State of the Reactor - March 10, 2023
In this State of the Reactor call, the team discussed the powerful utility of predictable rates for renting liquidity.
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!