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What are Early zkSync Whales doing On-chain?
Jake Kennis
main
Key Takeaways
5 min read
  • The top 25 early whale bridgers to zkSync Era have an average of 32% of their total holdings on zkSync. These holdings comprise of spot ETH, USDC and a distant 3rd of MUTE, signaling lots of idle capital sitting on zkSync.
  • Most of their activity is centered around DEXs, particularly LPs across SyncSwap, iZumi Finance, Mute and Velocore. Majority of LPs are in the ETH/USDC pools, meanwhile pool 2s and alts make up a very negligible position, indicating a lack of interest in the zkSync alts at the current time.
  • There are a few derivatives apps launching soon, such as UniDex and Derivio which is in testnet. There have been many rug pulls on zkSync, so always exercise caution before interacting with any protocols.
  • With that being said, there is lots of idle capital waiting to deploy given the large amount of spot holdings sitting in ETH and USDC, so keeping track of new products launching can prove fruitful in the near term if/when there is an alt-season.

Introduction

zkSync is a general-purpose smart contract validity rollup. You can check out our in-depth report on zkSync to dive deeper into their entire stack. Since then, they went live with their mainnet, zkSync Era at the end of March. Following Arbitrum’s airdrop and the excitement behind the first zkEVM to hit the market, zkSync Era already boasts over $240m TVL at the time of writing across 433,000+ depositors from Ethereum mainnet.

For those interested in viewing an all-inclusive dashboard of zkSync, check out our dashboard here. With all of this rapid growth, what exactly are people doing on-chain on zkSync, and more specifically, what are these early whale wallets doing?

Methodology

We defined ‘Early zkSync Era Whales’ as addresses who have deposited funds into zkSync Era prior to April 20th, 2023. We then took the top 25 addresses by USD deposits and mapped out their portfolio holdings below. These addresses have deposited anywhere from $950k to $17.9m into zkSync Era, indicating they have a lot of conviction in zkSync or speculation on a potential airdrop. Let's dive in.

Who are these Early zkSync Bridgors?

Source: Nansen Query
Source: Nansen Query
Source: Nansen Query

Over 32% of the top 25 wallet holdings are on zkSync. Interestingly enough, breaking it down into 3 segments by largest deposits, we can see that this skews heavily across these wallets.

Chain Allocation

Top 10 wallets by USD Deposits (1-10)

  • 57% of their assets sit on zkSync, followed by Ethereum and then Arbitrum at a distant third.
  • This indicates they have a lot of conviction in zkSync or are very keen on farming a large airdrop given their highly skewed favor of zkSync over other chains.

The Second Segment by USD Deposits (11-20)

  • Most of their assets are split between Ethereum, Fantom, and BNB chain, with only 8% of assets on zkSync.
  • This shows a more balanced allocation between Ethereum and alternative chains.

Third Segment by USD Deposits (21-25)

  • 99% of their assets sit on zkSync. With $1.3m between the five wallets, this represents nearly all of their allocation.
  • This indicates they also have a lot of conviction in zkSync or are speculative on a large airdrop given how skewed their chain allocation is towards zkSync.

Largest Holdings and Allocations on zkSync

Over $7.1m sitting idle in wallets, comprising mainly USDC, ETH, and MUTE. The lack of exposure into alternative assets indicates a more risk-off approach to playing with things on zkSync Era. Outside of tokens being held, there are a few protocols being used. The activity skews heavily towards DEXs and farming opportunities in general.

The top protocols used from the top 25 wallets are:

  1. iZUMi Finance (website/twitter)
    • $16.2m allocated
  2. SyncSwap (website/twitter)
    • $9.7m allocated
  3. Mute. io (website/twitter)
    • $5.3m allocated
  4. Velocore (website/twitter)
    • $3.72m allocated

Izumi Finance

Izumi Finance has a few products, but they deployed iZiSwap, a concentrated liquidity DEX built from Uniswap v3 that adds in additional functionality. Their docs state some of this includes discrete liquidity on every price tick, as well as things like limit orders to provide a better trading experience. However, the main reason for this large allocation may be due to this recent announcement, which airdrops 1.5m uZi tokens and promises 50% of any airdropped zkSync tokens to its users.

Two wallets comprise the entire allocation: EIP 1559 User and this EIP 1559 User. Both of these wallets are very fresh, having first been funded from Binance less than a few days ago, April 17th and 19th respectively. This indicates this may be a yield opportunity, looking to farm the potential airdrops.

SyncSwap

SyncSwap is a DEX on zkSync with the most TVL at the time of writing. They recently announced a loyalty program through token incentives, which can be found here.

Many addresses are LPing on SyncSwap, including: 🤓 samurai.eth, this Heavy Dex Trader and 🤓 Oapital: 0x66b and this Heavy Dex Trader who have over $9.4m LPed in the ETH/USDC pool alone. Note, USDC and ETH account for over 95.4% of the asset value on the DEX.

Mute

Mute is a DEX on zkSync with over $13m in TVL at the time of writing. Of that, these whales comprise of $5.1m, mainly comprising the ETH/USDC and MUTE/ETH pools. These pools are yielding 23% APR and 33% APR respectively at the time of writing. This wallet is actively LPing over $3.2m alone in the ETH/USDC pool. Note that ETH, USDC and MUTE comprise of over 97% of asset value on the DEX.

Velocore

Velocore is a DEX on zkSync, which is a fork of Solidly. It currently has over $17m in TVL, of which, the early whales comprise $3.72m of it. This wallet is farming the ETH/USDC pool, with all of its zkSync funds staked in the pool which is currently earning just over 17% APR. The assets ETH, USDC, and VC comprise of over 93.19% of asset value on the DEX.

Conclusion

  • Much of the holdings and liquidity allocation revolve around DEXs, mainly around ETH and USDC, showing no indication of any other altcoins favored by these whales. A few wallets own and LP MUTE on the DEX but that is all. This indicates these early whales are not particularly bullish on zkSync altcoins at the time of writing, but are keener on farming new opportunities with their ETH and USDC for DEX token incentives and positioning for a zkSync airdrop.

  • Things to monitor would include new token allocations, derivative exchanges allowing users to take on leverage and other DeFi building blocks. The DEX landscape is key but the liquidity is quite low for alternative assets. Benchmarking to Arbitrum, GMX played a pivotal role in bringing in new users and sparking a lot of activity, looking for a similar app will be a key value add to the protocols already mentioned.

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Disclosure: The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.