You should replace that tyre as it is damaged by too much flexing due to not enough air pressure. You can for short time get away with low pressure at low speed, but at higher speed the tyre will heat up too much and the rubber will crack and fall apart followed by the carcass. This tyre is not safe to use, especially at speed as it could fail catastrophically at some point.
Looking at your tyre it seems like the whole of the tread width was your contact patch as there is noticeable wear right up to where the damage is located. This suggests that your tyre was under-inflated. Ideally the majority of wear should be on the centre tread blocks with only minimal wear on the outer blocks as those should only contact the ground when cornering. The Z tyre has very little sidewall and seems designed to run well at low pressures, but this probably makes it difficult to tell when the pressure is too low.
I suggest you set the tyre pressure by checking how much the tyre compresses with you mounted on your EUC. This is not easy, so most people will guess based on preferred comfort level and stability, which is best when the tyre is under-inflated and so is not so good for the tyre. If you set the pressure to the manufacturer recommended values you will be good. Ideally you want the centre blocks to be your contact patch and the shoulder blocks to only contact the road when leaned over during cornering. Tyres can handle a wide range of pressures so there are no hard and fast rules, but you want to keep the pressure higher rather than lower because over-flexing is what causes the damage.