Zeta Markets Launches ZEX Airdrop

Zeta Markets, a Solana-based decentralized perpetuals exchange, is the latest web3 project to airdrop a token to early adopters.

On June 27, Zeta opened airdrop claims for its ZEX token. ZEX facilitates governance and staking for the project, and will also serve as the native gas token for Zeta’s upcoming Layer 2 network, Zeta X.

“ZEX is the native token of Zeta Markets, powering governance, staking, and incentives on the protocol,” Zeta said. “Additionally, ZEX will serve as both the native gas token and an incentive mechanism on Zeta X, Zeta’s pioneering DeFi L2 on Solana.”

Zeta is currently the 25th-largest DeFi protocol on Solana with a total value locked of $17.2 million, according to DeFi Llama. The platform drove $45 million in 24-hour volume, has processed $10 billion in cumulative volume since launching in 2021, and hosts 125,000 monthly active users.

For comparison, dYdX v4, a top DeFi derivatives exchange, hosted $542 million worth of trades over the past 24 hours, according to CoinMarketCap.

Zeta allocated 10% of ZEX’s supply to the airdrop. Active Zeta traders can now claim 70% of the drop, with allocations determined by an internal snapshot taken on June 7.

Zeta ecosystem partners will receive 1% of ZEX’s supply, while the remaining tokens are going to ZEX stakers in a follow-up drop that will take place after 28 days. Airdrop claims will remain open until Sept. 25, 2024.

“The initial airdrop is designed to reward genuine and long-term users of Zeta,” the project said.

Zeta added that 30% of ZEX’s total supply is earmarked to providing ongoing trading incentives, with rewards distributed to users over 90 epochs lasting 28 days each.

Vote-escrow tokenomics

Zeta claims its token is among the first to introduce a “vote-escrow” (VE) mechanism to the Solana ecosystem.

VE stakers receive governance power proportional to the sum of staked assets and the time duration that tokens are locked for, allowing stakers to vote on which asset pools rewards are allocated to. This mechanism famously gave rise to the “Curve Wars” in 2021, where DeFi protocols competed to allocate CRV to Curve’s liquidity pools.

Zeta described VE-tokenomics as “incentivizing long-term commitment with exponentially greater governance and boosted incentives for stakers.”

Zeta X to join Solana’s L2 ecosystem

The airdrop follows Zeta announcing plans to launch a Solana-based Layer 2 appchain, Zeta X (ZX) on May 23.

Zeta X will comprise a Solana-based optimistic rollup that utilizes zero-knowledge proofs to facilitate permissionless on-chain settlement. The platform will match orders on Layer 2 while using Solana’s base layer for data availability and settlement, aiming to offer on-chain performance comparable to centralized platforms.

The project claims Zeta X will facilitate throughput of up to 10,000 transactions per second and transaction confirmation in less than 10 milliseconds. Zeta X will also support leverage of up to 50x.

“By taking the inherent strengths of Solana's Layer 1 and harnessing the power of a purpose-built L2, ZX will provide traders with an unparalleled experience in terms of speed, efficiency, and security,” said Tristan Frizza, Founder of Zeta Markets.

Frizza told The Defiant that although the project is currently focused on building out ZX to support a revamped Zeta exchange, it will invite third-party developers to build “synergistic applications” on the network in the future.

"Our current plans are to focus on a single exchange application to best prioritize liquidity and user experience,” Frizza said. “That being said, following that we would definitely be exploring ways for people to compose on top of this liquidity layer and build synergistic applications on our L2, for example, money markets, basis trading vaults, etc."

Zeta X is expected to launch on mainnet during the first quarter of 2025 following a testnet deployment in Q3 of this year.

Zeta’s Layer 2 ambitions come as Solana’s ecosystem appears to be tentatively moving towards embracing L2, despite the Solana team committing to achieving high-throughput scalability at its base layer.

On June 21, Light Protocol and Helius Labs ignited controversy with the testnet deployment of ZK Compression, a Solana-based scaling solution appearing to borrow much of its architecture from Ethereum Layer 2s.

“It’s like an L2 without all the things that people complain about L2s,” said Anatoly Yakovenko, Solana’s co-founder, amid fierce debate on social media. “It’s an L2 that doesn’t need a security council multisig, users don’t need to switch chain IDs, doesn’t need a governance token, doesn’t need an external sequencer, Solana validators still get all the transaction fees.”