Introduction
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With Zeta Markets, we built DeFi’s most performant fully on-chain central limit order book (CLOB), natively on Solana. This iteration successfully managed over $7 billion in trading volume and has supported over 100,000 active traders, uncovering critical insights into L1 CLOB scalability and opportunities to improve the trader experience.
Through the development of Zeta Markets we have identified a number of limitations in delivering a world-class user experience for on-chain perps trading solely on the L1. Despite its industry-leading block times of 400ms and much lower gas fees compared to its competitors, a derivatives exchange built completely on the Solana L1 still faces several challenges such as latency, congestion and high barriers to liquidity provision (Appendix A).
ZX is our solution to providing the optimal trading experience that preserves the core advantages of on-chain trading such as complete self-custody, transparency, proof of reserves and verifiability of state changes - qualities that both DeFi users and market makers highly value.
The landscape for DeFi derivatives has continued to expand and evolve significantly since the launch of Zeta’s v1 in 2021. In the first four months of 2024 alone, the total monthly volume averaged close to $250 billion. During the same period, Solana saw a surge in DeFi activity that brought its global DEX volume on equal footing with Ethereum.
Given these dynamics, we are confident in Solana’s continued growth as a pivotal layer for DeFi activities. By choosing to develop a Solana L2 solution, Zeta strategically positions itself to leverage Solana's thriving DeFi ecosystem and incoming liquidity.
Furthermore, Zeta Markets is a project that has the spirit of Solana at its core. Our team is continually inspired and reassured by the resilience of the Solana community, which has successfully navigated through challenging events such as the FTX collapse, numerous technical hurdles, and a prolonged bear market. We are committed to remaining an integral part of this robust community.
ZX is being built in close collaboration with the Sovereign Labs team who are building an open-source toolkit for architecting asynchronously-proven, sovereign zk-rollups. [1]
ZX aims to push the frontiers of what Solana is capable of in terms of performance and security, charting a course for the future scalability and excellence of dApps that are only possible on Solana.
