Draft SIP: Zero Subprotocol


I hereby publish the current draft of the Zero subprotocol SIP for your comment and discussion. , integrated with the Sovryn Mynt will allow for 0% borrowing against BTC.

Please find the draft here: Zero SIP - Draft v1.0 (Forum) - Google Docs

Yesterday I posted the related SIP draft for the Mynt.

Both subprotocols are SOV-bonded token projects, further described here:

Please note that while I have published these drafts to the forum, I am not the sole or primary author.


Thank you - As we have explored in other forum posts, I am in favor of these for our ecosystem. Much appreciated!

I’ve really been looking forward to this SIP! This is a great project!

I’m a little confused about the proposal to charge the trading fee in SOV for redeeming ZERO for SOV. Why would we not charge RBTC, since this is the fee for everything else in Sovryn?

There is no rBTC in that pool.

Can you please explain how the governance will work? The draft says “all operations are algorithmic and fully automated, and protocol parameters are upgradable by Bitocracy.” The algorithmic part I like, the latter one may introduce some vulnerabilities. What exactly can be changed? Can the full contract be updated? Are there only some parameters (e.g. fees) that can be chanced, whereas the rest is immutable? Can changes affect deployed contracts (credit lines) or only newly created ones?

As this seems to be modeled after Liquity, is this a direct fork? Are there any other substantial differences than asset and governance? Where is the repository located?

Thanks for bringing this to bitcoin!

Great, thank you very much! 0 percent interest loans is exactly what many bitcoiners might be looking for. At least for me this is true.

I would like to get some more info on the following passage:

Users can earn from ZERO in two different ways:
Deposit ZUSD to the Stability Pool
and earn liquidation gains (in RBTC) and ZERO rewards.

To what extent are liquidations possible with ZERO?
And should a business line of ZERO be to liquidate its users? Doesn’t sound particularly sustainable.
Or are the liquidations mentioned those from margin trading?

Ordinarily, the required BTC collateral is 110%. If it falls below that, your BTC collateral can be liquidated to cover the loan. To avoid liquidation the borrower would need to monitor the collateral and maintain it well above 110%.

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The base contracts are developed from Liquity. However, this implementation does allow for upgradability. Liquity itself is currently working on a v2 and further versions are likely after that, so upgradability, to my mind, is a big advantage. Otherwise you end up with users who are not paying close attention stuck in old versions - which then means that users need to be constantly monitoring, which for perpetual positions is undesirable.


Well, with Bitcoin I’m used to monitor things myself and take conscious - sovereign - choices whether to upgrade or not. Same reasoning why Bitcoin Core does not force you to upgrade. You can choose to not use new features (i.e. not use SegWit or Taproot) if you don’t like aspects of them. Nobody is pushing you or has control over your funds. But you can take action and switch if you agree by upgrading and moving your funds. Maybe just moving funds from an old contract to a newer version of the contract should be manual but free of the one-time interest payment.

Thanks for clarification!

If the parameters are subject to bitocracy, what if, for example, the collateral requirement is increased and legacy users get liquidated thinking they were subject to the original rules? It seems on the surface that this is more of a scenario where users would be needing to pay close attention.


Since Zero seems to be very appealing for BTC owners, but its supply its not virtually unlimited as by yago’s sip, since it’s connected to Sov and it’s expensive for Sov. What would this entails on the long turn? And what could be a fix for a really unlimited supply so that virtually any BTC owners will have the interest to use this loan?


Some thoughts/comments about the SIP:

‘’* Deposit ZUSD to the Stability Pool and earn liquidation gains (in RBTC) and ZERO rewards.

  • ​Stake ZERO and earn ZUSD and RBTC revenue from borrowing and redemption fees.’’

Would prefer to have some more info on the above, especially with an example to understand the liquidation of loans while under collateralized condition . Also would like some more details on the revenue from borrowing and redemption fees you get from staking ZERO. Is it going to work like SOV staking, the bigger period you stake, the higher your awards?

‘‘It is expected that ZERO stakers will govern the Zero subprotocol. However, there may be a transition period where Zero is still directly governed by SOV Bitocracy.’’

Personally I am not in favor to have the ZERO stakers govern exclusively the ZERO subprotocol. Yes we go again to a long discussion with the sub protocols, but I want to see SOV stakers to have a voice on what is happening in those subprotocols, even with a smaller percentage comparing with the ZERO stakers. I have the feeling that we are giving too much of independence to those subprotocols while SOV must be the center of attention, especially at those times that we are under radar in the market. Those who hold SOV, must have a voice on everything that is happening on the platform when it comes to voting.

‘‘It is anticipated that Zero subprotocol and the Sovryn Mynt sub-protocol within 6 weeks of both protocols having been approved.
It is anticipated that the Bootstrap sale for the Zero bonding curve will occur shortly after this SIP is passed.’’

I would like to see a more accurate information here, there was a confusion with MYNT token, many people thought that they will trade their coins immediately after the sale, while some emails we received were saying for 6 weeks lock period. In the proposal it is stated for one month lockup, this lockup period will start immediately after the ZERO sale ends?


I would be interested to see a plan of proposed budget actions from Founders and Zero Treasury. What would be the areas that any budget allocation is going to be used for, Marketing, Adoption, etc. I will also have to disagree with the allocation for Fully Vested SOV stakers which is 3%. SOV stakers are a vital part of Sovryn ecosystem and they shape the future of Sovryn with their votes. I would like to see SOV stakers allocations to 5% or 6%

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I completely agree with this. More attention is needed to be given to SOV stakers. It is in the name that these are Sub protocols of sovryn and currently the actions here do not match that.

Also I agree, more clarification is needed on the exact timelines of what happens after the Bootstrap event is needed. Needs to be simple and easy to understand unlike MYNT

ZERO is not the dollar stablecoin. It is the subprotocol token issued by the Zero protocol. It captures the fee revenue generated by the system and incentivizes early adopters. ZUSD is used as the USD-pegged stablecoin used to pay out loans on the Zero protocol. An unlimited amount of ZUSD can be issued depending on the amount of RBTC that is deposited as collateral.