TopShelf Finance: Pre-Launch Announcement

5 min readDec 7, 2021

Overview

TopShelf Finance is a multichain protocol for creating collateralized synthetic assets, such as the USDL stablecoin.

Based on Liquity and following in the path of some of the best DeFi protocols, TopShelf Finance is non-custodial, immutable, and governance-free.

The protocol will launch on BSC, Fantom and Avalanche and use BNB and 3EPS tokens for collateral on BSC, FTM and g3CRV on Fantom, and AVAX and av3CRV on Avalanche.

Why TopShelf?

The stablecoin landscape is increasingly competitive with a new generation of protocols allowing more and more collaterals, often weakening the strength and decentralization of their stablecoins. TopShelf value proposition is simple, USDL is backed by the native token of the chain it exists on. It’s non custodial and immutable meaning it’ll be there forever, in the same state it will be from day one.

TopShelf is a decentralized borrowing protocol for taking out interest-free loans against collateral. Loans are paid out in a synthetic token (for example the USDL stablecoin, or BNBL, a synthetic token pegged to the price of BNB) and need to maintain a minimum collateral ratio of 110%.

There are two primary use-cases for Topshelf synthetic assets:

Earning yield as a liquidity provider or by depositing into the Stability Pool, without losing long exposure to the collateral.
Entering into a leveraged long or short position.

Mint chart

Earning Yield through Stability Pools

For each synthetic token, there is a corresponding Stability Pool. The Stability Pool is designed to absorb debt from liquidations, and reward depositors with the liquidated collateral. Users stake their tokens into the Stability Pool, and receive a portion of all liquidated collateral in proportion to their deposit size. Stakers additionally receive incentives in LIQR, the native protocol token.

Earning Yield as a Liquidity Provider

For each synthetic Topshelf asset, there will be a corresponding Curve pool (Ellipsis on BSC). Liquidity providers for these pools will be incentivized with LIQR, as well as earning a portion of the trade fees generated by the pool.

Opening Leveraged Positions

Topshelf enables interest-free leveraged positions of up to 10x on BNB, FTM, and AVAX. For example: to go long on BNB a user would deposit BNB, mint USDL, sell the USDL for BNB, then redeposit this BNB and repeat the same process. Entering or exiting a leveraged position is possible in a single transaction, using a flashloan.

The `LIQR` token

LIQR is the native protocol token for Topshelf. It is given as an incentive to early users of the protocol in order to encourage healthy liquidity within the system and on related decentralized exchanges.

LIQR is a revenue-sharing token. 100% of fees generated by the protocol are distributed proportionally to LIQR stakers. As Topshelf is immutable and governance-free, holding LIQR does not convey any governance rights.

Tokenomics

6% added as initial liquidity for LIQR
9% distributed to participants in the initial liquidity event (ILE)
25% evenly distributed between the Stability Pools over 6 years
20% reserved for 3rd party AMM incentives over 6 years
20% as incentives for LIQR LP token stakers over 3 years
20% vested for the Topshelf team over 3 years

Note that all token emissions use a halving schedule. Over a six year release period this means that 50% is released in the first year, 25% in the second, etc. with 98.5% of tokens released after six years. Beyond this time emissions will be so small as to be negligible.

The Initial Liquidity Event

Topshelf will be kicking off with an Initial Liquidity Event (ILE) to ensure healthy ongoing liquidity for the native protocol token, LIQR.

The ILE will happen simultaneously on BSC, Fantom and Avalanche. At a specific time that we will announce soon, ILE contracts will open for deposits of BNB, FTM and AVAX depending on the chain. Deposits will be open to whitelisted participants only — more information about the whitelisting process will be released shortly (join our Discord!). There will be an initial contribution cap allowing guaranteed entry for everyone who is whitelisted within the first hour. The cap will double each hour until being is removed at 4 hours in. The ILE will last for 24 hours, or until a hard cap of $5m is reached on that chain. The contracts additionally have a soft cap of $1m — once this is reached, the contract will close for new deposits 6 hours later. In the event the soft cap is not reached, participants will be able to withdraw their contribution after 24 hours.

Once the ILE finishes, the received tokens will be combined with 2% of the total LIQR supply to create initial liquidity on the respective chain’s DEXes: PancakeSwap, SpookySwap and TraderJoe. These LP tokens are permanently locked within the contract — the liquidity is “protocol owned” and cannot ever be removed.

Contributors to the ILE will receive 3% of the total supply of LIQR, distributed proportionally according to their contribution. Thus, all participants are at a 50% profit based on the initial price set in the LP token. The tokens are streamed out linearly over 30 days, starting from the same moment that LIQR emissions begin within the main protocol (less than 24 hours after the close of the ILE).

At any time during the 30 day stream period, a contributor may choose to withdraw their entire reward balance at once. In doing so, they must pay a 33% penalty on all outstanding vested tokens. The tokens paid in the penalty are then distributed evenly between the remaining users who have not taken an early exit. If every user takes an early exit, the remaining penalty tokens are burned.

The initial liquidity event is planned in approximately one week with the exact date and time to be announced.

Incentives for `LIQR` LPs

LIQR incentives are given to users who provide liquidity for LIQR. These “pool 2” incentives are released on a shorter distribution schedule than the incentives for Stability Pools or other AMMs. This is done to encourage significant liquidity in the early stages of the protocol.

There is a 2% deposit fee when staking LIQR LP tokens, as well as a variable withdrawal fee starting at 8% and reducing to 0 at a rate of 1% per week. 50% of the fees received are deposited in the protocol treasury, adding to the protocol owned liquidity. The remaining 50% is held for 8 weeks, after which time the liquidity is withdrawn. At the time of withdrawal, the LIQR is burned and the paired token is sent as an incentive to the LIQR staking contract.