What is Zephyr Protocol? Zephyr Protocol is a decentralized, secure and fully collateralized Stablecoin protocol with Crypto assets. So what’s special about Zephyr Protocol? Let’s find out with HAK Research in this article.
To better understand what Zephyr Protocol is, people can refer to some of the articles below:
- What is crvUSD? Overview of Stablecoins Released by Curve Finance
- Noteworthy Decentralized Stablecoins In The Near Future
- What is Proof Of Work (POW)? Advantages, Disadvantages and Core Operating Mechanism of Bitcoin
Zephyr Protocol Overview
What is Zephyr Protocol?
Zephyr Protocol is a decentralized, secure and fully collateralized Stablecoin protocol inspired by Djed Protocol on the Monero based chain. Djed comes from a partnership between Ergo Foundation, Emurgo (Cardano ecosystem) and IOHK and the first deployment was SigmaUSD on Ergo in 2021.
Zephyr Protocol was designed with the vision of revolutionizing the stablecoin industry. The project aims to merge the best stablecoin and security protocols to facilitate stable anonymous transactions and cash storage. In the long term, the project aims to have ZephUSD (ZSD) used as a liquidity pair similar to USDT and BUSD.
What is Zephyr Protocol?
Zephyr Protocol inherits all security features, officially launched on May 29, 2023. It uses a 3-asset model: ZEPH, ZSD and ZRS
- ZEPH is the base coin used as collateral in the Stablecoin protocol as well as mint ZSD and ZRS by adding an equivalent ZEPH value to the reserve.
- ZSD (Zephyr Stable Dollar) is a Private Stablecoin, backed by a value equivalent to at least 400% of ZEPH at the time of minting.
- ZRS (Zephyr Reserve Shares) is a reserve coin. The coin holder acts as a reserve provider, depositing ZEPH into the protocol to mint ZRS. ZRS holders can benefit as ZEPH grows at a profit as a form of leveraged exposure. On the contrary, this can also be a double-edged sword, when the market is not good.
Not only that, transaction fees as more ZSD coins are minted and converted will be added to the reserve. This process not only amplifies the profit potential for ZRS holders but also contributes to the stability of ZSD. The protocol maintains a maximum reserve ratio of up to 800% ensuring that minting of ZRS will be paused so that existing ZRS values are not diluted. Retain benefits for Holder.
In addition to these benefits, ZRS holders can also convert to ZEPH based on their value in the reserve fund. This gives them a significant degree of flexibility and control. Thereby strengthening the decentralized characteristics of Zephyr Protocol.
Zephyr Protocol focuses on the balance between promoting growth and maintaining stability, minimizing losses when affected by poor market conditions. At the end of November 2023, Zephyr Protocol has reserve parameters as shown below. Everyone can continuously update information at Network Zephyr.
Hashrate parameters
ZEPH is the basic layer that plays an important role in the connection between ZSD and ZRS. To secure ZSD with the name The Private Untraceable Stablecoin, ZEPH is a Native coin on this Blockchain that uses the Proof of Work consensus mechanism.
Zephyr Protocol uses the RandomX algorithm. This is an algorithm optimized for general-purpose CPUs that promotes decentralization and equitable mining. As a PoW mechanism, the numbers of primary concern are the hashrate rate and rewards for miners. A simple explanation of hashrate, it reflects the mining performance of mining hardware and is measured in seconds.
Each solution performed on the network is called a hash. That mining efficiency is measured in h/s. The parameters are converted similarly to the following:
- 1 Kh/s = 1 000 h/s
- 1 Mh/s = 1 000 Kh/s = 1 000 000 h/s
- 1 Gh/s = 1 000 Mh/s = 1 000 000 Kh/s = 1 000 000 000 h/s
- 1 Th/s = 1 000 Gh/s = 1 000 000 Mh/s = 1 000 000 000 Kh/s = 1 000 000 000 000 h/s
Solution roughly translated as calculation solutions or algorithmic solutions. A GPU or mining device has different computing parameters. From there, Miners or Users can consider and build suitable, high-performance equipment to participate in the mining network to earn profits. For small individuals, we can preview mining profits with the number of available devices through the calculation website 2CryptoCalc or Whattomine.
