Dialogue Zeta Market CEO: Boosting Solana's speed by 100 times, it wouldn't be surprising if Solana surpasses Ethereum in the future

Author: Deep Tide TechFlow

The Dex battlefield is filled with smoke, especially for perpetual DEXs characterized by high frequency, where optimization of cost and speed has become the key to breakthroughs for all parties in the perpetual DEX arena.

Two years ago, although Ethereum had a larger and more mature financial ecosystem, many DeFi projects considered switching to Solana due to high fees, transaction speed, and scalability limitations. Zeta Markets was one of them. As a decentralized derivatives trading platform, Zeta Markets aims to provide users with a lower-cost, more efficient, and flexible trading experience based on Solana's outstanding performance.

Two years later, Zeta Markets has grown into a leading perpetual contract trading platform in the Solana ecosystem, boasting 100,000 active traders and over $10 billion in trading volume. However, Zeta Markets' optimization thinking regarding cost and speed has not stopped. The construction of a Layer 2 solution named Zeta X based on Solana is gradually becoming clear: by building a rollup on Solana, Zeta X can achieve up to 10,000 TPS and 5 milliseconds of latency, striving to deliver a trading experience comparable to CeFi.

As the $ZEX (the native token of Zeta X) airdrop claim opens, we interviewed Zeta Market CEO Tristan Frizza to discuss the design intentions of Zeta X, the token effects of ZEX, and the future development trends of perpetual DEXs. During the interview, Tristan stated:

"We ultimately hope to become a universal exchange, somewhat like an on-chain Robinhood, allowing users to experience various products under low cost and high efficiency, while providing a smooth onboarding experience for users outside the crypto ecosystem."

Here are the highlights of the interview.

Key Points

• Not every application in the Solana ecosystem needs L2 or application chains; most applications may not need them because Solana's L1 already has extremely high scalability. However, for applications like Zeta that are very performance-focused, require isolated block space, and need a lot of customization, L2 is a very natural choice.
• There is currently no need to develop Layer 3, as it would lead to more bridging complexity, while the performance of L1 or L2 should already be satisfactory.
• We are not building L2 to attract a higher valuation. Our development is based on real product and user needs; we need to create an extremely flexible infrastructure layer to meet trading demands.
• Currently, the block time on Solana is 400 milliseconds, and Zeta's goal is to accelerate it by 100 times to achieve 5 milliseconds of latency, competing with the TPS of top centralized exchanges like Binance.
• In my view, future improvements in DeFi will come more from faster execution layers, cheaper block space, and more user-friendly wallet interfaces.
• We spent a lot of time ensuring that the airdrop rules were designed to guarantee fairness, including prioritizing real activity and genuine usage patterns, rewarding according to target ratios, eliminating low-quality and low-value users, and thoroughly screening for fake account activity.
• It is difficult to predict whether Solana will surpass Ethereum in the future, but I can say for sure that if it happens, I would not be surprised.

Solana's Performance Can Meet Most Application Needs, But We Still Need to Build L2

Deep Tide TechFlow: Thank you, Tristan, for accepting our interview. Could you briefly introduce your background and what Zeta Market is doing?

Tristan:

Hello everyone, I am Tristan Frizza, CEO of Zeta Market.

Before joining the crypto industry, I mainly engaged in artificial intelligence research related to computer vision and generative deep learning. I started getting involved in cryptocurrencies in 2017 and dedicated myself to Crypto full-time in 2021.

In 2021, I co-founded Zeta with another co-founder to explore the application of financial markets in the blockchain space. So far, Zeta has grown into a leading perpetual contract trading platform with 100,000 active traders and over $10 billion in trading volume.

Since its inception, the Zeta team has been committed to continuously pushing the boundaries of DeFi in terms of product user experience and performance. Currently, users on the Zeta exchange can trade in less than a second while maintaining complete self-custody and transparency, which is a remarkable achievement technically.

Deep Tide TechFlow: Zeta Market has been active in the crypto market since early 2022, which was probably the end of the bull market. After more than two years of development, can you share some progress and significant changes Zeta Market has made during this time?

Tristan:

The contributors at Zeta have persisted in building during the bear market.

Since the mainnet launch in early 2022, as part of Zeta V2, we have completely rewritten the exchange. These efforts have greatly improved application usability, including a complete redesign of the user interface, numerous optimizations that have made our order book fast and real-time, and improvements to our market maker tools to ensure better liquidity. Additionally, we have launched a mobile trading experience, referral, and points system.

At this stage, our native token $ZEX is about to launch, allowing users to earn platform governance rights through staking and benefit from trading incentives.

Deep Tide TechFlow: For Zeta Market, the two hottest topics recently should be $ZEX and Solana Layer 2. In fact, there is much debate about whether Solana needs Layer 2. What do you think Layer 2 will enhance or change for Solana? Is there a possibility of Layer 3 in the future? Why?

