Targeting the $78B L2 market by investing in ZK-rollup infrastructure providers. Strategy capitalizes on recent Starknet/zkSync upgrades and 67% YoY dev growth. Portfolio spans core protocols, middleware, and tooling tokens.
With Starknet achieving 90k TPS and zkSync boosting prover efficiency 10x via Boojum, zero-knowledge technology has reached enterprise readiness. This strategy targets critical middleware and tooling providers enabling zkApp development, positioned to capture value from the $78B Layer-2 market amid regulatory tailwinds for privacy tech.
Context
The ZK ecosystem has seen breakthrough scalability: Starknet’s Quantum Leap upgrade achieved 90k TPS while zkSync’s Boojum improved prover efficiency 10x. Enterprise zkApp development grew 67% YoY, with L2 TVL now at $78B. Regulatory clarity around privacy-preserving tech creates favorable conditions, mirroring 2018-21’s Ethereum tooling boom where ConsenSys saw 23x valuation growth.
Strategy Explanation
This capitalizes on ZK tech’s maturation by investing in the developer stack – infrastructure enabling zkApp creation. As rollups transition from scaling experiments to production environments, middleware and tooling become critical value layers. The strategy mirrors Solana’s tooling boom during Firedancer development, where projects like Pyth Network delivered 40x returns.
Token targets
- Core protocols (40%): Starknet (STRK) and zkSync (ZK) tokens – foundational L2 networks
- Middleware (35%): Decentralized prover networks (e.g. =nil; Foundation) and ZK coprocessors (Risc Zero)
- Tooling (25%): Debugging platforms (Herodotus), SDK providers (Starkware), audit firms (Certora)
Expected returns & risks
Upside: 5-8x in 24 months based on $25B ZK tooling TAM. Historical analogues show 19x TVL growth post-Arbitrum Nitro upgrade.
Risks: ZK-EVM fragmentation, prover centralization, cryptographic breakthroughs. Mitigated via diversification across ZK-VM approaches (WASM/RISC-V) and 15% allocation to post-quantum research.
Exit signals
- Valuation: Aggregate ZK stack MCap >$18B (3x current) or tooling tokens at 10x revenue multiples
- Technical: Proving time plateaus >6 months, enterprise adoption <30% YoY
- Ecosystem: Declining GitHub commits across top 10 ZK repos for 2+ quarters
