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Stability Pools

Stability Pools are a core mechanism in Zhenglong that provides security, yield generation, and automated rebalancing capabilities.

What are Stability Pools?​

In Zhenglong, system solvency is maintained through an elegant and powerful mechanism: Stability Pools. These pools not only secure the protocol but also offer yield opportunities and strategic flexibility to participants.

Zhenglong features two types of Stability Pools, each with different redemption outcomes:

Types of Stability Pools​

  1. Collateral Stability Pools

    • Pegged tokens (e.g., zheUSD) deposited here are used to redeem real collateral assets (e.g., ETH, stETH) when needed
    • Depositors effectively exchange their pegged tokens for the underlying collateral at 1:1 value based on the oracle price at the time of redemption
    • Perfect for accumulating collateral assets during market downturns

  2. Steamed Stability Pools

    • Pegged tokens deposited here are swapped for steamedTokens (variable leveraged exposure tokens) during rebalancing
    • Depositors accumulate leveraged exposure to the collateral asset's performance during market volatility
    • Ideal for those seeking amplified returns if the market rebounds

Both types of pools play critical roles in ensuring the system remains healthy, flexible, and rewarding for users.

How Stability Pools Protect the System​

When the global collateralization ratio of the system falls below a predefined safety threshold (e.g., 130%):

  1. The protocol automatically triggers redemptions
  2. A rebalance transaction becomes executable by MEV searchers who are economically incentivized to execute it
  3. Pegged tokens deposited in Stability Pools are burned to cancel outstanding system debt
  4. Depending on the pool type:
    • Depositors receive collateral assets (Collateral Pools), or
    • steamedTokens representing the leveraged remainder (Steamed Pools)

This instant rebalancing ensures the protocol stays solvent without auctions or external liquidators.

Why Stability Pool Participation is Attractive​

  • 1:1 Value Redemptions: Depositors swap their pegged tokens at fair market value for either collateral or leveraged exposure — not discounted, not auctioned, but at market price when the market is experiencing a downturn, or after a pegged token experiences a price spike.

  • Yield Opportunities: Stability Pool depositors earn the yield from underlying collateral (e.g., stETH)

  • STEAM Token Rewards: Participants in either type of pool can earn additional STEAM incentives, compounding their returns, if veSTEAM holders have voted to direct liquidity incentives to the stability pool

  • DeFi Composability: Stability Pools can form the foundation for automated strategies: Vaults can deposit into Stability Pools, accumulate redeemed collateral or steamedTokens, and optionally swap back into pegged tokens

Example: During a Market Downturn​

In a Collateral Pool​

  • A user's zheUSD is used to cancel system debt
  • They receive ETH or stETH worth exactly the value of the burned zheUSD, based on current oracle prices
  • They now own real crypto assets, possibly at a market low, and benefit from any recovery

In a Steamed Pool​

  • A user's zheUSD is swapped into steamedETH
  • If ETH rebounds strongly, their steamedETH could increase in value more rapidly than regular ETH exposure

Both options allow users to benefit from system stress rather than fear it.

Participating in Stability Pools​

Depositing​

  1. Connect your wallet
  2. Choose a stability pool type (Collateral or Steamed)
  3. Enter deposit amount
  4. Approve transaction
  5. Start earning yield

Withdrawing​

  1. Navigate to your position
  2. Enter withdrawal amount
  3. Approve transaction
  4. Receive funds

Claiming Rewards​

  1. Check available rewards
  2. Click "Claim Rewards"
  3. Approve transaction
  4. Receive STEAM tokens

Yield Calculation​

Yield is generated from multiple sources:

  1. Collateral token yield (e.g., stETH staking rewards)
  2. STEAM rewards
  3. Boost multipliers for veSTEAM holders
  4. Potential upside from rebalancing events (not included in displayed APR)

Best Practices​

  1. Diversification

    • Spread deposits across both Collateral and Steamed pools
    • Consider multiple collateral types when available

  2. Regular Monitoring

    • Check global collateralization ratios
    • Monitor protocol health metrics
    • Stay informed about market conditions

  3. Strategic Positioning

    • Use Collateral pools during expected downturns to accumulate assets
    • Use Steamed pools when you anticipate volatility with recovery

  4. Understand the Risks

    • Be aware of potential pool depletion
    • Understand the recovery mechanisms
    • For a comprehensive view of protocol risks, see the Risk Considerations documentation

Summary: Why Zhenglong's Dual Stability Pool Design is Powerful​

✅ Automatic System Protection: Pegged token backing is constantly rebalanced without auctions

✅ Flexible Redemption Outcomes: Users can choose between collateral accumulation or leveraged exposure

✅ Attractive Real Yields: Participants earn from collateral performance and STEAM incentives

✅ Building Block for Advanced DeFi: Vaults and strategies can be created directly on top of Stability Pools

✅ Market Participation, Not Liquidation: Users actively benefit from volatility instead of being exposed to liquidation risks

Zhenglong's Stability Pools transform market downturns into opportunities — rewarding users for securing the system and offering the flexibility to accumulate collateral or gain strategic leveraged exposure, all fully on-chain and permissionless.

Technical Details​

Contract Addresses​

  • Collateral Pool: 0x7c77704007C9996Ee591C516f7319828BA49d91E
  • Leveraged Pool: 0x081F08945fd17C5470f7bCee23FB57aB1099428E

Key Parameters​

  • Minimum deposit amounts
  • Withdrawal delays
  • Rebalancing thresholds
  • Yield distribution rates

Support​

Need help with stability pools?

  • Join our Discord
  • Check our FAQ
  • Contact support team