Tetu v2 is coming

6 min readJul 25, 2022

Hello Tetuans, let’s explore the new features of Tetu v2.

veTETU

veTETU will have some features. It is not transferable but can be used as collateral for loans. Unlike many ve Systems where the maximum lock period is 4 years, veTETU will only have 1 year as the maximum period to lock TETU.

As in ve Systems, the voting power is linearly diminished with time during the lock period and the rewards and weight of votes depend on the voting power.

Multiple Locks

In addition to TETU, it will be possible to lock in veTETU some LP pairs with TETU, the rate of voting power that each LP will provide is yet to be decided, but we can expect that overall LPs based on TETU will provide 25% of the voting power in relation to locking only TETU.

Understanding TETU power

In case of locking 1 TETU for 1 year, the user will receive 1 veTETU. In the case of locking LP, the reference will be the LP tokens, and not the TETU contained in the LP token. So let’s say 1000 TETU locked for 1 year gives 1000 veTETU and 1 LP token contains 1000 TETU and 100 USDC represented by 1 LP token gives 250 veTETU based on ve power rate of 25%, if the TETU price drops and 1 LP token represents 2000 TETU and 50 USDC still 1 LP token will still provide 250 veTETU.

When locking LP tokens it is important to keep in mind that the power provided by the LP refers to the LP tokens and not the amount of TETU contained in the LP position.

Now I will illustrate another scenario to demonstrate how to lock veTETU efficiently. Let’s say 1 LP token contains 5000 TETU and 2 USDC. When locking the 1 LP token the user will still receive 250 veTETU due to it being determined by the amount of LP tokens, however locking 5000 TETU for 1 year will give the user 5000 veTETU, that is 20 times more voting power than locking LP in this scenario.

Now let’s say that the price of TETU has gone up a lot so that 1 LP token represents 50 TETU and 200 USDC. To get 1000 veTETU by locking LP it will be necessary to lock 4 LP tokens, in this scenario 200 TETU and 800 USDC totaling 1600 USDC in value, compared to locking only TETU the user would need 1000 TETU to get 1000 veTETU, that is 4000 USDC in value in this scenario.

The locking system will work in such a way that it will be more attractive to lock LP when the price of TETU is high and more attractive to lock only TETU when the price of TETU is low.

Loans

It will be possible to supply veTETU as collateral and borrow ERC20 tokens. When creating a borrowing position the veTETU will be transferred to the PawnShop special contract and all votes and boosts will be reset.

The borrowing duration cannot be less than the current locking duration. However, the borrower can repay the loan early, but interest for the entire period must be paid as well.

There are restrictions on the borrowing period because the suppliers must be able to receive the NFT in the event that the borrowers do not return the loan. This liquidation can be done through a sell deal for locked tokens.

veTETU distribution system

Tetu v2 will have a dynamic distribution of incentives based on the ve system, being the first in the industry ve based yield farming platform.

Voting system for emission distribution

veTETU will be able to vote on vaults to increase distribution of TETU emissions directed to the vault. Liquidity providers will be able to attach bribes to vaults to attract more veTETU votes, increasing their profit. This will probably be an additional income for veTETU.

The available amount of TETU tokens will be added weekly in the Voter contract. All vault buybacks will be distributed to Voter contract too. In this way, part of the profits of every strategy will be distributed to veTETU.

Voting system for platform attributes

veTETU will be able to control some platform attributes, such as the % of income that will be distributed to the gauges and the % of income that will be distributed to the investment fund.

Compound ratio for each strategy

Strategy profits will be separated between auto compound and not-compound. The autocompound part will be immediately added to the linked vault. By default, the compound part of each strategy is 0.

The not-compound part will be transferred to ForwarderV3 where it will periodically be sold for TETU. The TETU amount will be divided each time in three directions.

Investment Fund
TetuVoter where it will then be distributed to Gauges.
The remaining amount will go to VeDestributor and will be distributed weekly to veTETU.

For example, a strategy earned 100 USDC for the underlying asset of WMATIC. Assuming that votes for this strategy set an autocompound rate of 50%, 50 USDC will buy WMATIC for the vault producing immediate auto compound profits. The remaining 50% will go to ForwarderV3.

ForwarderV3 now has 50 USDC. Assuming that the votes determined the attributes of 10% for the investment fund and 30% for the Gauge ratio, ForwarderV3 will buy 50 USDC of TETU, let’s say it is 10,000 TETU, it will be distributed it in the following proportion:

Transfer to InvestFund 1,000 TETU (10%)

Balance is 9000 TETU

Transfer to TetuVoter 2,700 TETU (30%). These tokens will be distributed to gauges based on votes.
6,300 TETU will be transferred to VeDistributor. These tokens will be distributed to veTETU holders.

Boosted rewards

Vault liquidity providers will receive TETU emissions and buybacks. Users will be able to attach veTETU to any vault and get a boost. The greater the amount of veTETU, the greater the boost. The boosting system is completely similar to Curve, and Dystopia.

Boosting works like a zero-sum game. The total amount of rewards remains the same so that the boost increases the user’s virtual TVL. So the more unboosted users in the vault the greater the profit of a boosted user.

If all users in a vault are max boosted they will all receive the same APR. However, getting a 2.5x max boost is practically impossible.

Default virtual balance = 40% of the real balance
Bonus virtual balance = Gauge TotalSupply * veTETU power / Total veTETU power

Virtual balance = Default virtual balance + Bonus virtual balance

For example, you deposited to the gauge 100 USDC and the total staked USDC is 1000
Your Default virtual balance = 40 USDC
If you have 1,000,000 veTETU power and the whole veTETU power is 10,000,000
You will have 10% of the gauge supply as a bonus balance, 90 USDC
Virtual balance = 40 + 90 USDC = 130 USDC

Your final profit will depend on how much other users have veTETU power.

Tetu VaultV2

ERC4626
Adopted to improved splitter
Has an insurance system for auto-covering strategy losses
StrategySplitterV2 now is a part of the system
Cheap transactions (less than 200k for deposit/withdraw)
Automatic system for HardWorks — users will be able to control it
Automatic system for a strategy profitability calculation

We assume to have little deposit/withdraw fees (0.2%). These fees will go to the Insurance contract connected to the vault. With the insurance system, we will be able to farm anything — LP tokens, pools with taxes and etc.

New SplitterV2 don’t need to rebalance manually anymore. We adopted everything for farm more stable sources of income — such as UniV3, the most popular DEXs, and lending platforms.