This product is on its beta. Use at your own risk.

Prelude: The Innovation of Duet Protocol

In May 2021, Duet Protocol proposed the world's first dual-channel pegging mechanism of synthetic assets, supporting over-collateralization and algorithm-pegging (for details please check out the white paper. at https://duet.finance/doc/Duet-Protocol-White-Paper.pdf ).

In the algorithm-pegging module (Lite Mint), Duet supports direct burn DUET and mint equal dollar value synthetic assets. This mechanism in the project's initial stage benefits minting users by more convenient minting method, higher capital utilization efficiency, and easier arbitrage opportunities. Lite Mint strongly incentivize synthetic assets minter and benefits early synthetic assets to form the initial supply. But on the other hand, DUET circulation is elastic supply in the short term, there may be a systemic risk when the overall market gets into a downward trend.

Duet is committed to building a robust & stable platform for the synthesis of assets. The team continued to optimize mechanism design, reducing the volatility of assets, improving the system robustness and stability through many theoretical research and testing practices. To maximize the validation of the Duet design, perfect the risk control mechanism and emergency response mechanism, Duet Protocol with the synthetic asset platform of its pilot version: Zerogoki, takes the algorithm anchoring mechanism into real transaction scenarios for validation.

Break-thought: The birth of Zerogoki

Zerogoki, a transliteration of '零号機' in Japanese, stands for the experimental model Unit-00, and its token REI is the pronunciation of the word 'zero' (れい) in Japanese. Thus, it’s a metaphor for a prototype. Zerogoki is a leveraged token trading platform deployed on Ethereum and based on an algorithmic pegging mechanism, which can provide users with leverage tools for traditional assets such as foreign exchange, gold, and bonds. Users can use the platform token REI to cast leverage tokens or use the protocol's synthetic dollar-zUSD to buy leverage assets directly.

Zerogoki is the pilot experimental protocol from Duet Protocol, which only has the Lite-minting module of Duet Protocol. That is, the synthetic assets are generated only by destroying the protocol asset-REI, and the volatile leverage tokens are chosen as the listed assets to increase the system test pressure. At the same time, the slower Ethernet main net with high cost is used to test if Duet can run smoothly in a harsh environment.

Differences and Correlations between Zerogoki and Duet

Zerogoki is an experimental product, and users need to understand the design mechanism of the protocol and analyze the risk structure of participation, then implement the strategic and rational practice. In contrast to Duet Protocol's more robust risk control concept, Zerogoki takes on a certain pressure test task for Duet. Its risk and income structure are significantly different due to the difference in mechanism design. The specific differences are as follows:

Compared with Duet Protocol's dual-channel (over-collateralization + algorithm pegging model) synthetic asset minting, Zerogoki only supports algorithm mint/redeem. This makes zAssets as elastic algo-pegging synthetic assets. The source of value comes from the burning of the REI, but there are no excess collateral assets in the system as debt positions so there is no CDP concept in Zerogoki.
In terms of assets listing, Zerogoki supports the minting and trading of financial assets including cryptocurrency, commodities, forex, bonds, stocks, and financial index. However, to put more pressure on the system, Zerogoki presents leveraged tokens. For example, gold supported by Zerogoki is a 3X bull tokens, recorded as zGOLD3L. The price principle of leveraged tokens refers to FTX leveraged tokens. For users of the concept of leveraged tokens and price adjustment methods, please read the price mechanism of leveraged tokens carefully in following sectors.
From the perspective of the economic design of the protocol token, since Zerogoki is a community-oriented project and liquidity providers bear higher risks, the allocation of tokens is more focused on incentivizing liquidity providers, and 50% of the REI tokens will be the reward for them. In addition, 15% of REI is used to reward governance participants in the Duet ecosystem. The remaining part will be left as a reserve fund, and the community will vote on its spending in the future.

Zerogoki Internal Assets Category

Zerogoki produces two types of assets, the system token REI, and the synthetic asset zAsset. The system token REI has governance rights and serves as the fuel to burn for minting synthetic assets. zAsset includes stablecoin zUSD and other leveraged tokens, and the system encourages zUSD as a quote currency. The conversion rate in the minting procedure is determined by the Zerogoki Oracle, which will not follow the price fluctuations in the on-chain swap market but will follow the price calculated from off-chain prices where these assets have better liquidity.

Attention：Please make sure you are choosing correct Zerogoki assets.