Innovations in the Blast Ecosystem: Stablecoin Solutions to Enhance Capital Efficiency

As a certain blockchain platform announces the launch of its testnet and allocates 50% of its tokens to developers, the ecosystem inevitably faces challenges in optimizing liquidity. In traditional stablecoin models, a collateralization rate of 150% is typically required, which means users must lock assets worth $150 to mint $100 of stablecoins, resulting in $50 of assets being underutilized, highlighting a clear inefficiency.

How to more effectively utilize the over one billion dollars in liquidity currently on the chain has become a key issue that aspiring development teams in the cryptocurrency field must consider. Against this backdrop, a project called Zest has proposed its own solution.

Overview of the Zest Project

Unlike other blockchains, the ample liquidity on this platform presents a new proposition for developers: "How to maximize capital efficiency". In short, it is about how to help users leverage more effectively.

In response to this challenge, Zest has proposed an innovative approach that separates yield from volatility, aiming to achieve a stablecoin system with 100% capital utilization efficiency.

Core Mechanism

A major innovation of this blockchain platform is that all ETH on its network earn native yields. Based on this feature, the protocol layer can perform various operations, such as LSDFi (Liquid Staking Derivatives Finance).

In the Zest system, when a user stakes platform ETH worth $150, they can receive $100 of zUSD (Zest's stablecoin) and $50 of leveraged platform ETH. The yield of platform ETH is inherited by zUSD, while the volatility is borne by the leveraged platform ETH. This process can be represented by the following formula:

1 * platform ETH = k * zUSD + 1 * lBETH_k

Among them, a platform can mint k zUSD and 1 lBETH_k from ETH. When the price of ETH falls to $k, lBETH_k will face liquidation risk. In the future, the protocol plans to introduce diversified k values to meet the risk preferences of different users.

Meet diversified user needs

By decomposing volatility and returns, the Zest protocol can simultaneously meet the needs of two types of users:

1. Risk-averse users seeking stable returns: Since all price fluctuations of platform ETH are absorbed by leveraged platform ETH, zUSD provides users with risk-free leveraged returns.

2. Users seeking high leverage: For users willing to take on higher risks, the leveraged platform ETH offers significant potential returns. For example, under certain conditions, when the ETH price rises from $1300 to $3000, lBETH could achieve returns close to 7 times.

Outlook

The Zest project has not yet disclosed the specific design of its tokenomics, and this part is subject to further discussion and analysis.

Conclusion

Thanks to the ample liquidity of the blockchain platform, projects like Zest can focus more on innovative designs of product mechanisms and economic models to achieve higher leverage and capital utilization efficiency. This environment presents us with more excellent financial design solutions, showcasing the tremendous potential of blockchain technology in financial innovation.