The Stabilize Protocol is a decentralized finance application designed to help keep stablecoins stable by rewarding depositors with STBZ tokens. Currently users must manually change pools they are in to earn the highest reward rates.
Now depositors have a new option to earn on their stables without having to manually switch pools and save gas. Stabilize is introducing a new stablecoin strategy that automatically takes advantage of price differences between the stablecoins to earn more for depositors and STBZ holders.
Introducing the zs-USD
Depositors can wrap four different types of stablecoins into the interest earning zs-USD tokens. Those stablecoins are USDC, DAI, USDT and sUSD. In this strategy, when deposited, the tokens are considered equal in value to each other. Tokens are then sold against each other using Curve.fi to increase the total amount of tokens.
For example, if sUSD is worth more than DAI in the pool, the strategy will sell a certain amount of sUSD into DAI which will result in a greater amount of stablecoins in the strategy. If the next day, DAI is valued more than sUSD, the strategy will sell a certain amount of DAI into sUSD, thus causing another increase in the total number of stablecoins in the strategy again.
As this process repeats upon deposits and withdraws, the zs-USD strategy will help depositors earn interest on their deposit without needing to manually switch pools and Stabilize will bring more stability to stablecoin prices by selling overpriced coins and holding under-priced ones until they become overpriced.
A unique vault
The zs-USD strategy is a bit different than your average vault-strategy. Instead of farming other protocols and selling their governance tokens for profit, this strategy uses real trading techniques to benefit depositors and the crypto ecosystem as a whole. As Stabilize develops, we will focus on creating unique strategies that go beyond the typical farm and sell model adopted by other protocols.
To start using the vault and acquire zs-USD, simply wrap your stablecoins in the zs-USD wrapper found here. You will receive a certain amount of zs-USD which represents your share in the stablecoin strategy.
To redeem your share of stablecoins, just unwrap zs-USD and you will receive a certain amount of stablecoins back, whichever is the lowest priced asset first then other assets sorted by their increasing price, according to Chainlink. This means if you deposit 1000 sUSD to get zs-USD, when you redeem your zs-USD back for stablecoins, if DAI is the lowest priced asset, you will redeem DAI first; however, the total quantity of stablecoins redeem will never be smaller than what you put in. So you will get back at least 1000 stablecoins. To swap redeemed stablecoins for any other (stable)coin, just simply go to Curve.fi, 1inch or Uniswap.
To provide benefit for the Stabilize community, a percentage of the profit from each trade will be converted to WETH and split between the Stabilize treasury and STBZ staking pool.
As hacks and exploits have become very common in this space, the team has taken special precautions to protect depositors against the most common types. We have incorporated mechanisms in the zs-USD strategy that were inspired by postmortems of other protocols’ hacks.
The main concern is vulnerability to flash loans. The zs-USD contract has specifically two protections against flash loan exploits. The first protection is that the strategy prevents contracts from depositing and redeeming in the same transaction which is what flash loans exploits must do in most cases to work. Secondly, the strategy will not trade when activated by a smart contract thus limiting the opportunity for external protocol manipulation (such as draining the Curve pool).
Another concern is re-entrancy attacks and malicious user input. All tokens in the zs-USD strategy are whitelisted to avoid arbitrary code execution. The entry points for user input are checked for sanity to prevent unexpected behavior. In addition, the strategy utilizes a re-entrancy guard for unforeseen edge cases.
Finally, when the strategy does arbitrage trading to increase its total stablecoin balance, it checks to make sure the trades are profitable and will revert the transaction if they will not be. This assures that all trades provide a positive return.
Start earning and use this now
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