Zircon Finance FAQs
We've collected some of the most common questions our community asked us.
Who are the founders?
–Andrey: Previously an editor at Cointelegraph focusing on DeFi. While working on Zircon, I’m also consulting at Hypersphere Ventures and writing the Dot Pulse newsletter by DeFi Pulse. Made a few trading bots before Zircon.
–David: Worked as software developer on Banca Sella. Before Zircon, I was/am helping build great products for small startups like FantaMaster, Fly Wallet and Allo Energy. Love to be part of new challenges.
How will the DAO work?
All DAO members will have governance power over the protocol.
The governance will be able to set key parameters of the Zircon Pylon System and will be able to take decisions about Zircon’s treasury spending via a flexible grant system. The grants can be used to direct development and reward other initiatives of the protocol.
When will mainnet be launched?
Zircon Gamma will be launched in Q2. We will announce the exact date on Twitter and Discord. Stay tuned!
Who is funding the project?
The project is currently operating on a Moonbeam grant while working on further fundraising.
Where can I see the roadmap?
Our litepaper offers a glimpse of the Zircon roadmap, stay tuned for a deeper dive soon.
What is Pylon?
Pylon is the name of our risk tranching mechanism for pools based on Uniswap V2. It splits the pools into a “Junior” tranche called Float, and a “Senior” tranche called Anchor. This enables users to provide liquidity with 100% exposure to only one asset. Pylon is an external vault added on top of the liquidity pool, and it doesn’t affect how it operates. You can read more in the docs.
Do you combat impermanent loss?
Partially. The system is designed to cover losses for Anchor holders, essentially providing protection for impermanent loss when the Float asset dumps. But if the Float asset goes up, its holders still suffer IL. Their returns are exactly 2X those of the regular LP model (if no additional liquidity is supplied).
Why don’t you cover upside impermanent loss?
It’s a matter of liability. Assets have no limit to how high they can go, so if an amazing coin goes up 100x, the pool would only capture 20x of that. The protocol would suddenly have to cover 80x of the initial value. On the other hand, an asset can only dump 100%, so there’s a clear limit to how much you’ll ever need to cover.
This allows us to localize our protection to the liquidity pool: each is responsible for its own impermanent loss. Our protection mechanism is flexible and permissionless.
What’s the value of Zircon for Float then?
Impermanent loss is often misunderstood. It’s actually a very gentle phenomenon that only starts to matter from 10x rises onwards.
Before 10x, Zircon’s Float holders make more money than the “ideal” no impermanent loss benchmark. This is because the benchmark assumes that you split your assets 50/50, which makes you instantly lose half of the gains. Zircon gives 100% exposure, and thus doubles your gains over a regular liquidity pool.
Can you provide liquidity to Zircon normally?
The Zircon DEX is still a slightly modified Uniswap V2 underneath. The swapping functions are the same, and you can still provide liquidity as you would regularly.
Who chooses which asset is the Float and which one is the Anchor?
Each pool can support two Pylons, one for each combination.
You can have an ETH/USDC vault where ETH is Float and USDC is Anchor, but you could also have USDC as Float and ETH as Anchor (this produces a weird but interesting consequence: the USDC Float is a put option on ETH).
Anyone can create pools and Pylons. Pool creators are free to pick which combination they want to start with, but obviously some common sense should be applied there.
What are the risks of supplying liquidity to Zircon Pylon?
Shared: Smart contract risk of hacks and exploits.
You suffer impermanent loss when your asset goes up.
You have 100% exposure to your asset, which also means that you lose more if it goes down, compared to a regular LP portfolio.
You can never earn more than your original assets + fees.
Your risk profile is that of bonds: you have reduced exposure to the market, but can still lose up to 100% of your money in Black Swan scenarios.
How can Anchors lose their money?
If the Float goes down by more than 60%, the Pylon system starts to get strained. Then:
If the pool hasn’t accumulated enough reserves,
If the pool is not covered by the protocol at large,
If the Float asset never recovers,
If there is no demand for the pool’s fee bonds,
If nobody supplies fresh Float liquidity,
Then Anchors will be only allowed to withdraw as much as (Total Pool Value - Float Share) until these conditions persist. This is still unlikely to result in total loss, unless the Float asset literally goes to zero.
Community & PoinZ
How do I get whitelisted?
The whitelist gives users a possibility to enter the DAO and guarantees 5-20 NFTs of the upcoming chemistry-based collection. To get whitelisted users need to:
Subscribe the Beta on the website
Join the Discord server and invite at least 5 people
Tweet at least 5 times tagging @Zircon_Finance
Reach at least level 5 on the Discord server
Further info on the blog
We will also open up more ways to make it into the whitelist or earn PoinZ based on testing and specific contests.
When will the whitelist be closed?
The whitelist will be closed somewhat before mainnet launch, which will occur in a couple of months.
How will you know if I subscribed to the beta?
Right before the beta launch, the team will open a form that enables users to connect their Discord account to their registered wallet.
How many people do I need to invite on Discord?
You need to invite at least 5 people on Discord.
How do I connect my Twitter account to Discord?
Currently user accounts can not be linked to Discord. Users can link their tweets on our dedicated channel so that we can track them. Make sure to tag @Zircon_Finance in the body of the tweet. If it starts from the tag, it will not appear on your timeline.
How will I track my PoinZ?
We are making a bot on Discord to automatically track your PoinZ. It is currently being developed and it will be available around the end of February (after beta launch).