What Is ZeroFi? Turning Privacy Assets into EVM Compatible Coins

Decentralized finance has grown into one of the most important pillars of the crypto industry. Lending, borrowing, decentralized exchanges, and onchain asset management have created an open financial system without intermediaries.

Despite this growth, a large portion of global crypto liquidity remains locked outside of DeFi. Assets such as Monero and Bitcoin were never designed to interact with smart contracts, leaving them isolated from Ethereum based ecosystems.

ZeroFi Protocol was created to solve this structural limitation by connecting native Layer 1 assets to EVM compatible DeFi in a permissionless and non custodial way.

Key Takeaways

• ZeroFi bridges native assets like Monero and Bitcoin into EVM based DeFi
• The protocol issues 1:1 backed ERC 20 wrapped assets called zAssets
• zAssets such as zXMR and zBTC are fully redeemable for native coins
• ZeroFi removes reliance on centralized custodians
• The protocol unlocks liquidity, yield, and composability for privacy assets

What Is ZeroFi Protocol

ZeroFi Protocol is a decentralized infrastructure designed to bring non programmable cryptocurrencies into Ethereum and EVM compatible ecosystems.

It enables users to wrap native assets such as Monero and Bitcoin into ERC 20 synthetic tokens known as zAssets.

These zAssets can then be used across DeFi protocols for lending, borrowing, trading, liquidity provision, and yield strategies while remaining fully backed and redeemable.

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The Core Problem ZeroFi Solves

Lack of DeFi Utility for Native Assets

Bitcoin, Monero, and similar Layer 1 chains were not designed with smart contracts or DeFi composability in mind.

• Native assets cannot earn yield in DeFi
• Users cannot use them as collateral in decentralized lending
• Liquidity remains idle on their native chains

Liquidity Silos Across Blockchains

Billions of dollars worth of crypto assets remain trapped within their own ecosystems.

• DeFi protocols cannot access major capital pools
• Capital efficiency across crypto is reduced
• Innovation is limited by fragmented liquidity

Privacy Assets Are Excluded from DeFi

Privacy coins offer fungibility and financial privacy but are often excluded from both centralized and decentralized finance.

This creates a paradox where the most decentralized assets are the hardest to use in open financial systems.

Lack of Permissionless Interoperability

Most existing bridges rely on centralized custodians or trusted intermediaries, introducing counterparty risk and censorship concerns.

ZeroFi is designed to remove these constraints.

The ZeroFi Solution

ZeroFi introduces a non custodial, automated wrapping protocol that allows users to deposit native assets and receive ERC 20 representations on EVM chains.

Key Innovations

• zAssets: ERC 20 tokens such as zXMR and zBTC backed 1:1 by native assets
• ZeroFi Bridge: A decentralized system for wrapping and unwrapping assets
• Cross chain liquidity unlocking: Native assets become usable across DeFi

This design preserves ownership while expanding asset utility.

How ZeroFi Works

Native Asset Wrapping

• A user sends native assets such as XMR or BTC to a ZeroFi controlled address
• The transaction is verified through decentralized validation mechanisms
• Once confirmed, an equivalent amount of zAssets is minted on EVM chains
• zAssets are sent directly to the user’s EVM wallet

zAssets Explained

• zAssets follow the ERC 20 standard
• Each token is backed 1:1 by a native asset
• zAssets can be used across DeFi protocols
• zAssets are always redeemable via the ZeroFi bridge

The ZeroFi Bridge Protocol

• Operates as a bi directional bridge
• Verifies deposits and withdrawals on native chains
• Uses cryptographic mechanisms such as threshold signatures and MPC
• Maintains a public reserve ledger for transparency

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Key Features of ZeroFi

Privacy Inclusion

• First protocol designed to bring Monero based value into DeFi

Trust Minimized Design

• No centralized custodians
• Security enforced by decentralized validators

Increased Liquidity

• Idle BTC and XMR can generate yield
• Capital efficiency improves across DeFi

Multi Chain Compatibility

• Supports Ethereum and EVM compatible chains
• Designed to expand to multiple ecosystems

Plug and Play DeFi Integration

• zAssets integrate with existing protocols
• Compatible with DEXs, lending markets, and yield platforms

ZeroFi Use Cases

Lending and Borrowing

• Deposit zAssets into lending protocols
• Earn yield or borrow stablecoins

DEX Trading and Liquidity Pools

• Trade zAssets on decentralized exchanges
• Provide liquidity to deepen markets

Arbitrage Opportunities

• Exploit price differences between native assets and zAssets

Yield Farming

• Participate in incentivized liquidity programs
• Earn governance tokens and fees

Collateral for Stablecoins

• Lock zAssets to mint stablecoins
• Access liquidity without selling holdings

Cross Chain Payments

• Faster and cheaper transfers across EVM chains

DAO Treasury Management

• DAOs can hold zAssets onchain
• Participate in governance and DeFi strategies

Onboarding Non EVM Communities

• ZeroFi acts as an on ramp for Bitcoin and Monero users

ZeroFi Tokenomics Overview

Utility of the ZFI Token

• Governance voting on protocol decisions
• Staking to secure the network
• Fee payments for wrapping and unwrapping
• Liquidity incentives for zAsset pools

ZeroFiNode Validator System

• Validators secure the bridge and minting process
• Validators must stake 1 million ZFI tokens
• Rewards include transaction fees and inflationary incentives
• Slashing penalties apply for misbehavior

Staking Pools and Liquidity Mining

• Non validators can join staking pools
• Liquidity providers earn ZFI rewards

ZFI Token Distribution

• Liquidity mining and staking rewards 30%
• Community incentives 20%
• Treasury 15%
• Team and advisors 15%
• Token sale 10%
• Airdrop 10%

Inflation and Burn Mechanisms

• Inflation supports validator and staker incentives
• A portion of fees is burned to reduce supply

Roadmap

The detailed roadmap is currently under development and will be released as the protocol progresses toward full mainnet deployment.

Final Thoughts

ZeroFi Protocol addresses one of the most persistent gaps in crypto. Valuable assets like Monero and Bitcoin have remained disconnected from DeFi despite their importance to the ecosystem.

By introducing zAssets and a trust minimized bridge, ZeroFi enables privacy, liquidity, and composability to coexist. It positions itself as a foundational layer for inclusive decentralized finance.

As DeFi continues to mature, protocols like ZeroFi may play a critical role in unifying fragmented crypto liquidity into a single interoperable financial system.

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FAQs

What is ZeroFi Protocol

ZeroFi is a decentralized protocol that wraps native cryptocurrencies into ERC 20 tokens so they can be used in EVM compatible DeFi.

What are zAssets

zAssets are 1:1 backed synthetic tokens such as zXMR and zBTC that represent native assets on EVM chains.

Is ZeroFi custodial

No. ZeroFi is designed as a non custodial and trust minimized protocol.

Can zAssets be redeemed

Yes. All zAssets are redeemable for their native counterparts through the ZeroFi bridge.

Which assets does ZeroFi support

ZeroFi supports Monero, Bitcoin, and plans to expand to additional native assets over time.