After seeing @protocol_fx's insane success with liquidationless perps and delivering 11% APY to fxSAVE, a friendly fork has appeared
Here's how @ZhenglongFi plans to deliver yield bearing ETH and BTC with 20% APY by magnifying fxSAVE yield
Backed by real yield, not vibes
👇
Zhenglong is a friendly fork of f(x) Protocol and will share some of the revenue for veFXN
• f(x) Protocol focuses on yield for USD
• Zhenglong focuses on yield for ETH and BTC (and other..) pegged assets
If you're not too familiar with @protocol_fx V2 here's a quick TLDR
🔷️ f(x) invariant
• User deposits stETH or WBTC as collateral to trade perps
• The deposit is split in two by the f(x) invariant. Half minted as fxUSD stablecoin derivative, half minted as leveraged ETH/BTC xPOSITION
• Fully collateralized by LSTs
🔷️ fxSAVE
• xPOSITION rebalancing is handled by Stability Pool
• Yield from collateral is funneled into the Stability Pool which also earns
• Perps trading fees
• ETH staking yield
• FXN emissions
• fxSAVE is a yield bearing wrapper stablecoin for the Stability Pool offering 11% APY
🔷️ Liquidationless Perps
• xPOSITION offers up to 7x leverage for ETH and BTC with no liquidations
• No funding fees or interest
• Liquidation brake automatically keeping position at a max 88% LTV by leveraging down.
• In the rare case of liquidation that would happen at 95% LTV, highest possible.
Truly one of the most innovative defi protocols this cycle, and now seeing massive TVL growth
fxSAVE and wstETH will be split by the f(x) invariant into
• zheETH + steamedUSD/ETH
• zheBTC + steamedUSD/BTC
• zheBTC + steamedETH/BTC
🔷 zheETH and zheBTC are pegged yield bearing tokens with an estimated 20%+ APY
🔷 Steamed tokens are leveraged tokens that rebalance, not liquidate
Both fully collateralized and redeemable
The different collateral types will power different markets
🔷️fxSAVE Markets:
• zheETH + steamedUSD/ETH
• zheBTC + steamedUSD/BTC
🔷️ wstETH Market:
• zheBTC + steamedETH/BTC
Steamed tokens tokenize the difference in value between the market's pegged tokens and its collateral.
They have bull and bear sides.
🔷️ steamedUSD/ETH: bullish USD vs ETH (short ETH)
🔷️ steamedUSD/BTC: bullish USD vs BTC (short BTC)
🔷️ steamedETH/BTC: bullish ETH vs BTC
But how can the yield be amplified to 20%+?
When splitting into zheTOKEN and steamedTOKEN, all yield from the collateral is directed to the zheTOKEN Stability Pool, effectively doubling the APR of the collateral yield
In addition there is rebalancing fees from perps
And then we'll get $STEAM incentives on top of that
The zheTOKENS can be deposited in the Stability Pools, and i'm sure we will quickly see an auto compounding vault similar to fxSAVE
IDO is happening rn with discounts for veFXN holders (and veBAO)
So if that's of interest you should dig around to find out some more
🔷️ Concluding thoughts
Same model as f(x) but applying it to different pegged tokens
• Insane yield estimates on ETH and BTC pegged token, 20% is close to unheard of for single side staking
• Rebalancing leverage tokens
• Real fooking yield
• Can create market for any token. wen zheTSLA?
• f(x) Protocol TVL has skyrocketed so clearly there is PMF for this kind of protocol
- Negative is that most of the planned markets are short
Big potential, will be monitoring closely
Follow me @Slappjakke for more alpha and defi deepdives
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