ZKsync continues 65% weekly rally on burn, staking, buybacks

ZKsync’s new governance proposal could fundamentally shift how the protocol generates revenue for its holders.

ZKsync has continued last week’s rally, with an upgrade that aims to prove its long-term utility and tokenomics. On Tuesday, Alex Gluchowski, CEO and co-founder of Matter Labs, announced a major ZKsync that would bring rewards to its holders.

The upgrade proposed by the creator of the ZKsync network would turn the purely governance token into one that generates utility. The network would collect both off-chain and on-chain fees and use the proceeds to buy ZK tokens.

A part of these tokens will be burned to increase their scarcity over time. The rest will go toward staking rewards and to a treasury to fund ecosystem development.

ZKsync rallies after Vitalik’s endorsement

Following the news of the upgrade, Zksync rose 15% in a single day, adding up to a 65% weekly rally. There were several catalysts for its rally, the main one being the endorsement of the Ethereum Layer-2 chain by Vitalik Buterin.

On November 1, Ethereum’s co-founder suggested that ZKsync’s contributions to the Ethereum ecosystem are important, if often undervalued. His remarks were about the network’s Atlas upgrade, which promised significant improvements in throughput and finality. Following the announcement, the token surged up 70%.

Still, long-term benefits from ZKsync’s new tokenomics proposal will depend on the revenue it can generate. This includes both the revenue from network usage and off-chain partnerships.