them.
While the native zkSync token has yet to be launched, the global crypto market has been on an upward trend in recent days, expressing leniency for the new tokens. Over the past day, the global crypto market capitalization has increased by almost 1% with a value above $1.2 trillion.
Featured image from Unsplash, chart from TradingView