What Is Tokemak And How Does It Work?
An overview of a tokenized liquidity provider Tokemac and the token TOKE!
Tokemak is designed to optimize liquidity for constant product AMM (automated market makers) like Uniswap V2 and its forks like Sushiswap. Essentially, the platform locks up ETH and USDC in its genesis pool and pays out in $TOKE. The $TOKE is then staked to direct liquidity back to the ETH or USDC pools or Tokemak reactors.
Currently, there are 7 live single token reactors/liquidity pools FXS, ALCX, SUSHI, TCR, OHM, APW, and FOX. Plus 3 that will yet to go live - VISR, SNX, ILV.
So, $TOKE holders are the key factor when it comes to one of the reactors receiving liquidity because they act as “liquidity directors,” and they do this by voting to which Tokemak reactor the liquidity should be sent.
For example, when the FSX protocol was fully deployed, users who are staking $TOKE could vote for the FSX pool to receive a portion of liquidity from ETH or USDC genesis pool. In other words, if a user wants to provide ETH/FXS liquidity, he locks up his $TOKE and on top of APR he gets, the user can also vote for the FSX liquidity.
Along with investors wanting to increase their returns with a decent APR, Tokemak can offer:
- Liquidity providers and yield farmers who can deposit single assets into the network to be utilized as liquidity.
- DAOs to harness Tokemak’s liquidity flow in order to strengthen and direct liquidity for their project.
- New DeFi projects which can use protocol-controlled assets to generate healthy liquidity for their project from its inception.
- Exchanges in order to gain access to deep liquidity to bolster their market depth.
Tokemak social sentiment
@TokenReactor Twitter page has 28K followers, 8k of whom joined in the last 30 days.
This could mean that the project is picking up momentum. It was launched just August 2021 and keeping in mind the complexity of the product, I would expect the slower growth because of a smaller targeted group of people, but getting 8K new people in 30 days is not easy to achieve unless perhaps for the gaming projects.
Discord has 13K members and about 30% were online at the time of writing. Neither Discord chat nor Twitter engagement doesn’t give any feeling worth mentioning.
The diluted valuation is 18 times larger and the allocation details below show that the vast portion of the $TOKE will enter the market over 2 years. There’s a possible exception related to 30% of reward tokens which might take a bit longer to be available depending on some variables but it shouldn’t be a massive amount of tokens.
30,000,000 TOKE (30%). This is the largest part of allocation having the biggest effect on inflation and currently, the emissions are designed to be emitted over 24 months/104 weekly cycles, however, these emissions could extend past this length of time depending on a few variables that could be adjusted in order to keep the Genesis Pools appropriately incentivized.
- When a token reactor is in a state of imbalance, the APR will be adjusted to incentivize LDs to stake more or less $TOKE.
- In the event when $TOKE needs to be used as a backstop to make LPs whole (when a specific token reactor receives a large number of withdrawal requests), TOKE rewards from a specific token reactor may be pulled back into the PCA to be distributed at a later time.
- The TOKE price informs the number of tokens emitted in order to sustain the desired APR for LPs.
Team’s, investors', DAOs & Market makers', and contributors' coins are locked for 12 months and vested for a year. So, overall a large portion of $TOKE will begin to be unlocked in August 2022.
Since the token $TOKE is at the epicenter of the mechanics of Tokemak, which is anchored in staking, it’s important to look at the TVL. Just as the value of the project, TVL is in a constant uptrend since the beginning of the launch and currently has almost 1B of assets locked:
On Etherscan, Tokemak contract has 3,155 holders and 109,585 transfers. In comparison, Olympus (OHM) which is ranked by TVL on Defilama just a little bit below Tokemak has 8,714 holders and 1,007,852 transfers.
Team and partners
Unfortunately, the team is anonymous, there is no information on the website or on the web.
However, the company was trusted by Framework Ventures, a well-known DeFi investment fund known for its bets on Synthetix and Chainlink, which led an investment round totaling $4M. Other major funds such as Electric Capital, Coinbase Ventures, North Island Ventures, Delphi Ventures, and ConsenSys also joined the round.
On the day of analysis, single token deposit pools all had over 60% APR and 2 paired pools SUSHI/ETH and UNI/ETH can offer over 160% APR. I could expect the large numbers will continuously attract new users and the project will continue to grow in regards to TVL and valuation.
The danger is in a large portion of $TOKE being available just in 2 years, although in the short term when the team and investor tokens will be unlocked in August next year, the inflation shouldn’t have a massive effect. The other caution is no information about the team but at least, from the Tweets posted on the official account, we can see that the team is working and constantly has an update to share.