Our Thesis
What we care about, and what our ambitions are.

1. Returning to the Principles of DeFi

DeFi summer saw the explosion of various L1 and L2 chains in response to the Ethereum scalability question. Declining Ethereum dominance can be observed as DeFi total value locked from 97% at the start of 2021 to 63% in Jan 2022. The introduction of alternative L1 and L2 chains which filled a growing demand for blockchain infrastructure capable of delivering cost and speed Ethereum could not meet.
Many of these solutions captured Ethereum TVL as they offered a faster, cheaper alternative to paying high Ethereum gas fees and constant network congestion, both of them fundamental barriers to reach mass adoption and scalability.
However, these chains fundamentally sacrifice decentralisation and security for speed and scalability. Low node volume, onerous validator requirements (hardware and staking requirements) and low initial public sale of native blockchain tokens, as indicators of decentralisation and security, remain high compared to Ethereum.
zkLend believes that truly decentralised finance must be built on chains that are not only cheap, fast, and scalable but also secure and decentralised. zkLend is built with the conviction that Ethereum is the only decentralised solution and zk is the only technology that can scale without compromising on the properties that make Ethereum so unique.

2. Towards Institutional DeFi

Although 2021 was a landmark year for DeFi adoption - DeFi market cap is still a drop in the ocean compared to the market cap and legacy infrastructure of TradFi. In fact, total DeFi market cap amounts to only $145B, compared to total global equities market cap of over $100T. Mere shavings from the traditional financial system would represent multiple times over the current AUM and capital flows of the total DeFi space.
As the entire financial system is being rebuilt in the DeFi realm with more security, transparency, and innovation, Tradfi institutions are getting involved before its too late. Already, Chainanalysis reports that 60% of DeFi transactions are made by ‘large institutions’, defined as transactions greater than $10M. This year it was reported that around 30% of all crypto hedge funds use DEXes (Uniswap being the preferred choice), and in 2021 Societe Generale took out a $20M in DAI using a tokenised bond as collateral.
Last modified 3mo ago