What is Tectonic (TONIC) | What is the tectonic token? What is a TONIC token?
This article will discuss information about the Tectonic project and the TONIC token. What is Tectonic (TONIC) | What is the tectonic token? What is a TONIC token?
What is tectonic?
Tectonics is a decentralized non-custodial protocol based on money market algorithms that allow users to participate as liquidity providers or borrowers. Providers provide liquidity to the market for passive income, while borrowers can borrow liquidity on an overcollateralized basis.
Tectonic’s protocol design and architecture reference Compound, a tested and audited protocol. It is complemented by an attractive incentive program powered by $TONIC, the native token of the Tectonic protocol.
In short, the Tectonic protocol aims to provide cryptocurrency money market functionalities. secure and seamless
“HODLers” can generate additional interest returns by supplying assets to the protocol without having to manage their assets actively.
Traders may borrow certain cryptocurrencies to capitalize on short-term trading insight (eg, shorting) or opportunities to maximize returns (eg, farming).
Users can gain access to other cryptocurrencies for multiple purposes (eg participating in ICOs, pegging), without having to liquidate their original assets
Supply of assets to Tectonic
Tectonic allows users to supply their cryptocurrencies (assets) to the platform as a liquidity provider. The tectonic protocol aggregates each user’s supply into a pool of assets controlled by smart contracts, making it a fungible resource for the protocol and allowing users to withdraw their supply at any time.
In exchange for their supplied assets, liquidity providers will receive the corresponding tToken (eg tETH, tUSDC), which entitles them to redeem the supplied assets in the future. The value of tToken will continually increase reflecting interest rates on deposits, which are set based on the supply and demand for assets.
Tectonic Asset Loan
Using their assets provided as collateral, users can borrow supported cryptocurrencies from Tectonic’s asset pools to use for any purpose.
Each asset has a collateral factor (i.e. loan-to-collateral ratio), which means the amount available to borrow for each collateralized asset. A collateral factor of 75% means that users can only borrow up to 75%. of the value of its guaranteed assets.
In the event that the value of the secured assets decreases, or the value of the borrowed assets increases, a portion of the outstanding loan will be settled at the current market price less any settlement discount. The proportion of borrowed assets to be liquidated varies depending on assets and market conditions. Users can prevent the liquidation event from occurring by either increasing the collateral amount (ie providing more assets) or by repaying a portion of their loan. Each loan will have a compound interest rate and can be repaid at any time.
The Guarantee Factor for each asset is established based on various characteristics inherent to the asset, such as the availability in the reserve and the liquidity of the asset in the market. The Tectonic team currently determines these ratios and their parameters, however, as the protocol matures and the necessary processes are implemented, the governance of these parameters will be opened up to the community through the Tectonic governance process.
There will be a 10% buffer for secured assets to prevent accidental or unwanted liquidations. An example of the calculation is shown below. This initial ratio will then be allowed to creep up to the asset’s maximum collateral factor if there are changes in the asset’s price.
Maximum Eligible LTV ( Guarantee Factor ) = 90% * Settlement LTV
CRO Settlement LTV = 80% CRO Maximum Eligible LTV = 90% * 80% = 72%
When withdrawing the guarantee, this protection rule will also apply. This means that after collateral withdrawal, your new LTV cannot be above the maximum eligible LTV. In order to withdraw, you will have to pay back more of your existing loan. You can find an example of this here in Step 2
In exchange for their supplied assets, liquidity providers will receive the corresponding tToken (eg tETH, tUSDC), which entitles them to redeem the supplied assets in the future. The tToken-asset exchange rate will continually increase to reflect the interest earned by the lender.
Each asset backed by the Composite Protocol is integrated through a tToken contract, which is an ERC-20 compliant representation of the balances supplied to the protocol. By minting tTokens, users (1) earn interest through the cToken exchange rate, which increases in value relative to the underlying asset, and (2) gain the ability to use tTokens on other protocols that accept tTokens.
The Tectonic protocol plans to support the following tokens in the public launch.
- Currency USD (USDC)
- Tether (USDT)
- Dai (DAI)
- Ethereum (ETH)
- Wrapped BTC ( WBTC )
- VVS Finance (VVS)
- Crypto.org Currency ( CRO )
- Tectonic (TONIC) (will be supported soon after TGE)
In the future, Tectonic will be open to more tokens. We welcome further suggestions from the community via our web app /social media channels.
Interest rate models
Tectonic adapted a variable interest rate model, popular among other DeFi money market protocols on the market (such as Compound and Aave), where rates are largely determined by the supply and demand of assets, represented by their interest rate. Utilization.
In addition, the calculation of interest rates is divided into two stages, the standard model and the Jump (Kink) model, to further encourage or discourage supply and borrowing activity.
The parameters described in the following sections will be established by the Tectonic team at the outset, taking into account Tectonic’s competitive positioning with respect to other lending protocols on the market.
Once the Tectonic governance process is established, all loan parameters will be subject to a community vote.
Specific parameters such as collateral ratios for each token can be found in the Supported Tokens section.
The settlement module is a critical component within Tectonic. It is required as a mechanism to prevent insolvencies through the liquidation of loans that have exceeded the required Collateralization coefficient. This can happen when the collateral decreases in value or the borrowed loan increases in value relative to each other.
When a settlement event is triggered, the following events occur:
1. The settlement module will calculate the amount, up to the closing factor of the given asset, required to repay the loan to a healthy level (i.e. based on the stipulated collateral factor)
2. The corresponding amount of collateral will then be deducted, calculated at the current market price of the collateral less a settlement discount, offset by a settlement fee.
3. After said loan amount is repaid, the loan account will be considered a healthy account (within the Collateral Index) and will be removed from the liquidation module.
The settlement discount acts as an incentive for arbitrageurs to step in and reduce the borrower’s exposure, thereby reducing the risk of loan default in the process. The amount of the liquidation discount (or penalty for borrowers) depends on the asset used as collateral. This settlement process is facilitated by using Tectonic’s own feed price (ie “oracle”).
Anyone can participate as a liquidator of Tectonic, as long as they are in possession of the corresponding collateral assets.
The tectonic protocol will start with centralized control of key decisions in the protocol (eg interest rates, collateral index, token allocation, etc.). The tectonic team will make such decisions in consultation with the community. Over time, Tectonic aims to transition the governance process to the community and stakeholders fully.
At that time in the future, anyone with a minimum TONIC token threshold to be determined will be required first to submit, and then vote on, proposals (Tectonic Improvement Proposals/TIPs) that would affect key parameters such as economics, security, and protocol development.
Examples of parameters that could be voted on:
interest rate model
The addition of assets that meet the risk requirements of the protocol.
Risk parameters for over-collateralization and liquidation
Changes to the Liquidity Mining Program to adjust incentives based on market conditions
Treasury control protocol
- buyback and burn
- New LP listing
Max supply: 500,000,000,000,000 TONIC token
How to buy Tectonic (TONIC) Token?
The first step to buying Tectonic (TONIC) Token is to buy CRO Token and add Red Cronos to our Wallet.
Second step to buy Tectonic (TONIC) Token: Buy TONIC Token at VVS Finance:
As soon as we have everything we need for the first step, we have to go to the following link: https://vvs.finance/swap
Next, we have to connect our Metamask Wallet, and by default, in the token above, we will get CRO, and in the one below, we will search for “Tonic” and select it.
Next, we have to put up the amount of CRO that we are going to exchange for Tonic and hit SWAP, and that’s it, we will have already bought our Tonic Token and in our Metamask Wallet.
Official website: https://tectonic.finance/