ZKsync Governance Discussions

Matter Labs co-founder and CEO Alex Gluchowski expressed expectations that discussions regarding upgrades to the ZKsync token will commence soon. He noted that these discussions may include adding functionalities that enhance the token’s value.

> “The governance token is a stem cell of a token,” Gluchowski remarked on The Crypto Beat podcast, part of The Block’s podcast network. He emphasized that governance can vote for enhancements, making the token more valuable and interesting.

Moreover, he anticipates that the ZKsync community and the broader Elastic Network governance will engage in these discussions shortly.

Understanding the Elastic Network

The Elastic Network refers to the interconnected networks within the ZKsync ecosystem, highlighting the importance of interoperability. Gluchowski stated that this feature introduces new requirements for tokens regarding value accrual and exchange between the primary network and its larger ecosystem of chains, predicting significant changes ahead.

Value accrual is crucial for many token holders, reflecting how well a token capitalizes on its ecosystem’s growth. This can occur through revenue sharing with token holders or through burning tokens to decrease supply. For instance, heightened transaction fees on Ethereum led to a significant burn rate, causing token supply to diminish, which is generally seen as bullish for prices.

Impact of Layer 2 Networks

With Layer 2 networks allowing cheaper data storage on Ethereum via data packets called blobs, alongside other storage solutions like Celestia, the rate of burning tokens has notably declined. Ethereum’s supply has been continuously rising since April 2024, exceeding its pre-Merge levels.

Gluchowski doubts that Ethereum will return to previous peak fee levels during times of congestion, viewing this shift positively. He believes the Ethereum community should focus on ETH as the primary store of value and collateral in the developing Ethereum economy.

> “The proliferation of Layer 2s will turn Ethereum into the Internet of value,” Gluchowski said, illustrating the role of ETH as the predominant asset in this economy.

Additionally, he stressed the need for the Layer 2 ecosystem to coordinate effectively, ensuring that mechanisms are established to direct value back to Ethereum. Matter Labs plans to unveil ideas for achieving this later this month.