Investing in Zircuit
Summary
- The fact that Zircuit’s TVL, which only supports staking, is higher than rollups such as Blast, Mantle, zkSync, and Starknet, which are already running on the mainnet, can be seen as evidence that a significant portion of web3 utility is still driven by yield farming.
- One of the biggest reasons Zircuit was able to secure such a large TVL seems to be its ‘Ease of Use’. As mass adoption approaches, providing an easy UI/UX will become even more important.
- Most of Zircuit’s core members are from Quantstamp and have experience auditing various web3 products. They have demonstrated outstanding technical capabilities by developing a new mechanism called Sequencer Level Security (SLS), submitting over 10 Publications, and receiving a total of 4 grants from Zcash and the Ethereum Foundation.
- At a time when anyone can deploy an L2 within 15 minutes, Zircuit holds a strong competitive edge with abundant liquidity, an easy UI/UX, and a highly skilled technical team.
- After launching the mainnet and completing the airdrop, the next challenges for Zircuit are to see how much of the massive TVL secured through staking they can retain and whether they can establish a unique identity as an L2 to build an attractive ecosystem that distinguishes itself from other L2s.
Introduction
At the time when Nonce Classic was considering investment in May 2024, Zircuit’s TVL was $2.6 billion according to DeFiLlama. This was a larger amount than the TVL of Arbitrum at that time, which was $2.3 billion.
The TVL provided by DeFiLlama only includes assets related to DeFi activities within the ecosystem, which generally results in a smaller value compared to the TVL provided by L2beat. Despite this, the fact that Zircuit’s TVL according to DeFi Llama was higher than that of several prominent rollups such as Blast, Mantle, and Starknet at that time serves as evidence that a significant portion of web3 utility is still driven by yield farming.
Easy-to-use
Zircuit aims to become a secure liquidity hub where users can easily deploy their capital. At its peak, Zircuit secured up to $3.6 billion in TVL, making it the 12th largest protocol in terms of TVL.
While point programs played a significant role in attracting such a large TVL, not all protocols utilizing point programs have managed to gather over $3 billion in TVL. The primary reason only Zircuit was able to achieve this is because it is an easy-to-use protocol. As mass adoption approaches, providing an easy UI/UX will become even more important.
The Zircuit team noticed that many existing web3 products are often difficult or complex for users to use. In an interview with the Zircuit team, they mentioned their commitment to building an intuitive UI/UX, stating that they aim to make the English version of Zircuit’s product so easy to use that even non-English speaking users can navigate it effortlessly.
Techy
The Zircuit team has conducted extensive research across various fields to launch a highly advanced mainnet, producing numerous Publications and Grants. One of the outcomes of their research is the Sequencer Level Security (SLS), an AI-based algorithm designed to prevent malicious transactions.
The above diagram illustrates the operation process of the SLS algorithm. When transactions from the mempool arrive at the SLS Sequencer, they are first routed to the malice detection module. This module classifies transactions as either normal or potentially malicious. Normal transactions are immediately added to the block inclusion queue according to the standard sequencing protocol. Maliciously flagged transactions, on the other hand, are sent to the Quarantine-Release module, which acts as an intermediate holding area. Here, they undergo a rigorous verification process against specific release criteria. Transactions that meet these criteria are passed to the transaction execution module. The transaction execution module processes the transactions against the blockchain state in the upcoming L2 block. Successfully executed transactions are then returned to the SLS Sequencer for inclusion in the upcoming L2 block.
What’s next
Recently, various services have been launched, making it easy and simple for anyone to deploy rollups. This means that rollups must possess unique characteristics to avoid falling behind in a competitive environment. In this context, Zircuit, with its abundant liquidity, easy UI/UX, and technically skilled team, holds a strong competitive edge.
Nonce Classic expects that, just as Zircuit designed its product to allow anyone to easily use staking services, many easy-to-use DeFi apps will emerge within the Zircuit ecosystem.
However, following the mainnet launch and completion of the airdrop, the next challenges for Zircuit will be maintaining the massive TVL secured through staking and establishing a unique identity as an L2. This will be crucial in building an attractive ecosystem that distinguishes itself from other L2s.
About nonce Classic
nonce Classic is a crypto VC borne out of Seoul’s largest Web3 hacker house. Backed by a strong alliance of builders and angels, nonce Classic lays out a bedrock for founders by providing a strong community of like-minded people
Website: https://nonceclassic.org/main
Twitter: https://twitter.com/nonceclassic
Disclaimer: This article is for informational purposes only, not investment advice. Always consult with a professional for investment decisions. Information here, sourced from elsewhere, has not been independently verified by nonce Classic, and its accuracy isn’t guaranteed. The views expressed are the author’s and may not reflect those of others at nonce Classic. Opinions can change without notice.
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