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Investing in ZeroLend


When EigenLayer first popped its head out of the sand it was like that moment in DBZ when Cell reached his perfect form. A behemoth was born. And with that, a slew of Cell juniors tagged along. Staking ETH, liquid staking ETH, restaking ETH, liquid restaking ETH, restaking liquid staked ETH, you name it. The floodgates were open.

Many protocols spawned. Points programs, comparing APYs and security risks, bridging between chains. It’s. Just. Too. Much. Sticking to the aforementioned analogy, this is where ZeroLend enters the Cell Games tournament arena.

Enough with the nerdy shit, I promise (maybe). Let’s get into it!

ZeroLend TL;DR:

  • ZeroLend is the leading lending/borrowing market on ETH-based L2s Linea, zkSync, Blast, and Manta. And Ethereum itself, obviously.
  • ETH-based LRTs are a key asset class on the platform
  • ZeroLend has garnered a staggering TVL of over $213M
  • Over 420K active addresses on the platform
  • ZeroLends native token ($ZERO) will have its TGE on April 29th, 2024.
  • ZeroLend is incubated by MahaDAO
  • While lending and borrowing is a huge pillar of the project, they are building a larger ecosystem. Read more about it in the article below.
  • The platform has been audited by a few of the top firms. Find the audits in the ZeroLend Docs.
  • ZeroLend raised $3M from Momentum6, Blockchains Founders Fund, Morningstar Ventures, Banter Capital, and more VCs/angels. Rarestone Compass, which I am part of, is also an investor. This article reflects my personal opinions.

What is ZeroLend?

ZeroLend is the leading lending market on zkSync, Manta Network, Blast, and Linea. The big daddy of lending on all the L2s that actually matter. Yes, I said it. Oh yea, of course they’re on Ethereum as well. That one’s for the Boomers among us.

Lending? Borrowing?

Yes Howard, lending! And borrowing!

At the core of the ZeroLend ecosystem is their lending and borrowing mechanism. It’s not rocket science, you could have derived that from the name. But here is where it gets interesting!

The key asset class on the ZeroLend platform is Ethereum-based LRTs. Liquid restaked tokens. A fresh-faced, shiny new ponzi. And being the crypto degens that we are, we welcome it with open arms. As Howard would say: let’s bet on this shit.

ZeroLend is working closely with the following LRT protocols:

As the post above describes, there are a whole bunch of benefits to supplying LRTs on ZeroLend. To name a few:

  • $ZERO Gravity Points ($ZERO is ZeroLend’s native utility token)
  • EigenLayer points
  • Native supply yield
  • 1.5–3x boosted LRT points from our LRT partners

Ngl fren, those boosted points are juicy af, especially considering we’re in peak airdrop season. One thing about all these LST/LRT platforms is that they are a playground for whales, so us shrimpies will need the boosted points if we want to claim our piece of the pie.

How sweet is it to supply just one LRT asset, yet earn points for a multitude of mega-hyped protocols?

Other than ETH-based LRTs, there is a wealth of other assets and chains integrated into the protocol. The following chains are integrated:

  • Linea
  • Blast
  • zkSync
  • Manta

Each network has a string of assets that are integrated.

More than a lending protocol — exploring the ZeroLend ecosystem

Shall we dive into the docs fren?

  1. DeFi lending protocol. This is what we’ve spent the most time on so far. Decentralized, non-custodial, all that good stuff. Power by LayerZero as well 😉
  2. Yield-bearing stablecoin: $ONEZ. ZeroLend’s own stablecoin that captures native yield from the lending protocol, equipped with self-loan repaying capability. Collateralize your assets on ZeroLend to mint $ONEZ.
  3. $ZERO. ZeroLend’s native token which gives the community the power over the protocol’s future.
  4. Account abstraction. A fancy term you’ve probably heard of a lot lately. Hailed as the thing that will help onboard the next 1B users into crypto. It allows for gasless transactions, social logins, and much more. In short, it removes a lot of the complexity for the newbies in this industry.
  5. Real-World Assets (RWA). Blackrock is betting big on tokenization of RWA. While I’m a bit more hesitant/pessimistic on the short-term potential, I do believe in the long-term potential of tokenization and RWA. So I’m happy to see this on the roadmap of ZeroLend. RWA-based lending will be a big factor in the ZeroLend ecosystem imo.
  6. Privacy Layer using zkStack. ZeroLend is building a privacy layer using hyperchain (L3). Slated for release in early 2025. Powered by the zk stack, it will enable lending that’s KYC/AML compliant while still maintaining user privacy. This is achieved through the magic of zk proofs. Yeah science!

Token utility

$ZERO stands at the center of it all, it powers the entire protocol. 100B tokens to be used for:

  • Staking -> be incentivized/rewarded for participation in the ecosystem
  • Fees and validator rewards -> transaction fees for the Hyperchain/privacy layer and used as rewards for validators securing the network
  • Incentive programs -> used to encourage users to actively use the platform. The plan is to reward users for liquidity provision, referring new users, and completing social/activity tasks within the ecosystem.
  • Integration with DeFi ecosystems -> additional layers of utility may be offered through integrating with other Defi protocols. Which will allow holders to do all kinds of DeFi shenanigans using $ZERO. Use it as collateral, do some yield farming, to name some examples.

Ve-tokenomics and token sustainability

Utility is nice, but what ensures sustainability? To give some color on that, we dive into the tokenomics.

One thing I personally like is that $ZERO starts off with a relatively higher float compared to most recent launches we’ve seen. The low float, high FDV model is broken, and ZeroLend launching with a higher float is a breath of fresh air. The starting float will be around 25% of the total supply, although the final tokenomics are still pending at the time of writing.

The team holds 5% of the supply, a lower share compared to most projects. They also have a 1-year cliff with 4 years of vesting afterwards. Incentivizing long-term commitment to the protocol’s success.

To ensure long-term sustainability, ZeroLend uses the well-known Ve-Tokenomics model which is meant to reward long-term holding and active governance participation.

Ve-tokenomics entails locking your $ZERO tokens for x amount of time, after which you receive vote-escrowed (ve-)tokens. The longer you lock your tokens, the more benefits you gain. Such as boosted voting power or higher APYs/rewards. With each user that locks his tokens in exchanges for veTokens, the circulating supply decreases. Combine a reduced supply with equal or higher demand and you get yourself some good-old sustainability.

Users can get ve-tokens by simply staking $ZERO or providing liquidity to ZERO/ETH and staking their LP tokens for x amount of time. Naturally, 1$ worth of staked LP-tokens gives you more veZERO tokens than just staking 1$ worth of $ZERO.

ZeroLend backers and team

ZeroLend raised $3M at a $25M valuation from Momentum6, Blockchains Founders Fund, Morningstar Ventures, Banter Capital, and more VCs/angels.

There is not much info on the team available to share, but I’d suggest reading Morningstar Venture’s interview with Ryker. The founder of ZeroLend:

Very excited to be an investor in ZeroLend and eagerly awaiting their TGE and progress throughout the next few years.

Thanks for reading anon <3

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