Global zAsset Market Liquidity

Horizon Futures are synthetic assets that are backed by global zAsset liquidity.

The global zAsset market liquidity is provided by HZN stakers who stake their HZN tokens as collateral to mint new zAssets. To maintain balance between collateral and the value of the global zAsset market, stakers actively manage their debt against the global debt pool on a weekly basis and are rewarded with HZN and trading fees in return.

The global zAsset market can fluctuate due to the profits and losses incurred by traders on Horizon Futures. When traders profit, the global zAsset market grows (new zUSD is minted), and HZN stakers’ debt increases, requiring them to manage it in relation to the new global zAsset market size. Conversely, if traders incur losses, the global zAsset market contracts (zUSD is burned), reducing the debt burden of HZN stakers and allowing them to mint more zUSD and subsequently increase their rewards.

To limit the risk from trades in Horizon Futures to the overall protocol, futures smart contracts factor in the real underlying assets’ open market liquidity, and volatility in relation to the global zAsset market cap. The data informs the protocol the limits on maximum open interest (total size of all open trades allowed in the market), funding rates, and maximum leverage for each asset. These factors prevent exploits between the open market and Horizon Futures and ensures a more balanced market skew (longs vs shorts), which in turn protects the protocol and the HZN stakers who back the system.

Having a stable and liquid zAsset market is essential to the trader experience and it is incentivized by the protocol’s business model that generates fees from trading.