Tristan:

To be frank, I don't think every application in the Solana ecosystem needs L2 or application chains; most applications may not need them because Solana's L1 already has extremely high scalability. However, for applications like Zeta that are very performance-focused, require isolated block space, and need a lot of customization, L2 is a very natural choice. Building a specific rollup for our application on Solana will provide us with great flexibility in designing the exchange, as there may be some limitations in design space with the current Solana runtime.

Finally, I believe there is currently no necessity to develop Layer 3, as it would lead to more bridging complexity, while the performance of L1 or L2 should already be satisfactory.

Deep Tide TechFlow: Building a Layer 2 might be more appealing than a standalone perpetual Dex narrative, and the valuation could be higher. Have you considered this? If you were to value Zeta Market, you and your team probably wouldn't want to benchmark it solely from the perspective of a perpetual Dex, so what angle do you think is better to assess Zeta Market's potential?

Tristan:

While the market situation may be such, we are not building L2 to attract a higher valuation. Our development is based on real product and user needs; we need to create an extremely flexible infrastructure layer to meet trading demands. Based on this demand, we need to have that technology stack rather than completely relying on a general-purpose blockchain.

We see that other leading perpetual contract exchanges have also pursued similar application chain routes, particularly dYdX (now based on Cosmos) and Hyperliquid (building its own L1). Given the Zeta team's rich background in high-frequency trading (HFT), we are confident in maintaining strong competitiveness in this vertical.

Moreover, we believe that value will flow more easily to chains like Zeta because it is built on Solana rather than an isolated application chain, which means bridging should be seamless, and we inherit Solana's security assurances.

Deep Tide TechFlow: Why is Zeta Market pursuing Layer 2? Could you please introduce the core features of Zeta X?

Tristan:

The main purpose of Zeta Markets developing a Layer 2 solution is to migrate the execution layer off-chain, significantly enhancing trading speed and throughput. Currently, the block time on Solana is 400 milliseconds, and Zeta's goal is to accelerate it by 100 times to achieve 5 milliseconds of latency, competing with the TPS of top centralized exchanges like Binance. This upgrade will make the liquidity of perpetual contracts more efficient and deep, bringing users the best liquidity in the market.

Zeta X will adopt an order book entirely written in Rust and executed in zkVM. This allows for encrypted verification of each transaction through zero-knowledge proofs, providing users with ultra-fast, pre-confirmed trades that deliver response speeds comparable to centralized exchanges while maintaining the security and transparency of DeFi.

Additionally, Zeta X will significantly reduce trading costs and greatly enhance user experience by eliminating the need for individual trade signatures and reducing gas fees. Overall, Zeta X aims to integrate cutting-edge technologies, such as Rust zkVM and Solana's high-performance foundational layer, to provide a non-custodial, fully verifiable perpetual contract exchange with speed and usability comparable to centralized platforms.

Deep Tide TechFlow: When launching Layer 2 on Solana, did you and your team encounter any resistance or controversy? How did you respond?

Tristan:

Initially, there were indeed some skeptics or critics who viewed this as a denial of Solana. However, I believe these criticisms are immature; in fact, Solana is very fast and has a lot of block space, making it an excellent choice for DA and consensus layers.

Fortunately, in the past few months, the controversy around building L2 on Solana has significantly decreased. On one hand, people have recognized that Solana, as an ecosystem, will exist for the long term. On the other hand, many new teams are launching their own L2 or application chains based on Solana, and given the Solana developers' relentless focus on improving product user experience, developers and the community generally accept this.

Significant Efforts in Designing ZEX: Airdrop Must Be Fair, Tokens Must Be Useful

Deep Tide TechFlow: Next, I want to ask about the token issue that users are concerned about. You posted your views on the token airdrop on Twitter: if designed poorly, airdrops can do more harm than good. What are the core metrics or principles for the $ZEX airdrop design?

Tristan:

We have invested a lot of effort into the design of the $ZEX airdrop. The distribution of the $ZEX airdrop follows these principles:

Prioritizing real activity and genuine usage patterns: We spent a lot of time identifying the core behaviors of real users, continuously adjusting and optimizing the rules to try to allocate rewards to those who truly create value for the exchange. Therefore, long-term traders, those with high trading volumes, and users who are generally active in the Solana ecosystem received substantial allocations.

Rewarding according to points ratio: We chose linear distribution as our airdrop method, meaning the airdrop allocation is roughly converted according to the points users have earned. This is fair because it means that those who trade more will receive more rewards, effectively avoiding the odd behavior of people creating thousands of wallets to gain more rewards. The challenge of linear distribution is that sometimes some large holders on the platform may receive a significant amount of airdrop, so we set reasonable caps to make the distribution relatively fair across the board.

