How to Get Started with DeFi on zkSync Era

zkSync DeFi guide by DappRadar

A complete guide with everything you need to know about zkSync’s DeFi ecosystem

Ever since zkSync Era launched its mainnet, the ecosystem has been thriving with DeFi services and all kinds of other dapps. In this guide we will deep dive into the zkSync ecosystem, and specifically the available DeFi services. How do we get started, and what are the best DeFi platforms to use on zkSync Era?

Before we get deeper into the available DeFi services, let’s first get to the basics. We need to understand the importance of DeFi and the position of zkSync. This will allow us to understand and assess the potential of this ecosystem. 

An easy explanation about zkSync

Many still consider Ethereum to be the leading platform for blockchain applications, but with the increasing gas fees actually using that chain has become almost impossible. That’s where Layer-2 networks like zkSync come into play. zkSync is a Layer-2 scaling solution that utilizes zero-knowledge rollup technology. zkSync is capable of bundling multiple transactions into a single cryptographic proof, processing them off-chain and then finalizing them on Ethereum mainnet, resulting in cheaper transactions.

Zero-knowledge cryptography allows two parties to prove knowledge about a piece of data, without revealing the data itself. There’s a sense of privacy here as well. Through zero-knowledge proofs any party asks the same question over and over to minimize the risk of getting an unexpected outcome. This is important technology for the future of user privacy and blockchain scalability. 

Introduction to DeFi on zkSync

DeFi, short for decentralized finance, is a product category of financial services powered by blockchain technology. These services tend to be funded by the community, while that same community also earns rewards for doing so. Users can provide liquidity by depositing tokens into a pool, which the rest of the community can then use to for example swap cryptocurrencies or borrow some money. 

You can find DeFi on almost every blockchain, but in this guide we are looking at zkSync Era. At the time of writing DappRadar tracks 179 dapps on zkSync Era. The value locked on zkSync Era has been moving from $120 million to $187 million in the past months. DeFi is blossoming on zkSync Era. Now let’s see how to get started. 

1. Bridge ETH from any chain to zkSync Era

Before we’re able to do anything on zkSync, it’s necessary to deploy some initial funds on zkSync Era. You can do this by utilizing DappRadar’s bridging and swapping service, powered by LiFi Protocol. Simply go to the Ethereum token page, click “swap”, and initiate a swap from one chain to ETH of zkSync Era. 

When you’re doing this, know that bridging from and to Ethereum is very costly. However, bridging between two different Layer-2 networks is a lot cheaper. You will have to approve token spending, which also comes with a price tag of a few dollars on Ethereum. 

Swapping and bridging any token through DappRadar with very low fees across 18+ chains

Once you’re reviewed and approved the bridge, it will take a few minutes before your bridged and swapped funds ends up on zkSync Era. As soon as the process has been completed, you will have ETH on zkSync Era in your wallet. 

Other methods to fund your wallet 

It’s easy to get started on zkSync thanks to the large amount of options available. Aside from the bridge presented above, various other bridging services connect to zkSync. This includes Celer Network, RhinoFi, Interport Finance and XY Finance. For an overview of the available DeFi bridges, we’d like to refer you to our Rankings. Simply filter by “zkSync” and “Bridge”, and you will find these platforms in no time. 

On-ramps like Transak, linked through your account options on DappRadar, also allow you to top up your zkSync wallet. Through these services you can use your credit card to purchase ETH on the zkSync network. 

2. Add zkSync as a network to your wallet

If you want to use your funds, it’s also nice that you’re able to see it. zkSync supports many EVM-compatible wallets, like Argent, OKX Wallet and of course MetaMask. For this example, I will use MetaMask. 

  • Open your MetaMask wallet
  • Click the network selection dropdown menu
  • Click the button “Add network” 
  • And then click “Add network manually” 
  • After that, fill in these details:
    • Network name: zkSync Era
    • RPC URL: https://mainnet.era.zksync.io
    • Chain ID: 324
    • Currency symbol: ETH
    • Block explorer URL: https://explorer.zksync.io
  • Press “Save”, and you can now select zkSync from the network selection menu. 

3. Trading and farming on zkSync

Similar to all DeFi platforms, users can provide liquidity and then stake their LP tokens for rewards. Projects often use this type of token farming during their early stages to reward ecosystem participants for their conviction. Below we will highlight some of the mechanics you can utilize to make your cryptocurrencies work for you, and earn an interest on your assets. 

Liquidity providing and staking on SyncSwap

Among the most popular decentralized exchanges on zkSync, you can find SyncSwap. Users can provide liquidity and then stake their LP tokens in one of the pools. SyncSwap offers Prime Pools where users can for example earn 15.5% APR on staked assets in the DAI-USDC stablecoin pool.  

Mute and their Koi farming pools

Through Koi, formerly known as Mute, users get access to a decentralized exchange, yield and bond platform on zkSync. One of the eye catchers on this platform is the ability to enjoy a fixed APY model through the farming pools. Users can first provide liquidity for certain pools, and then stake their LP tokens. By staking the LP tokens in the Koi farming pools, users can predetermine the rewards they earn over a 30-day period. 

Borrowing and lending with Zerolend 

With ZeroLend, we have a popular lending platform which already has over $57 million in market size on zkSync. Through this platform users can for example supply stablecoins like DAI, LUSD, USDC or USDT to enjoy an APY up to 4.3%. 

Velocore and the one-click compound

Innovation sits in the details, and that can also be said about the decentralized exchange Velocore. You can swap, provide liquidity and stake your LP tokens here, but Velocore also innovates. This automated market maker allows users to compound their interest with one click, while also introducing a ve(3,3) real-time bribe mechanism. This mechanism promotes steady distributions of rewards, while also incentivizing users to hold and stake their assets and participate in the ecosystem. 

Trade with leverage on Satori Finance

Satori is the first on-chain derivatives protocol made for mass adoption. The DeFi platform supports limit trading, market trading and users have the ability to utilize up to 25x leverage. This makes Satori Finance an excellent platform for the more seasoned crypto traders. 

For users who are curious about other DeFi platforms on zkSync, please visit the DeFi TVL rankings. 

Hold and earn with Holdstation

One DeFi service stands out from the rest, and that’s Holdstation. They have created a Web3 smart contract wallet based on Account Abstraction, providing services like futures trading, self-custodianship and user privacy. On a technical level, Holdstation is powered by ERC-4337, zk-SNARK privacy and MPC technology. Simply put, this smart contract wallet aims to make decentralized finance as easy and secure as traditional financial services. 

Within the zkSync ecosystem, developers can build custom paymaster contracts. The contract can allow developers to allow users to do transactions for free, or to pay using the app’s ERC-20 token instead. Holdstation is one of the pioneers at implementing Paymaster. Its users can utilize the DeFi platforms without paying gas fees on some actions, which heavily improves the user experience. In addition, users can also pay gas fees using tokens such as USDC, USDT HOLD or uGOLD. 

Holdstation isn’t only a wallet and an exchange, but also a launchpad and lending platform. Those who have HOLD tokens in their wallet, can use these to pay less gas fees across a wide variety of services. While HOLD token stakers also receive a percentage of the trading fees, and get access to new projects on the launchpad.  

Closing words

Those who are looking to expand their horizon, will find a formidable DeFi ecosystem on zkSync. The zero-knowledge ecosystem offers a wide variety of financial services, including the ability to participate in yield farms, lending and liquidity provision. These features alongside native account abstraction and the introduction of zero gas fees with Paymasters, make zkSync a force to reckon with.

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