From Zero to Hero: Navigating the zeroDAO Ecosystem
Published On: 9/27/2023
Due to centralization, trust issues, high transaction costs and a number of other factors, bridging assets like Bitcoin and other non-EVM compatible coins and tokens cross-chain has always presented a problem.
zeroDAO and the ZERO Network aim to solve the challenges with existing bridging solutions. The network's layer 0 infrastructure allows users to bridge assets across both EVM and non-EVM networks in a decentralized, secure and cost-effective manner.
This post offers a detailed overview of the network's infrastructure, utility, approach to security, staking, governance and more.
We'll also delve into the network's tokenomics, examining the functionalities and benefits of the $ZERO token and the ZERO Heroes NFT collection.
A 'Zero to Hero' step-by-step guide will also be provided for those looking to participate in the testnet launch.
Let's get started!
The Technology Behind the Network
To achieve cross-chain interoperability, the ZERO Network relies on custom-built infrastructure, including its FROST-powered layer 0 and Roastchain substrate palette.
Let's take a look at the infrastructure that makes up the ZERO Network.
FROST-powered layer 0
Flexible Round-Optimized Schnorr Threshold Signatures (FROST) is a signature scheme developed jointly by the Zcash Foundation and the University of Waterloo in 2020. Threshold signatures allow for multiple signers in a network to share a common private key. FROST improves upon the widely known Schnorr signature design by allowing signing operations to execute in a single round without limiting the concurrency of signing operations.
Zero implements FROST as part of the peer-to-peer protocol that oversees smart contract pegs verifying Schnorr signatures from remote networks. Ultimately, it is a key component for safely connecting EVM to Schnorr-enabled non-EVM in a decentralized manner. FROST is integrated into the functions of the key Zero Network participants: signers, validators, and voters.
In every Zero network epoch, there are signers that are awarded a secret share in key generation. Awardees are then responsible for participating in signing messages via FROST, earning passive yield in the form of the bridged asset. Validators produce blocks on ZERO. Every block on the network contains a message that must be signed with FROST before the next block.
Voters are the governance participants of Zero. Voters implement FROST in certain emergency DAO functions. For example, voters can liquidate the FROST ring in the event that signers collude and the shared key is compromised.
While FROST is an effective method for signing off on BTC transactions, it is designed for aborting transactions when necessary signers are absent or disruptive. This makes it difficult to achieve automated signing. Bitcoin research firm Blockstream developed a wrapper for threshold signature schemes, like FROST, known as Robust Asynchronous Schnorr Threshold Signatures (ROAST). ROAST improves FROST by ensuring that a quorum of honest signers can always execute a valid signature, even when signers are absent or disruptive.
In the future, Zero will make use of a “ROASTchain” as a coordinator for multiparty Schnorr signing. This will allow Zero node operators to control Bitcoin multisigs. These multisigs serve as the vaults that users lock their $BTC into, and receive minted wrapped $zBTC on their target EVM chain.
Network Economics, Staking & Governance
Zero employs a unique economic model focusing on collateralization and staking for assets bridged onto EVM networks.
For example, if a user transfers $BTC from the Bitcoin blockchain to the Ethereum network via Zero, this $BTC is secured and represented by equivalent coins on the destination chain.
Simply put, the $BTC transferred to Ethereum is a synthetic version (zBTC) backed by underlying liquidity.
This guarantees that the actual assets on the native chain underpin the value of the tokens on the destination chain.
Roles and Responsibilities of Key Actors
Signers are responsible for signing messages using the FROST protocol. By staking $ETH as collateral, they can participate in key generation and earn passive yield from the bridged assets.
Validators produce blocks on the ZERO Network. They earn rewards based on their $sZERO balance on the Ethereum mainnet, acquired by staking $ZERO / $ETH LP tokens. The more value transferred, the more yield for stakers.
Staking and Earning Revenue
The primary staking asset in the network's economic model is $ETH, which provides security to the protocol.
Users can stake their $ZERO / $ETH LP tokens in the sZERO staking contract to obtain sZERO tokens. These tokens also grant voting rights within the network's governance system.
To unstake, users can exchange their sZERO tokens back into the original input LP tokens and receive any accumulated $ZERO rewards.
Validators who act as a governance body can also stake $ZERO LP tokens. As these activities generate fees, stakers receive a share of the fees, creating an incentive for users to contribute to the network's liquidity and security.
Handling Malicious Behavior
If stakers behave maliciously, slashing penalties are applied. In such cases, the staked $ETH is liquidated, and the resulting funds are used to buy back and burn zBTC until the network is solvent again.
By implementing this economic model, the ZERO Network aims to create a secure and sustainable environment for cross-chain interactions, offering users the opportunity to generate revenue while contributing to the network's growth and security.
Liquidity and NFTs: The ZERO Heroes Collection
One of the key components of Zero's ecosystem is its NFT collection, the ZERO Heroes.
While typical NFTs are merely digital collectibles, the heroes go far beyond this, acting as a mechanism for providing liquidity to the network's cross-chain bridge.
So how do they work, what utility and benefits do they offer holders, and how can you secure your own?
The LP Process: How ZERO Heroes Work
The ZERO Hero collection consists of 3,000 uniquely generated 1/1 NFTs that serve as a liquidity provision mechanism to the $ZERO token.
While this may sound complex, the process is straightforward.
Users who participate in the mint (dates to be announced via socials) will purchase their NFT using $ETH. The Hero NFT will hold the value of the deposited $ETH, which will then be paired with $ZERO tokens and deposited into liquidity pools.
ZERO Heroes provide an innovative strategy to enhance liquidity for the $ZERO token and allow holders to be part of the Diamond Hands game!
Diamond Hands Game
The Diamond Hands game is designed to encourage holding the ZERO Heroes and, in turn, providing liquidity to the $ZERO token long-term.
Upon network launch, NFT holders can optionally redeem or burn their tokens for the underlying LP ($ETH & $ZERO) at any time – resulting in a potentially deflationary NFT supply.
However, the redemption process is non-linear and is engineered with an exponential liquidity redemption curve. This means early redeemers receive fewer LP tokens than those who redeem later – Diamond Hands!
The ZERO Token and Upcoming Testnet
As the ZERO Network continues to evolve, two pivotal milestones are on the horizon: the further development of the $ZERO token's functionalities and the testnet launch. While we can't reveal specific times, dates, or tokenomics details such as vesting schedules, we can offer a glimpse into what these developments mean for the ecosystem.
Fueling the Network
The $ZERO token serves as the backbone of the ZERO Network, driving various functionalities that ensure the network remains liquid, secure, and efficient. While the complete tokenomics are still in the works, the token is designed to offer multiple utilities, from governance to staking – playing a crucial role in the network's economic model.
Upcoming Testnet—Get Involved!
This phase will serve as a testing ground for all the network's features, from bridging assets across chains to governance mechanisms. The testnet aims to showcase the network's capabilities, focusing on enhanced security measures and interoperability functionalities.
Community members will be able to test the network's features and provide valuable feedback. Your insights can help fine-tune the technology and user experience, making the network more secure, efficient, and user-friendly.
Keep an eye out for future announcements and join ZeroDAO's community channels regarding additional ways to get involved. As always, stay tuned for more updates, and join ZeroDAO's community channels on Twitter, Discord, and via the zeroDAO website.
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