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Created August 10, 2021 19:35
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Wrapped Balance Logic
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balance-logic.md

Contrived assumptions:

  • USD value of 1 Ether = USD value of 1 Zcash
  • Wrapped Service Fee is a fixed 10%
  • Contract execution cost (gas) is 0.1 ETH
  • Zcash transaction execution cost is free

Wrapping Flow

  1. Starting state, Wrapped.com has put 1 ETH in the vault to pay for gas
Token Vault Balance User Balance
Zcash 0 0
Wrapped Zcash 0 0
Ether (for gas) 1 N/A
  1. User deposits 1 ZEC in order to create a wrap order for 1 WZEC
Token Vault Balance User Balance
Zcash 1 1
Wrapped Zcash 0 0
Ether (for gas) 1 N/A
  1. User executes the wrap order on their entire ZEC balance (1 ZEC)
  • service fee of 10% is deducted as 0.1 ZEC
  • execution fee of 0.1 ETH, priced as (0.1 ZEC) is deducted
  • WZEC tokens are minted
Token Vault Balance User Balance
Zcash 1 0
Wrapped Zcash 0.8 0.8
Ether (for gas) 0.9 N/A
  1. User withdraws their wrapped tokens, incurring an execution fee of 0.1 ETH (Wrapped.com simply pays for this)
Token Vault Balance User Balance
Zcash 1 0
Wrapped Zcash 0 0
Ether (for gas) 0.8 N/A

Unwrapping Flow

  1. Starting state, assumed to occur after the events of the above wrapping flow
Token Vault Balance User Balance
Zcash 1 0
Wrapped Zcash 0 0
Ether (for gas) 0.8 N/A
  1. User deposits 0.8 WZEC in order to unwrap into ZEC
Token Vault Balance User Balance
Zcash 1 0
Wrapped Zcash 0.8 0.8
Ether (for gas) 0.8 N/A
  1. User executes the unwrap order on their entire WZEC balance (0.8 WZEC)
  • service fee of 10% is deducted as 0.08 ZEC
  • execution fee of 0.1 ETH, priced as (0.1 ZEC) is deducted
  • wrapped tokens are burned
Token Vault Balance User Balance
Zcash 1 0.62
Wrapped Zcash 0 0
Ether (for gas) 0.7 N/A
  1. User withdraws their underlying tokens (0.62 ZEC)
Token Vault Balance User Balance
Zcash 0.38 0
Wrapped Zcash 0 0
Ether (for gas) 0.7 N/A

Limitations

  • We are required to maintain a higher balance of underlying tokens in the vault at all times
  • If we have a customer who is only unwrapping and they have their own vault... where do the underlying tokens to pay for fee's come from?
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