zkTrue-up: A Customized ZK-Rollup

Our custom ZK rollup, zkTrue-up, was built to support the specific transactions needed for the Term Structure protocol. When users place orders for borrowing or lending, the order data and order matching data are processed. This updates the rollup state, and eventually, when orders are matched, the balance of digital assets across both the L1 and the L2.

In a nutshell, our customized ZK rollup solution, zkTrue-up, is used to verify all transaction types across all the different markets on Term Structure.

Why Not Use a Public ZK-Rollup Solution?

There are already general-purpose ZK rollup solutions running on the Ethereum mainnet. The question that arises is: why not build our protocol on top of these scaling solutions?

While it would be possible to build our protocol on top of a rollup, there are other issues worth considering:

Abundance of Liquidity

Our custom rollup, zkTrue-up, allows Term Structure to operate as a decentralized application, enabling users to deposit tokens directly from Ethereum, in turn leveraging its high liquidity. This would facilitate order placement and matching in both Fixed-Rate Borrowing/Lending and tToken Markets on Term Structure.

Minimum Gas Fees Required

Within zkTrue-up, placing or cancelling orders has no associated fee: it is only when orders are matched that fees are incurred. Additionally, L2 fees are significantly less than they would be on Ethereum, as we only verify the zero-knowledge proof validating the transaction logic, and do not execute this logic onchain.

Leverage of DApps Ecosystem

As zkTrue-up is on the Ethereum mainnet, when users withdraw their assets from Term Structure, they can directly interact with other DApps on the L1. This will broaden the use cases of Term Structure’s tTokens in the Ethereum ecosystem.

Composability of Loan Position

As all the transaction data is published to the L1, bots can automatically liquidate users' loan positions in Fixed-Rate Borrowing/Lending if the collateral value falls below the liquidation threshold. Moreover, composability is also achieved by enabling users to transfer their loan positions from Term Structure to AAVE when they wish to convert their fixed-date loans into ones without a maturity date.

Certainty of Development Timeline

The Term Structure team was built in Q2 2023. Our customized ZK rollup solution for the Fixed-Rate Borrowing/Lending and tToken Markets involves an intricate design. As our team expands its product offerings following our roadmap, additional enhancements are required. A customized solution allows us to follow our development schedule independently, and without relying on third-party applications.

Flexibility of Business Requirements

A customized rollup allows Term Structure to make decisions according to our business requirements. For example, we can decide our batch frequency and timing according to our business growth and cyclic price movement of gas fees within a day. Moreover, we implement a forced withdrawal and evacuation mode to uphold our commitment to being a responsible DeFi protocol. Note how many L2s have not implemented such feature yet.