How do Zeta Markets L2 Bullet and flagship DApp Zeta X operate? Will it weaken the utility of the ZEX token?

Written by: Karen, Foresight News

The potential of decentralized derivatives markets is well-known. However, the comprehensive prosperity of derivatives markets on Solana has not yet fully manifested, primarily constrained by current on-chain performance limitations, response delays, and user experience bottlenecks. To address these challenges, Zeta Markets is injecting new vitality into the Solana ecosystem through its upcoming Solana Layer2 project Bullet and perpetual CLOB platform Zeta X.

At the recently concluded Solana Breakpoint conference, Zeta Markets co-founder Tristan Frizza revealed that Zeta Markets is incubating and developing the real-time L2 project Bullet for the Solana ecosystem. The project is expected to launch its testnet in the fourth quarter of 2024 and its mainnet in the first quarter of 2025. The first DApp in the Bullet ecosystem, the perpetual CLOB platform Zeta X, will also provide early access opportunities for ZEX stakers.

Development History of Bullet

Initially, Zeta Markets planned to build its Layer2 as a closed application chain focused on a perpetual contract order book model. However, after extensively gathering feedback from the Solana Foundation, partners, users, and ecosystem developers, Zeta Markets recognized that the potential of this Layer2 far exceeded that. In the future, this Layer2 may encompass options, spot trading, gaming, and other high-throughput applications, becoming a more diverse and powerful platform. Thus, Bullet was born.

What is Bullet?

So, what exactly is Bullet? Bullet is a Rollup that uses Solana L1 as the settlement layer and data availability layer, utilizing ZK fraud proofs for verifiable on-chain settlement, fully leveraging Solana's security and transparency. By employing zero-knowledge proofs and verifiable off-chain computation, Bullet places the key components of system latency off-chain while still maintaining verifiability and censorship resistance.

Zeta Markets team member @Tristan0x stated, "This allows us to achieve nearly instant 5 milliseconds soft confirmation latency, thousands of TPS, and safely provide high leverage through a complex risk engine that is not limited by on-chain computation. Additionally, Zeta Markets plans to enable an SVM module that will allow permissionless sandbox smart contracts to run on top of it, leveraging Zeta's existing perpetual, lending, and spot liquidity."

At the same time, Sovereign Labs also provides experience in building secure and interoperable ZK-Rollups on a shared data availability layer, offering a critical framework for Bullet's scalability.

How does Zeta X operate? What are its features?

Currently, the architecture and process of Zeta X are largely similar to previous designs. On the Zeta X platform, users first deposit collateral assets into a Solana smart contract that holds the funds. At this point, a full node responsible for monitoring Solana Block Headers will parse the transactions and generate deposit proofs. This proof will be submitted to the sequencer, which will update the user's balance records in the Rollup. Once these steps are completed, users can freely trade on Zeta X. When published to the DA smart contract, the sequencer will include the transactions in future blocks. Zeta Markets team members are confident that deposit speeds can be reduced to below 15 seconds.

When interacting with ZX, users sign transactions with their wallets to generate session keys for smooth and seamless trading. These transactions are sent to the sequencer, sorted, and processed through a state transition function (STF). Users will receive soft commitment transaction receipts within milliseconds. Once the transactions are sorted and executed, the sequencer will generate a ZX blob and publish it to the Solana DA smart contract. Once the block becomes available from the DA component, the settlement process will be initiated, where full nodes execute each transaction to compute the latest state root.

Zeta Markets team member @0xjcaa revealed the features and capabilities that can be achieved in Zeta X:

• Near-instant soft confirmations (3-5 milliseconds);
• Seamless one-click signing via session keys / easy social login;
• Over 50x leverage with multiple assets as collateral;
• Deep liquidity and seamless market-making conditions with REST/Websocket API and CEX-like latency.
• Fully transparent and verifiable, with a relatively trustless dispute mechanism.

Is there a token issuance plan?

Regarding the token issuance plan, Zeta Markets team member @PDAnimol stated that there is currently no token issuance plan for Bullet. Zeta Markets plans to launch the Zeta X testnet within a month. Zeta X will utilize Bullet's core infrastructure, becoming the first super application on Bullet to provide a more liquid and reliable trading experience. Zeta X will offer early access to ZEX stakers.

However, it is worth noting that in a tweet released when Zeta Markets previously announced the Zeta X (ZX) Litepaper in May 2024, it was stated that Zeta X would be supported by the Z token. The Z token will serve as the native gas token for transactions on the ZX Rollup and as an incentive mechanism to reward stakeholders (including sequencers) for performing key operations on Zeta X.

However, in the Zeta X Litepaper document updated three months ago, the ZEX token was positioned as the governance token of the Zeta Markets protocol, providing additional utility (such as exclusive fee tiers) for long-term stakeholders holding ZEX and further use on Zeta X.

According to the latest confirmation from @imranfaststart, Zeta X is still the primary focus of the Zeta Markets team and will launch as the flagship DApp on Bullet. Meanwhile, some members of the Zeta team will also shift their attention to the Bullet project, collaborating with Sovereign Labs to bring L2 expansion to Solana. Additionally, ZEX will continue to serve as the core token within the Zeta Markets ecosystem. Rewards will still be distributed in ZEX, and ZEX stakers will retain the benefits of additional rewards and governance rights. @imranfaststart explicitly mentioned that the launch of Zeta X on Bullet will not disrupt or weaken the utility and governance of ZEX.

As for whether a new token will be launched after Bullet, it remains unknown, and Foresight News will continue to follow up.

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