Ahead of the launch of the ZeroLiquid protocol, we claimed the 113 ETH that has been earned by our ZERO/ETH LP position on Uniswap V3 since its inception. With this, we used 85 ETH to seed a zETH/WETH liquidity pool on Curve.
Now we are launching a liquidity mining scheme for our community to participate in. This is designed to reward those who provide the zETH liquidity which is required for the protocol to function. Read on to learn more about this.
Rewards will be paid exclusively in the LP fees earned by our ZERO/ETH LP position on Uniswap v3, with the initial rewards coming from the remaining 28 ETH from the aforementioned transaction. There is no inflation of the ZERO token for this scheme.
How to Participate
- To obtain zETH (ZeroLiquid ETH), you can buy it on Curve or take out a loan on ZeroLiquid (as the loan is paid out in zETH).
- To add liquidity, visit the zETH/WETH liquidity pool on Curve. You can add liquidity in any ratio (for example 50:50, 60:40 or single sided). The zETH contract can be found here.
- Once you have added liquidity, visit the Earn tab on the ZeroLiquid to track your rewards.
- APY is dynamic and is currently at ~25%. It will fluctuate as TVL changes.
- Rewards will be airdropped to users’ wallets at the end of each month. This saves you gas as you do not need to stake/unstake LP tokens or claim the rewards!
- LPs in this pool are also earning a 6x multiplier in our Zero Gravity scheme. Check it out here.
When a user deposits LSD tokens into ZeroLiquid, they will be issued zETH (ZeroLiquid ETH), a synthetic token that can be traded on the market to provide instant liquidity. This token is pegged to the price of ETH.
In order for this process to work efficiently, the zETH token needs both deep liquidity and demand for the token to counter sell-pressure.
Demand for zETH
By allowing users to exploit price differences between zETH and ETH, we create an opportunity for arbitrage and therefore demand for zETH. When the price of zETH is less than the price of ETH, users can acquire zETH and use the Valve to convert it 1:1 to ETH.
If the price of zETH falls below that of ETH, zETH can be acquired at a discount and deposited into ZeroLiquid’s Valve in order to receive the same amount of ETH. This market mechanism helps to maintain the peg by creating demand for zETH whenever its price falls below that of ETH.
Deep Liquidity of zETH
With the launch of our Curve liquidity and farming scheme, we provide strong incentives for users to supply zETH liquidity. This deep liquidity ensures that even large transactions don’t significantly impact the price of zETH.