> For the complete documentation index, see [llms.txt](https://docs.zaros.fi/overview/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.zaros.fi/overview/getting-started/protocol-architecture/liquidity-engine.md).

# Market Making Engine

<figure><img src="/files/bHNVcgmdfXZgqHnhPL16" alt=""><figcaption></figcaption></figure>

## Overview of Zaros Market Making Engine

Zaros unveils an innovative Market Making Engine utilizing the [Tree Proxy Pattern](/overview/getting-started/tree-proxy-pattern.md), which consists of Leaves, Branches, and a Root for its structure. This engine is supported by a modular architecture, including critical components such as `FeeBranch.sol`, `CreditBranch.sol`, `CollateralBranch.sol`, and `ZLPBranch.sol`. This setup lays the groundwork for a sturdy and flexible ecosystem.

### Benefits to Liquidity Providers (LPs)

LPs play a crucial role on Zaros by providing credit to its markets. In exchange for their contribution, LPs earn a sizeable portion of trading fees from Zaros’ perpetual futures markets. Certain Vaults may also reward LPs with zPoints, enhancing the benefits of participation.

### USDz Backing

USDz is paid out to profitable positions, and is accounted as debt by the `CreditBranch`. Traders can swap USDz to any of the ZLP Vaults underlying collateral at any point in time, using Chainlink's Data Streams prices for settlement. This ensures traders can have a smooth experience on Zaros while the system remain collateral agnostic, enabling the DAO to smoothly spin up new ZLP Vaults.

### Rewards

LPs allocate their collateral to specific ZLP Vaults designed for efficiency in asset management, supporting a variety of purposes. By depositing Liquid Staking Tokens (LSTs) and Liquid Restaked Tokens (LRTs) into ZLP Vaults, LPs can earn up to 70% of trading fees generated, linking their success directly to the platform’s performance.

This innovative framework not only incentivizes liquidity providers but also establishes a stable and scalable trading landscape for perpetual futures on Zaros, fostering a mutually beneficial ecosystem for traders and LPs alike.