Zephyr Protocol v2.0.0 — ZSD Yield Announcement

As the world of decentralized finance (DeFi) continues to evolve, the need for stable, secure, and innovative financial solutions grows more critical. The Zephyr Protocol, with its Zephyr Stable Dollar (ZSD), has positioned itself as a robust player in the market, but the next chapter in its journey is all about driving adoption and ensuring long-term success.

What’s Coming in v2.0.0?

Introducing the ZSD Yield Mechanism — an innovative feature that rewards users for “staking” their $ZSD in return for:

Zephyr Yield Shares $ZYS, a new native asset representing the value of and your share in the ZSD Yield Reserve.

Hardfork at Block 360,000 (expected in two weeks)

This update will be mandatory and includes significant changes to enhance adoption and the protocol’s success.

ZSD Yield Mechanism

A new feature that allows users to stake ZSD and earn Zephyr Yield Shares (ZYS), which represent a stake in the protocol’s yield reserve. These shares increase in value over time and can be redeemed for ZSD at any point. This mechanism offers financial incentives for holding ZSD, making it competitive with other stablecoins offering APY (Annual Percentage Yield) returns.

Block Reward Allocation Changes

Adjustments have been made to balance rewards for miners, reserve providers, and ZSD holders:

• Miner reward reduced to 65% (from 75%)
• Reserve reward increased to 30% (from 20%)
• New 5% allocated to the ZSD Yield reward
• Governance reward removed

No Lock-Up Periods

Users can freely enter and exit the yield program, making it user-friendly.

Mechanism Details

5% of block rewards will be used to mint new ZSD, which is added to the yield reserve. Users staking ZSD receive ZYS, which appreciates over time based on the amount of ZSD in the yield reserve. The price of $ZYS is determined by competition for yield rewards. More participants = rewards spread out. The amount of $ZSD minted for yield is tied to the value of the 5% block reward in $ZEPH.

How ZSD Payouts Work

$ZSD payouts are proportional to the value of the $ZEPH block reward. The ZEPH is auto-converted into the equivalent amount of $ZSD. This amount will fluctuate in accordance with $ZEPH’s price.

Goals of ZSD Yield

The mechanism addresses a key challenge in stablecoin adoption by offering yield returns that can offset inflation and attract more users, which in turn drives demand for ZSD and its adoption on exchanges and other platforms.

Removal of Governance Reward

This change aligns the protocol with its vision of decentralization and ensures that rewards are focused on the community and long-term success.

The goal of these updates is to make ZSD more attractive to users, drive its circulation, and enhance its competitiveness in the stablecoin market.

Full update article: https://zephyrprotocol.com/blog/2024-09-30-Zephyr-Protocol-v2-0-0-ZSD-Yield-Hardfork-Annoucement