State of ZKsync Q1 2025

Key Insights

• Average daily transactions across the Elastic Network rose 276.2% QoQ, with the launch of chains like Abstract, Lens, and WonderFi on ZKync driving growth. ZKsync reinforced its position as a modular, multichain ecosystem.
• ZKsync Era ended the quarter as the second-largest blockchain for RWAs. Institutional adoption accelerated, with UBS conducting a successful tokenized gold pilot and Tradable bringing $1.7 billion in tokenized private credit onchain.
• Market cap declined sharply in Q1, but protocol fundamentals remained strong. Decentralized sequencing via ChonkyBFT, and integrations with EigenLayer, and The Graph made ZKsync more decentralized and resilient.
• DeFi activity on ZKsync remained resilient, with DEX volume increasing 43.2% QoQ to $20.2 million and stablecoin balances doubling to $127.5 million, driven by USDC growth and the successful launch of USN.
• The launch of a six-month contributor program with Gitcoin bolstered community participation, while ecosystem campaigns like ZKsync Ignite helped bootstrap DeFi liquidity ahead of the program’s planned sunset in March.

Primer

ZKsync Era is an Ethereum Layer-2 network designed to enhance blockchain capacity while maintaining security and decentralization. As an EVM-equivalent ZK rollup, ZKsync processes transactions offchain and posts cryptographic proofs back to Ethereum for verification, enabling efficient and cost-effective operations. The platform employs advanced cryptographic methods, including zk-SNARKs and zk-STARKs to balance scalability with flexibility.

ZKsync's ecosystem is powered by the ZKsync Stack, a modular framework that enables developers to build customizable blockchain networks known as ZKsync Chains. These ZKsync Chains, part of the Elastic Network ecosystem, operate within a shared bridge to facilitate liquidity and composability across the network.

Matter Labs, the team behind ZKsync, saw the potential of building a zk-solution for rollups and launched ZKsync Lite (originally called ZKsync 1.0), a simple peer-to-peer payment protocol, in December 2020. Two years later, Matter Labs coined the term “zkEVM” in an announcement of plans to build a zk-powered Layer-2 rollup. And in March 2023, it launched ZKsync Era (originally called ZKsync 2.0), the first mainnet zkEVM. ZKsync is now poised to accelerate the mass adoption of crypto by scaling Ethereum with interconnected zk-powered ZKsync Chains.

To help realize this vision, Matter Labs raised $258 million from various investors, including a16z, Union Square Ventures, Blockchain Capital, Dragonfly Capital, and others. ZKsync offers features such as native account abstraction, flexible gas payment options, and efficient cross-chain capabilities. For a full primer on ZKsync, refer to our Initiation of Coverage report.

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Key Metrics

Financial Analysis

Market Cap and Revenue

In Q1 2025, ZKsync’s market cap declined 64.3% QoQ, falling from $675.6 million to $241.4 million. The sharp drop mirrored a 64.3% decline in token price, which fell from $0.18 to $0.07. By the end of Q1, its market cap ranking amongst all tokens fell from 126 to 159. In spite of this drop, fees generated across the Elastic Network more than doubled, rising 109% QoQ to $2.7 million. This growth in fee revenue corresponds to the launch of new chains on the network, including Abstract and Lens, which spurred onchain activity.

Supply Dynamics

Source: ZK Nation Docs

ZKsync’s token, ZK, has a maximum supply of 21 billion and is governed by a capped minter model, where designated addresses can mint tokens up to the supply cap. As of March 31, 2025, the circulating supply of ZK is 3.74 billion with 3.68 billion coming from the initial airdrop and an additional 65 million being generated and distributed through the Ignite Program.The distribution of ZK is designed to balance community access, ecosystem growth, long-term governance, and team and investor incentives. Key allocations include 17.5% to airdrop recipients (3.68 billion ZK, fully unlocked at launch), 19.9% to ecosystem initiatives, 19.78% to investors, 13.55% to the team, and 29.3% to the ZKsync Token Assembly. The airdropped tokens were distributed with no vesting restrictions, while the Token Assembly’s allocation will only become liquid once onchain governance is enabled.

Investor and team allocations are subject to a four-year vesting schedule with a one-year cliff. Unlocks begin in June 2025, with 124 million ZK scheduled to unlock to the team and 132 million ZK to investors. From July 2025 through June 2028, both groups will receive approximately 143.28 million ZK per month. Vesting cliffs are tiered: executives unlock 10% after one year, while non-executive team members unlock 25%.

