What are zTOKEN Vaults?

zTOKEN vaults represent the foundational infrastructure layer of the Zoth protocol, serving as specialized, yield-generating investment vehicles that bridge traditional fund management with blockchain technology. Each zTOKEN is an ERC-20 compliant, interest-bearing token where the token price appreciates over time to reflect accumulated yield from underlying investment strategies.

Unlike traditional stablecoins that maintain fixed value parity, zTOKENs function as tokenized fund shares. Each token represents a proportional claim on the vault's net asset value (NAV), which increases as the fund manager's strategy generates returns. This share-based model aligns zTOKENs with conventional mutual fund or hedge fund structures while leveraging blockchain technology for transparency, composability, and efficient settlement.

zTOKEN vaults are strategy-specific investment vehicles, with each vault typically focusing on a distinct investment domain or approach. The vault taxonomy includes:

• Real-World Asset (RWA) Vaults: Tokenized exposure to traditional assets such as commodities, secured lending, and equity positions

• DeFi Strategy Vaults: On-chain yield generation through liquidity provision, lending, derivatives, and trading strategies

• Private Credit Lending Vaults: Direct credit facilities and structured lending arrangements

• Geographic-Specific Vaults: Funds focused on particular jurisdictions or regional opportunities

※ Vaults based on single strategy and risk tier. Not a mixed strategy and risk tier. Risk-Tier Vaults: Categorized by risk profile (conservative, moderate, aggressive) to accommodate diverse investor preferences

• Single-Strategy Vaults: Highly specialized funds executing discrete strategies within narrow mandates

While fund managers maintain complete operational control over their strategy execution and can deploy capital across any DeFi protocol, blockchain network, or token asset, most vaults concentrate on singular or closely related investment domains to maintain strategic coherence and operational efficiency.

The zTOKEN vault ecosystem forms the yield-generating substrate for higher-level protocol products. Notably, ZEUSD—the protocol's flagship Liquid Yield Token—is itself structured as a vault that allocates capital across multiple underlying zTOKEN vaults according to governance-determined weights. This hierarchical architecture allows ZEUSD to offer diversified, risk-adjusted yield while individual zTOKEN vaults provide specialized exposure for investors seeking targeted strategies.