Zero Deployment on Ethereum

Sovryn App
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Since the Banking Collapse and the depeg of USDC I have been advocating for a Zero Deployment on Ethereum or one of its Layer 2s.

To me, it seems obvious that Zero has outgrown Rootstock’s ecosystem and should be making plans to attract some portion of the +157k BTC that is in WBTC.

There is a mountain of BTC in DeFi on Ethereum that is not coming to Sovryn on Rootstock so maybe Sovryn needs to go to that mountain.

Supporters and detractors comment below.

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Thanks @SovOG156.

I would be in favor of something like this if we had good answers to some of the bellow. I will refer to the Zero-on-Eth stablecoin as ZETH.

  1. How will we generate demand for ZETH?
  2. Will ZETH be the same as DLLR or a different token. If the same, will that not dramatically change the risk profile of DLLR? It will now rely on bridges and, I assume, WBTC?
  3. How will we govern the protocol on Ethereum?
  4. Will the protocol on Ethereum be Sovryn, or something else? How will this impact our messaging and branding? How does it align with our values?
  5. What will be our unique advantage (USP) on Ethereum?

I am very interested to hear a variety of views on this.

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A fork of Zero on Ethereum? Isn´t simpler to just have a Zero based coin Zusd/Dllr wrapped on Ethereum?

“DLLRs” or “eDLLR”
How would this be achieved and how liquidity is managed and effected to execute it?

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That won’t work if we’re aiming to allow WBTC as collateral. Wrapped WBTC on Rootstock is not RBTC.

If we can convince WBTC holders to sell and buy RBTC, then we could bridge out DLLR onto Ethereum.

Here’s another thought that I’ve never explored before. What if we bridge RBTC onto Ethereum and create an RBTC lending pool that allows WBTC as collateral. WBTC users deposit WBTC, borrow RBTC (and pay some interest), and then bridge RBTC back to Rootstock (now native on Rootstock), where they can borrow DLLR to be bridged back to Ethereum. That’s quite complicated, but if it could be simplified in UX, it might be viable.

It doesn’t solve the problem of governance on Ethereum.

Also, and I think this may be the defeater of all of the above – DAI already allows WBTC as collateral. So I can’t think of any USP that Sovryn can bring to the table that involves the use of WBTC. We could offer a more decentralized bitcoin-backed stablecoin if we built it on RBTC. But not if it ultimately uses WBTC.

Just throwing that out for discussion.

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I would love to see DLLR on Ethereum, on Polygon, all the Eth L2, and on the other BTC L2 as well, like Stacks and Liquid.
This is tough to do because of bridging. But I think it would probably be the best thing to do instead of creating a brand new DLLR with a different collateral than RBTC (although I see how WBTC has a much higher market cap than RBTC)

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While it may be simpler to just wrap DLLR and deploy it on Ethereum. Don’t we then have the problem of establishing and maintaining a liquidity pool on an Ethereum DEX?
Then doesn’t Sovryn have the “peg” problem against ETH to then manage?

Plus, how are the fees absorbed for wrapping RSK native DLLR? Is Sovryn going to pay those fees? Would the fees to wrap RSK DLLR be more than it would for someone to just wrap WBTC on Ethereum? Where are those RSK DLLR coming from?
I, personally, see a lot more problems and expense wrapping RSK native DLLR for deployment opposed to deploying a fork of Zero on Ethereum and letting the market mint at will.
If the market finds value in the proposition of minting a US dollar-valued coin backed by BTC on Ethereum, the market will mint the token. The protocol will maintain the “peg” relative to the value of the BTC locked in the contract. Fees will be absorbed by the one minting the token and not by Sovryn wrapping, deploying, and pooling RSK DLLR on Ethereum.
Liquidity would be managed by the protocol the way it is supposed to be and not some pseudo “reserve board” tinkering with how many DLLRs are wrapped or not.
At least that’s the way I see it from my layman’s perspective.

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I follw the “ZETH” naming convention for the purposes of this discussion only as I see it as a poor name for marketing purposes…