The ZKsync Foundation’s token allocation, in contrast, was immediately liquid and is available to support operational and strategic initiatives. Overall, the structured and phased release of ZK tokens aims to minimize market disruptions while supporting long-term decentralization and governance transitions.

Network Analysis

In Q1 2025, average daily transactions across the Elastic Network grew 276.2% QoQ from 291,900 to 1.1 million. Average daily active addresses saw significant growth as well, increasing 99.2% from 47,500 to 94,700.

In Q1 2025, the average transaction fee on ZKsync Era dropped by 22.8% QoQ from $0.04 to $0.03. The decreasing trend in transaction fees paid by addresses proves the effectiveness of EIP-4844 and the current Layer-2 scaling roadmap for the Ethereum ecosystem.

The average daily transaction success rate was maintained at around 96%, down just 1.5% QoQ. Q1 also saw 81,000 new contracts created, a 21.8% increase QoQ from 66,600 in Q4 2024.

Technical Progress

In December 2024, ZKsync released its 2025 roadmap, in which it defined three main goals for the year:

1. Simplify Developer Experience: Achieve EVM bytecode equivalence, expand LLVM tooling, and integrate familiar development environments like VS Code with advanced debugging support.
2. Enable Web2-Like User Experience: Improve performance (10,000 TPS at ~$0.0001 per transfer), security (Stage 1 rollup decentralization), wallet UX (smart wallet SDKs), and privacy (private validium chains).
3. Interconnect Public and Private ZKsync Chains: Build native interoperability infrastructure for fast cross-chain transfers, remote calls, and seamless integration between public and enterprise-grade private chains.

Since then, ZKsync has made a number of improvements to the network that highlight its commitment to follow through on these goals and remain competitive among other Layer-2 networks. These achievements include:

• Formal Verification of zkVerifier (February 7): Nethermind formally verified ZKsync’s onchain zkVerifier using EasyCrypt, a first for any production-grade ZK rollup. This adds mathematical assurance to the protocol’s core security assumptions.
• ChonkyBFT for Decentralized Sequencing (February 12): ZKsync announced ChonkyBFT, a new consensus algorithm designed for single-slot finality with one round of voting and enhanced fault tolerance. This protocol marks a major step toward permissionless block production and network decentralization.
• Fiamma Bridge Integration (February 23): Fiamma Bridge was integrated as the Elastic Network’s first trust-minimized Bitcoin bridge. Built with BitVM2 and backed by leading infrastructure providers, Fiamma enables BTC to move seamlessly and securely across the ecosystem.
• The Graph Integration (March 17): The Graph began supporting ZKsync subgraphs, enabling decentralized indexing for dapps and reinforcing ZKsync’s commitment to open infrastructure.
• EigenLayer and EigenDA Integration (March 18): ZKsync incorporated EigenLayer’s decentralized proving AVSs and adopted EigenDA as an alternative data availability layer. EigenDA joins Celestia and Avail as the third data availability option to be supported by ZKsync.
• Decentralized Proving via Lagrange and Fermah (March 20): ZKsync advanced its move away from centralized proof generation. Matter Labs has committed to directing up to 75% of outsourced proving to external provers like the Lagrange Prover Network. Simultaneously, ZKsync began using Fermah, a universal proof market, to further decentralize and optimize ZK proof generation through a competitive marketplace of provers.

The first quarter of 2025 showcased steady technical momentum for ZKsync. Achievements in decentralized sequencing and proving, and ecosystem integration reflect the protocol’s evolving maturity. These advancements not only enhance ZKsync’s developer experience and infrastructure resilience but also lay a foundation for a more performant and decentralized Elastic Network moving forward.

Ecosystem Analysis

DeFi

In Q1 2025, DeFi TVL on the Elastic Network declined by 15.9% QoQ, falling from $131.7 million to $110.8 million. When measured in ZK, however, TVL more than doubled from 527.4 million to 1.2 billion ZK, which reflects the drop in price of the ZK token during the same period.

SyncSwap remained the largest protocol on the Elastic Network by TVL, despite a 10% QoQ decline from $23.7 million to $21.3 million. Its market share increased modestly from 16.6% to 17.9%, indicating broader contraction across smaller protocols. Aave climbed to second place with a 41% increase in TVL from $10.9 million to $15.4 million, expanding its market share from 7.7% to 13%. Venus dropped to third place, despite a 3.6% QoQ increase in TVL to $12.5 million and a market share of 10.6%.

