ZKsync's Development Choices

Author: Thejaswini M A Translator: Shan Ouba, Jinse Finance

When discussing competition, people often think of "survival of the fittest." What comes to mind is an endless, all-out game where the strong use their advantages to squeeze out their opponents and ultimately emerge victorious.

But now I'm beginning to question whether the long-term survival of ecosystems truly follows this law. At the beginning of the 20th century, naturalist and philosopher Peter Kropotkin, in his work on evolutionary mutualism, proposed a completely different view. He discovered that species that survived extreme climate change relied on a mature model of collective cooperation. In the long process of evolution, cooperation is far more powerful than individual struggle. The true "fittest" are those groups that know how to work together to build stable and shared systems to cope with unknown environments.

This principle applies to all fields.

Today, all crypto projects are repositioning themselves, and those protocols that survived the industry downturn are making crucial choices for future development. Some development teams are returning to their roots, adhering to the core principles of absolute censorship resistance and complete decentralization; others are adding centralized control mechanisms to ensure basic project operation and solvency; still others are focusing on building their own ecosystems, consolidating internal liquidity into independent Layer 2 networks. ZKsync, however, has made a different choice—moving towards collaborative symbiosis, targeting traditional banks. The Boston Consulting Group (BCG) predicts that by 2030, the tokenized asset market will climb to $10 trillion to $16 trillion, fully migrating to the blockchain space. Currently, major banks have already conducted related pilot programs, with some institutions moving from the testing phase to formal implementation. The infrastructure solutions finalized now will determine the flow path of trillions of dollars and the control of the underlying network. ZKsync is a strong contender for this underlying financial infrastructure. Even if you've stopped paying attention to Layer 2 networks after the last bull market, it's still essential to understand its developments. Why are banks entering the market? And why did they choose ZKsync? The ZKsync used by traditional financial institutions is different from that used by ordinary crypto users. Deutsche Bank uses Memento ZK Chain—a private, authorized Layer 2 network built on ZKsync's Prividium enterprise suite. Prividium is a dedicated product from ZKsync for institutions, supporting privacy transactions, access control, built-in compliance tools, and all transactions are ultimately settled on the Ethereum mainnet. After comparing five major blockchain ecosystems, Memento ultimately chose ZKsync. With this solution, the funding deployment cycle was shortened from two to three months to two to three weeks. Banks favor ZKsync technology primarily because it can prove the authenticity and validity of transactions without disclosing private information. When verifying transactions, banks do not need to disclose sensitive data such as the names of the transacting parties, the amount, or the underlying assets. This architecture allows banks to independently control the scope of data visibility, protect business secrets, meet regulatory requirements, and highly aligns with Wall Street's operating model. Currently, the Tradeable platform has $1.7 billion in private credit assets deployed on ZKsync, with institutional holdings yielding between 8% and 15.5%, and nearly 30 related positions. In October 2024, the Buenos Aires city government quietly migrated its entire digital identity system to the ZKsync Era network. The government credentials of all 3.6 million residents in the city are secured through encryption technology, and the related data cannot be traced by municipal departments, making Buenos Aires the first city in the world to implement this application. As of the end of 2025, the global private lending market had reached $3.5 trillion, with Tradable accounting for less than 0.05% of the market. The tokenized lending sector is still in its growth phase and is expected to capture a larger market share in the future. It can be seen that the current volume of on-chain assets is still significantly smaller than the overall size of the traditional market. For corporate risk control teams, they face three choices: an independent network completely controlled by themselves, a corporate alliance network based on contracts, or a public network governed by the community. Comparison of the Three Mainstream Institutional Networks Since 2019, JPMorgan Chase has built a private blockchain through its Kinexys division. The system is entirely under internal control and connects with partner institutions such as BlackRock and Siemens to handle repurchase transactions, cross-border payments, and asset settlement. The platform's servers and ledger are maintained by JPMorgan Chase, completely isolated from the public network. Network fees and system upgrades are executed according to internal rules, with token holders having no right to interfere; governance is entirely in the hands of the bank. However, data reveals a weakness: after five years of operation, Kinexys processes approximately $5 billion in transactions daily, while JPMorgan Chase's overall daily payment volume reaches $10 trillion, meaning its blockchain business accounts for only 0.05% of its total internal payments. The bank, holding absolute control, has failed to drive the large-scale implementation of blockchain technology; complete control has not solved the core problem of implementation difficulties. Another example is R3 Corda, a consortium network that brings together over 200 financial institutions. All rules are uniformly agreed upon through contracts before launch, and feature iterations require the joint signature confirmation of all members. From the very first transaction, major banks have had equal say, with their tokenized real-world asset settlement scale exceeding $10 billion and daily transaction volume reaching one million transactions. Both of these platforms are competitors of ZKsync. However, ZKsync possesses unique advantages that neither can replicate: it ensures data privacy while achieving public verifiability, and its settlement layer is independent of any single enterprise. If the operating entity of a private consortium blockchain shuts down, the on-chain assets immediately become paralyzed; however, assets on ZKsync are ultimately pegged to the Ethereum mainnet, eliminating the risk of unilateral shutdown by the operating entity. This underlying independence is ZKsync's core differentiating advantage, but it also brings new contradictions: institutions must directly confront the uncertainties brought about by external community governance. Strategic Shift: Saying Goodbye to Retail Investors, Fully Embracing Institutional Investors Before fully betting on the institutional market, ZKsync launched an incentive program called Ignite to subsidize DeFi protocols running on the network. With the strategic adjustment, the plan was officially