KuCoin AMA With zkLend (ZEND) — The Future of Decentralized Lending Protocols

Dear KuCoin Users,

Time: March 12, 2024, 12:00 PM - 01:15 PM (UTC)

KuCoin hosted an AMA (Ask-Me-Anything) session in the KuCoin Exchange Group, featuring the Co-Founder of zkLend, Brian Fu.

Official Website: https://zklend.com/
Whitepaper: zkLend Whitepaper

Follow zkLend on Twitter, Telegram, and Discord

Q: Can you introduce yourself and your team?

Brian: Our founding team comprises of 3 co-founders, which are well-balanced across technical, market, and financial expertise:

Jonathan is a co-founder and also our tech lead. He has a strong technical capability and proficiency in Cairo programming language. He wrote the rust library in Starknet (stark-rs), built a command line interface (starkli), and he is also instrumental in bringing The Graph to Starknet. In fact, he is one of core developers in the Starknet ecosystem and also in the Starknet Builders’ Council.

Jane is also a co-founder and co-project lead of zkLend. Jane came from a web2 startup background, where she is exceptionally experienced in scaling start-up businesses, identifying market trends and product-market fit. Jane also represents zkLend in the DeFi Community chaired by Starknet Foundation to help foster growth and development of Starknet’s DeFi ecosystem.

With me coming from a traditional finance background, the three of us really complimented each other in various areas.

Q: Could you please give us a brief introduction of zkLend?

Brian: The zkLend is a permissionless money-market protocol natively powered by Starknet, combining zk-rollup scalability, superior transaction speed and cost savings with Etheruem’s security. zkLend allows users to deposit assets into protocol’s liquidity pools, and to enable these assets as collateral to borrow against other assets, all in a trustless over-collateralized manner.

Our vision is to become the foundational lending protocol on Starknet, and also a top player within the wider DeFi ecosystem where we will leverage ZK technologies such as Starknet, ZK storage proofs, and ZK privacy to create a modular application across different chains and L2s.

In the medium to long-term, we are aspired to build a money market protocol that can leverage on fractal scaling to create an omni-chain lending and borrowing experience, all the while offering floating- and fixed-rate borrowings to retail and institutional users, solving the issues on liquidity fractionalization and capital efficiency to onboard the next wave of DeFi users.

Q: Can you elaborate what the zk-rollup layer 2 is, and what are the design choices that led to building on the Starknet - zk-rollup?

Brian: On a high level, rollups are commonly used as data compression mechanisms to reduce the amount of data posted on layer 1 (Ethereum in our case).

A zero-knowledge rollup (ZK-rollup) is a layer-2 scaling solution that moves computation and state off-chain into off-chain networks (i.e. Starknet) while storing transaction data on-chain on a layer-1 network (i.e. Ethereum).

Multiple transactions on Starknet are batched and executed together to generate a single proof. Only the proof will then be sent to layer 1 for transaction settlement, relying on Ethereum’s security.

Among the different zk-rollup available, our team decided to build on StarkNet for several reasons:

(1) Robust track record - StarkWare, the creator of Starknet, also developed StarkEx as a SaaS to help scale many well-known crypto projects, such as dYdX, immutable, sorare, etc. StarkEx is battle-tested with over 646M transactions and $1.2T trading volume.

(2) Most advanced ZK technology - Cairo programming language is designed by StarkWare especially to execute zk-circuit. Cairo, while being non-EVM compatible, is extremely efficient and scalable in running zk-rollup. In addition, Starknet uses zk-STARK proof which requires no trusted set-up. This is widely believed to be the future-proof encryption technology for its quantum resistance properties.

(3) Constant and rapid innovation - There is a dedicated Exploration Team by StarkWare that works in a decentralized and collaborative manner. This team will inspire and partner with builders to push for new innovations, like Kakarot, Madara and many more. The ecosystem is rapidly growing and expanding with many talented developers with bright ideas.

Q: What are the key achievements / milestones that the project had so far?

Brian: We have been building zkLend for about 2 years and launched the project on mainnet for over half a year, while we are still very young in the ecosystem, we have had some worthwhile mentions along the way:

On the product development side:

- We are audited by ABDK + audited and formal specified by Nethermind

- Mainnet Alpha launched with open source contract since May 2023

- We are the first to integrate wstETH in lending & borrowing market pool to support DeFi pooling and liquid staking token narrative on Starknet

- We integrated native account abstractions in features like (one-click repay, etc) to streamline and simplify the user experience

- The zkLend has become the most used and most active smart contract on Starknet.

