State of the Reactor - July 29th, 2022


Key Takeaways

  • A UI update to be released early next week links to the new Curve v2 LP pools and the boosted Convex staking pool, along with a related article on Medium to provide details about these new options.
  • A full UI revamp is coming, but no concrete timeline has been announced.
  • Pairs (under the Pro mode) will be able to be deployed to the new Curve v2 pools over the next several weeks. The contracts are ready to go pending audit.
  • Balancer v2 will be added as a liquidity deployment venue. Balancer, with 80/20 token ratio, introduces a novel pool balance mechanism compared to other AMMs.
  • In the near future, experimental Reactors will be spun up that allow the protocol to begin the process of adding a more decentralized avenue for initializing new Reactors. These experimental Reactors, along with Curve v2 and other additional liquidity deployment venues, will become more important since they allow for additional sources of revenue besides just liquidity fees.
  • Profitability of Reactors will become more important, with slashing being utilized more aggressively.
  • Spinning up a Reactor may be similar to passing through a Curve gauge – it’s possible for anyone, but it requires effort and due diligence on the incoming project’s part.
  • Protocol revenue is posted in the #dev-updates channel, but the figures are under-reported since they do not include sources other than trading fees. The team is exploring methods for improving reporting in the dashboard. The protocol is on track to become net-profitable, with revenues greater than emissions.
  • Trading fees alone (ignoring impermanent loss) average around 2-5% on the low end to 20-25% on the high end. Current revenue is roughly $100k per week.
  • In answer to a question on burning unminted tokens when revenues exceed emissions: it’s technically possible for the protocol to burn uncirculating supply. However, it is a net-positive for Tokemak as a protocol to have the optionality of the treasury (for incentivizing deposits, contributors, investments, etc).
  • Deployment of Tokemak v2 is still planned for the near future; no major delays are expected.
  • Tokemak is not planning to request grant funding from Optimism, as it would likely overlap with Curve. Deploying to Arbitrum is more interesting for the protocol.
  • Tokemak has a different approach than Bond Protocol (Olympus Pro), which is generally used for slowly building up a treasury of native tokens owned by the protocol. Tokemak is more direct than Bond Protocol, as it allows pairing and immediate deployment of market liquidity.
  • The team is excited regarding a potential partnership for market making with Uniswap v3, and also reported very exciting opportunities for collaborations with builders whom they chatted with during EthCC.
  • The team has been speaking with many protocols that offer solutions for deploying to Uniswap v3, but is currently working on maximizing revenue on existing venues. However, they are in discussions with the Gamma team and others.
  • The team mentions that there are ways to make low-volume pairs profitable.
  • The TOKE/ETH Curve v2 pool, which offers rewards in CVX and CRV, was being farmed by Tokemak by itself, but has now been diluted. This pool will now be more publicized on the dashboard.
  • The SushiLP won’t be sun-setted anytime soon.
  • Liquidity deployment utilizing EIP-2635 will allow pairs to be moved without leaving dust using “diamond patterns.” These are “A proxy pattern that can allow us to add almost unlimited functionality and easily re-use that functionality as we start to make more complicated deployments”CodeNutt
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