State of the Reactor - March 10, 2023


News and Marketing

  • Tokemak does not have any exposure to Silicon Valley Bank, which suffered a bank run today and has been taken over by the FDIC.
  • The team wants to ensure that they do not front-load marketing efforts before v2 is ready. The marketing budget will have more of an impact with onboarding new users once the product is more feature-complete.
  • Medium articles, Twitter Spaces, hype-videos, and other efforts are underway. The team is thankful for the community’s patience!
  • V2 will be much more consumer-facing than v1, so marketing efforts will be more directly actionable by end users who may be interested in the product.

Protocol Updates [4:20]

  • Liquidity Management Pools will be a DAO-facing product that will allow liquid staking derivative (LSD) protocols to rent liquidity at transparent rates. This feature can be thought of as a “liquidity order book.”
  • V2 will ultimately combine two separate sides of a product. On one side the general user will interact with liquidity provisioning, and the other side features a DAO-facing product that will allow for renting liquidity.
  • “Liquidity campaigns” will enable DAOs to define their liquidity needs and set the amount they are willing to pay per period for a given amount of liquidity at the current market rate. DAOs will be able to stack various methods of attracting liquidity, including paying the market rate and layering additional incentives. [6:16]
  • The ability for the Tokemak protocol to set a defined rate will allow for predictable liquidity incentivization. [8:25]
  • The UI/UX design aims to be visually understandable to users without them needing to understand detailed parameters. [10:09]
  • A redacted version of the UI will likely be shared with the community soon.
  • The development team is working on AMM integration contracts with Velodrome, Balancer, Curve, and others. [13:29]
  • Unlike Tokemak v1, which was limited by a health factor to protect both the users and the protocol, v2 will be able to scale without guardrails.
  • Because LSD DAOs need to position their derivatives as a unit of account within DeFi, the addressable market for Tokemak v2 is large. [14:32]
  • The past couple years of DeFi have exposed pool2s as broken, but bribing markets have proven to be a more sustainable method of attracting liquidity. Tokemak v2 will improve upon this design and remain compatible with bribing protocols. [15:50]
  • HiddenHand continues to see significant bribe activity, which further confirms the product-market fit of a liquidity incentive marketplace.
“Ultimately, the market then finds an equilibrium for the cost to rent liquidity into the specific pools it is going into.” - Craig [16:49]
  • Tokemak is engaged with most of the leading LSD protocols in order to validate the product and incorporate feedback. [22:26]
  • In April there will be a Twitter Space community call with Swell, a new LSD provider.
  • The release of v2 is not dependent on Ethereum’s upcoming Shanghai upgrade; rather, the release is following an internal timeline.
  • Stay tuned for more updates!
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