About Scroll

The ZK-Rollup space is highly competitive, with networks like ZKSync, Linea, and StarkNet actively expanding their ecosystems. Scroll, another Layer 2 network utilizing ZK technology, is also making significant strides. Recently, Scroll’s Total Value Locked (TVL) has been steadily increasing, making it one of the fastest-growing ecosystems in the Layer 2 space. The advantage of Scroll lies in its ZKEVM equivalence, allowing Ethereum applications to migrate to the Layer 2 network almost seamlessly. Currently, over 100 ecosystem projects have been built on Scroll.

Scroll boasts EVM equivalence and comprehensive decentralization, enabling it to stand out in the ZK-Rollup race. It has successfully raised $80 million in funding, led by Polychain Capital, with participation from prominent institutions like Sequoia China, OKX Ventures, IOSG Ventures, and Qiming Venture Partners, valuing the company at $4 billion. According to Dune’s data dashboard, Scroll’s TVL continues to grow steadily, reaching $218 million.

Source: Dune

About Pencil Protocol

Pencil Protocol, formerly known as Penpad, has emerged as the inaugural Launchpad platform within the Scroll ecosystem. Building upon its existing LaunchPad ecosystem foundation, Pencil Protocol has undergone a comprehensive rebranding initiative and introduced a suite of innovative features, including Pencil Protocol Staking, Vaults, and Shop.

As a project actively supported by Scroll, Pencil Protocol is expanding its reach into yield aggregators and RWAs. Its recent Season 2 Launch event witnessed a staggering 250% oversubscription, with over 4,000 users participating in staking and a TVL (Total Value Locked) exceeding $3 million.

Engaging with Pencil Protocol allows users to gain access to promising early-stage projects within the Scroll ecosystem. As the Scroll ecosystem matures and flourishes, these users stand to reap substantial rewards.

Project Background

Pencil Protocol was established in 2023 and received strategic investments from Gate Labs, OKX Ventures, the crypto investment institution Animoca Brands, Presto Labs, and Scroll co-founder Sandy Peng this April. As the first Launchpad project in the Scroll ecosystem, it has received substantial support from Scroll officials and currently holds an estimated off-market valuation of approximately $250 million.

Features of Pencil Protocol

Pencil Protocol is a novel concept Launchpad platform built on Scroll. It leverages Scroll’s native functionalities to provide builders with a comprehensive toolkit for ZK solutions, offering cutting-edge technology and support for developers and new communities. Key features include:

• “Proof of Humanity” Login: Pencil Protocol prioritizes user transaction privacy and user control over their on-chain identities. Utilizing robust ZK technology offers DApps a secure and reliable login method that ensures user privacy while adhering to KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations. Pencil Protocol harnesses Scroll’s scalability to integrate with real-world social media, email verification systems, and even device biometric technology, ensuring account authenticity and effectively preventing bot spam.
• Compliance Through ZK Technology: Pencil Protocol focuses on user privacy and compliance tools, facilitating the integration of Web3 projects with real-world applications and services. For instance, Pencil Protocol includes a “Deposit Manager” and “Filter” feature to detect and prevent illicit fund transfers. It enables projects to separate asset storage and execution through Teller and Handler smart contracts, simplifying reporting processes. Essentially, Pencil Protocol provides security and compliance assurances for Web3 projects.
• Support for Account Abstraction: Pencil Protocol allows developers to utilize account abstraction features within their DApps. By treating user accounts as smart contracts, developers can introduce complex logic and automation into their applications. This feature enables more dynamic user interactions, MPC (Multi-Party Computation) security functions, and a more user-friendly experience. Account abstraction can also be combined with other ZK features to enhance on-chain privacy and compliance.

Supported by ZK technology, Pencil Protocol offers a modular approach to supporting the various LaunchPad needs of projects and teams. It also features proof of humanity, account abstraction, scalability through ZK and EVM, privacy, and integration with real-world applications.

About Pencils Protocol

The latest phase of the Pencil Protocol focuses on the synergy between Launchpad and staking, achieving dynamic interactions between different functions to serve the entire Scroll ecosystem. The innovation of Pencil Protocol optimizes capital flow within the ecosystem, ensuring seamless integration and interaction between various funds and projects.

Pencil Protocol is an auction platform and yield aggregator that supports multiple assets. Users can stake various assets, including BTC/BTC derivatives, ETH/ETH derivatives, stablecoins, and Pencil Protocol platform tokens. According to official data, Pencil Protocol has 1,098.4 ETH staked, valued at $3.21 million.

Source: Pencils Protocol

In addition to the aforementioned assets, other high-quality ERC-20 assets within the Scroll ecosystem will gradually be added. When users stake assets in Pencil Protocol, they will receive pETH, pWBTC, or any other “pToken.” A pToken can be understood as a “staking certificate,” essentially representing a certificate of the underlying staked token. Since these tokens are ERC-20 tokens, users can earn additional yields in DeFi pools besides the basic token rewards.

Pencil Protocol will collaborate with ecosystem partner DEXs to incentivize the initial pToken liquidity pools, ensuring their successful launch. Additionally, early active staking participants will receive multiple reward points from Pencils Protocol, Scroll, and other Scroll ecosystem protocols. In the later stages, two new major features will be introduced: LSD and reLSD, encompassing Staking and Liquid Staking, and Liquidity Vaults.

User Participation Path in Pencil Protocol Liquid Stake

Users deposit ETH or other assets into the Liquid Stake vault and receive pETH, representing the user’s share of ETH in the pool. Users holding pTokens can use them for DeFi activities, such as participating in liquidity mining within Pencil Protocol vaults. When withdrawing the original ETH, users will receive more ETH than they deposited (i.e., the principal ETH plus staking income).

Source: @PencilsProtocol"">medium.com/@PencilsProtocol

Pencils Reward Points

After rebranding, Pencil Protocol introduced a new points system called Pencils. Pencils will become the core of the Pencil Protocol ecosystem, helping users unlock and receive rewards while using product features. Additionally, Pencils will benefit and empower users on the Pencil Protocol Launchpad.

Ways to Earn Pencils Points:

1. Earn Pencils by Staking Supported Assets: Users can earn Pencils by staking supported assets.
2. Increase Quota Using Pencils: Users can increase their quotas by using Pencils, enhancing their chances of participating in high-quality projects.
3. Boost Liquidity Mining Rewards: In the Pencil Protocol Vault, users can use Pencils to increase leverage and boost liquidity mining rewards.
4. Exclusive Limited Edition Products and Services: Users can spend Pencils to obtain exclusive limited edition products and services from the Pencil Protocol merchandise store.

Source: @PencilsProtocol"">medium.com/@PencilsProtocol

Conclusion

With the new wave of Layer2 track TVL hitting new highs, Scroll’s technical and fully decentralized advantages will also significantly enhance its value. Sandy Peng, Scroll’s co-founder, ‘s investment in Pencil Protocol represents the emphasis of Scroll’s ecosystem on Pencil Protocol.

Although Pencil Protocol has been established for less than a year and is still in its early stages, Launchpad is a highly lucrative track. Early participation can provide a good first-mover advantage. The Scroll ecosystem is expected to experience a new boom in the new bull market. As the Scroll ecosystem rises, Pencil Protocol will also become a strategic layout for major investors.