The composability of DeFi is truly something we are proud of.
To all Time Travelers and Plutons, we’re delighted to announce that a new money market is live, and a frenship is formed!
So what can you do with this pool? And how are we able to be the first one to make such a money market? Let’s find out!
Here’s a quick TL;DR!
There is a massive value locked in the plsARB pool, and the official ARB-plsARB pool will be live in 4 weeks!
Meanwhile, there exist no method for plsARB holders to access capital.
Timeswap will be the first ever lending market that enables plsARB as collateral, while paying fixed interests. On the other hand, lenders can earn fixed interests for empowering this market.
View more details down below!
An Introduction to PlutusDAO
PlutusDAO is the governance blackhole of the Arbitrum ecosystem.
If you’re familiar with what Convex is to Curve, PlutusDAO is comparable, but with a bigger vision: for the whole Arbitrum ecosystem!
For those of you unfamiliar with the concept of governance in DeFi, here’s a quick one to keep you up to speed.
Governance tokens are the most popular type of tokens, especially in DeFi. The value of governance can be generally derived from: 1) rights to receive protocol’s revenue and 2) rights to vote on the protocol changes (e.g., parameters, features, etc.).
Number 2 is very broad, and differs for every protocol. For example, in Curve, tokenholders have a say in the future token distribution (to who and how much), which is inherently more valuable than making changes in the UI-level. Rights that are related to economics (e.g., fee switch, turning on/off and setting the direction of incentives, etc.) are expected to be more valuable in proportion as the underlying protocol scales.
In exchange for these rights and revenue streams, tokenholders have to typically ‘lock’ (or stake) their tokens, and it’s common practice to reward those who commit the tokens for a longer time period.
Now the issue is that for users to access the rights, they have to give up the ability to ‘sell’ their tokens. It’s an opportunity cost. This is where protocols (rather, meta-protocols) such as Convex and PlutusDAO steps in.
PlutusDAO aggregates the governance power through their plsAssets (e.g., plsDPX). Users have to convert their eligible assets (e.g., DPX) into plsAssets (e.g., plsDPX), and PlutusDAO will lock the assets for the longest possible duration. The plsAssets are not convertible, but can be swapped back to the assets through DEXes to allow flexible exits. Additionally, the asset-plsAsset LP pairs are incentivized with PLS tokens to ensure deep liquidity.
This way, users are able to reap the benefits of a max-locked token (e.g., revenue distribution, bribing rewards, etc.), all while having the flexibility to sell their positions. Additionally, plsAsset holders could stake on PlutusDAO to receive additional PLS rewards.
At the time of writing, PlutusDAO controls massive governance power across several protocols. Here’s a screenshot of Mochi’s dune dashboard (https://dune.com/defimochi/plutus-metrics)!
The PLS token is currently being used to amass governance power everywhere. We too believe it will have a massive value when the harvesting period begins!
What is plsARB?
plsARB is a plsAsset, minted by converting $ARB on PlutusDAO. Currently, plsARB stakers receive c. 15% APR on PLS emissions. Additionally, PlutusDAO received 2.7mn ARB tokens from the Arbitrum airdrop, to which a portion of it will be distributed to plsARB converters and stakers!
To date, more than 8.4mn ARB tokens (about 0.6% of the circulating supply) have been converted into plsARB. The goal of accumulating such an amount is to even better position PlutusDAO in being in the centre of the Arbitrum ecosystem. If you’re curious, here’s a great dune dashboard all about plsARB (https://dune.com/maybeYonas/plsarb).
However, unlike other plsAssets, plsARB does not have an incentivised (or official per se) ARB-plsARB pool yet. Hence it is virtually impossible for plsARB holders to access capital at a ‘fair’ rate. The incentivised ARB-plsARB pool is coming in the next 4 weeks (per PlutusDAO Discord).
Currently, there is a non-incentivised ARB-plsARB pool on Uni V3, and plsARB has been trading at a 20–35% discount with respect to ARB (https://dexscreener.com/arbitrum/0x030571cda878781cdbbe669d63aa87d9d7371ca1).
Users who need access to capital would be missing out on the plsARB distribution (cutoff date has not yet been announced as per Discord), and be selling at a big discount. There is just no fair solution, at least not yet.
The value locked under plsARB is a gold mine. However, the lack of secondary liquidity restricts the potential of plsARB outside of PlutusDAO. Such an immense value, with a strong underlying token (ARB) and a strong meta-governance layer (PlutusDAO), it’s a no brainer to be used as collateral, right?
If you’re wondering why no such solution exists, it’s due to the oracle dependency of conventional money markets. But we ain’t conventional, so here we are presenting you our USDC-plsARB money market! The first of its kind.
The USDC-plsARB money market
Before we go on and explain how our design allows us to launch this pool ahead of everyone, here are the pool details.
Pool Details
Network: Arbitrum
Pool: USDC-plsARB
Maturity: May 12, 2023–12pm UTC (i.e., 21 days)
Transition Price: 0.7 plsARB/USDC
By design, our lending/borrowing pools run on no oracles and are isolated. This is due to our non-liquidatable structure, where borrowers have the option to repay the loan or forfeit their collateral based on the value of the debt taken and their collateral at maturity. In turn, the assets lenders receive at maturity is determined by the aggregate borrower’s decision. Let’s not forget that all rates are locked-in throughout the duration of the loan once you open a borrowing/lending position!
For now, you can refer to our docs to learn more about our design. Worry not, we’re releasing a blog series really soon to help you navigate our design in a faster, more digestible manner.
So, what can you do with this pool?
Simply said, we enable the usage of plsARB as collateral.
Here’s the thorough breakdown.
Borrowers could borrow USDC by posting plsARB collateral. The collateral ratio is determined by the transition price (set to be 0.7 plsARB/USDC). That is, for every 0.7 USDC debt, you have to post 1 plsARB as collateral. At the time of writing, that figure is translated to be ~155% CDP. The interest borrowers have to pay remains fixed once borrowers open a position. Additionally, borrowers do not have to fear liquidations!
Precaution: Borrowers need to repay their loans before the pool expires. Failing to do so will lead your collateral to be distributed amongst lenders and LPs.
Borrowers can always pay back their debt and close their positions early.
Lenders could lend USDC to these borrowers. The ‘insurance coverage’ (i.e., CDP) of your lending position is determined by the transition price (set to be 0.7 plsARB/USDC). That is, for every 0.7 USDC return (principal + interest), you will receive 1 plsARB if borrowers default. If they do not default, you will receive your USDC principal and interest. The lending interest you will receive is fixed, once you open a lending position.
To lenders, note that plsARB is currently still an ‘illiquid’ asset. Should borrowers default (expected to be when plsARB/USDC is trading under 0.7), you will receive plsARB instead.
Lenders can close their lending positions early, but are subject to slippage (depending on the pool’s liquidity when you open and close the positions).
The plsARB pool is a significant representation of what Timeswap enables. This pool unlocks a massive amount of locked capital, while allowing lenders to earn fixed interests. We’re excited to see what strategies users will come up with!
In case you’re new to Timeswap, you can refer to our user guide to navigate fluidly through the dApp.
Follow us:
Discord: https://discord.gg/timeswap
Twitter: https://twitter.com/TimeswapLabs
Medium: https://medium.com/Timeswap
Telegram: https://t.me/Timeswap