  1. Demand for ZETH can be generated using the same narrative that was used for the RSK iteration. It will remain a self-issued, uncensorable, dollar-value coin backed by BTC that one can use to get dollar liquidity without selling one’s BTC (or in this case WBTC) for use in DeFi protocols, commerce, or HODLing.
  2. “ZETH” would best function, in my opinion, as a different token as it will be backed by a different version of Bitcoin wrapped in an ERC20 wrapper native to Ethereum. For branding purposes, it should have a similar ticker to its RSK native cousin i.e. eDLLR (Zero Dollar on Ethereum) of aDLLR (Zero DLLR on Arbitrum), etc. Think of how a Mcdonald’s franchise is different across different parts of the globe all share the brand name and have flagship offerings. There are different variations by region but the core branding is consistent. The risk profile of DLLR native to RSK stays the same. I am quite sure that a bridge could/would facilitate transfers in a cost-efficient way if necessary.
  3. Governance can be handled by Bitocracy just as the various Sovryn protocols are currently governed. The “ZETH” deployment would bring added utility to the SOV token and additional revenue to Sovryn in general.
  4. Why wouldn’t the protocol on Ethereum be Sovryn?
    The impact on Sovryn’s messaging and branding would be HUGE!!! “Rootstock’s fastest growing DeFi protocol seeks to bring utility to Bitcoin across all chains!!! If the purpose of Sovryn is to build financial primitives to enable people to use their Bitcoin for more than just HODLing an Ethereum deployment fits Sovryn’s values. If the value proposition is to “only” build “on Bitcoin” and not “for Bitcoin” there may be a problem.
  5. Sovryn’s unique advantage (USP) on Ethereum is that “ZETH” will be the only source for a US dollar-valued token backed exclusively by the value of Bitcoin that can be self-minted on Ethereum. You mint it, you own it, and you redeem it as you like. If Sovryn does not capitalize on this narrative, some other protocol will and Sovryn will be left in the dust screaming “We had it first…” because the world is ignoring Rootstock for some reason.
    Sovryn has established itself as a dominant force on Rootstock. Sovryn protocols hold more BTC than any other Bitcoin DeFi protocol. More than Stacks, more than MOC, more than ALEX. But the big fish hold BILLIONS and those BILLIONS of Bitcoin value are on Ethereum. If Sovryn wants to grow it needs to go after those BILLIONS. The best way for Sovryn to capture those BILLIONS is through a Zero deployment on Ethereum.

IMHO

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Zero on Ethereum will work with WBTC as collateral as those tokens will only be native to Ethereum and its sidechains where WBTC is the main form of Bitcoin value available.

Remember RBTC is no more actual Bitcoin than WBTC or Stacks XBTC is. They all are value representations of actual BTC locked in a smart contract in one way or another.

Obviously, WBTC is not RBTC and there is no need to bring WBTC to Rootstock or RBTC to Ethereum. There is no need to convert people from either camp to switch the way they wrap their Bitcoin to use in DeFi. Sovryn just needs to bring utility to Bitcoin in whatever way one has chosen to wrap it.

Rootstock has had no success convincing WBTC holders to buy RBTC so why would Sovryn succeed where Rootstock has already failed?

The whole idea of “bridge(ing) RBTC onto Ethereum and create(ing) an RBTC lending pool that allows WBTC as collateral.” is inefficient and would most likely be cost-prohibitive as an alternative. It already costs at least $53 bucks to bridge back to Ethereum, If the gas to mint a DLLR on Ethereum using WBTC as collateral is more expensive, then I could see the feasibility of wrapping DLLR and bridging it out to Ethereum. But with that solution, we still have the problem of “convincing” people to sell WBTC for RBTC which appears to be a losing proposition.

If we bridge RBTC onto Ethereum and create an RBTC lending pool that allows WBTC as collateral we create a lot of friction. Users have to deposit WBTC (transaction fee), borrow RBTC (unnecessary interest expense), and then bridge RBTC back to Rootstock (another fee to get native on Rootstock), where they can borrow DLLR (another set of fees) to be bridged back to Ethereum (another fee). Quite complicated and even if simplified in UX still potentially very expensive.

As far as governance goes, I don’t see a problem with governance for the Ethereum iteration. Maker, UniSwap, AAVE, GMX, and many other protocols have deployments across various chains and handle governance through their primary governance model. The same governance model currently used by Sovryn can be applied to the Ethereum deployment.

As far as not having a unique selling proposition because of DAI’s existence I think one needs to broaden their view of the narrative that can be promoted. While DAI does allow WBTC as collateral, MakerDAO only offers “multi-collateral” stablecoins.

No protocol currently offers a dollar-value token (DVT) backed exclusively by WBTC.

Sovryn’s USP is that it is the only protocol that offers this unique value proposition.

Sovryn can pioneer a brand new category of “stable-coins” US Dollar Value Tokens. We can switch the narrative to the backing of the token and make the “dollar peg” less relevant. Sovryn can emphasize that their DVTs are not backed by any dollar-denominated assets yet are always exchangeable for $1 worth of satoshis.

Mint today for 3,226 sats payback for whatever the future sat value of $1 in the future.

Bitcoin dollar price doubles, burn your tokens for half the sats!

Sovryn’s objective should not be to just “build ON Bitcoin” Sovryn should build FOR Bitcoin wherever that Bitcoin may be, in whatever wrapped form the Bitcoin may take on.
Are there different risks with WBTC that are not inherent with RBTC? Sure. But the market has chosen WBTC by a factor of +40 to 1 (4.88B to 98M). Sovryn needs to offer more decentralized Bitcoin-backed DVTs built on whatever network has Bitcoin liquidity be it Rootstock, Ethereum, Binance Smart Chain, Arbitrum, or Polygon.
The whole “But not if it ultimately uses WBTC.” argument is short-sighted at best and pseudo-maxi prejudice at worse.
Let’s keep the discussion going…

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