Introduction to Azos
A New Approach to Climate Finance
Azos is a revolutionary financial platform that allows users to access liquidity while supporting climate solutions. The platform enables users to mint a stable digital currency (AZUSD) by staking climate-focused assets as collateral.
How Azos Works
At its core, Azos operates through a straightforward process:
- Users stake their climate assets as collateral on the platform
- Based on this collateral, users can mint AZUSD, a stable digital currency
- Users pay an ongoing stability fee based on their outstanding debt
- As long as users maintain a healthy collateral ratio, they keep full access to their minted AZUSD
This system provides immediate liquidity without requiring users to sell their climate assets. Instead, these assets work for users by unlocking value while maintaining long-term exposure to climate solutions.
Understanding Risk Management
The Azos platform includes robust risk management mechanisms to maintain system stability:
If a user's position becomes unhealthy (when their debt exceeds the allowed ratio for their staked collateral), a liquidation process begins automatically. The collateral is seized and auctioned off at a discount on the open market to cover the outstanding debt.
During liquidation, users keep any AZUSD they've already minted. The loan is paid back through the liquidation auction, and any remaining collateral becomes available for the user to claim.
This transparent risk management system protects both individual users and the overall stability of the platform.
The Climate Focus
While the Azos technology could work for various asset types, we've specifically designed it for climate-focused assets. Due to significant early commitments from environmental organizations, the platform has bundled climate assets into its collateral pool.
This means the risk profile of the system is tied to a diversified index of climate-related assets, distributing risk across multiple projects and initiatives rather than concentrating it.
Building on Proven Technology
The Azos protocol serves as a framework for creating systems capable of issuing stablecoins. These stablecoins not only act as a reliable source of collateral for other DeFi protocols—when compared to assets like ETH or BTC—but also function as a store of value, complete with an integrated funding rate.
Azos is built on top of a long line of pioneering software genius including MakerDAO's Multi-Collateral DAI, Reflexer Finance's Goedell, Escher, Bach Reflex Index and HAI On Optimism.
For a comprehensive understanding of the Azos framework, this documentation aims to detail each of its components. We strongly recommend reviewing Reflexer's original whitepaper as a precursor to this documentation.
Core Differentiators of ZAI from GEB
AZOS is an enhanced fork of HAI.
Future Potential
As the platform matures, the technology can be scaled laterally to accommodate different risk profiles and collateral types. This flexible architecture allows Azos to potentially expand beyond climate while maintaining its core functionality.