Zest Protocol successfully made its synthetic version of Ethereum (ETHz) debut on the Fantom Opera network. Through the provision of efficient and successful arbitrage opportunities, ETHz will reflect the price of ETH. It is anticipated that users of both platforms will benefit from a variety of changes brought about by this move. Since the Fantom Opera blockchain is known for its high performance and security, it should be an ideal platform for Zest’s synthetic Ethereum because of these characteristics.
Table of Contents
Introduction
The Zest Protocol is an accumulation of synthetic tokens that gives players the opportunity to speculate on the price of assets without holding the asset that is being speculated on.
The Zest team has announced that they will be adding several additional assets to the Zest Protocol that will allow users to speculate on a larger variety of assets while also taking advantage of exceptional yield farming opportunities.
Additionally, Fantom is a safe, scalable, and high-performance smart contract platform that is also compatible with EVM. Lachesis, Fantom’s consensus method, is utilized in the construction of the main net deployment known as Fantom Opera. Fantom is a blockchain protocol that is leaderless, asynchronous, and fault-tolerant in a byzantine configuration at the Layer 1 level.
Through the use of Lachesis, Fantom can provide deterministic finality, rapid transaction rates, and minimal transaction costs. This is accomplished by maintaining its open-source, decentralized, and permissionless characteristics.
Synthetic Assets
Synthetic Assets belong to the broader category of financial products known as ‘derivatives.’ A derivative is an agreement between parties that has the objective of facilitating speculation on the price of an underlying asset. Futures are the most popular sort of derivatives used within the cryptocurrency industry.
The fact that participants in derivative contracts are not required to own the asset in question to engage in the speculative activity is a significant benefit of these arrangements. While using USDT as a margin, one might potentially make a substantial profit on a Bitcoin futures derivative.
Zest’s synthetic representation of the FTM token that is indexed one-to-one to the price of the underlying asset is guaranteed by at least 90 percent collateral (and probably more at any one time).
A synthetic version of Ethereum that is being hosted for the very first time on Fantom Opera. The price of ETHz will be identical to that of ETH, and it will provide arbitrage opportunities that are both efficient and effective.
Because Zest protocol’s synthetic FTM token keeps its peg between 0.998 and 1.005 FTM, it most surely compels users to reconsider seigniorage protocols (such as Tomb forks) that assert to be pegged.
The value of Zest digital tokens is guaranteed by collateral (FTM in the case of FTMz, WETH in the case of ETHz). At any time, users can exchange their synthetic token for collateral.
If the price of the synthetic coin is higher than that of ETH, users may easily create the synthetic coin and then sell it for a profit. Another option is to buy the synthetic currency on the market and then exchange the collateral if the price falls below the peg.
When we mint ETHz or FTMz, Zest charges a nominal fee of 0.3 percent, which is then divided among all of the users who have locked our protocol’s token ZSP.
From the user’s point of view, the benefits can get from the Zest protocol’s synthetic Ethereum could be:
- If you are an ETH farmer and use ETHz, your exposure to risk is extremely low because Zest Protocol has taken all possible safety precautions and has been thoroughly vetted. A three-day timelock serves to maintain the integrity of our contracts.
- The collateral ratio (CR) is reduced by 0.25 percentage points whenever the 60min-TWAP of ETHz is more than 1.005 and allows ETHz to be partially collateralized using our token ZSP.
- Users that decide to lock their ZSP (also known as semi-liquid locking within an NFT) are eligible to collect protocol fees, which are paid in ZSP, FTM, and ETH.
- ETHz is increasing the generation of liquidity owned by the ZSP-FTM protocol (POL). Before Zest protocol add any ZSP-FTM to our treasury, Zest first convert one percent of its ETH holdings into FTM and ZSP. Creating a foundation that is more stable for ZSP liquidity and incentives for every users.
In order to avoid huge purchases from snatching up all of the ZSP rewards, the maximum quantity of ETHz is always kept under control. The maximum number of ETHz initially available is 20, which is equivalent to around $30,000 USD. Users will be required to wait until the following epoch in order to mine ETHz if all of this is mined in the first epoch, which takes six hours.
Note that the collateral ratio of ETHz will be capped at a minimum of 97 percent while the protocol stabilizes immediately following the commencement of minting. This cap will remain in place until the protocol is fully stable.
This is the first of many synthetics that are not native to FTM that are going to be added to Zest. With each asset, revenue will flow to ZSP lockers, and this is the beginning of that process.
Features and Functionality of Zest Protocol
In a nutshell again, the followings are what the Zest Protocol is all about:
- Making available a synthetic Fantom token known as FTM-Zest (FTMz), which is backed by collateral.
