News & Updates

Zero Design Preview #3 - Earning BTC and Using Mynt

January 17, 2023
min read

Welcome to part 3

Welcome to the third and final installment of our design preview series where we share designs from the new Sovryn web app and the thought process behind some of our design decisions. If you haven’t seen them yet, you can check out design preview #1 and #2 here and here, respectively.

In this design preview, we are going to show the “Earn”, “Rewards”, and “Convert” pages. The same disclaimers as before still apply: the designs shown will be “final-ish” and may change prior to release, either based on work yet to be done or in response to feedback received. Some of the flows will be simplified in these posts for the sake of brevity. We welcome your feedback! Now let’s dive in.

Once you have some DLLR or ZUSD in your address, you will be able to visit the “Earn” page and deposit either of these assets into the Zero stability pool. If you deposit DLLR, the Mynt protocol will be used behind the scenes to redeem DLLR for ZUSD, then the ZUSD will be deposited into the stability pool, all in a single transaction. This is part of our effort to make the new web app both a “DLLR-native” and “DLLR-first” application.

Recall that stability pool depositors earn a pro rata share of collateral from liquidated lines of credit in exchange for paying off the debt in those lines of credit. If the stability pool is able to cover the entire debt of a liquidated line of credit, then the reward received by stability pool depositors is equal to the collateral held by the liquidated line of credit minus the 0.5% gas compensation for the liquidator. (You can learn about what happens if the stability pool cannot cover the entire debt of a liquidated line of credit here.)

Due to the minimum collateral ratio of 110%, liquidations can provide nearly 10% profit per liquidation to stability pool depositors!

Let’s say for example that the Zero protocol is in normal mode and the price of BTC as reported to the Zero price feed drops to 20,000 USD. A line of credit has 1 BTC in collateral and 18,349 ZUSD in debt, giving the line of credit a collateral ratio of 109%. Because its collateral ratio is below the minimum collateral ratio of 110%, the line of credit gets liquidated. If the stability pool is able to cover all of the debt in the line of credit, then out of the liquidated collateral 0.005 BTC will go to the liquidator and 0.995 BTC will be split pro rata among stability pool depositors in exchange for the 18,349 ZUSD needed to cover the line of credit’s debt. This provides 8.5% profit for the stability pool depositors. Once received, the reward can either be exchanged for ZUSD to lock in the profit or held as BTC, whichever each individual stability pool depositor decides.

If you are a stability pool depositor who has earned stability pool rewards, you will be able to go to the “Rewards” page and decide what you want to do with your rewards. You will have two options: “withdraw” or “transfer to line of credit”. “Withdraw” will transfer the rewards directly to your Rootstock address. If you have an open line of credit, “Transfer to line of credit” will withdraw the rewards and transfer them to your line of credit’s collateral balance in a single transaction, increasing your line of credit’s collateral ratio.

As we mentioned in design preview #2, after the launch of the Sovryn Dollar (DLLR) we will make DLLR the main stablecoin of the Sovryn ecosystem. To make DLLR widely accessible, we will be providing a “Convert” page in the new Sovryn web app that will be the first user-friendly frontend interface for the Mynt protocol.

Recall that Mynt is an aggregator of BTC-backed stablecoins, initially DOC and ZUSD. A Mynt user will be able to deposit DOC or ZUSD in the Mynt aggregator and mint an equivalent amount of DLLR, or redeem DLLR for an equivalent amount of DOC or ZUSD. Using the “Convert” page, you will be able to use Mynt to convert DOC and ZUSD to DLLR and vice versa.

One of the ways that we will be making DLLR the main stablecoin of the Sovryn ecosystem is by creating a DLLR AMM pool and encouraging LPs in other stablecoin pools to move their liquidity to the DLLR AMM pool. If you are holding DOC or ZUSD and decide that you want to provide liquidity to the DLLR AMM pool, you will need a way to convert DOC or ZUSD to DLLR. And if you ever want to convert DLLR back to one of those assets, you will need a way to do that as well. The “Convert” page will provide the functionality to do so.

This concludes the design preview series for the new Sovryn web app. We appreciate all the love and suggestions we have received so far and invite you to keep them coming. Expect more updates and announcements as we get closer to launch.

Stay Sovryn!


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