Tectonic — a non-custodial decentralized algorithmic money market protocol that allows users to participate as liquidity providers or borrowers. Providers provide liquidity to the market for passive income, while borrowers can borrow overcollateralized liquidity.
Description of Lending Tectonic
The design and architecture of the Tectonic protocol references Compound. It is complemented by an attractive rewards program, based on $TONIC, the native token of the Tectonic protocol. As such, the Tectonic protocol aims to provide secure and seamless crypto money market functions by providing its users with multiple use cases.
The main features of the Tectonic project:
| 1 | Hodlers can earn additional interest income by providing assets to the protocol, without having to actively manage their assets. |
| 2 | Traders can borrow certain cryptocurrencies to capitalize on their short-term trading outlook. |
| 3 | Users can access other cryptocurrencies for various purposes (e.g. ICO participation, linking) without having to liquidate their original assets. |
Tectonic allows users to supply their cryptocurrencies (assets) to the platform as a liquidity provider. The project protocol aggregates deliveries from each user into a pool of assets, controlled by smart contracts, making it a fungible resource for the protocol, as well as allowing users to revoke their deliveries at any time.
In exchange for their lent assets, liquidity providers will receive a corresponding tToken (e.g. tETH, tUSDC) which entitles them to redeem the lent assets in the future. The value of tToken will constantly increase, reflecting interest rates on deposits, which are set, depending on the supply and demand of assets.
Borrowing assets
By using their lent assets 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 indicates the amount, available to borrow for each collateralized asset. A collateral ratio of 75% means that users can only borrow up to 75% of the value of their collateral assets.
The proportion of leveraged assets subject to liquidation varies, depending on assets and market conditions. Users can prevent a liquidation event by either increasing the amount of collateral or paying off part of their loan. Each loan carries a compound interest rate and can be repaid at any time. The collateral factor for each asset is set, based on several inherent characteristics of the asset, such as reserve availability and market liquidity of the asset. These ratios and their parameters are currently being determined by the Tectonic team.
On the project website, you will find introductory information. Thus, each participant can study the features of the project. Also, the developers maintain a Medium blog, where articles with news are available. The smart contract doesn’t have an audit..