ZKsync's DeFi Steering Committee announced it will permanently discontinue its liquidity reward program as the project redirects resources toward broader network development initiatives. The committee confirmed that ZKsync Ignite will end March 17, with the program's second season canceled entirely and rewards for the final phase of season one eliminated.
The protocol is shifting focus to its Elastic Network architecture, which aims to transform the platform into an ecosystem of interconnected zero-knowledge chains. "Our long-term vision for ZKsync is increasingly centered on the Elastic Network, and we want to focus our resources to accelerate this becoming a reality," the project stated in its announcement.
Resources previously allocated to the single-chain incentive program will be redirected to support the protocol's interoperability goals. The team indicated that maintaining a reward structure confined to one chain contradicts their broader vision of a multi-chain ecosystem.
Cointelegraph attempted to contact Matter Labs, the development company behind ZKsync, but received no response by publication time.
The termination comes as cryptocurrency markets face persistent downward pressure. "To stay sustainable, we're tightening our focus and spending smarter rather than fighting headwinds," the team acknowledged, directly referencing market conditions as a factor in their decision. ZK tokens had performed strongly earlier in the year, reaching a high of $0.26 on December 8. The token currently trades at $0.06, representing a 76% decline from its December peak.
Despite the program's cancellation, ZKsync Ignite exceeded its initial objectives. The initiative had targeted $100 million in total value locked (TVL) but ultimately helped drive that figure above $270 million. This substantial increase improved trading conditions on the network by enhancing liquidity. Current data from DefiLlama shows ZKsync's TVL has decreased to $139 million as market conditions have deteriorated.
When launched, the Ignite program intended to distribute 300 million ZK tokens over nine months to users providing liquidity for key token pairs. The first season, scheduled from January 6 to March 31, allocated 100 million tokens valued at approximately $21 million during the launch period. At current prices, this allocation would be worth only $6.8 million.
The protocol's challenges reflect broader market trends affecting the entire cryptocurrency sector. Major assets including Bitcoin and Ethereum continue to struggle maintaining price levels in what analysts describe as an industry-wide downturn.
ZKsync's strategic pivot highlights the difficult choices protocols face during market contractions, with sustainability concerns increasingly outweighing short-term liquidity incentives. The project's focus on its Elastic Network architecture signals a long-term approach despite immediate market pressures.
This development marks another example of crypto projects adjusting strategies as the sector navigates challenging conditions. As ZKsync discontinues its reward program, its ability to maintain developer interest and network activity without incentives will be closely watched by market participants.