USDz - Zaros' Ecosystem Stablecoin

Why does Zaros needs USDz and how is it different from other stable coins used in a similar landscape?

USDz is a central component of Zaros' architecture as its settlement asset. When traders realize profit, USDz is minted and sent to their account's margin. Then, it can be swapped to any of the ZLP Vaults underlying collateral priced at $1 using a low-latency oracle provider. Furthermore, the stablecoin is over-collateralized by these vaults.

USDz ’s stability is achieved through a combination of strategies and collateral within the protocol:

  • Boosted (Re)Staking Vaults: Users deposit collateral, including Liquid Staking Tokens (LSTs) like Lido’s $wstETH and EtherFi’s $weETH, into Zaros’ Boosted (Re)Staking Vaults. These assets serve as the backing for the markets liquidity, hence USDz .

  • Triple Caps: Open Interest, skew, and minting caps are crucial mechanisms that ensure USDz is always significantly over collateralized. They also allow profitable traders to exit the system by selling for liquid collateral assets provided by LPs in the ZLP Vaults. The settlement price is determined by a low-latency oracle, pricing USDz at $1 worth of the desired underlying.

Upon closing a position, the trader receives USDz, which can be converted (burned) for any available collateral from a ZLP Vault using a low-latency oracle.

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