- Users are free to view the protocol’s collateral at any moment, and Zest uses its system to guarantee that there will always be at least 90 percent and frequently 100 percent available.
- By depositing in Zest’s farms, users/investors will be able to earn high APRs while incurring little to no temporary loss on FTMz-FTM.
- Users can receive prizes by staking rewards or locking them and also trade locked tokens on a secondary market after obtaining a veZest NFT that pays interest and serves as verification of deposit.
Notably, users can accumulate staking and farming rewards with the Zest Synthetic Protocol (ZSP) token while simultaneously speculating on the value of their preferred assets.
When users contribute to the reward token liquidity pool (ZSP-FTM), Zest gives out a greater proportion of users’ total rewards than the pegged token (FTMz-FTM). The first receiving eighty percent of all ZSP emissions and the second receiving twenty percent of those emissions. Zest is incredibly competitive because the options for farming FTM without temporary loss or opportunities for single-staking are in the single-digit or double-digit APR range elsewhere (currently offering 200 percent APR).
Zest has decided to use additional incentive mechanisms besides locking to maintain liquidity and encourage users to continue aiding the system. To be more specific, the synthetic Ethereum provider vests farming rewards. They can be reclaimed, but doing so incurs a cost that is split among those who have staked or locked their ZSP. A situation in which vampire farmers offer something of value, in the form of their punishments, to those individuals who actively support the protocol.
The Zest Protocol will serve as a host for a diverse collection of Synthetic Assets, ranging from brand-new, up-and-coming Crypto assets to the more established Crypto assets. Users of the Zest Protocol will eventually be able to speculate on all their favorite assets without ever having to leave the FTM network as this product continues to evolve.
This is not to imply that Zest Protocol does not necessitate the participation of the community or the application of game theory to produce greater income for users. Users need to be acutely aware that contributing liquidity to the ZSP-FTM pool is always the most helpful action they can do for the Protocol, and they should be conscious of this fact at all times.
If everything went according to plan, a user would take half of their earnings and put them back into the ZSP-FTM liquidity pool. This would be the perfect case. There are additional ways to get to the destination.
A user has the option to lock their ZSP for eight weeks, during which time they will earn an additional APR of 7,000 percent on their tokens. What are the benefits of putting a lock on it? Locked ZSP acts not only as a governance mechanism for the protocol but also as a right to receive revenue from the protocol. Users who mint and redeem FTMz are responsible for the generation of these fees.
When a user mints or redeems any synthetic asset, the user is required to pay a charge of either 0.3 percent or 0.5 percent of the underlying asset (for example, FTM – further information) depending on which fee is higher. Users who have staked or locked their ZSP receive a portion of these fees after they have been processed.
These fees are then redistributed to users that have locked ZSP, the Zest DAO has the ultimate ability to decide how fees should be distributed, giving such users rewards in ZSP (from users that choose to skip vesting with a penalty) as well as in FTM (from protocol fees).
Assets currently offered
Zest Protocol makes use of three unique tokens to provide users with the ability to make speculative investments on underlying assets while also getting passive income.
- ZSP, or Zest Synthetic Protocol Token, is the utility token for the Zest system. It is how participants in the platform are compensated with fee money created by the protocol.
- FTM (Fantom) is the token on the Fantom Opera network that everyone is familiar with and adores.
- FTMz (Synthetic Fantom), is a fabricated version of the FTM token with its price linked exactly to that of FTM.
The team behind the Zest Protocol is responsible for adding support for new synthetic assets to the protocol whenever coming across assets that have strong community participation. This will only increase the demand for ZSP and will enable users to continue to earn revenue from the protocol.
ZSP Tokenomics
Liquidity Mining (Farming Rewards) accounts for seventy percent of all rewards (used to reward liquidity providers and provide ZSP for redemption by redeeming FTMz for ZSP, if the collateral ratio is below 100 percent)
Zest DAO — 5 percent vested for two years with a cliff after eight weeks
8 percent goes to the Treasury Fund. Earned during one year. Includes marketing, customer management, public relations, peg protection or re-collateralization, and other services.
Team — 7.5 percent vested for two years with a cliff after eight weeks
Airdrops — a 5% Genesis airdrop will be distributed to holders of Fantasm and Batasm, in addition to a loyalty airdrop (to be decided by DAO).
Maximum Supply: 50,000,000 ZSP
Learn More
Twitter: https://twitter.com/ProtocolZest
Medium: https://medium.com/@ZestProtocol
Websites: https://zestprotocol.fi/
Github: https://github.com/ZestProtocol
Disclaimer
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