Eliminating low-quality, low-value users: We are very aware that many users at the bottom are either outright bots or will never use the platform long-term. We decided to set a $500 trading volume cap for all wallets as a standard, filtering out about 25% of wallets, meaning that airdrops allocated to these low-value users are less, while those allocated to real traders are more.

Thoroughly screening for fake account activity: We spent a lot of time working with the Allium team to study behavioral patterns and identified thousands of wallets that clearly came from the same person or were executing automated, robot-like repetitive actions. We also excluded these wallets.

Deep Tide TechFlow: We conducted a simple survey among users around us, and some users feel that the utility of tokens for perpetual DEXs is very limited, simply being staking, fee discounts, etc. We know that $ZEX will also serve as the gas token for Layer 2. How do you think the utility of a token for a Perp DEX should be designed more reasonably? Additionally, could you share your complete design ideas for $ZEX's utility?

Tristan:

There is indeed a huge and yet-to-be-fully-explored design space in perpetual projects and broader token economics. I am particularly impressed by protocols like GMX and their GMX/GLP 2 token model, which allows users to earn LP rewards in their point-to-pool model. This model is very unique and brings a lot of real value.

Zeta's token design has some notable features. First, users can stake their tokens to earn gZEX, which is the governance voting token of the Zeta platform. This is based on a voting escrow model (we are one of the earliest projects on Solana to adopt this model), meaning the longer the staking time, the more gZEX is earned exponentially, thus encouraging long-term holding. gZEX grants users governance power and allows them to share up to 30% of our token's trading incentives, further enhancing user returns.

Once L2 is launched, we also envision utilizing the ZEX token in our Rollup infrastructure. For example, running a network of validators for zk Rollups is quite costly, so local Rollup tokens can be used to reward participants running validators. We are still in the conceptual stage regarding this design, and we are committed to better integrating the token into our new Rollup, so stay tuned!

If Solana Surpasses Ethereum in the Future, I Would Not Be Surprised

Deep Tide TechFlow: Back to the product itself, we see that many DEXs are exploring new directions this year, such as Uniswap improving the AMM mechanism, Jupiter focusing on experience, dYdX launching its own chain, and Bluefin aiming to build financial infrastructure, etc. From the perspective of the track, what innovative space do you think there will be in the future for DEXs or Perp DEXs?

Tristan:

I am very happy to see the DeFi space exhibiting vibrant innovation. I believe DeFi has a long way to go, especially considering that the current scale of DeFi is far below that of the CeFi market, and the CeFi market is again far below that of traditional finance. In my view, future improvements in DeFi will come more from faster execution layers, cheaper block space, and more user-friendly wallet interfaces.

I think we have already seen tremendous progress in DeFi. Of course, Zeta is building an ultra-fast execution layer for perpetual contract trading, and Solana has also made great strides in further reducing costs and improving efficiency. Additionally, we have seen interesting innovations around decentralized entry points that allow users to directly access DeFi, and the fast bridges like DeBridge that we recently integrated enable us to attract users from more blockchains to deposit and trade on Zeta.

Deep Tide TechFlow: What position do you hope Zeta Market will hold in the Solana ecosystem in the future? Expanding to the entire blockchain world, what do you envision Zeta Market to be like?

Tristan:

In the short term, whether in terms of speed, liquidity, or trading volume, we have already proven Zeta's position as a leading perpetual contract exchange on Solana. As we move towards our Rollup vision, our ambitions are also growing. In the future, our goal is to compete with all on-chain perpetual contract markets and become a leader in this space, ultimately being able to compete with centralized exchanges.

We ultimately hope to become a universal exchange, somewhat like an on-chain Robinhood. We want to provide users with various products (such as spot and lending), all of which can be traded cross-margin under the same risk system and accessed from any underlying chain, providing a smooth onboarding experience for non-crypto-native users.

Deep Tide TechFlow: One last question: do you think Solana will surpass Ethereum?

Tristan:

It is difficult to predict the future because cryptocurrencies seem to undergo a round of evolution every few months, but I can say for sure that if this happens, I would not be surprised.

As an early developer, I have been building projects on Solana for over three years. The reason I chose Solana is that I believe the Solana team has done an excellent job technically and has successfully developed a very focused ecosystem. I think Ethereum is a great attempt at a general-purpose smart contract blockchain, but it has some obvious scalability bottlenecks, which is also why emerging public chains like Solana have been able to develop rapidly. With exciting developments like Firedancer, I believe Solana will lead the way in blockchain scalability.

Moreover, the Solana ecosystem has a large number of excellent developers, which is something that other public chains or competitors find hard to replicate. Therefore, I believe these emerging competitors will need at least a few years to catch up with Solana. Nevertheless, Solana still lags far behind Ethereum in metrics like TVL, but it has attracted more institutional adoption (such as Visa, Stripe, Shopify Pay, and PayPal), and all of this could change rapidly in the future.