In this proposal, we document the opportunity to use the ZAI Direct Deposit Module to mint 1mn USDz and supply it to the borrow side of Morpho Blue on Base with a borrow cap of 1mn.
Brief about Base
Base is the new chain by the Coinbase team. It has recently shown a lot of potential and growth and positioned itself as the L2 with the most active user base.
The listing of Aerodrome (AERO) on Coinbase further proves that building and contributing to the Base ecosystem will eventually allow us to get MAHA listed on Coinbase.
Plan of Action on Base
The base deployment of ZAI is live over here: ZAI Stablecoin (xUSDz) Token Tracker | BaseScan
We will start by incentivizing a pool on Aerodrome using MAHA rewards as voting bribes. We recently proposed the Aerodrome discord, asking permission to whitelist USDz for emissions. Discord
Our proposal to Aerodrome users is to share 60% of all protocol revenue on Base back to veAERO voters so that they can allocate the most amount of emissions to the USDz/USDC pool. Historically, we’ve seen that with incentives as little as $2000-3000/month we can easily scale the liquidity and TVL to over $1mn+.
Regarding infrastructure, we propose using the connext Bridge to bridge ZAI onto Base. Connext Bridge: Send USDz from Ethereum to Base with Connext
Regarding support from Base itself, we can participate in Base’s current gasless paymaster campaign: Base Gasless Campaign – Smart Wallet, where we can attract $10-15k of transaction incentives to keep transactions completely gasless on ZAI.
Usage of Funds
With a 1mn debt limit, we can supply 900k into Morpho and allow users to borrow USDz to lever up on LP tokens specifically. We have found that there are multiple Aerodome LP pools and multiple DeFi tokens that we can support leveraging yields on.
The remaining 100k can be kept on a liquidation contract to execute liquidations on any bad loans from the protocol.
LP tokens carry a lot of risk due to their potential to get exploited; however, they bring potential upsides in attracting DeFi users and liquidity. Hence we propose keeping a very small portion of borrow liquidity into LP tokens and the rest into vault tokens like the Moonwell USDC vault or lending protocol aTokens.
We expect the 1mn limit to get fully borrowed within a month. If this happens to be the case, we can execute another governance vote to increase the debt limits beyond 1mn (probably 5, 10mn, etc…).
Introduction of Native Restaking
With the launch on Base, we are also excited to share the feature of native restaking. See: Native Re-staking | MAHA
Native re-staking allows users on Layer-2s (like Base) to mint ZAI instantly with USDC without having to bridge to the ETH mainnet to get their ZAI.
Conclusion
We are super excited about the opportunity and potential of Coinbase and the base ecosystem. We encourage our community to give us feedback on this proposal. We look to launch into Base sometime in the coming week (August 25th).
Submitting Author
- Tally ID: enamakel.eth’s Delegate Profile
- Wallet Address: 0x77cd66d59ac48a0e7ce54ff16d9235a5ffff335e
- ENS: enamakel.eth
- Yae
- Nay
