Meet Zest: The 100% Capital Efficient Stablecoin on Blast

How to better attract and utilize the current liquidity of more than one billion US dollars on the Blast chain has become a question that all ambitious development teams in the crypto world must think about, and Zest has given their answer.

Written by: Go2Mars Research

Preface

As Blast announced the launch of the testnet and 50% of the shorts are distributed to developers, the ecosystem will inevitably face the problem of optimizing capital liquidity. In the existing stablecoin case, at a typical 150% collateralization rate, users require more than $150 worth of collateral to purchase $100 of stablecoins, leaving $50 underutilized. This model represents a severe inefficiency.

How to better attract and utilize the current liquidity of more than one billion US dollars on the blast chain has become a question that all ambitious development teams in the crypto world must think about, and Zest has given their answer.

Zest Introduction

Different from other chains, the sufficient liquidity on Blast gives developers a new proposition - "how to maximize capital efficiency", or to simplify it a bit, how to help users better leverage.

In response to this proposition, zest’s answer is to decompose the rate of return and volatility to achieve a stable currency with 100% capital utilization efficiency.

Project core mechanism

One of Blast's innovative designs is that all ETH on the Blast network has native returns. On top of this, the protocol layer can perform various operations, such as LSDFi.

When a user stakes $150 worth of Blast_ETH in Zest, he can obtain $100 worth of zUSD and $50 worth of Leveraged Blast_ETH. The yield of Blast_ETH is inherited by zUSD, and the volatility is inherited by Leveraged Blast_ETH. The specific process can be described by the following formula

$$1∗BlastETH=k∗zUSD+1∗lBETHk$$

In the above formula, 1 Blast_ETH can cast k zUSD and 1 lBETH_k. When the ETH price fell to $k, lBETH_k faced liquidation. After going online, taking into account the risk preferences of different users, the protocol will introduce diversified k values.

By decomposing volatility and yield, the Zest protocol can meet the needs of both types of users.

Risk aversion, pursuit of farming income users

Since all fluctuations in Blast_ETH are absorbed by Leveraged Blast_ETH, zUSD has risk-free leverage returns.

Assume K=1000, the price of ETH rises from 1800 to 3000, and the APR of Blast_ETH is 4.5%, then there is zUSD Stake APR=(3000**4.5%)/(1000**0.5)=*27% *, Six times the native APR (27%/4.5%)

Leverage User

Also assuming that the price of ETH rises from 1300 to 3000, K=1000, then the value of IBETH will increase from (1300-1000) to (3000-1000), achieving a gain of nearly 7 times.

On the token side, Zest has not yet launched a specific design, and this part is left for subsequent discussion.

Summarize

Due to the particularity of Blast's abundant liquidity, the above protocol can better focus on its own product mechanism and economic model design to achieve higher leverage and higher capital utilization efficiency. So we can see more excellent designs on it.