Tracer is an open-source, smart contract protocol for derivatives.
Tracer is an open-source, smart contract protocol for derivatives with the capability to enable anyone to deploy a derivatives market from what is called Tracer Factory. In short, the factory is a smart contract which will generate Perpetual Pool markets.
Tracer allows anyone to create their own financial protocol template and propose it to the DAO. It makes the TracerDAO highly decentralized, other DAOs often only vote on proposals of developers.
The idea behind the protocol is to give a trader an exposure to an asset or index by creating leveraged tokens that don't expire and can't be liquidated. This is achieved by creating a leveraged long or short token that traders can mint by adding collateral. Tokens can have leveraged returns because of the way pools are structured. Each pool has two sides, long and short and shorts collateral funds long positions and vice versa.
The value of the particular perpetual contract is determined by the proportion of collateral on the short or long side. If there’s more collateral on the short side, the price goes down and if there’s more collateral on the long side, the price goes up.
For example if you take the BTC/USDC pair pool, when the price of the BTC goes up, the price will be determined by the increasing collateral on the long size. Then, the long side gets a percentage of the short side's collateral. If the price goes down, the short side gets a percentage of the long side's collateral.
Trading digital assets (not just crypto currencies but also NFTs) is the initial step of Tracer but moving forward the idea is to expand by offering to trade real world assets, such as water, real estate or anything else.
The way it works from a user perspective is that you select a pool, let’s say levered ETH/USD and mint a token. The token is burned when you want to exit the position.
TCR is the governance token for Tracer DAO granting the right to participate in proposals that may include: research engagements, advisory roles, protocol upgrades, management of the treasury, software development, media partnerships, security audits.
The max supply is 1B tokens. The current market cap is $54,8M and the diluted valuation is $340,1M. 24H trading volume is $769,6K.
The protocol has 13M of value locked but it has been decreasing and is currently down by 25% from ATH:
Team provides a couple token distribution schemes. One as a current distribution and another as a future distribution:
Current token distribution:
- DAO Treasury - 64.04 % - 640,400,000 (There are funds for community initiatives)
- Mycelium - 21.50 % - 215,000,000 (Mycelium refers to the team)
- Strategic Partners - 10.00 % - 100,000,000 (Total raise of $4.5M USDC)
- Academic advisors - 1.75 % - 17,500,000 (Refers to academic advisors for their service to Tracer DAO)
- The 100 - 1.00 % - 10,000,000 (The first 100 claimants of TCR tokens at Tracer DAO's Genesis)
- Advisor - Yamashita - 1.00 % - 10,000,000 (Advisor to Tracer DAO for financial contracts and growth expertise. Future advisors will draw an allocation from the Growth Fund)
- Governors + Alpha Testers - 0.51 % - 5,100,000 (Members of Tracer DAO that were voted in by proposal to test Tracer DAO's financial contracts)
- Flex Dapps - 0.20 % - 2,000,000
- Market Distribution - 35.30 % - 353,000,000 (Perpetual Swaps liquidity mining, Perpetual Pools liquidity mining, Retroactive airdrops (varying metrics), Future financial contracts liquidity mining, Potential public sale of TCR token, Additional Governors & Alpha Testers)
- Growth Fund - 25.00 % - 250,000,000 (A fund that is allocated for the 'Growth' of Tracer DAO. This includes service providers within areas such as development work, marketing, audits, advisors, engaging professional services etc. This fund additional acts as a way to expedite the decision making process of the DAO that is run by a proposed multi- sig)
- Mycelium - 21.50 % - 215,000,000
- Strategic Partners - 10.00 % - 100,000,000
- Ecosystem DAO - 3.00 % - 30,000,000
- Academic advisors - 1.75 % - 17,500,000
- Governors + Alpha Testers - 1.25 % - 12,500,000
- The 100 - 1.00 % - 10,000,000
- Advisor - Yamashita - 1.00 % - 10,000,000
The future distribution mainly shows the changes in the allocation of the DAO treasury tokens, majority of which will be split out between market distribution, which has a purpose of effective decentralization of the Tracer protocol and growth fund, which will fund the necessary growth processes like marketing and development.
The changes in the future distribution cover the initial 5 years and seeing the token flows so well thought out for a long term, leaves a very good impression about the team and it’s dedication.
Seed round tokens are vested for 2 years but information about team token vestings isn’t provided.
Looking at the etherscan we see a small holder count - only 942 holders and there are 10,119 transfers made.
The team behind Tracer has a brand name and is called Mycelium. They are also creators of a few other projects: Chanlink Oracle Reputation, which is a platform to evaluate Chainlink nodes; also - Secura Data Links, which provides solutions to integrate off-chain data into smart contracts. Both products have been in development since 2019, which give clues that the Mycelium team has a strong background in crypto expertise.
Github page of the project is linked on a website of the project. There are 20 public repositories. Most recent update happened 3 days ago, it doesn’t tell much, but at least we know the team is active and probably more work is done in private repositories.
Partnerships & Investors
Tracer DAO has raised a total of $9M in funding over 2 rounds. Their latest funding was raised on Sep 10 with 4,5M fund size from Framework Ventures, DACM, Maven 11, Apollo Capital, Distributed Global Ventures, Paperclip Fund and Supernova. GSR and Efficient Frontier have also joined the round as strategic market making partners.
The community on Twitter is tight, there are 8.6K followers and engagement is low. Discord is also not the largest - 4K server members, 821 of whom are online. As expected for a server of this size, the chat isn’t very active. But practically all people’s messages are addressed by one of the team members - there are 12 server members with a status core builder and also 3 moderators. This tells that the team takes the community aspect seriously, which is nice to see.
The project also has a dedicated discourse with 8 categories which contain 128 topics. The activity on the general topics in the forum is low, although the purpose of it is mainly to get the community votes on the DAO proposals. The proposals get from a couple hundred to couple thousand views but majority of them are on the lower end - 200-500 views.
TracerDAO v2 pools are about to launch, the update will bring simpler leverage trading experience and more levered tokens.
New Features in V2:
- Long-term leverage without getting “rekt” by volatility decay
- No more minimums
- Permissionless Market Deployment
- Create Custom Indices
What does this mean for users?
- Hold a leveraged token in your wallet with minimal volatility decay
- Mint a leveraged long or short token of value less than $10
- Create any leveraged token with permissionless deployment
- Experiment with creating new indices
The first thing is that the project is very technical and isn’t something that an average crypto user can easily digest. Such technical projects tend to have smaller communities but these communities are strong, devoted and make great token holders. But the current possibilities will not be easy to grasp for larger audiences. The real world perpetual tokens you will be able to trade in the future, I believe, also be ahead of the needs of a broader crypto market.
That doesn’t mean that the current community will not grow. The DAO structure offering a lot of freedom and flexibility is attractive for decentralization fans. The team has a lot of experience and is large, and you can tell that they are looking into the work they do very seriously. Everything from the website to the communication on Discord is well made and delivered professionally.
But I wouldn’t expect fast growth. Especially when TVL numbers are also decreasing, possibly indicating that users don't stay for a long time.
The protocol was audited by Signa Prime which is a respected crypto auditing firm. It takes its time to evaluate the protocol. There were a total of 12 issues raised, with 1 critical, 1 medium, 2 lows and 8 informational issues. Tracer team addressed the issues with speed.
At this point the token is only traded on Sushiswap, Uniswap, and Balancer, it isn’t listed on any of the CEXes and with such a small market cap has a lot of room to grow.