The ZeroSwap protocol is built on top of ZeroLiquid. It enables users to buy crypto today using their future Ethereum staking yield, benefiting from the time value of money principle. The time value of money states that a sum of money today is worth more than the same sum of money in the future due to its investment potential in the interim. How It Works 1. A user selects their trade. For example, they want to swap WBTC for LINK. The input token - in this example WBTC - is swapped for the wstETH LSD (liquid staking derivative) token using the 1inch DEX aggregator. 2. Upfront Yield. This LSD token is then deposited on ZeroLiquid in order to obtain instant upfront yield in the form of ZeroLiquid's synthetic ETH token, zETH. The maximum upfront yield is 50% of the value of the deposit. 3. Swap. This upfront yield is swapped for the user's desired output token - in this example LINK - using the 1inch DEX aggregator. 4. Collateral Unlock. The deposited wstETH collateral is a productive asset and earns Ethereum staking rewards over time which pays off the upfront yield. There is no risk of liquidation and the user can access their deposit at any time by repaying / liquidating their remaining position.
Example of a ZeroSwap trade
  • Sam has $10,000 of Ethereum.
  • Sam wants to buy altcoin XYZ but does not want to risk losing his Ethereum, especially as Sam views altcoin XYZ as highly speculative and risky. However, he wants to buy the token today as there is a chance it could 10x.
  • Instead of selling any of his Ethereum to buy altcoin XYZ, Sam uses ZeroSwap.
  • Sam deposits his $10,000 of Ethereum on ZeroSwap and opts to receive $5,000 of altcoin XYZ today without selling any of his Ethereum.
  • Sam now owns $5,000 of Altcoin XYZ and his original $10,000 of Ethereum, which will unlock fully at maturity (or any time Sam decides to repay or liquidate his position).
  • By investing today using his future yield, Sam is taking advantage of the time value of money principle.
  • If the price of Altcoin XYZ went up significantly, Sam might choose to repay his trade early and unlock his Ethereum. If the price of XYZ