Set Protocol V1 Deprecation
Overview
In 2019, we introduced DeFi to Robo and Social trading Sets powered by Set Protocol V1. They went live at a time when DeFi was operating under a very different set of constraints. Most notably, on-chain liquidity was non-existent and the system lacked event based smart contract execution.
To support the permissionless rebalancing of Sets, we had to vertically integrate the rebalancing process. On the smart contract layer, this took the form of a modified dutch auction that allowed external market makers to supply the Sets’ new collateral in exchange for their current collateral and take spreads in the process. To make this as smooth as possible, we built interfaces and coordinated with market makers and trading desks at odd hours to successfully execute what were at the time, the largest transactions on Ethereum.
Event driven execution is still a fairly modern development and is slowly making its way into DeFi design with Keep3r Network leading the charge. To facilitate our rebalance triggers in 2019, we had to build infrastructure that scanned on-chain oracles and initiated rebalances against contracts that verified their state.
And while it was exciting bringing these products to life and watching the ecosystem grow, the realities for operating these products began to fundamentally change. The rise in on-chain liquidity has resulted in a corresponding rise of gas prices and it became incredibly expensive to execute rebalances successfully. It is incredibly expensive for our network of market makers to participate in them, leading to higher slippages than dex trades.
In light of the change in DeFi, we redesigned our protocol into a V2 that was released earlier this year, enabling us to take advantage of on-chain liquidity and reduce smart contract complexities.
With that, it is time to deprecate our old Robo and Social Sets built on our V1 platform and create room for products we have lined up to be built on Set Protocol V2.
V1 Sets Deprecation
To minimize confusion about which products are affected, we migrated interactions with Set Protocol V1 products (all Robo and Social Trading Sets) to our legacy app: https://legacy.tokensets.com. Balances of all past products can be found on the legacy app on the account page and your credentials will be the same as they were for TokenSets.
TokenSets does not have access to your account balance. Your balance is tied to your Ethereum wallet. The representation of your ownership (state) for Set Protocol V1 products are simply displayed on a different domain now.
As part of this migration, all Robo Sets will cease to rebalance immediately. During a brief feedback window, users expressed preferences that Robo Sets remain in their risk assets (ETH, WBTC, etc.) until they are ready to be sold. All Sets are currently in their risk assets given the recent price movement. Holding onto your Sets gives you the same exposure as holding onto the underlying asset.
A Set is effectively a wrapper around its collateral and that allows rebalancing (e.g. E20MACO rebalances between ETH and USDC based on the 20 day moving average price of ETH). As a holder, you may redeem them for their underlying assets at any time. They do not need to be sold or redeemed immediately. They live permanently on Ethereum. When you are ready to exit your Set, you will have two options: selling or redeeming.
Selling is the process of taking the collateral within the Set and selling it for another asset through our Exchange smart contract. While convenient, this incurs a significantly higher gas cost (represented as Network Fee). To sell, find the Set linked on your account page and follow the Sell modal instructions.
Redeeming is the process of unwrapping your Set, and retrieving the underlying collateral directly without going through a (decentralized) exchange. There is currently no interface built into the legacy application for redeeming Set Protocol V1 Sets. Follow this guide on redeeming your Sets directly.
Looking Forward
Set Protocol V2 protocol is a much more robust and capable system that powers products such as the DeFi Pulse Index and the Flexible Leverage Index. As we continue building out the protocol to interact with other DeFi projects, we are thinking of ways to rebuild our existing popular products.
We can now build products without a reliance on external market makers and we remove ourselves as operators by integrating networks like Keeper. We will be exploring ways of utilizing Uniswap V3 within Set Protocol V2 to unlock true technical trading strategies. Our managers can expect all of these tools to be at their disposal to facilitate execution of their strategies.
Thank you to all of our Set Protocol V1 users and traders, you are not forgotten.
If you have any questions, ideas, or need help exiting your Sets, please reach out to us on Discord.
FAQ
- Where can I find balances for my Robo and Social Trading Sets?
Use the same wallet to log in and view your balances: https://legacy.tokensets.com/
- Do I need to sell my existing Sets immediately?
No, they can be sold or redeemed at any time. They are all 100% risk asset (ETH, WBTC, etc.). Holding longer is the same as holding the risk asset.
- What happens if TokenSets goes down?
Your ownership is guaranteed by the Ethereum blockchain and is tied to your wallet address. You will always be able to redeem at any time using this guide.
- The sell modal is giving me an error. What gives?
This is most often due to your current wallet not having enough ETH to execute the transaction. The amount required for the Network Fee must be on your wallet prior to executing. Proceeds from the sale cannot be used.
- Where are my fees going?
We have not and do not take fees on Tokensets. The fees incorporated into the selling process are strictly network fees that are paid to Ethereum miners.