As of 2023, ZEPH has a few on-chain parameters as follows:
- Network hashrate: 1.49 Gh/s
- Network difficulty: 178.72 G
- Block reward: 11.38 ZEPH
- Block time: 120 sec
- Daily emission: 8194 ZEPH
- Return 1 Mh/s: 0.0000055 ZEPH
Everyone can refer to hashrate.no to update hash rate in the fastest and most accurate way.
Highlights of Zephyr Protocol
With ZSD being an algorithmic Stablecoin, how can the death spiral be avoided? The project team has assured that no ZEPH will be created spontaneously, its supply is only increased by mining on the network. Surely this would eliminate ZEPH’s risk of sudden inflationary shocks. Essentially, the protocol does not spontaneously follow the Luna-like mint Native Coin approach.
Zephyr Protocol incorporates several powerful mechanisms to maintain and increase the strength of the reserve, thereby ensuring system stability. As mentioned above, it is the transaction fee that is collected whenever ZSD is minted or swapped. These fees gradually accumulate in the reserve, thereby increasing its value over time and promoting long-term stability. Besides, the price of ZRS is calculated based on the current reserve ratio, when the reserve ratio decreases, the price of ZRS also decreases and encourages users to become reserve providers. However, if no one wants to do that, the project team also has a reserve fund to do it.
This reserve fund consists of 500,000 ZEPH and charges a 5% admin fee, which can supplement reserves ensuring ZSD remains fully collateralized.
The difference between Zephyr and Fiat Stables is that they have distinct approaches to achieving price stability. Moreover, they also differ significantly in basic structure, release process as well as overall hierarchy such as:
- Basic assets:
Each stablecoin is pegged 1:1 to a specific fiat currency, like the US Dollar. On the other hand, Zephyr Protocol’s stablecoin, ZephUSD, is backed by overcollateralized reserves of ZEPH Native assets. - Issue and buy back: Fiat money is related to the issuing organization, users must trust this organization and accept the rules they set. In contrast, Zephyr is completely decentralized, users can mint ZephUSD without having to trust a centralized party.
- Decentralization and transparency: Built on a blockchain with a PoW mechanism, every transaction and activity is publicly verified to help users trust in the integrity of the system. In contrast, fiat-backed stablecoins undergo regular audits, but they lack the level of transparency that comes with relying on the trustworthiness of the institution.
- Robustness: Fiat-backed stablecoins can face challenges such as bank account freezes. Meanwhile, ZSD does not.
- No licensing required: Zephyr operates on an open source and license-free platform allowing any user, anywhere in the world, to interact with the protocol as long as they have access to the internet. On the other hand, fiat-backed stablecoins may have restrictions based on geography or regulation.
Development Roadmap
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Core Team
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Investor
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Tokenomics
Basic information about ZEPH token
- Token name: Zephyr Protocol
- Ticker: ZEPH
- Blockchain: Zephyr Protocol
- Standard: Native token
- Total Supply: 18,400,000 ZEPH
Token Allocation
The total supply of ZEPH is distributed as follows:
- Mining: 75 %
- Reverse: 25 %
- Governance: 5 %
Token Release
When the initial total supply of 18,400,000 is fully exploited, the Block Reward will decrease to below 0.6. This means that the total supply is technically unlimited and exceeds 100%.
Below is the detailed calculation:
Token Use Cases
- Pay transaction gas fee.
- Miners are rewarded for participating in transaction validation and network security.
- ZSD can be minted or converted to ZRS, as well as collateral in the Stablecoin protocol and the Zephyr Protocol ecosystem.
Exchanges
Currently ZEPH is present at the following exchanges: MEXC, SAFETRADE, SEVEN SEA, NONKYC, TRADEOGRE, XEGGEX.
Zephyr Protocol Information Channel
- Website: https://www.zephyrprotocol.com/
- Twitter: https://twitter.com/zephyr_org
- Discord:
Summary
Zephyr Protocol is an algorithmic Stablecoin project with new innovations. ZEPH has seen tremendous growth in a short period of time. Using the traditional PoW mechanism, it is currently ranked very high (Rank 4) in terms of CO2 emissions, surpassing other major mining coins such as ETC or LTC. Besides the With BTC 2024 event approaching, it is possible that ZEPH will be even hotter and listed on larger cryptocurrency exchanges. From there, it attracts more investors.
