Zephyr Protocol v2.0.0 — ZSD Yield
As we know, the foundation of any successful stablecoin is its ability to store value. ZSD is already decentralized, private, and through battle testing it has remained stable, fulfilling this key requirement. However, in today’s market, simply maintaining stable value isn’t enough. Inflation erodes this value over time and to remain competitive, users are looking for more. This is where ZSD yield comes into play with making ZSD an unbeatable store of stable value.
Let’s figure out how ZSD yield works
5% of the block reward is allocated for the ZSD yield mechanism. The ZEPH from the block reward is used to mint new ZSD, which is then placed into the yield reserve, while the ZEPH itself is added to the reserve backing these newly minted stablecoins. The amount of ZSD minted fluctuates based on ZEPH price at the time. These mechanics operate similarly to our proven ZRS model.
How do you participate in this mechanism?
The Zephyr Yield Share, or ZYS, is Protocol’s new native asset created to track the value of the yield reserve and your stake in it. By exchanging your ZSD for ZYS, you secure your share of the yield reserve ZYS appreciates by the new ZSD minted via the 5% block reward allocation used to bolster the yield reserve. This works in a similar way to ZRS implementation for reserve providers backing ZSD, the difference being that ZYS is valued in ZSD and therefore this value appreciates in real USD terms. Unlike traditional yield programs, there are no lockup periods and no direct wallet payouts. You can redeem any amount of your ZYS for ZSD at any time, making it easy, flexible and efficient while maintaining complete control over your funds.
Key to Zephyr’s stablecoin protocol is the reserve ratio, which is defined as the total value of ZEPH backing all ZSDs. The value of ZEPH in the reserve are Protocol’s assets and the total circulation of ZSD is their liabilities. To maintain stability, we’ve set a 7 to 1 ratio of new assets to new liabilities generated from our block reward. This means that for every unit of ZSD minted as a yield reward, 7 units of ZEPH are added to the reserve. This balance ensures the reserve ratio will naturally normalize at 700%, keeping the system resilient and sustainable.
Stake your ZSD to earn yield through Zephyr’s innovative ZSD Yield system. Exchange your ZSD for Zephyr Yield Shares (ZYS) and watch your stake grow as new ZSD is added to the Yield Reserve. No lock-ups, no hassle — redeem your ZYS for ZSD anytime.
source: https://www.reddit.com/r/Zephyr_Protocol/comments/1g44u35/zsd_yield_mechanism/
