What Is It

Tokemak is a decentralized liquidity engine for decentralized exchanges whose primary goal is to solve bootstrapping liquidity for new projects. Tokemak “Defi Primitive” Network is designed to generate sustainable Defi liquidity and capital-efficient markets through a convenient decentralized market-making protocol. 

An example of this would be a new start-up project that needs to provide liquidity to launch its new coin. Under normal circumstances, the project needs to buy the coin it will be traded with, e.g., ETH, USDC, USDC. In addition, liquidity farms are typically set up on centralized systems such as Amazon Web Services. Both of these costs are of huge expense to new start-ups, which sometimes hinders the project’s growth. Tokemak aims to remove this costly inconvenience for new start-ups. Through their unique architecture, projects can source decentralized liquidity and have it directed to many decentralized exchanges of their choosing without providing its trading counterpart (ETH, USDC, USDC). This highly needed use case puts the cherry on top of Defi and has HUGE potential and significant benefits for all Defi users alike.

Who Can Benefit From Tokemak

➤ Liquidity Providers and Yield Farmers
➤ DAO’s
➤ New Defi Projects
➤ Market Makers
➤ Exchanges

Current Issues

Standing up liquidity for a new project is costly and inefficient
It is currently achieved by:
➤ Engaging centralized market makers (through capital, market knowledge, trading/pricing experience)
➤ Incentivizing users through yield farming

Value Proposition

Yield farming for new projects causes a strain on the health of the project due to inflationary tokenomics. This also carries high IT costs for massive server farms. Through Tokemak’s unique architecture, they directly solve these issues. In addition, a future decentralized economy requires a performant Defi base layer with sufficient liquidity for interoperability. THIS IS WHERE TOKEMAK DELIVERS! By building the first-ever Decentralized Liquidity Reactor for Defi, Tokemak has changed the future for accessing liquidity.

Tokenomics

➤ T. Supply – 100m
➤ Reward Emissions – 30%
➤ Cycle Zero’s DeGenesis Event & CoRE – 5%
➤ DAO Reserve – 9%
➤ Contributors – 16.5%
➤ Team – 14%
➤ Investors – 17%
➤ DAOs & Market Makers – 8.5%

Contributors, Team, Investors, DAOs & MM’s-(12-month cliff +12 month linear vest)

Architecture

Tokemak has two main protocol participants called:
➤ Liquidity Providers (LP)
➤ Liquidity Directors (LD)

These both play critical roles in providing and maintaining tokenized liquidity

Liquidity Providers (LP’s) deposit, e.g., ABC token into what is known as a “Reactor” & they receive a 1:1 tokenized version of that asset back in return. This process amounts to the SINGLE-SIDED liquidity provisioning for users.

Liquidity Directors – Through stakeholder governance rights, the LD’s will then choose & direct where they want the TVL (liquidity) in the Reactor to be sent. The liquidity can be sent to many DEX’s of their choosing, e.g., Uniswap, Sushiswap, Balancer & 0x.

Working Operation

Once the single-asset liquidity from the Reactor hits the chosen DEX, it’s paired with assets from Tokemak’s Genesis Pools to make a complete liquidity pair, e.g., ABC/USDC. LD’s stake quote assets in the Genesis Pools to earn TOKE rewards. Like a non-AMA exchange, real-time pricing needs to be provided. Tokemak will source what will be called “Pricers” (aka ‘market makers’) to set the bid/offer prices! There is more information coming soon on the Pricer network.

T-Assets

When an LP deposits assets into a reactor, they’ll receive a corresponding amount of t(Assets), a 1:1 ratio of their deposited assets. These t(Assets) are burned upon redemption of their underlying funds

Tokemak DAPP

The Tokemak DAPP consists of 5 pools, all of which the public can participate in and receive rewards in return. When you deposit into any of the five pools, you will receive an equivalent amount of tABC tokens.

Tokemak Pools

➤ ETH and USDC Genesis Pools: will receive an equal amount of tETH
➤ TOKE Single Asset Staking: will receive an equal amount of tTOKE
➤ TOKE/ETH Sushi LP: will receive an equal amount of tSLP
➤ TOKE ETH Uni V2 LP: will receive an equal amount of tLP

Governance

➤ Unlike most chains that incorporate Governance, #Tokemak brings it to another level
➤ $TOKE holders comprise the Tokemak DAO
➤ LD’s have the authority to choose where the liquidity is provided. This is not like typical Governance in other protocols
➤ Controlling protocol fee distribution
➤ Calibrating the length of Cycles
➤ Adding new token reactors
➤ Modifying protocol safety measures
➤ Starting at a 10/1 ratio at launch – you will be able to direct $10 of liquidity from owning $1 of TOKE staked – and will be incentivized with TOKE rewards
➤ Truly is Governance on steroids

Token Utility

➤ Governance – voting rights
➤ TOKE tokens are used to collateralize the network
➤ Reward system to stakeholders

Benefits

➤ Tokemak tokenizes liquidity & directs it where needed to create yield for token holders
➤As Tokemak sources, the single-sided pool, liquidity providers for new projects do not need to place a bond for the asset that will be traded with their token3
➤ Tokemak improves capital efficiency by creating an efficient market for tokenized liquidity that can be used to bootstrap new projects or supplement existing liquidity needs
➤ DEX’s may also see the platform as a way to increase their market depth

Protocol Collateralization for Liquidity Providers

➤ If LP’s want to withdraw their liquidity but have IL, there is a protocol in place that allows for a rebalancing of assets – it will enable LP to take out what they put in!
➤ Tokemak makes LPs whole by drawing the asset in deficit from the Protocol Controlled Assets (PCA) reserve
➤ This is reimbursed by drawing system-wide asset surpluses into the PCA

Incentives

➤ TOKE can be earned through participation in the protocol
➤ Liquidity Providers & Directors will receive $TOKE as rewards
➤ Essentially, Staking or Providing Liquidity between the Genesis Pool, TOKE, or TOKE/ETH Pools, you will be rewarded3

Black Hole Effect

As Tokemak grows, its increased value can be used to supplement the LPs assets & ensure the protocol can provide liquidity & MM services without 3rd parties. This will enable Tokemak & its holders to generate more value in addition to providing liquidity

Procedure for Rewards & Cycles

➤ If you deposit mid-Cycle, you’ll begin to earn TOKE at the start of the next Cycle
➤ TOKE rewards are only claimable weekly
➤ You must first “request” to withdraw, then the assets will be fully withdrawable at the start of the next Cycle

Partnerships

Strong backers include:
➤ Coinbase Ventures
➤ Framework Ventures
➤ Consensys
➤ Delphi Ventures

This is only the beginning. Tokemak will have every start-up and DAO eating out of their hand once it is up and running.

Team

Team size – 17
Developers – 2

Carson Cook – (CEO) – https://www.linkedin.com/in/carson-r-cook-phd-a7441738/

Verdict

Tokemak has a solid use case that many, if not all, new projects could avail of. The team has made a considerable breakthrough in Defi by creating the ultimate liquidity utility that is highly beneficial & cost-efficient. If this project team delivers and maintains their roadmap, I believe the project will gain a lot of traction in the near future.

Resources

https://medium.com/tokemak/introducing-tokemak-the-utility-for-sustainable-liquidity-8b99a4757301
https://medium.com/tokemak
https://www.tokemak.xyz/