ZARP is a digital asset designed to track the value of the South African Rand (ZAR) 1:1 on the blockchain. It offers a programmable way for users to hold and transfer rand value with the speed and efficiency of digital tokens.
What is ZARP structurally?
ZARP is a fully collateralized stablecoin where every token is backed by ZAR held in reserve. These reserves are managed by Old Mutual Wealth, one of South Africa’s largest and most established financial services providers.
The asset is issued as a native token on several blockchains, including Ethereum, Polygon, Solana, and Base. This structure ensures that ZARP is a “crypto-native” representation of the rand, capable of interacting directly with decentralized protocols.
How it works in practice
Users acquire ZARP by sending rands to the issuer through supported South African banking channels. Once the funds are received and verified, the issuer mints the equivalent ZARP tokens and sends them to the user’s specified wallet address.
On-chain, ZARP enables users to send and receive rand value instantly, 24/7, without relying on traditional banking hours or international transfer systems. It can also be used in decentralized finance (DeFi) to provide liquidity or earn yield on ZAR-denominated holdings.
Fees and pricing mechanics
The ZARP issuer aims to keep minting and redemption fees minimal for verified users. By removing the need for complex currency conversion intermediaries, ZARP significantly reduces the cost of moving between traditional bank deposits and on-chain assets.
Users are responsible for the network transaction fees required to move ZARP between wallets. Because ZARP is available on low-fee networks like Solana and Base, these costs are typically much lower than traditional bank transfer fees for cross-border payments.
Limits, eligibility, and availability
ZARP is primarily intended for South African residents and international businesses that require efficient ZAR exposure. Users must complete a KYC process to ensure compliance with South African financial regulations and anti-money laundering laws.
The token is listed on various decentralized exchanges, including Orca on Solana and Aerodrome on Base. This ensures that ZARP is tradeable and liquid, allowing users to exit their positions or swap for other stablecoins as needed.
Tradeoffs, risks, and limitations
The main tradeoff is the centralization of the reserve management. Although Old Mutual Wealth is a reputable custodian, users are ultimately dependent on the issuer and its partners to maintain the 1:1 peg and provide redemptions.
ZARP is not legal tender and is not protected by the South African Reserve Bank’s deposit insurance schemes. Additionally, like all stablecoins, ZARP is subject to the smart contract and security risks of the underlying blockchain platforms it inhabits.
