What can be achieved for exotic assets without a liquidity pool? Becoming superfluid collateral! How? Find out in this journey!
DeFi has scaled over the years into a massive financial hub where billions of dollars in TVL are distributed across multiple DeFi protocols. Most of this capital is productively earning yield or being deployed for sophisticated yield strategies. Staking, LPing, Vault strategies, AMMs, LSTs, etc are avenues where degens park their tokens in return for some yield. Positions on all the protocols have a certain payoff/value & being tokenised makes it possible to unlock that value in the form of secondary liquidity and leverage. In order to unlock this value, we need a money market where the yield-bearing tokens can be used as collateral to borrow stablecoins or other tokens. The borrowed tokens can be used as temporary liquidity or they can be used to acquire more of the yield-bearing tokens to get a leveraged exposure to the underlying yields.
Permissionless creation of a money market for any token pair makes the Timeswap AMM stand out. Traditional lending/borrowing protocols cannot support yield-bearing tokens as collateral due to their dependency on external price feeds and liquidations. Timeswap functions using a three-variable AMM (X+Y)*Z = K for market-driven discovery of interest rates and real-time overcollateralisation of loans. Lending/Borrowing on Timeswap works on a no-liquidations model where borrowers have the discrete choice of whether to repay the loans or not. Depending on the decision of the borrowers, lenders & LPs receive the Principal + Yields in the form of the Asset lent or the Collateral defaulted by borrowers.
Ever since the launch of Timeswap V2, we’ve launched money markets for multiple tokens, a vast majority of them being long-tail/yield-bearing tokens. One of the biggest/in-demand tokens we launched a money market for is $plsARB (governance-locked $ARB derivative) by PlutusDAO. Since $ARB to $plsARB is a one-way conversion, it makes $plsARB an illiquid asset.
What is PlutusDAO?
PlutusDAO is a governance aggregator, aiming to get control over the governance of the majority of DeFi protocols on Arbitrum. Getting a major share of the governance of a DeFi protocol will enable Plutus to direct token incentives to the pools of their choice, which will lead to earnings through Bribes. Governance token holders can convert their tokens into $plsAssets on PlutusDAO. plsAsset stakers receive $PLS emissions and additional Bribes for being a part of the collective.
This process ultimately makes PlutusDAO the ‘L2 Governance Blackhole’. With approx $18M in Total Value Converted, the vision and cult of PlutusDAO has been solidified into the Arbitrum ecosystem. The majority of the ‘Total Value Converted’ on PlutusDAO comes from the infamous $plsARB, heading very close to hitting $12M. plsARB has already managed to have a hold on 0.88% of the total $ARB supply.
$plsARB pools retrospective performance
The primary DEX pools for $plsARB are yet to be launched, making the token illiquid. For a long time, $plsARB holders were looking for secondary avenues where they can get temporary liquidity while not giving up their exposure to $plsARB. We were able to realise the demand for collateralisation of plsARB to borrow other tokens early on. The next thing we knew, the fat $plsARB pools were rocking the UI. Up until today, we’ve launched 2 pools with $plsARB as collateral. (The 3rd one is live as we speak.) The pools were received very well by $plsARB holders.
Over 9.5M $ARB is converted into $plsARB, actively looking for avenues for temporary liquidity. Timeswap’s money markets with $plsARB as collateral have enabled the $plsARB holders to borrow $USDC (or $ARB) at a fixed APR without being bothered by liquidations.
Let’s closely look into data for three of them.
#1 $plsARB genesis pool
On 21st March, we launched the first-ever lending/borrowing pool with $plsARB as collateral, bringing a unique utility to the token.
This pool enabled:
- $plsARB holders to borrow $USDC at a fixed APR.
- Non-liquidatable loans with a 21-day duration.
- $USDC holders to earn fixed yields collateralised by $plsARB.
- Lenders would get discounted $plsARB when borrowers default.
How did the pool perform?
The pool was very well received by both sides of the market, generating an impressive Volume per Liquidity added. The pool had a cumulative volume of more than $200k.
Total Lend volume: $111,442
Total Borrow volume: $92,549
#2 The follow-up pool
Looking at the impressive demand for the plsARB pool, we launched a follow-up pool with a longer duration. And the results? Up Only!!
The plsARB/USDC pool launched with a 1-month duration did an impressive volume of $235k a 17.5% increase from the previous pool. The demand for collateralisation of $plsARB is phenomenal. The lending volume in the pool very well tells us how lenders are comfortable lending USDC backed by collateral which is not quite liquid, implying they understand its value.
Total Lend Volume: $144,621
Total Borrow Volume: $92,225
#3 LIVE pool: plsARB/ARB
Owing to the exceptional demand the previous two pools got, we collaborated with PlutusDAO and launched a new pool with a 2-month duration.
The $plsARB/$ARB pool is still LIVE, and here’s all you can do with it:
- Use $plsARB as collateral to borrow $ARB, giving a more correlated token.
- Non-liquidatable loans for a longer period of time.
- Lend $ARB for a fixed APR. Low risk being backed by a correlated asset.
- Get discounted $plsARB if borrowers default on their loans.
The pool went live on 29th June, and the response was nothing short of our expectations. As of writing, the pool has already surpassed $217k of cumulative volume.
Total Lend Volume: $116,632
Total Borrow Volume: $104,102
The volumes are going to the north-east of the chart as we speak. When it comes to degeneracy, the Plutons are always charged up you see!
Become a Plutonic Time Traveler, here: app.timeswap.io
Conclusion
In retrospect, the plsARB pools are a state-of-the-art example of how much value the Timeswap protocol can unlock for valuable tokens with liquidity constraints. The amount of value an oracleless and no-liquidation environment can unlock is phenomenal and we’re on the journey to make it a reality.
If you want your tokens to have lending/borrowing functionality too, let’s connect! 🤝 It’s a quick and simple process, just fill out this form. 🙂
Time Is Money ⏳
Follow us
Discord: https://discord.gg/timeswap
Twitter: https://twitter.com/TimeswapLabs
Medium: https://medium.com/Timeswap
Telegram: https://t.me/timeswap
