Use Cases

This page explains the various use-cases that users can use ZAI with.

ZAI is primarily a lending-focused stablecoin. Although pegged at $1, it is not really meant to be used as a means of payment or as a means of holding wealth. It is designed specifically to allow users to leverage on yield.

This is why most use cases of ZAI revolve around the liquidity provisioned by the Direct Deposit Module into various lending protocols.

In each of these use cases of ZAI, We need to allow ZAI to be readily available on lending markets at attractive interest rates and reasonable LTVs so that it will make sense for borrowers to borrow and leverage their exposure.

With this in mind, we present the following use-cases for ZAI. Keep in mind that the use-cases below need to be voted in by governance before they are executed upon.

Leveraging on Yield-Bearing Assets

This is the most common use-case for ZAI, where users are looking for ways to leverage their exposure on yield bearing assets.

The yield-bearing assets also need to be pegged to the $1 mark or relatively stable to avoid impermanent loss or massive liquidations.

Ideal assets are USDe, sDAI, aUSDC, etc...

Leveraging on Pendle PT tokens

With the rise of pendle and other yield market-places, PT tokens present an opportunity to allow yield managers to leverage their exposure within the various PT markets.

Ideal assets are PT-USDe, PT-aUSDC, PT-sDAI, etc...

Getting liquidity against liquidity lockers

A lot of veTokens (such as veCrv and veBal) are not highly liquid but are still financial assets as they are backed by governance tokens, which, upon the expiry of a lock, can become unlocked and traded in the open market.

By offering loans in the form of ZAI, the protocol can not just solve a liquidity problem with these tokens but also charge a higher interest rate due to the higher risk profile of these tokens.

Ideal assets are sdCRV, cvxCRV, sdBAL, etc.

Leveraging on LP tokens

While super risky, LP tokens are complex DeFi tokens and their usage as collateral allows users to leverage up on certain positions.

Furthermore, with the introduction of Uniswap V3 vaults such as Ichi and Gamma, this can be further extended to leverage highly capital-efficient Uniswap V3 positions.

Ideal assets are Ichi Vault Tokens, Gamma Vault Tokens, etc...

Leveraging on Memecoins

A lot of memecoin users are looking for avenues to long/short memecoins with leverage. By providing liquidity to a lending market with these memecoins, traders can now find liquidity to long/short memecoins with leverage.

The protocol can also charge a lot higher interest fees due to the high-risk profiles of these tokens.

Ideal assets are PEPE, Shiba Inu, etc...

Lending against Governance Tokens

Governance tokens are known to be highly volatile and illiquid at times. By providing liquidity to a lending market with these governance tokens, we allow long-term contributors to find liquidity against their illiquid governance tokens.

The protocol can also charge a lot higher interest fees due to the high-risk profiles of these tokens.

Ideal assets are UNI, CRV, MAHA, etc...