Stability Pool Rewards Have Arrived

The Stability pool now provides a minimum of 5% yield and potentially significantly more.

We have great news for users looking to put their DLLR or ZUSD to work — SIP-0061 (Zero stability pool subsidies) has passed! Depositors to the Zero stability pool can now earn steady rewards in liquid SOV. Rewards are currently 5% APR on top of any revenue earned through liquidations—which, according to one study, could reach 100% or more in some years.

Zero allows users to deposit BTC collateral and borrow DLLR, an overcollateralized USD-pegged stablecoin, at 0% interest. If you’re unfamiliar with Zero—Sovryn’s zero-interest borrowing protocol—you can read a gentle introduction in If Bitcoin Is Magic Internet Money, Zero Is Magic Internet Borrowing.  If you want all the details, immerse yourself in Zero: Protocol for Zero-Interest Loans.

The stability pool is a pool of ZUSD deposits that is deployed to liquidate Zero loans if the individual collateral ratio (ICR) of a line of credit becomes risky and falls below a threshold. (Note that DLLR can be deposited to the stability pool, but it is converted to ZUSD in the process. It can be withdrawn as either DLLR or ZUSD.) The stability pool helps protect the solvency of the system. In normal mode, liquidations occur when a line of credit ICR falls below 110%. At that point, ZUSD in the stability pool is used to pay off the loan. As a reward to stability pool providers, the BTC collateral of the liquidated line of credit—usually just under 110% of the value of the loan paid off—is distributed pro rata to the stability pool providers.

While liquidations can be quite lucrative, they are extremely sporadic. Rewards allow stability pool participants to earn while waiting for the next big liquidation. This incentivizes users to remain in the stability pool rather than trying to jump in and out to time the market. It also provides an attractive place to deposit and hold DLLR assets so that excess DLLR supply is absorbed. Absorbing excess DLLR in the stability pool should lead to fewer redemptions against lines of credit and a tighter peg of DLLR to USD.

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The rewards currently pay 5% in liquid SOV. In addition to steady rewards, the stability pool offers the possibility of liquidation profits. In normal mode, liquidations occur when the value of the BTC collateral in a line of credit falls below 110% of the value of the loan. In essence, this allows stability pool providers to purchase BTC at a significant discount, which they can then hold or sell to realize a profit.

Because liquidation is a sporadic process driven by individual user behavior and price dynamics, it is difficult to characterize the APY of the stability pool. Sometimes months go by with no liquidations, and then several large liquidations occur in short order. Nevertheless, some studies have been done to provide an estimate. According to "Fishing for Gains in the Zero Stability Pool", the APY could be as much as 95% based on the current size of the stability pool relative to supply. A more sophisticated model was created to estimate historical returns over the lifetime of bitcoin. In "Fishing for Gains in the Zero Stability Pool: Logistic Regression Analysis" the average APY was estimated to be 132% but with a wide variation from year to year. Of course, past performance is no guarantee of future results.

These estimates are on top of the 5% reward!

You can bridge stablecoins USDT, USDC, or DAI on Ethereum or USDC or BUSD on BSC into the Rootstock chain on Babelfish as XUSD and convert directly to ZUSD. ZUSD can be deposited to the stability pool. If you have ETH or BNB, you can bridge these in from the Sovryn portfolio page and then swap for DLLR on the swap page.

You can also convert BTC to RBTC on the portfolio page and then swap for DLLR.

Visit sovryn.app, and then go to the Earn tab. 

Enter the amount you want to deposit, and then specify DLLR or ZUSD as the asset. Confirm your deposit.

Visit sovryn.app. After you’ve connected your wallet go to the account menu, and select Rewards on the dropdown. This will show you your accumulated SOV rewards and BTC revenue. Click Withdraw to claim your rewards.

Earn even more by staking the SOV you earn. Now you are layering 23% max staking APY on top of 5% on top of a possible 135%! You can stake your SOV and earn fees paid in BTC and other assets from user activity on Sovryn. Currently, the APY on SOV for max staking of three years is 23%. This payoff is hard to beat anywhere! In addition, staking SOV allows you to participate in Bitocracy. You can be involved in decision-making for the long-term success of Sovryn. SOV rewards are liquid, so you also have the option of claiming and selling it.

You can hold your value in the decentralized, bitcoin-backed DLLR stablecoin—shielded from the centralized banking system—while reaping rewards at the same time!