🧬slztokens

Increasing the capital efficiency

slzTokens are here to increase SolidLizard capital efficiency. These synth tokens are pegged assets that represent USDC, USDT, and ETH, and are called slzUSDC, slzUSDT, and slzETH, respectively. These tokens can be minted at a ratio of approximately 1:1 with an initial 0.01% fee and can be redeemed or minted at any time with no locking period. The slzTokens will be highly liquid and can be easily bought or sold in the market.

The collateral assets used for minting slzTokens generate yield through secure farming strategies. Currently, there is only one strategy available, which involves single asset staking on the Stargate Finance protocol.

Benefits of slzTokens:

One of the primary benefits of using slzTokens is that earnings generated by the collateral will be utilized to buy back and burn SLIZ from the market every few days, reducing the SLIZ supply and creating a constant buying pressure that benefits all users of the protocol.

Furthermore, the SolidLizard team plans to reward slzTokens users with higher yields compared to non-synthetic pairs. For instance, ETH/USDC liquidity providers will earn lower yields than ETH/slzUSDC providers, who will in turn earn less than slzETH/slzUSDC providers. Therefore, by utilizing slzTokens, users can enjoy higher yields and greater benefits.

The need for synth Assets in SolidLizard

SolidLizard has identified a need for slzTokens to achieve two primary objectives. Firstly, to introduce a deflationary mechanism for SLIZ while also offering better capital efficiency for users. Secondly, to reduce selling pressure from "farm & dump" users by encouraging all users to contribute positively to the SolidLizard ecosystem through utilizing their funds to generate yields on other protocols.

However, it is important to note that slzPairs will not replace traditional pairs, as classic tokens will still be required for routing and volumes.

Disclaimer

The usage of slzTokens comes with several risks that need to be acknowledged. These include possible issues with the Stargate protocol from Layer Zero, unaudited slzTokens (although an audit is planned for release soon), and the use of proxy contracts for deploying strategies.

To minimize these risks, SolidLizard will set an initial maximum mint cap for slzTokens. This cap will limit the impact of potential issues related to smart contracts and will be set at 300k for slzUSDC and slzUSDT, and 140 for slzETH. The cap will increase gradually over time. Additionally, the team will timelock ownership of slzTokens after a few days of tests to ensure added security.