What problem Onyx solves

The core problem is simple:

Zcash gives you strong privacy, but there is no credibly backed, stable “money layer” on top of it.

Right now ZEC looks scary to most normal people:

• “What even is Zcash?”
• “The price chart looks like a nuke.”
• “It is private, so it must be risky.”
• “I cannot park savings in something that can drop 40% in a month.”

They are not completely wrong. ZEC is volatile and “just hold ZEC” is not a great savings story. On the other side:

• Dollar stablecoins (USDC, USDT, etc.) live on fully transparent chains, so every balance and transfer is traceable.
• “Algo stables” often rely on circular, reflexive tokenomics that blow up under stress.
• There is no Zcash-native, private stablecoin that feels conservative and boring enough to be real money.

Onyx is designed to fill that gap.

Our approach: a $100 floor and explicit risk separation

Onyx introduces USDO, a ZEC-backed stablecoin that lives privately on Aztec.
The key design choice is a conservative ZEC floor price and a split between “safe” value and “risky” value.

1. The protocol picks a conservative floor price for ZEC, for example
   `P_f = $100 per ZEC`.
2. When ZEC trades above that (say `P_m = $350`), the protocol only treats the first $100 as stable collateral for USDO.
3. The extra $250 of value is not assumed to be safe. It is pushed into:
   • a surplus / bond token called xUSDO, and
   • a buffer called the Volatility Absorption Pool (VAP).

So if ZEC is at $350 and you deposit 1 ZEC:

• You mint roughly 100 USDO (plus a small protocol-defined bonus).
• You receive xUSDO that represents the extra volatile value.
• Some of the surplus is routed to VAP and protocol fees.

If ZEC “nukes” down toward $100 or below:

• The system only promised the floor part.
  USDO is still backed by at least $100 of ZEC per ZEC used at mint.
• The pain is absorbed by xUSDO holders and protocol buffers, not by USDO holders.
• There is no magical algorithm pretending $350 is still “there” when it is not.

If ZEC rallies higher, xUSDO and a time-based redemption curve allow risk takers to share upside, while USDO stays pegged close to $1.

In other words, Onyx takes the “what if Zcash nukes?” question and bakes the answer directly into the math instead of hoping it never happens.

What people can actually use it for

• ZEC holders who do not want to sell
  Borrow USDO against ZEC at a conservative floor instead of dumping into a CEX. Keep long-term ZEC exposure but unlock stable liquidity.

• Privacy-focused users
  Hold a dollar-like asset (USDO) that lives in Aztec’s private state, instead of fully transparent L1s where their entire financial history is on-chain.

• Builders in the privacy DeFi stack (Aztec dapps, Boreal projects, etc.)
  Plug a native private stablecoin into lending, DEXs, payments and payroll without bolting on a centralized USDC bridge.

Onyx does not claim ZEC is risk-free or magically backed. It just makes the risk explicit and priced:

• USDO is backed at the conservative floor price.
• xUSDO and VAP take the “nuke or moon” volatility.