Introduction

Welcome to Zest Finance. Here you will discover the Zest ecosystem and how Zest will be changing the ETH ecosystem to make it more resilient, censorship resistant, and accessible.

What is Zest Finance?

Zest Finance is an innovative DeFi solution designed to enhance the decentralization of validator networks within the cryptocurrency ecosystem. By fostering competition among liquid staking protocols, Zest Finance aims to provide millions of users with the best possible staking experience for their cryptocurrency holdings. Zest's core mission is to achieve decentralization through incentivization. By strategically engineering incentives, Zest Finance aims to distribute capital throughout the ecosystem in a way that prioritizes the decentralization of validators.

What is LSDfi?

LSDfi refers to a new class of DeFi primitives that are built on top of liquid staking derivatives (LSDs) in order to enable markets on staking yields, validator monopolies, slashing risks, and even validator censorship. LSDfi enables use cases such as validator decentralization mining, validator dominance options, interest rate swaps, yield speculation, and efficient risk pricing. These mechanisms allow users to take advantage of the unique properties of liquid staking derivatives, and can similarly be used to improve healthy competition among validators and restrict capture of the consensus layer.

If you're new to DeFi, we suggest starting with our explainer series. These articles will help you grasp the fundamentals of staking, liquid staking, and Zest Finance.

What is Staking?

Staking is a process in which users lock up their ETH with validators or staking providers to support the operations and the security of the Ethereum network.

Proof of Stake (PoS) is a consensus mechanism used in some blockchains, like Ethereum, where the validators are incentivized to behave honestly in validating transactions/blocks and participating in the consensus mechanism, as well as not perform malicious acts that can dampen the integrity of the network. As a reward for their work, the network pays out to validators in ETH.

The technical purpose of staking is to create a decentralized and secure network by incentivizing users to contribute tokens, to maintain the blockchain’s operations by verifying transactions and deterring bad actors.

General users can either self-run a validator (Stake-at-Home movement) or utilize a staking provider. The requirements for running your own validator is 32ETH as collateral.

With the requirements of 32ETH for a self-hosted validator, it’s a high barrier of entry to participate in the network’s consensus. The true ethos of Ethereum means permissionless access and opportunity, which gave rise to the protocols such as Lido and Rocket Pool. Users can now meaningfully participate in validating the network, without much capital constraints.

Traditionally, in PoS systems, when users stake their cryptocurrency, their assets become locked and inaccessible for a specific period while they contribute to the consensus and security of the network.

What is LSTfi?

LSTfi refers to a class of decentralized finance (DeFi) protocols that are built on top of LSTs (Liquid Staking Tokens). LSTfi protocols leverage the liquidity and composability provided by LSTs to create new financial products and services within the DeFi ecosystem.

These protocols aim to enhance the utility and value of staked assets by enabling various use cases and promoting competition among validators in PoS networks. By unlocking the liquidity of staked assets, LSDfi protocols offer users the ability to actively participate in DeFi activities while still earning staking rewards.