Ethereum Layer 2 chain ZKsync has decided not to extend its liquidity rewards initiative, ZKsync Ignite, as the project pivots toward expanding its broader network infrastructure.
The program will officially conclude on March 17, marking the end of its first season and cancelling the reward allocation for period six, which was initially set as the final phase.
In a statement, the platform’s DeFi Steering Committee (DSC) emphasized its commitment to developing the Elastic Network, an interconnected ecosystem of zero-knowledge (ZK) chains designed to enhance scalability and interoperability.
“Our long-term vision for ZKsync is increasingly centred on the Elastic Network, and we want to focus our resources to accelerate this becoming a reality,”
the team stated.
The decision to discontinue Ignite aligns with this shift, as the project team believes that concentrating resources on a single-chain liquidity program does not fit its evolving strategy. Market conditions also played a role in the move, with ZKsync acknowledging the impact of broader crypto market volatility.
ZK tokens saw strong performance in 2024, peaking at $0.26 on December 8 2024. However, the asset has since faced sustained selling pressure, now trading at $0.06—a steep 76% decline from its December high, according to data from CoinGecko.
Despite this downturn, ZKsync noted that Ignite exceeded its initial objective of driving DeFi total value locked (TVL) to $100 million. At its peak, TVL surpassed $270 million, significantly enhancing trading activity on the chain. However, current data from DeFiLlama shows that TVL has dropped to $139 million.
Launched with a nine-month roadmap, Ignite was designed to distribute 300 million ZK tokens to DeFi users who provided liquidity for key trading pairs. The first season ran from January 6 to March 31, allocating 100 million tokens initially valued at $21 million. However, at today’s ZK prices, the same allocation is worth only $6.8 million.
Meanwhile, the Ethereum Layer 2 ecosystem has continued to attract institutional interest. UBS, a global banking giant managing over $5.7 trillion in assets, recently announced its moves to explore blockchain technology to modernize digital gold investments for retail investors. The bank successfully completed a proof-of-concept for its fractional gold investment product, UBS Key4 Gold, on the Ethereum L2 network ZKsync Validium.
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