Status of Protocol Health
- Tokemak is in a very safe and healthy state regardless of the wider market conditions.
- $31M PCA, 74% stables ($23m USDC and DAI).
- 4-5 years of runway assuming zero revenue.
- Have been able to handle all withdrawal requests successfully through this market.
- 20 full time core members and numerous contributors.
- Recent sell-offs have changed many different protocols' focus to sustainability. This may be the key to future DeFi as we change from emissions-centric to revenue- and PCA-centric.
Tokemak Project Updates
- 85% confidence that accTOKE will ship in 2-3 months.
- Team is reviewing the second-order effects to be sure the mechanism does not affect how Tokemak currently functions.
- accTOKE enables locking, which will decrease circulating supply of TOKE.
- Enables profitable deployment, which further reduces emissions and helps to drive organic demand of TOKE across DeFi.
- Working on efficiently migrating into staking contract.
- Staking contracts are currently undergoing audits. This will take approximately three months.
- Looking into the technical feasibility of integrating into AMMs (Balancer, Fraxswap, Maverick, and other integrations).
- Adding market monitoring and DNS monitoring.
- Long term overhaul of liquidity deployment for increased efficiency.
- At first a game wrapper, but has evolved into something much deeper.
- More info to drop next week after testnet deployment.
- Governance recently launched; Snapshot is live; a foundation is established to support the Tokemak DAO. (For more info, listen to the TRU-1 Community Call).
- “Permissionless Reactors” are now referred to as “decentralized Reactors”.
- Team is continuing to work on decentralized Reactors, and is formalizing the ignition process.
- C.o.R.E. winners no longer need to perform a token swap in order to provide reserves. With the new ignition model, the DAOs may decide on providing their reserves, and then a Reactor may be spun up.
- This preserves TOKE and reduces governance requirements.
- Three out of five winning projects have progressed through discussions.
- Reactors can technically be spun up with ease. However, it is the business development and governance votes that take time.
- C.o.R.E.3 winning projects' liquidity and reserves are being established. This requires discussions with each DAO. Delays are due to market conditions.
- Team consensus is that we will conduct C.o.R.E.4, but will delay it due to unfavorable market conditions.
- Two types of calls are being implemented: Captains' Call on Thursdays, and biweekly Community Calls to be tentatively hosted on Fridays.
- The focus of the State of the Reactor will be general updates rather than specific delivery dates.
- A community Notion board is now public and up for questions, thoughts, and ideas.
- A new State of the Reactor Discord channel will be created to discuss the team's updates.
- The Dune Dashboard will continue to be updated.
Community Questions and Concerns
- Tokemak’s revenue decline is correlated with the market crash, and has dropped from $500k per week to $80k-100k per week. Both yield and value of earned assets are down.
- The currently deployed liquidity is not at risk, and our focus is on generation of safe revenue for sustainability. Our risk profile is being kept low and the liquidity multiplier is also being kept low given the current market conditions. These guardrails have saved Tokemak a lot of exposure during the market downturn.
- Other options for liquidity deployment that may improve revenue are being explored.
- Updated reward mechanics and revenue modulation on individual Reactors are working as expected.
- Enables locking TOKE and the emission of locked TOKE as rewards.
- The priority is that revenue outpaces emissions.
- Non-inflationary buybacks will be possible with the ACC model.
- Revenue will be distributed via TOKE rather than native reward tokens in order to reduce costs of the compounding process whilst supporting token markets. Otherwise this would be highly costly for users.
- Buybacks will be a subset of the accTOKE model.
- Buybacks must be supported by revenue.
- A TOKE/ETH gauge has been established on Curve.
- This increases our governance control on Curve.
- Membrane is already being tested by trading desks, and the team is receiving feedback.
- A DeFi-centric version without KYC is coming.
- Considering that the market conditions are not favorable for a product launch, it has been delayed for a provisional 3 months. Many other projects across the industry are also being delayed.
Alternative L1 & L2 Integrations
- A study of Reactor assets that are currently available outside of Ethereum revealed that only TCR and SNX were supported. As a result, the focus is on Tokemak v2 before deploying to additional layers.
- There needs to be an overlap in Reactor token presence in alt L1s and L2s. However, their markets currently do not have the demand to support the Reactors.
- Inflation of BNT is used to cover impermanent loss.
- Some Bancor LPs are no longer protected and are 50% underwater after the protocol suspended impermanent loss protection.
- Tokemak always has a protocol reserve and a leverage multiplier which can be run conservatively or aggressively. These are used to deploy liquidity safely, thus protecting against any impermanent loss.
Options & Derivatives
- Currently options, futures, and derivatives in DeFi are inefficient and the premiums are expensive.
- The team is open to future discussions with the community about implementing our own solution when it's more economically viable.