🏗️Architecture

Introduction

The Cronos zkEVM Testnet is a zero-knowledge layer 2 network on top of Ethereum Sepolia Testnet. It leverages the hyperchain stack created by Matter Labs, together with some custom open-source developments such as the use of a custom token (zkTCRO) to pay for transaction fees.

Relevant Github repositories:

Differentiation

Cronos zkEVM is a new Layer 2, will coexist with the flagship Cronos chain (EVM compatible Layer 1 built on Cosmos SDK) and Cronos POS chain (aka "layer zero" built on Cosmos SDK). This is aligned with Cronos' vision of a multi-chain world.

The target timeframe for mainnet launch is summer 2024.

The new network aims to introduce 4 distinctive strengths aligned with the emerging trends of the next market cycle:

CROFam

  • #CROFam is a strong community of users and dapps that have proven their passion and resilience through the bear market.

  • Partners like VVS Finance, Veno Finance and Fulcrom Finance have crafted high quality apps that deserve to be better known and have the potential to scale in the next market cycle.

  • The new chain will enable participating apps to scale to the next level.

Shared liquidity

  • When users hold cryptocurrencies on a hyperchain, their assets are secured by Ethereum where they can always choose to withdraw. Besides, they can transfer their assets to other hyperchains securely and at low cost thanks to unified bridge and messaging.

Yield-bearing assets

  • Cronos zkEVM is partnering with Veno Finance to enable users to hold natively yield-bearing tokens when they hold crypto assets on the Cronoe zkEVM block chain.

  • Cronos zkEVM has the potential to create an entire ecosystem of dapps that treat yield-bearing tokens as first class citizens and can effectively compete in a high interest rate economy.

  • See the dedicated section Yield-bearing tokens (on mainnet only) below for more details.

Account Abstraction

  • Account abstraction has been possible for a while on EVM compatible chains, but it has been challenging for legacy chains to migrate existing liquidity to AA-enabled wallets.

  • Thanks to AA, users can deposit their funds to the chain and transact with dapps without ever having to switch network. Instead, they can opt to emit off-chain signatures from any EVM home chain, or even from mobile apps or games with usual login.

  • Dapps on Cronos zkEVM should support AA by default, so that they can take care of relaying transactions to Cronos zkEVM and even pay for gas.

  • This will unleash the power of AA to support mainstream adoption.

Yield-bearing tokens (on mainnet only)

Cronos zkEVM is partnering with Veno Finance to enable users to hold natively yield-bearing tokens when they hold crypto assets on the Cronos zkEVM block chain.

CRO and zkCRO

What is zkCRO?

When users deposit Ethereum mainnet CRO on the Cronos zkEVM native bridge, they will receive zkCRO which is a yield-bearing version of CRO. The price of zkCRO is expected to appreciate over time relative to CRO, reflecting the accumulated yield.

zkCRO is created by the decentralized Veno Finance protocol, in partnership with Cronos zkEVM.

How is the yield generated?

The CRO assets will actually be bridged over to the Cronos EVM chain by Veno Finance, in order to be staked on Veno. This means that the CRO will be sent to Cronos POS chain to be staked. Veno Finance will issue LCRO (liquid CRO) to back every single zkCRO issued, and the corresponding LCRO will be locked on a smart contract on Cronos EVM.

How can users convert zkCRO back into CRO?

Given that each zkCRO is backed by LCRO locked on Cronos EVM chain, users can redeem their zkCRO on Cronos zkEVM chain and they will receive CRO on Cronos EVM chain in return.

When users send zkCRO back to the Cronos zkEVM native bridge, the corresponding LCRO is unlocked on Cronos EVM and an unstaking request is initiated. Given that unstaking takes 28 days on Cronos POS, users can claim their CRO on Cronos EVM after 28 days plus up to a week of processing time.

USDC/DAI and zkUSD

What is zkUSD?

When users deposit DAI, USDC or USDT on the Cronos zkEVM native bridge, they will receive zkUSD which is a stable asset that aims to approximate the value of 1 USD. zkUSD holders will be able to earn yield.

zkUSD will not appreciate to reflect the accumulated yield, as this would offer a confusing user experience. Rather, zkUSD holders will be able to claim the accumulated yield from a "Reward Vault" that will be updated every week to account for their new holdings.

Under the hood, zkUSD is backed by ybUSD, which is a yield-bearing token that appreciates relative to DAI over time.

zkUSD is created by the decentralized Veno Finance protocol, in partnership with Cronos zkEVM.

How is the yield generated?

Initially, the stable assets deposit on the bridge will be converted into DAI and invested into the Maker Protocol's DSD (Dai Savings Rate).

Later on, additional yield-generating protocols can be considered.

How can users convert zkUSD back into DAI?

When users send their zkUSD to the Cronos zkEVM native bridge on Cronos zkEVM, the zkUSD is bridged to Ethereum mainnet, and it is used to unlock the underlying amount of DAI from the DSR contract. Users then receive DAI on Ethereum mainnet.

ETH and zkETH

What is zkETH?

When users deposit ETH on the Cronos zkEVM native bridge, they will receive zkETH which is an asset that aims to approximate the value of 1 ETH. zkETH holders will be able to earn yield.

zkETH will not appreciate relative to ETH to reflect the accumulated yield, as this would offer a confusing user experience. Rather, zkETH holders will be able to claim the accumulated yield from a "Reward Vault" that will be updated every week to account for their new holdings.

Under the hood, zkETH is backed by ybETH, which is a yield-bearing token that appreciates relative to ETH over time.

zkETH is created by the decentralized Veno Finance protocol, in partnership with Cronos zkEVM.

How is the yield generated?

The ETH collected by the Cronos zkEVM native bridge will be staked by the Veno Finance protocol into a reputable self-custodial ETH staking platform on Ethereum.

Veno Finance currently uses Kiln’s staking pool on Ethereum for the existing LETH token on zkSync Era. zkETH is different from LETH, but the staking mechanics are similar.

How can users convert zkETH back into ETH?

When users send their zkETH to the Cronos zkEVM native bridge on Cronos zkEVM, the zkETH is bridged to Ethereum mainnet, and it is used to unlock the underlying amount of ETH from staking pool, potentially minus any slashing penalty that may have been incurred by the staking pool.

This process can take around 1 week (see here on how this works for LETH).

What's next

With the Tethys upgrade of Cronos zkEVM Testnet (May 2024), Cronos zkEVM is moving closer to the mainnet go-live, planned for Summer 2024.

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