Introduction
With emerging narratives like Yield Tokenization, Liquid Restaking, and the resurgence of Memecoins, zkLend remains committed to its core mission: to evolve and perfect the money-market framework within the crypto sphere through the most scalable L2, Starknet. Money markets are not just an integral component of DeFi; they are the bedrock upon which new and existing narratives gain traction and flourish.
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 customisable, efficient, and responsive to the dynamic needs of users and the market.
Specifically, this means extending the range of possible productive assets and the productivity of existing markets. We will introduce groundbreaking features such as Isolated Markets, Transaction Builder, Vaults, and our revolutionary V2 Omnichain Protocol with the aim to empower users with unparalleled flexibility, efficiency and creativity. Continuous iteration and a modular framework are key to unlocking the full potential of DeFi.
Let’s dive into the key features we have planned for you.
Isolated Markets: Unlock Previously Idle Starknet Assets
In the current landscape, most money markets utilize a commingle market pool design, where the inclusion of new assets may be restricted due to the potential risks they introduce. This is because any vulnerability associated with one asset can compromise the entire Total Value Locked (TVL), exposing the protocol to significant threats, as evidenced by incidents such as the CRV incident earlier in 2023.
Isolated Markets in DeFi are like creating specialized zones for different types of assets, each with its own set of rules and safety nets, where the risks of one don’t spill over. This setup is not only handy for trying out new, innovative tokens within the Starknet ecosystem such as LORDS or supporting AMM LP tokens, but also useful to enable more customisable parameters for assets as well. Imagine the ability to customise the interest rate curves and optimal utilization ratios for your own isolated market pools.
The first step to implementing isolated markets will be through permissioned listing, targeted in early Q2. The team will require submissions from protocols on their project description, operating model, tokenomics, circulation, and utilize a standard framework for evaluating the parameters of each pool. In the longer term however, we hope to create permissionless lending pools, allowing protocols to configure their own pools and pairs, interest rate model (IRM), as well as incentives to make the pools as attractive and sustainable as possible.
Vault Strategies: Modularise Yield Strategies
As more isolated markets emerge, liquidity may become fragmented and create potential complexity for users navigating varied investment opportunities. Vaults address this by simplifying choices and efficient liquidity allocation, showcasing modularity’s role in balancing variety with user-friendly navigation.
The concept of Vaults at zkLend draws inspiration from Morpho’s pioneering MetaMorpho design. MetaMorpho, an open-source protocol, laid the groundwork for permissionless risk curation atop Morpho Blue. It introduced a contract that deploys ERC4626-compliant MetaMorpho vaults, each dedicated to a single loan asset while allowing deposits across multiple Morpho Blue markets. These vaults automate risk management and active asset rebalancing, simplifying critical financial decisions in a seamless and secure manner.
Built upon zkLend’s protocol, Vaults offer a practical toolkit for users to deposit assets, enabling various strategies like yield optimization, long/short positions, and leveraged yield farming, all managed by the vault deployers. Because Vaults operate in a non-custodial way, they also empower users to maintain control over their assets while benefiting from expertly curated strategies and composability across DeFi protocols.
Transaction Builder: Extend and Simplify DeFi
Our journey towards simplifying and enriching the DeFi experience is supported by the ability to leverage native account abstraction on Starknet. (An excellent read by the Argent team if you need a recap). We have already showcased AA’s potential on zkLend through multicall features such as:
- Authorize deposits amount and execute deposit
- Execute multiple withdrawals and repayments of different assets
These initial steps lay the groundwork for more sophisticated functionalities to come, such as:
- one-click long/short strategies
- asset swaps, swapping your assets directly into deposit of another assets
- loan swaps, swapping your existing loan into another asset liability
- self-repaying loans, where users can repay their loans using the deposited collateral directly.
Ultimately, this evolution will lead to the development of the Transaction Builder, a versatile tool enabling users to tailor and combine multiple actions into one seamless transaction. Want to take a short ETH position by depositing your USDC, DAI, USDT in one go, borrowing ETH, only to swap it back into USDC all in one click? No problem.
Transaction Builder would also allow users to pre-run the series of transactions so that users can know the total transaction cost involved before execution, and ensure that all transactions will go through successfully with a single transaction signing. Ultimately the Transaction Builder will empower users to easily craft, extend and simplify their financial strategy.
Omnichain Lending: Unite Layers and Unleash Liquidity
Our endgame for 2024 will be an Omnichain protocol that utilizes Starknet as a base and a portal to L2 liquidity. We are in a unique position to leverage the latest advancements in storage proofs and modular data availability to tackle the fundamental issues in DeFi including liquidity fragmentation and unsynchronized cost of financing across chains. The goal is to build on top the existing foundation of Starknet’s scalability and speed, and create a singular, reputable, lending market with deep liquidity.
There will be a separate White Paper released in the coming months detailing on zkLend v2. Stay tuned for more soon…
Concluding Thoughts
While we set our goals to deliver on product development in 2024, we’re also committed to fostering a vibrant community, crafting initiatives aimed at building loyalty and engagement outside the protocol’s direct functionalities. To fully concentrate on these pivotal projects, we’ve temporarily paused the development of zkLend Institutional. This strategic decision allows us to prioritize immediate innovations that promise to reshape the DeFi landscape, with plans to resume and expand our institutional offerings in due course. Together, these steps underscore our dedication to not just enhancing DeFi technology but also nurturing the ecosystem that supports it.
P.s.! On a lighter, fun note: we’re announcing a new mascot to represent our brand.. Hopefully we can share it in the coming weeks.
About zkLend
zkLend is the native money-market protocol on StarkNet, an L2 scaling solution combining zk-rollup scalability, superior transaction speed, and cost-savings with Ethereum’s security.