On community development side:

- We have developed one of the largest communities within the Starknet ecosystem through educational AMA series, campaign, quests, giveaway and real-life meet up events. We understand the value of a strong community and we have taken opportunities along the way to reward our users and supporters.

- STARFALL campaign and $ZEND airdrop season 1 are ways in which we give back to our community. During the STARFALL campaign, we leveraged the power of our community and grew our TVL over 5x, while much of that TVL increase was captured and still retained with zkLend after the campaign was over.

Lastly, here are quick links of our socials: Twitter, Telegram, and Discord.

Q: What unique features does zkLend bring to the DeFi space that sets it apart from other competitors?

Brian: I would say that there are four key advantages that zkLend holds:

(1) Early entrant into the Starknet Ecosystem (Cairo knowledge)

zkLend was one of the first projects that decided to build on Starknet. We have been a part of Starknet’s evolution (and growing pains) over the past years, and we understand the team’s roadmap, the network’s potential, the unique builders’ ecosystem and user base, and the challenges they face and how we should be adapting our product to cater to this market.

(2) Core team entrenched with the Starknet Foundation

Jon is one of the 17 members of the Starknet Builders’ Council, a committee of builders who vote on behalf of the Starknet Foundation during the first phase of governance.

On the business and operations side, Jane is also one of the 6 members of Starknet DeFi Committee to research, design and execute the on-chain liquidity incentive program to foster DeFi development on Starknet.

(3) Developed core tools for the Starknet Ecosystem

As one of the first developers who decided to build on Starknet, Jon is one of the most skilled developers within Starknet. In previous interviews, the ex-CEO of Uri has referenced Jonathan as a powerhouse within the ecosystem.

(4) Blend of business and tech (forming a strong understanding between business relationship, user experience and technical components)

zkLend plays a unique role in the ecosystem in that we are made up of a team of full-time members with a blend in background in traditional finance, Web2 startup & tech, and blockchain.

We believe that it's absolutely critical to have a balance between the three in order to effectively build a product that is not only robust technically, but has a product market fit and marketing angle that users can resonate with.

Q: What is zkLend’s roadmap for 2024, and for the years to come?

Brian: We have a lot of plans for this year and beyond!

Besides the immediate token launch, we have recently announced our 2024 look ahead which focuses a lot on our protocol and product features to continue evolving. Our focus for 2024 centers on embracing “creative modularity”, to enhance the fundamental structures of DeFi money markets.

This modular approach makes our protocol more customizable, efficient, and responsive to the dynamic needs of users and the market. Our look ahead can be split into 4 components:

1. isolated markets

2. vaults

3. transaction builder

4. V2 omnichain protocol

To go into each a bit:

1. Isolated markets

The problem now is that most money markets pool assets together, but it can be risky if one asset becomes compromised, such as the CRV 2023 incident. Our solution is Isolated markets. These are separate zones for different assets. Each zone has its rules, so problems with one asset will not affect others, and risks remain ringfenced. This is useful for listing new tokens, and critical to provide accessibility of a wide variety of assets to the users while limiting risk exposure.

2. Vaults

Vaults is meant to be a modular build that supplement zkLend’s markets pools (both main and isolated pools). Vaults optimize liquidity allocation and rebalance asset distribution for risk management purposes. Taking inspiration from MetaMorpho, zkLend's Vaults will offer a practical toolkit for users to create custom vaults that optimize yield, rebalance positions, and develop more sophisticated DeFi strategies, all managed non-custodially.

3. Transaction builder

We’ve already proven the power of account abstraction with our one-click withdrawal and deposit. With our txn builder, we will advance towards one-click strategies, asset swaps, loan swaps, and self-repaying loans.

The upcoming Transaction Builder will enable transaction preview, as well as a seamless, cost-transparent transaction with a single signing, empowering users to simplify and extend their financial strategies effortlessly.

4. V2 Omnichain

As mentioned above, we’ve had goals to utilize cutting-edge storage proofs and modular data availability to address the core DeFi challenges of liquidity fragmentation and inconsistent financing costs across chains.

Overall token is only one small step in our journey to build the best product on Starknet.

If you want to know more, you can check out our ‘2024 Look Ahead’ medium post here.

Q: What is the utility of the ZEND token beyond just buying and holding it, and how does ZEND benefit its holders and contribute to ZKLend’s overall ecosystem?

Brian: ZEND tokens have the following utilities, some utilities are not immediately available yet but will become available later as we develop.

1. Distribution rewards

zkLend will utilize ZEND tokens as a form of reward to incentivize users’ participation in certain market pools, as additional yields to lenders and savings on financing costs for borrowers. The distribution rewards is a direct reward system that will instantly and transparently add value to users, unlike the points system.

