Collateralization

The collateralization ratio is determined by the zUSD Managed Treasury Value (MTV) and the amount of zUSD in circulation. The formula is:

Managed Treasury Value / zUSD in circulation * 100%

Overcollateralized

The protocol is built to become overcollateralized, meaning the Managed Treasury Value (MTV) exceeds the circulating supply of zUSD. This comes from the Managed Treasury Value (MTV) yield and appreciation of MTV with

  1. Partial allocation towards ZU buybacks to help align the incentives of ZU holders with the rest of the Zulu ecosystem

  2. The remainder serving as a buffer to absorb volatility and earn yield.

The market-bought ZU is allocated towards the following:

  • Staking rewards

  • Zu - zUSD Liquidity managed by the AMO

Overcollateralization occurs when the Managed Treasury Value appreciates in value or earns yield, causing an increase in the value of the Treasury Pool.

Collateral Types

zUSD/USDC POL: Protocol controlled liquidity deployed on DeJungle

USDC in LAAS: zUSD in pools used for liquidity as a service

Volatile: Volatile asset pairs making up part of the collateral (ZU/zUSD)

USD: USDC in contract waiting to be deployed

Over-collateralization Treasury: ZU overcollateralization

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