Pilot Manual: Introduction to Reactors


101 Level Reactors Course


Introduction to Reactors

Reactors are designed to supply sustainable liquidity across DeFi.

Assets are deposited into Reactors, and then deployed to exchanges.

There are two types of Reactors: Token Reactors and Pair Reactors.

Token Reactors are collateralized with volatile assets. Pair Reactors are collateralized with ETH and stable coins.

Token Reactors combine with Pair Reactors to complete the trading pair needed to provide liquidity to AMMs.

Each Reactor has two sides: Liquidity Providers, and Liquidity Directors.

Liquidity Providers deposit assets and receive an equal amount of tAssets.

Liquidity Directors stake TOKE and receive tTOKE and a proportional amount of voting power.

Both Liquidity Providers and Directors generate TOKE yield each cycle.

The APR on this yield is determined by the balance of the Reactor.

When an insufficient value of TOKE is staked, APR increases for Liquidity Directors.

Likewise, when an insufficient value of Assets are deposited, APR increases for Liquidity Providers. This incentivizes a balance of ASSET to TOKE.

When a Reactor is in perfect balance, yield is maximized on both sides.

A Liquidity Provider’s job is done after depositing assets into the Reactor, but a Liquidity Director can utilize their voting power to determine what exchanges assets will be deployed to.

Supported exchanges are currently Curve, Uniswap, Sushiswap, and Balancer, with more being integrated in the future.

The more votes an exchange receives for a given Reactor, the more liquidity it will secure.

Remember, a complete trading pair includes both Pair Reactor and Token Reactor assets.

The Tokemak protocol collects the trading fees it generates from this deployed liquidity.

These fees contribute to the Protocol Controlled Assets, which supplements user provided liquidity.

Ultimately, the protocol will own enough assets to provide liquidity without the need for third party capital. This is referred to as The Singularity.

The compounding of fees creates a blackhole effect as assets are continuously pulled in, allowing the protocol to sustain itself.

This concludes the Introduction to Reactors course.

Refer to Tokebase.org for additional training materials.

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