ZKsync, the Ethereum Layer 2 leveraging zero-knowledge proofs, has revealed an updated tokenomics proposal for its native token ZK, which would shift it from a pure governance token to a utility token.
According to a press release shared with The Defiant, the proposal will see value accrue to the ZK token via its on-chain interoperability fees, and offchain enterprise licensing income. These revenue sources will fund staking rewards, ecosystem funding, and a buyback and burn mechanism.
The move addresses the lack of tangible value in governance tokens, and is an extension of the ZKnomics roadmap first published in June. This original outline highlighted the need for usage-driven revenue, programmatic distribution, and a gradual implementation of the ZKnomics shift.
Today’s proposal marks “part one” of the new tokenomics design, and is primarily focused on a value flywheel for the ZK token.
The market has responded well to the announcement, and ZK jumped over 14% on the day. ZK is now up 62% on the week, indicating that forward knowledge of the proposal may have been frontrun, considering the altcoin market in general has been exceptionally weak lately.
The move may bring some much needed life to the ZK token, which is down 83% from its June 2024 all-time high. ZK currently changes hands at roughly 5 cents per token, or a $380 million market capitalization.
Alex Gluchowski, the CEO and co-founder of Matter Labs, which developed the protocol, commented on the proposal, saying:
“ZKsync has been building the rails for Incorruptible Finance for years; now, we move to the next phase building the real economy around it. This is the moment the $ZK token grows from governance into real utility. As the network scales in production, value flowing through ZKsync should flow back to the ecosystem.”