Tokemak: Reshaping Decentralized Finance Liquidity Management

In the field of Decentralized Finance, Liquidity Providers face a major challenge, which is the inefficiency and fragmentation of Liquidity across various protocols. Decentralized exchanges (DEX) and other Decentralized Finance platforms often struggle to maintain sufficient Liquidity, resulting in users experiencing slippage and a poor trading experience. This inefficiency ultimately limits the growth potential of the Decentralized finance ecosystem.

Tokemak emerged to address this pressing issue. It introduces a Decentralization Liquidity protocol and leverages innovative mechanisms such as Autopool to streamline the Liquidity provisioning process and enhance capital allocation efficiency in the Decentralized Finance field. This protocol enables Liquidity Providers to direct Liquidity to multiple DEXs simultaneously, ensuring that each platform has the necessary resources for effective operation.

What is Tokemak?

Source: Tokemak Official Website

Tokemak is an innovative Decentralized FinanceLiquidityprotocol, focusing on solving the inefficiency and fragmentation of Liquidity in the Decentralized Finance (DeFi) ecosystem. Tokemak allows Liquidity Providers (LPs) to deploy their assets on multiple Decentralizedexchange (DEX) through a single interface, simplifying the process of providing Liquidity. The protocol adopts a unique model called Autopool, which enables LPs to simultaneously guide Liquidity to multiple DEX, ensuring optimal allocation of capital and dropping Slippage for traders.

Vision and Mission of Tokemak

The vision of Tokemak is to build a powerful and interconnected Decentralized Finance ecosystem, enabling liquidity to flow seamlessly between platforms, thereby eliminating inefficiencies in the market. The protocol aims to create a more accessible and user-friendly financial system, allowing individuals to participate in Decentralized Finance and drive its widespread adoption.

Tokemak's mission is to reshape Liquidity management, and this is achieved by providing a Decentralization solution that improves capital efficiency and supports various Decentralized Finance protocols.

Tokemak Use Cases

• Liquidity Provision: Tokemak is a powerful liquidity provision platform. Users can deposit assets into the liquidity pool and earn profits while helping to improve the overall liquidity of the Decentralized Finance ecosystem. This use case brings benefits to those users who want to earn passive income from cryptocurrency without participating in trading.
• Improve DEX Trading: By leveraging Tokemak's Autopilot and Reactor features, traders can benefit from lower slippage, optimized DEX trading conditions, and more. Liquidity will be automatically deployed to the most efficient trading venues, allowing users to execute trades more effectively, resulting in better prices and less market impact.
• Support for new projects: Emerging Decentralized Finance projects can use Tokemak's Reactor to ensure an adequate Liquidity for their Tokens. Projects can attract Liquidity Providers by creating dedicated Reactors, thereby enhancing the market influence and volume of their Tokens. This support is crucial for new projects and helps them succeed in a competitive environment.
• Decentralization Governance Participation: Tokenholders can participate in Decentralization governance, influencing the development of the platform. By voting on proposals and providing ideas, users can shape the future of Tokemak and make the platform's development align with the needs of its community.
• Cross-Chain InteractionLiquidity Access: As Tokemak develops and achieves the ability for cross-chain interaction, users can access Liquidity across multiple blockchain networks. This use case creates new trading opportunities and allows users to leverage Liquidity from different markets, thereby enhancing the overall efficiency of the Decentralized Finance ecosystem.

Technology Behind Tokemak

DecentralizationLiquidityprotocol

Tokemak's innovative approach is based on its DecentralizationLiquidityprotocol, which utilizes a range of advanced technologies to optimize the process of Liquidity provisioning in the Decentralized Finance ecosystem. The Autopool mechanism is a fundamental component of Tokemak, enabling Liquidity Providers (LP) to deposit assets into a shared pool that can be utilized across multiple Decentralizationexchange (DEX). Through this aggregated Liquidity approach, Tokemak significantly improves capital efficiency and minimizes Slippage commonly seen when trading in fragmented Liquidity pools.

Automated Management of Smart Contracts

In addition, Tokemak has implemented smart contracts to facilitate automated Liquidity routing and management. These self-executing contracts eliminate the need for intermediaries, ensuring a transparent and trustless operating environment for all participants. With cutting-edge blockchain technology, Tokemak provides users with a secure and efficient Liquidity provisioning platform.

Cross-Chain Interaction Integration

Another important aspect of Tokemak technology is its integration with various Block chain networks, enabling it to leverage Cross-Chain Interaction Liquidity. This interoperability expands the coverage of protocols, enhances their functionality, and allows Liquidity Providers to access Liquidity from different ecosystems without being hindered by fragmentation issues.

Tokemak's main functions

Liquidity pool

Tokemak operates based on Liquidity pools, allowing users to deposit assets and earn profits. These pools are the foundation of the platform, aggregating Liquidity from multiple users, which can be used in various decentralized exchanges (DEX). This aggregation of Liquidity enhances Liquidity Depth and promotes efficient trading.

Autopilot

The Autopilot is an outstanding feature of Tokemak, which automates the deployment of Liquidity between DEXs. This feature analyzes market conditions in real time to optimize asset allocation, ensuring that Liquidity providers achieve the best returns with minimal management. By dynamically managing Liquidity, Autopilot mitigates risks such as Impermanent Loss.

Reactors

Tokemak introduces the concept of Reactors. They are Liquidity pools specifically tailored to individual Tokens or projects. Each Reactor provides custom Liquidity tailored to the specific asset's needs, improving trading efficiency and reducing Slippage. This specialization establishes a stronger relationship between the project and its Liquidity Providers.

