Zero Design Preview #2 - Managing a Line of Credit

Brought to you by Sovryn

January 10, 2023

Welcome to part 2 of our blog post series where we share previews of the new Sovryn web app that we are working on. In part 1 of the series, we previewed the “getting started” flow of the app. If you haven’t read part 1 yet, we suggest reading that first so you have more context then come back here for part 2.

In this post we are going to give a preview of what it looks like to manage a Zero line of credit using the new web app. The same disclaimers as before still apply: the designs shown will be “final-ish” and may change prior to release, either based on work yet to be done or in response to feedback received. Some of the flows will be simplified in these posts for the sake of brevity. We welcome your feedback!

You may recognize this page from part 1 of the design preview series:

This is the dashboard page where you can see information about the state of the Zero protocol and its wider ecosystem, including protocol statistics and information about open lines of credit. Specifically, this is the state of the dashboard shown if you have enough BTC in your connected address that you can open a line of credit with at least the minimum required amount of debt.

Clicking “Open line of credit” will pull up a modal where you can enter the details of the line of credit you want to open:

You can use the dropdown selector next to the “Borrow amount” field to select which currency you want to borrow: DLLR or ZUSD. If you choose DLLR, you will be able to open a line of credit, deposit collateral, borrow ZUSD, and deposit the ZUSD into the Mynt aggregator in exchange for DLLR, all in a single transaction.

Recall that ZUSD is the native USD-pegged currency issued by the Zero protocol and DLLR is the native currency issued by the Mynt protocol. The purpose of Mynt is to aggregate multiple forms of BTC-backed, USD-pegged stablecoins to provide a stablecoin (DLLR) that is more resilient and scalable than any of the individual stablecoins that are held by the aggregator.

Due to DLLR’s resilience and censorship-resistance, which are owed to being exclusively backed by BTC, we plan for DLLR to be the main stablecoin of the Sovryn ecosystem and will encourage everyone to use DLLR as their digital dollar of choice. The same goes for the new Sovryn web app. Wherever possible, we will make DLLR the default.

So, when you go to open a line of credit, DLLR will be the default currency to receive. However, you will have the option to select ZUSD from the dropdown if, for example, you plan to deposit your loan directly into the Zero stability pool and you don’t want to pay the additional gas costs that would be incurred going through Mynt for both the borrow transaction and the stability pool deposit transaction.

Once you have filled out your line of credit details, you’ll click confirm to complete your transaction. A modal will pop up with information about your transaction, specifying the action you are taking, exactly how much of which asset is being transferred from your address, and an estimate of the network fee given the gas settings of the transaction.

You will also be provided gas settings in the “advanced settings” section of this modal. This enables you to double-check and set your gas settings such as the gas limit and gas price of the transaction. Most of the time you should be able to leave these unchanged and the transaction will go through as expected. However, sometimes you may want to lower or increase the default values, so these settings are available for you to do that if you want. 

The gas settings feature will be especially useful to users who connect to the app using a direct hardware wallet connection. Hardware wallets don’t offer a way to edit gas settings directly on the devices themselves, leaving it to the software wallet interface or connected app to provide these settings. Since users who connect to an app directly using a hardware wallet aren’t using a software wallet interface, it’s up to the app to provide the ability to modify the gas settings, which is what we’ve done here.

Once the transaction to open your line of credit has been confirmed, you will be prompted to sign up for email notifications. This notification system is an extension of the same notification system used for the Sovryn margin trading protocol. The system will be able to give you alerts about important events related to your line of credit, such as warnings when your collateral ratio gets too low and alerts if the Zero protocol goes into recovery mode or your line of credit gets liquidated.

As with the margin trading notification system, for privacy reasons, the email address that you sign up for notifications with will be encrypted and stored in a database that is separate from your registered Rootstock address. Nonetheless, even with this security measure in place, it is advisable to sign up for notifications using a unique or “disposable” email address if you have any concern about linking your Rootstock activity to your identity.

Signing up for notifications is optional but strongly recommended so that you can be notified if your collateral ratio is nearing the liquidation threshold.

After either signing up for notifications or skipping that step, you will be given information about things you can do with your loan. For example you can provide liquidity to the Sovryn AMM, Sovryn lending pool, and Zero stability pool, buy more BTC or other assets using the Sovryn AMM, or use BabelFish to convert your loan to popular stablecoins on other supported blockchains. Clicking “Finish” will take you back to the dashboard where you can manage your newly-opened line of credit.

Once you have an open line of credit, you will see its current status in big, bold text at the top of the dashboard. You will also see your line of credit appear in the chart of open lines of credit on the dashboard.

Recall that the Zero protocol ranks lines of credit from the lowest collateral ratio to the highest collateral ratio to determine which lines of credit to pay off debt and redeem collateral from whenever someone uses the redemption feature of the protocol. With the line of credit chart you will be able to see your line of credit’s place in the ranking and details about the surrounding lines of credit. If you hover over your line of credit, you will also be able to see your line of credit’s “redemption buffer”, which is the amount of ZUSD that would need to be redeemed before your line of credit is redeemed against.

If you need to make any adjustments to your line of credit, you can click the “Adjust” button near the top of the dashboard. A modal will open with buttons and amount entry fields that let you adjust your line of credit by borrowing or repaying debt and/or adding or withdrawing collateral. You can perform these actions in any combination, as long as the resulting debt is greater than the minimum debt amount and the resulting collateral ratio is greater than the minimum collateral ratio.

As you adjust each value, your debt and collateral amounts, collateral ratio, and liquidation prices will change in real-time so you can immediately see how your line of credit will be affected.

After your transaction to adjust your line of credit is confirmed, you will see your changes reflected on the dashboard.

If you want to see your history of line of credit transactions, you can hover over your address in the top-right corner and click “History” to go to the history page. Here you can see a detailed view of your line of credit transaction history and export the history to a CSV file for record-keeping and accounting purposes.

When you are ready to fully pay off your line of credit, you can click the “Close” button. A modal will pop up informing you of the payoff amount and how much collateral you will receive in return. If you have enough of both DLLR and ZUSD in your address to close your line of credit, then you will be able to select which currency you want to use to close your line of credit. Otherwise, the default option will be whichever currency you have enough of to close your line of credit.

Once the transaction to close your line of credit is confirmed, your dashboard will return to the initial state, where you will be able to click the “Open line of credit” button again if you ever want to open another line of credit.

This concludes part 2 of the design preview series for the new Sovryn web app. In the next design preview, we will show how you will be able to use the new web app to interact directly with the Mynt protocol and earn BTC using the Zero stability pool.

Stay Sovryn!

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