Level up by using your snrLLP as collateral on Timeswap while continuing to earn staking rewards. Yields on yields, utilising our non-liquidatable loans!
Timeswap is now home to another exotic asset: snrLLP! With the integration of this new asset, the Time Machine is now capable of transporting Yield Bearing Assets (YBA) across time. With projects increasingly focusing on reward mechanisms to award sticky liquidity, YBAs are needed to make sure users don’t miss out on anything!
Taking the Time Machine to a new Level
Level Finance is a perpetual futures platform that allows users to trade numerous assets. With a TVL of over $18 million and more importantly, annualised revenue of nearly $9.5 million, Level is seriously demonstrating that on-chain finance is possible and profitable!
Level Finance, offers LVL for staking their LP token (LLP). In a money market that does not support YBAs, users would have to miss out on these LVL rewards if they wanted to leverage their existing position. This is the problem Timeswap is solving!
The Time Machine will now accept your senior tranche LLP (snrLLP) as collateral for non-liquidatable, fixed-rate loans while simultaneously allowing you to accrue the LVL rewards that are rightfully yours to claim! This allows Level LPs to leverage their snrLLP for new ventures: looping back into snrLLP or even hedging their snrLLP position to limit downside!
And no need to worry about your LVL rewards! You will be able to claim it from our UI itself.
How to use snrLLP as collateral?
If you have staked snrLLP, it will be unstaked and then staked again through the Timeswap UI.
Do not be worried if the transaction prompts you to unstake before the borrow transaction happens, Timeswap will stake it for you and you can claim the LVL rewards as usual!
This is the flow of a borrow transaction:
- You enter the amount of USDC.e you would like to borrow and click Borrow.
- The unstaking transaction prompts you to unstake your snrLLP to be used as collateral.
- Then it stakes your collateral into Level Finance.
- You receive the USDC.e loan.
If you have unstaked snrLLP, the unstaking portion of the transaction is not applicable. Timeswap will simply stake it into Level Finance and pay out the USDC.e loan.
Why are YBAs important?
YBAs represent another step on our journey to make exotic assets superfluid capital! We promised you that we would not stop until exotic assets would be dominant instead of dormant and we are building to keep that promise!
So far, Timeswap could not properly remit staking rewards paid out in another token to our users. This was a big stumbling block for integrating new exotic assets as LPs were loath to lose out on these rewards and even if pools were launched, liquidity would be relatively thin on the ground.
With this new innovation, asset backed tokens paying out rewards in a different token will find a new home in the Time Machine. Now, we are closer to emulating traditional finance which turns any claim on an asset into a new asset. The logic is simple: YBA tokens have a claim to the underlying asset in perpetuity, making them an incredibly safe bet. Packaging them as collateral makes inherent sense, as long as the underlying assets are of sound quality!
Take Level Finance, for example. On Arbitrum, their snrLLP is backed by 5 assets: BTC, ETH, ARB, USDT and USDC. So, two of the largest assets in the ecosystem, the native token of the most adopted L2 and two stablecoins that have withstood the test of time. Restricting this reliably liquid token to just one application seems inefficient.
Imagine this, you have two options to leverage your ARB tokens: LPing on Level and leverage on Timeswap’s ARB pools. These are both great options, but they are isolated from either possibility. You put them together and you get to double dip on returns! Deposit your ARB on Level as snrLLP, use that as collateral on Timeswap to take out a loan, invest into more snrLLP. Rinse and repeat till it makes financial sense!
Not to mention, a huge selling point of DeFi is the composability it brings to applications. You are building on the security of Ethereum by transacting on an L2, the yield offered by Level Finance from perpetual futures trading and leveraging it through a non-liquidatable loan from Timeswap. Congratulations, you have successfully completed the composability LEGO set!
Pool Details
- Network: Arbitrum One
- Collateral asset: snrLLP
- Supplied/borrow asset: USDC.e
- Transition price: 0.75 snrLLP/USDC.e
- Maturity: September 26, 2023 at 12:00 UTC (~4 weeks)
PSA: The staking contract built by Timeswap to stake snrLLP token has not been audited, but the underlying core contracts of Timeswap have been audited by CodeArena, Peckshield and Trust Security
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