Overview

The Zunami protocol is a DAO that works with stablecoins. It solves the main problems of current yield protocols by simplifying the interaction with DeFi, making it easier and cheaper, while improving profitability by differentiating and rebalancing users' funds. It has an automatic income generation mechanism, which reduces the entry barrier and reduces Gas costs through transaction batching and automatic compounding mechanisms. The Zunami protocol is currently based on the Ethereum blockchain, and also supports BSC and Polygon. Zunami plans to support Avalanche and other popular alternative chains in the future.

Original intention

Traditional banking can be a frustrating and inefficient process. Interactions with money should be simple and autonomous, empowering everyone to achieve their right to financial freedom. With the rise of stablecoins and DeFi, the financial landscape is changing rapidly. While liquidity mining is gaining popularity, it is still not widely adopted. The team at Zunami identified the pain points in existing solutions that hinder both new and experienced crypto users. The team's goal is to bridge the gap between traditional finance and DeFi and create the ultimate solution for stablecoin holders through the Zunami protocol.

application

The main problems with the existing liquidity mining interface:

  • The current existing DeFi interface is designed for professionals and is not friendly to beginners.

  • There is a large pool of capabilities.

  • Requires continuous interaction with multiple applications to complete the operation.

    Zunami has designed a smooth and easy-to-use UI solution based on the above problems: the single pool system and the new user interface make interaction with DeFi applications simple and easy to operate by performing all operations in one step.

Yield Aggregator

The Zunami Global Pool enables users to send stablecoins (DAI, USDC, and USDT) in a direct or optimized manner and receive ZLP (Zunami LP tokens) in proportion to the funds they have invested and earned in the protocol. Zunami then invests the stablecoins in a range of strategies (usually 2-3 strategies are running) that put them into the Curve pool as liquidity providers (LPs) and receive Curve LP tokens, which are then staked in Convex or StakeDAO reward contracts (Gauges). Direct deposits or withdrawals can be executed instantly, but require users to pay a large amount of gas fees. On the other hand, by optimizing deposits or withdrawals, users can save gas fees by entrusting the protocol to perform aggregated deposits or withdrawals once a day.

The protocol operator periodically calls Zunami's automatic compounding method, which collects earned rewards from all strategy contracts and sends them to the rewards management contract. A portion of the rewards will be sold and the profits will be reinvested into the Curve pool and the corresponding rewards contract, thereby increasing the value of the user's ZLP token and allowing the user to fully enjoy compounding. At the same time, the second part of the rewards, including performance fees and rewards earned on UZD stored in the Curve pool, will be sent to the treasury. In order to achieve decentralized governance, the Zunami DAO is responsible for making all important decisions, including adding new strategies, rebalancing funds, and setting management fees.

The Zunami Protocol leverages a decentralized revenue aggregator to select the most profitable stablecoin pools and optimally balance funds between them, eliminating the need for constant market research and manual transfers.

The community and Zunami team continuously analyze the risk/reward ratio of stablecoin positions and, through DAO voting decisions, develop strategies and asset rebalancing to ensure users receive the highest possible returns while diversifying their funds across trusted pools and dAPPs.

Omnipool

Zunami offers the Omni pool, a decentralized location where users can deposit USDT, USDC, and DAI. These funds are then allocated to multiple strategies, ranging from 2 to 10 strategies at a time. The selection and rebalancing of these strategies is determined by DAO voting.

The role of the DAO is to identify new strategies, submit them for voting, and ensure timely rebalancing and fund diversification. Regardless of which strategy funds are allocated to, every depositor in Zunami will receive ZLP tokens proportional to their contribution to the protocol. All profits generated by the Zunami protocol will be distributed to ZLP holders, except for a performance fee, which will be used for the treasury.

Transaction batching mechanism

The high commission costs on the Ethereum network are an important issue for the progress and future of DeFi. To address this issue, the Zunami Protocol team developed a transaction batching mechanism (TBM) to optimize costs.

This multi-layer smart contract allows users to deposit funds into the initial contract using the delegateDeposit() function. Then, once a day, the completeDeposit() function automatically allocates user funds to the strategy without incurring any additional fees.

This allows fees to be reduced by up to 10 times compared to using Curve and Convex directly. Withdrawals and deposits can be delegated by ticking a box in the app. Users of alternative networks can use Zunami through gateways on the BSC chain and Polygon, and the cost of interacting with smart contracts is less than $1.

Strategies and Automatic Compounding

The DeFi ecosystem is becoming increasingly complex. To maximize returns, users need to deposit funds into Curve and obtain LP tokens, which are then deposited into StakeDAO or Convex. The Zunami protocol simplifies this process by creating multiple strategies and automating the entire process in one transaction, making it more convenient for users.

In StakeDAO or Convex, users receive rewards in the form of tokens, but for users with small deposits, selling these rewards may not be cost-effective due to high commission costs or lack of time. Zunami will handle the sale of rewards for users, allowing users to fully enjoy the benefits of compound interest.

KNIFE

Zunami attaches great importance to the opinions and feedback of users and the community in the development of the protocol, so Zunami launched the DAO voting system to allow early participants of the project to have a say in the direction of the project. By depositing funds in Zunami, users will receive ZLP tokens in proportion to their contribution. These tokens can be used to vote in the Zunami DAO, where all important decisions, such as selecting and adding new strategies and fund rebalancing, will be made. Users who hold GZLP (Zunami BSC gateway users) also have voting rights. Before the proposal is voted on, it will be discussed in the Discord community, which will give everyone an opportunity to express their opinions on the proposal.

Treasury

The Zunami protocol has established a treasury system to accumulate funds to cope with losses in emergency situations and to support the development and expansion of the protocol.

The sources of funding for the National Treasury include:

  • A 15% performance fee is charged on the proceeds from depositors who use automatic compounding.

  • A performance fee of 15% of the proceeds collected from APS depositors using automatic compounding.

  • Additional accumulated tokens (CRV, CVX, FXS) from the rebasing stops of UZD stablecoins stored on Curve in the FRAXBP pool.

DAO tokens will be locked and used to increase the profitability of the UZDFRAXBP pool. Revenue from stablecoins allows Zunami to maintain its leading position in the market and mitigate risk during periods of volatility while providing funds for development and operating expenses. Overall, the treasury aims to reduce risk, fund development, and cover operating expenses to ensure the long-term operation of the Zunami protocol.

Tokenomics

UZD is collateralized by stablecoins stored in the Curve pool, from which it generates income. UZD is also a re-based token whose value increases in proportion to the APY of the Zunami protocol. It is over-collateralized by stablecoins allocated in the Curve Finance pool and minted using ZLP. UZD does not de-peg as it can be redeemed for USDT, USDC or DAI at any time. Users can obtain UZD by minting UZD through the Zunami interface or by exchanging it in Curve.

In the Curve pool, the rebase feature for UZD is disabled, and rewards for CRV, CVX, and FXS are directed to the Zunami treasury instead of being sold to increase the amount of UZD. The UZD economy is designed as shown below, with the rewards generated being enough to pay for the next bribe and maintain pool incentives, creating a self-sustaining cycle where bribes essentially pay for themselves.

Summary

The Zunami protocol is a platform that distributes stablecoins to users. The main idea behind it is to create a simple, profitable and absolutely safe alternative to bank deposits. At the same time, the Zunami protocol eliminates the challenges of users managing their own assets, making it easier for users to focus on growing their wealth in the decentralized financial ecosystem. In the process of development, Zunami attempts to bridge the gap between traditional finance and DeFi, and tries to create more beneficial solutions for stablecoin holders.