Thread by @TychoOnnasch

🍊 Meet Zest Protocol 🍊

Zest is on-chain Bitcoin capital markets. Undercollateralised bitcoin liquidity for institutional borrowers, zesty yields for individual Bitcoin lenders.

We're bringing the $120 trillion bond market on-chain. Zesty.🍊

For liquidity providers, Zest offers sustainable Bitcoin yield through professionally managed lending pools

For institutional borrowers, Zest offers undercollateralised on-chain Bitcoin financing without constant fear of liquidation.

Zest pools are managed by pool delegates who whitelist borrowers and earn performance fees

Why are we building this?

Show the world that Bitcoin is not a rock.

Turning Bitcoin into a productive asset is what’s needed to achieve the next wave of institutional adoption.

More on that here:

https://twitter.com/TychoOnnasch/status/1478786660372471808

Why do undercollateralised lending?

This is where the market is and where the zesty yields are 🍊

When we set out with the idea to build Zest, we actually looked into doing overcollateralised Bitcoin borrowing/lending. However, we couldn't find many borrowers.

Most large borrowers of BTC are already borrowing undercollateralised (or fully unsecured - i.e. no collateral) off-chain from big institutions.

Also, most CeFi retail crypto lending products will lend your crypto undercollateralised.

Undercollateralised loans are the norm in TradFi for a reason. They are much more capital efficient.

Zest Protocol is making a start at bringing this lending market on-chain.

We're trying to bootstrap an on-chain Bitcoin yield curve.

What's the tech?

Clarity smart contracts have read access to Bitcoin state. A liquidity provider can send their native main-chain BTC to into a pool managed by a pool delegate. The pool delegate whitelists a vetted borrower. Now the borrower can withdraw native BTC from the pool

If the borrower doesn't comply with the borrowing terms specified in the smart contract (interest payments or repayment), the protocol will automatically liquidate them by auctioning assets on the Stacks network for native Bitcoin & lenders will get their Bitcoin back

Borrowers and lenders just need a Bitcoin address to participate in Zest Protocol.

Pool delegates will interact with the Stacks network to whitelist borrower btc addresses and manage liquidations.

Where can this go?

In a future version of Zest, we issue tokenized receipts of Bitcoin loans to lenders. Thus creating fixed income Bitcoin bonds that can be traded on secondary markets and are fully non-custodial. These Bitcoin bonds are fully composable across DeFi. Zesty.

Wen launch?

@FriendsFerdina1, @yoson___ and me are working on the contracts now - aiming to be ready for testnet end of Q1 2022. We'll have zesty incentives for degens to come & break stuff 🍊

We’ll be going through multiple audits, ready for launch at the end of Q2

If you're an institution looking for orange liquidity or zesty yields, we’re exploring partnership opportunities with pool delegates, borrowers, and liquidity providers 🏛

We’d love to hear from you

.@ZestProtocol is looking for new frens on twitter, also join our Discord & check out our docs here:

zestprotocol.com

Come join us on Twitter Spaces at 5pm ET to learn more about @ZestProtocol

@a41_steve will join to explain why he thinks Zest is great for institutions

https://twitter.com/Stacks/status/1494030079403474948

Stay zesty 🍊

Also, big s/o to @Macxim for the zesty designs

And @ileanamalacrino & @louiseivanvp for suggesting the name 🍊