Introducing ZeroLiquid

3 min readFeb 4, 2023

After months of tireless effort and collaboration with an amazing team, we are excited to announce ZeroLiquid, a novel protocol that offers interest-free, self-repaying loans for LSD tokens.

Before we dive into ZeroLiquid, let’s take a step back and first understand why it’s even needed in the first place and what problem it is solving.

Liquid Staking Tokens

In the majority of POS chains such as Ethereum, you can stake the native token to earn rewards in exchange for verifying transactions.

However, while the tokens are staked they cannot be transacted, traded, or used as collateral — they are illiquid.

Liquid staking solves this illiquidity problem. A liquid staking provider takes token deposits, stakes those tokens, and gives the depositor a receipt that is redeemable for the staked tokens. The receipt is a representation of those staked tokens that can be traded or used as collateral elsewhere. For this reason, liquid staking tokens are referred to as liquid staking derivatives or LSD.

Putting LSD Tokens to use:

Now if you have LSD tokens you can trade them freely in the market. However, if you sell them you will stop earning staking rewards. What if you want to buy that next 100x token but still want to continue earning the rewards?

Well, you can take out a loan. But of course, you have to pay heavy interest on that, which will definitely make a dent in your rewards.

What if we can make this better?

How about we give you interest-free loans?

Hmmm, okay.

What if we can make this even better?

How about we give you self-repaying, interest-free loans?

Now that sounds interesting.

How about taking this to the next level?

How about we give you self-repaying, interest-free loans with no risk of liquidation? Sounds better?

A killer combination!

This is exactly what ZeroLiquid is introducing.

Simply lock your LSD tokens in the protocol and it will issue you synthetic tokens that can be freely traded on the market giving you instant liquidity.
Don’t worry about paying back the loan as it will be paid off using the rewards earned on it. You can also early unstake it by paying back the remaining loan; as simple as that.

You might be wondering how the protocol works, how it earns revenue and it how big the potential is…..

From the next article, we will start an explainer series that will discuss all of this in detail.