2. Revenue sharing

zkLend will retroactively airdrop and/or employ a lock-and-burn mechanism to redistribute value back token holders for their participation in the protocols’ operations.

3. Protocol staking

zkLend will activate ZEND staking following the ZEND tokens listing. ZEND staking allows users to stake their ZEND to attribute their tokens to the safety module of the protocol, and in return the users will receive a % reward (i.e. stake APY %). The safety module is a risk mitigation tool where zkLend may utilize up to 30% of the staked funds to buffer for losses as a result of bad debts from extreme market volatilities.

4. Governance

zkLend has plans to transition to a DAO governance structure, where token holders will hold the voting power to make decisions on some of the critical operating decisions, such as adding / removing certain assets, updating interest rate models, as well as decisions on future expansions.

Q: Can you talk about zkLend tokenomics and the recent ZEND airdrop?

Brian: zkLend has a total token supply of 100M tokens, which are roughly segregated into the following buckets:

- 17%: Public and Private Investors (2yr vesting) - over 20 high-quality institutional investors and other angel investors

- 15%: Team and Advisors (3yr vesting) - allocation for the founding team and the board of advisors

- 35%: Staking and Distribution Rewards - earmarked for staking rewards, deposit campaign rewards, distribution rewards and other incentives programmes

- 33%: Ecosystem - partially funding zkLend’s treasury for paying ecosystem/service partners, operating expenses and future expansions.

There is approx. 6.5% of initial circulating supply to be unlocked upon the listing day, and gradually increasing through linear vesting schedule.

Recently, zkLend has announced the $ZEND airdrop to the community - the first airdrop comprises 4% of total supply, of which 1% will be unlocked at listing with remaining to be released over the next 3 months.

Q: Could you provide additional information about the IDO? Including the schedule and contribution requirements for each token?

Brian: ZEND is currently listed on KuCoin. As we are native on Starknet, we will also make trading available on chain on Starknet through the support of DEXs, AMMs, and perps exchanges. There are no specific contribution requirements for ZEND, while portions of the tokens (i.e. investors and airdrop claims) are subject to vesting schedule.

Q: How does zkLend plan to integrate or collaborate with other projects within the Starknet ecosystem or the broader DeFi space?

Brian: zkLend has product collaboration with a number of DeFi protocols on Starknet, including Ekubo, Nimbora, Argent and Braavos wallets. In terms of community and PR partnership, we have a series of founders AMA where we invite founders online to chat about their projects and how to use their projects in conjunction to zkLend to create unique DeFi strategies.

Q: ZkLend has plans to expand beyond StarkNet? Tell us a little more about this goal and how this expansion is expected to affect the interoperability and liquidity of the protocol?

Brian: As I have mentioned in my response earlier, we will proceed to explore the omnichain narrative to tackle the issue of facturing liquidity and bad UX across chains. Our aim is potentially looking at an app chain solution powered by Starknet L3 in order to connect to other chains and L2s to function seamlessly as one lending/borrowing liquidity layer or DeFi logo piece.

Q: What advantages does holding your ZEND as a long-term investment offer? Could you please provide information on the motivation and benefits for investors who choose to hold your ZEND for an extended period?

Brian: Lending is the most primitive and fundamental DeFi narrative in any given network. We believe we will emerge as the foundational lending protocol on Starknet, and be able to scale with the network. With the huge growth potential of Starknet in the medium and long-term, we believe we are in a great position to capture the users and capital growth.

While these are not always directly related, we believe these are great catalysts for ZEND token value in the future.

Q: zkLend leverages StarkNet's ZK-rollups. Could you describe a real-world use case where the privacy benefits of zk-rollups would be particularly advantageous for zkLend users?

Brian: Great question - while we are currently only able to utilize the scaling effect of ZK-rollup. There is also the privacy component of ZK-rollup that we haven’t really fully explored and utilized. In the future, when projects are able to build their own custom L3 with volition data availability mode, we believe the privacy-preserving aspect of ZK-rollup can be applied with scaling to create a breakthrough in the DeFi landscape that can be very applicable to retail uses and institutions alike.

🎁 Participate in the zkLend AMA quiz now for a chance to win $10 in ZEND!

The form will remain open for five days from publishing this AMA recap.

KuCoin and zkLend have prepared a total of $2,000 in ZEND to give away to AMA participants.

1. Pre-AMA activity: $800 in ZEND

2. Free-ask section: $50 in ZEND

3. Flash mini-game: $400 in ZEND

4. Post-AMA quiz: $750 in ZEND

Sign up for a KuCoin account if you haven’t done so yet, and ensure you complete your KYC verification to be eligible for the rewards.

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