Noon, which went live on ZKsync in early February, reached $5.9 million in TVL, making it the biggest gainer of the quarter. Meanwhile, ZeroLend saw a 16.2% QoQ decline in TVL to $3.8 million, while Koi Finance experienced the largest drawdown among major protocols, with a 60.2% decrease to $3.0 million.

These shifts reflect an evolving competitive landscape, with growth from established protocols like Aave and the entrance of new players like Noon helping to offset attrition from earlier ecosystem leaders.

In Q1 2025, average daily DEX volume across the Elastic Network grew 43.2% QoQ, increasing from $14.1 million to $20.2 million. This surge in volume came despite broader market headwinds and declining token prices, signaling continued user engagement within the DeFi sector and increased trading activity.

Maverick led the ecosystem in average daily volume, nearly doubling its volume with a 77.7% QoQ increase to $4.9 million. Its market share rose from 19.5% to 24.3%, placing it as the most used DEX on ZKsync during the quarter. SyncSwap followed closely, posting the second highest growth with a 149.7% QoQ increase in average daily volume, rising from $1.7 million to $4.2 million. This jump lifted its market share from 11.8% to 20.6%.

zkSwap saw a slight decline, falling 4.3% QoQ from $2.6 million to $2.5 million in average daily volume. It also fell in terms of market share, dropping from 19.6% to 13.3% by the end of Q1. WOOFi and Uniswap saw moderate volume growth of 38.5% and 17.7%, respectively, but both experienced slight market share contractions as other platforms captured a larger slice of total volume. Lastly, Izumi Finance saw the highest growth in percent terms over the quarter, increasing its average daily volume by 158.3% QoQ from $126,500 to $326,700. Overall, Q1 marked a period of meaningful growth and reshuffling among ZKsync’s DEXs. While Maverick and SyncSwap emerged as dominant liquidity venues, the broader rise in trading activity underscores an increasingly competitive and maturing exchange landscape within the network.

Stablecoin activity on the Elastic Network saw robust growth in Q1 2025, with EoQ balances doubling to $129.1 million from $63.5 million in Q4, representing a 101.1% QoQ increase. The expansion was driven primarily by a surge in USDC holdings and the introduction of a new entrant, USN.

USDC remained the dominant stablecoin on ZKsync, with its balance more than doubling from $54.1 million to $113.7 million, a 110.2% QoQ increase. Its market share expanded slightly, rising from 85.3% to 88.2%. The token’s continued dominance reflects strong integration across DeFi protocols and user preference for its liquidity and reliability within the Elastic Network.

USN, a new stablecoin, by Noon, that launched its public beta in January 2025, quickly captured 5.7% of the market by quarter-end, reaching a balance of $7.4 million. Its rapid adoption suggests that newer stablecoin initiatives can gain a meaningful share when well-integrated and actively promoted.

In contrast, USDT experienced a notable decline, with balances falling 28.1% QoQ from $7.0 million to $5.0 million. Its market share declined sharply from 10.9% to 3.9%, indicating user rotation away from Tether in favor of alternatives.

zkUSD, ZKsync’s native stablecoin, saw no change in balance at $1.2 million, but its market share halved from 1.9% to 0.9% as overall stablecoin volumes increased. The stablecoin landscape on the Elastic Network continues to consolidate around USDC, but the introduction of new assets like USN suggests emerging competition.

Ecosystem Growth

ZKsync’s Elastic Network continued its expansion in Q1 2025, evolving from a single Ethereum Layer-2 into a robust network of interoperable, purpose-specific ZKsync Chains. This shift marked a strategic focus on building a modular, decentralized Web3 stack that prioritizes user experience, regulatory compatibility, and scale. Key developments during the quarter highlighted adoption from enterprise players, consumer-facing projects, and technical contributors across the crypto ecosystem.