terminated, and on-chain activity also declined along with the incentive policy. Simultaneously, the original network ZKsync Lite, launched in 2020, was permanently shut down. The Matter Labs team had been signaling this since December 2025 and confirmed the shutdown date at the end of February 2026. Platform funds are permanently withdrawable, and no institutional businesses had previously deployed on this network. The market changes are significant: leading DeFi lending protocol Aave, through a community vote, decided to shut down its trading market on ZKsync Era. The core reason stems from yield data—Aave generated only $714 in fees during its 30 days on the network, while during the same period, it generated $300,000 on the Base chain and a staggering $7.7 million on the Ethereum mainnet. The community believes that ZKsync Era failed to achieve effective product-market fit and has established a rule: new projects wishing to join in the future must achieve an annualized yield threshold of $2 million. Looking back at the market peak, ZKsync Era's DeFi value locked (TVL) once reached hundreds of millions of dollars. Now, its public DeFi ecosystem's total TVL is only about $15 million, while mainstream Layer 2 networks targeting retail investors generally maintain TVL levels in the billions of dollars. This raises a core question: should Layer 2 networks be positioned as a base for the retail crypto ecosystem, or as a traditional financial link relying on Ethereum for settlement? This positioning determines the direction of the entire ecosystem. Matter Labs CEO Alex Glukhovsky announced a roadmap this year, clearly shifting the focus to building high-end infrastructure for traditional finance. Product iterations also confirm this direction: first, the Prividium private suite was launched to create an isolated and private transaction environment for banks; then, a bank-specific toolkit was launched, and partnerships were established with institutions such as Cari Network to connect with large regional banks. Therefore, the departure of retail DeFi projects like Aave was already anticipated by the development team. Cari Network, founded by the former head of the U.S. Office of the Comptroller of the Currency, plans to launch a pilot program in the next quarter, partnering with five regional banks with a combined deposit size of over $600 billion. If the pilot program is successful, the massive transaction volume brought by the banks will completely offset the impact of the departure of retail projects; if the pilot program fails, ZKsync will only become a technically sound but impractical corporate experiment. Governance Challenges: The Game Between Institutions and the Community In early May 2026, ZKsync officially launched its v31 protocol upgrade through a community governance vote. This upgrade primarily achieved native cross-chain interoperability between various ZKsync chains, while also ensuring compatibility with Ethereum's Layer 1 settlement architecture and expanding system adaptability. According to the DAO voting results, all cross-chain interactions within the ZKsync ecosystem will uniformly incur a fee of 10 ZK tokens. For banks, fluctuating fees are a normal part of operations; network gas fees, cloud computing costs, and foreign exchange spreads all fluctuate. More importantly, the entire fee structure and billing mechanism can be revised by the community governance forum without prior notice to participating institutions. Currently, the ZK Nation community forum has begun discussing issues such as node fees, staking rules, and customized pricing for proof verification. Once these issues are voted on and passed, they will directly change the costs and rules of all cross-chain businesses of institutions such as Deutsche Bank and Tradeable. The entire discussion process was open and transparent, and anyone can access it. This contrasts sharply with JPMorgan Chase's Kinexys and R3 Corda: the former is entirely controlled by the bank, while the latter relies on pre-signed contracts to constrain rule changes. So why would banks still choose ZKsync? The core advantages remain privacy and independent settlement: ZK technology can complete transaction disclosure while keeping core data confidential; even if Matter Labs is poorly managed, the network will continue to operate on Ethereum, and assets will not be frozen. However, choosing this system means that banks must accept that the network has no single owner, and governance is jointly held by all community members who participated in the voting. The ZK token is currently priced at approximately $0.01, a 96% drop from its all-time high of $0.3285 in June 2024. At the current price, a cross-chain transaction fee is approximately $0.10; at the all-time high, the fee was approximately $3.28. While the token price volatility is manageable, the community-voted rules introduce uncertainty into the company's long-term financial planning. In the Layer 2 network hierarchy, L2Beat classifies ZKsync Era as a Level 0 network: an independent security committee can bypass the full DAO vote and directly suspend or modify smart contracts. Mature Level 1 networks like Arbitrum have eliminated this centralized intervention mechanism. For corporate risk control teams, emergency shutdown functionality is a crucial means of preventing contract vulnerabilities, but ZKsync's security committee is independent of traditional corporate structures, and control is not in the hands of partner institutions. In addition, Sygnum tokenized some of Matter Labs' corporate treasury assets and integrated them into Fidelity's liquidity funds; subsequently, Fidelity also launched an institutional money market fund on the network. The project team used its own assets to drive ecosystem activity and create a benchmark case, but the interests of this model are highly intertwined with the founding team. The core permissions of the overall infrastructure remain in the hands of an independent security committee. In case of emergencies, this committee can bypass regular procedures and temporarily modify contracts and freeze functions. The participating banks are always within a dynamically changing governance system, rather than the fixed cooperation agreement framework of traditional enterprises. The final test: ZKsync has bet its future on regulated traditional financial institutions. These institutions have never participated in token speculation, nor are they active in governance forums. However, once banks select an underlying infrastructure provider, they often cultivate it deeply and are difficult to replace—this type of cooperation model has high barriers to entry but also possesses extremely strong stickiness. ZKsync will either become the first benchmark project to successfully bridge the crypto industry and traditional banks, or it will become yet another example proving that traditional finance will ultimately choose to build its own system and withdraw. The final result may be determined in the next 18 months. Looking at the history of the industry, many projects possess cutting-edge technology but have failed due to governance models and long-term operations. For ZKsync, this major test of governance and ecosystem continues.