Elastic Network Expansion

Several new chains and infrastructure improvements were announced in Q1, with many reaching mainnet during the quarter. New additions to the Elastic Network ecosystem include:

• Abstract, a consumer-focused chain supporting over 100 apps at launch, aimed at onboarding non-crypto-native users through an intuitive UX and Web2-style access.
• WonderFi, recently acquired by Robinhood, deployed its own ZKsync Chain and wallet for seamless, gasless access to DeFi services and leverages ZKsync’s account abstraction and native interoperability.
• Union Chain, by Union Fintech, was announced and will be supported by leading exchanges in Southeast Asia. The chain will bring regulated RWA issuance and fiat integration into the Elastic Network.
• Lens Chain, in support of SocialFi apps, migrated 125GB of user data and profiles from Polygon to ZKsync, completing one of the largest data migrations in blockchain history.
• GenLayer, a novel AI-powered chain, was announced and will support intelligent contracts capable of live data access and adaptive logic.

These deployments increased the number of active ZKsync Chains and demonstrated the Elastic Network’s suitability for diverse use cases, from social and gaming to financial infrastructure.

Institutional Adoption

Institutional interest in ZKsync deepened throughout Q1 2025, with several high-profile organizations leveraging the network’s zero-knowledge architecture for regulatory-compliant scalability and privacy. UBS conducted a successful proof-of-concept using ZKsync Validium to tokenize gold in a private, offchain data environment. The pilot demonstrated the protocol’s ability to meet UBS’s stringent requirements for scalability, interoperability, and confidentiality, further validating ZKsync as a viable infrastructure for asset tokenization in traditional finance.

Tradable, a platform focused on tokenizing institutional-grade private credit, brought $1.7 billion in assets onchain using ZKsync’s infrastructure. Tradable’s integration reflects growing confidence in ZKsync’s technical maturity and regulatory alignment. The platform now ranks among the top three RWA projects globally and serves as a gateway for traditional asset managers entering Web3.

These developments contributed to ZKsync Era becoming the second-largest blockchain for tokenized real-world assets by the end of Q1, hosting over $2 billion in tokenized value across 27 projects. With Ethereum leading the sector, ZKsync’s positioning underscores its emergence as the go-to infrastructure for institutions looking to tokenize assets with scalability, privacy, and regulatory safeguards.

Developer Ecosystem & Tooling

ZKsync prioritized developer experience with a revamped DevEx strategy focused on quality, transparency, and cross-chain compatibility. Foundry-ZKsync and Smart Sign-On (SSO) made strides toward stable, user-friendly releases, while infrastructure providers like Enso and Halliday began building tooling for multi-chain DeFi and automated workflows. The developer experience now spans the entire Elastic Network, not just ZKsync Era, ensuring uniform standards and support for all chains.

ZKsync also launched a community contributor program in partnership with Gitcoin, allocating over 5 million ZK tokens to reward grassroots ecosystem engagement and governance participation. This included new community squads, regional Elastic Teams, and structured incentives for ecosystem expansion.

Gaming, Social, and Consumer Use Cases

The Elastic Network saw significant growth in consumer applications:

• TreasureDAO launched “Mage,” an AI-integrated gaming platform on ZKsync.
• Nodle, a digital trust network, launched multi-token support on ZKsync, enabling fast, low-cost transactions and expanding access to decentralized payments.
• Lens completed its Lens V3 migration to Lens Chain and introduced Grove, a novel onchain-controlled storage layer.
• Mountain Protocol deployed its yield-bearing stablecoins USDM and wUSDM, integrated with ZKsync Ignite liquidity programs.

At ETHDenver 2025, ZKsync hosted “Elastic House” and funded $25,000 in hackathon bounties. Winning projects spanned AI agents, onboarding tools, and novel DeFi applications, all highlighting the Elastic Network’s appeal to developers.

Closing Summary

Q1 2025 was a pivotal quarter for ZKsync, defined by ecosystem-wide growth, meaningful institutional adoption, and critical technical progress. While market cap and token price declined, network activity increased significantly, highlighting the success of the Elastic Network and adding to the protocol’s underlying momentum. ZKsync advanced its roadmap through the announcement of decentralized sequencing via ChonkyBFT, and a shift toward decentralized proving infrastructure with Lagrange and Fermah. These upgrades reinforce its strategy of building a modular, secure, and performant Layer-2 network.

The Elastic Network continued to expand with new chain deployments from consumer apps like Abstract and Lens, and trading platforms like WonderFi. ZKsync Era also solidified its role as a leading platform for real-world assets, reaching over $2 billion in tokenized value. As developer tooling improved and community initiatives gained traction, ZKsync strengthened its position as a platform capable of supporting diverse, scalable Web3 applications across financial, social, and consumer verticals.