Tokemak Products

The Tokemak v2 version has been released. v2 largely overcomes the limitations of the previous version and has evolved into an advanced ecosystem that optimizes the process of providing Liquidity for Liquidity Providers (LP) and Decentralized Autonomous Organizations (DAO). This upgrade is made possible by two core products: the intelligent Liquidity router Autopilot and the DAO Liquidity Market.

Tokemak Autopilot

Tokemak is a Decentralization-based Liquidity infrastructure that utilizes its Autopilot to optimize the process of Liquidity provisioning, aiming to improve capital efficiency and maximize the returns of Liquidity Providers (LPs). With the Autopools feature, Tokemak simplifies the process of Liquidity management, while leveraging real-time market dynamics to ensure users obtain the best returns without the need for manual intervention.

The automated pools are the core function of the Tokemak ecosystem. Users deposit assets into these pools, and the automated deployment system manages and rebalances liquidity based on real-time market conditions. This automated process ensures that users receive the highest possible returns while reducing the burden of active asset management.

Currently, Tokemak offers three main automated pools:

• autoETH: Mainly based on Ethereum Liquidity, providing high yields according to the demand for ETH trading pairs.
• balETH: Utilizing Balancer's unique Liquidity features to provide competitive yields and higher capital efficiency.
• autoLRT: Provide diverse opportunities for niche assets in uncommon markets.

Core Features of Autopilot

• Self-rebalancing: The automated deployment system continues to process market data and adjust Liquidity positions to ensure that user assets maintain the optimal configuration, thereby maximizing long-term returns.
• Save gas fees and time: Autopilot combines deposit, withdrawal, rebalancing, and other operations into a single transaction, dropping gas fees by up to 20 times, reducing gas costs.
• Automatic compound interest: The returns provided by Liquidity will be automatically reinvested in the automatic pool, improving long-term performance.
• Composability: Users will receive a receipt Token (such as autoETH), which can be integrated into a wider Decentralized Finance ecosystem, allowing for use or leverage.

The Autopilot system continuously allocates assets to automatic pools with the optimal risk-return configuration. This process ensures the optimization of Liquidity deployment and achieves automatic rebalancing.

How to use Tokemak Autopilot

1. Deposit: Users deposit assets into the automatic pool and receive corresponding receipt Token.
2. Rebalancing: The system monitors the market and proposes the best rebalancing strategy based on the fluctuation of returns.
3. Automatically compound interest: Regularly receive rewards and reinvest them into the underlying assets of the automatic pool.
4. Debt report: The system re-evaluates the value of LP Tokens and integrates available rewards into idle funds.
5. Restart: When idle assets accumulate, a new round of rebalancing will occur to ensure Liquidity continues to be optimized.

Liquidity Automated Tokens (LAT) and permissionless automated pools

Liquidity Automatic Token (LAT) is a profit Token representing participation in an automatic pool. With the introduction of permissionless automatic pools, users can create custom automatic pools with unique risk configurations and issue the corresponding LAT Tokens. These permissionless pools allow various participants (including DA and risk managers) to customize Liquidity strategies according to their own needs.

DAO Liquid market: Real-time Liquidity management

DAO Liquidity market

The DAO Liquidity market provides an innovative solution for DAO to obtain Liquidity. This market allows DAO to rent Liquidity in real time based on transparent market Interest Rate, which fundamentally changes the way Liquidity is obtained. DAO can directly bid for Liquidity, bypassing traditional indirect incentive mechanisms, which often lead to uncertainty in Liquidity Depth.

Intrerest Rate in the market will be adjusted based on supply and demand dynamics to ensure that DAO pays required Liquidity only at fair market prices. This flexibility is crucial for enhancing Liquidity of protocol during market Fluctuation.

Tokenomics of Tokemak

Tokemak uses two main tokens - LAT and TOKE, which have different functions in the ecosystem. It is important to understand the interaction between them to maximize user profits:

• LAT: Local Token used for stake and participation in the automatic pool.
• TOKE: As a governance and utility Token, rewarding user participation.

Tokemak v2 Tokenomics ($TOKE)

Source: Tokemak Medium

$TOKE is the governance and utility Token of the Tokemak platform, with a total supply of 100,000,000 $TOKE, allocated as follows:

• 30,000,000 TOKE (30%): Distributed as rewards
• 5,000,000 TOKE (5%): Used for the DeGenesis event and CoRE (Reactor Staking Event) in Cycle Zero, TOKE will be first distributed.
• 9,000,000 TOKE (9%): reserved as DAO reserves
• 16,500,000 TOKE (16.5%): Provided to contributors (12 months lock-up period + 12 months linear unlock)
• 14,000,000 TOKE (14%): Allocated to the team (12-month lockup + 12-month linear unlocking)
• 17,000,000 TOKE（17%）: Reserved for investors (12-month lockup period + 12-month linear unlock)
• 8,500,000 TOKE (8.5%): Given to DAO and market makers (12-month lockup period + 12-month linear unlock)

Functionality of $TOKE

• stake TOKE to participate in Liquidity Mining Pools (LMPs): Users can stake TOKE as collateral in Liquidity Mining Pools to align with their risk preferences.
• Performance Fee: Stakers will receive performance fees specific to the Liquidity Mining Pool, which enhances the pool's security and makes it more attractive to Liquidity Providers (LPs).
• Slashing Protection: In the event of significant losses in the Liquidity Mining Pool, assets will be transferred to a Lock-up Position contract to enhance the Annual Percentage Rate (APR) for stakers and stabilize the market.

Claim Auto Pool Rewards

Users participating in the Tokemak automated pool can receive TOKE rewards every two weeks. The distribution of rewards is based on the amount of LAT staked.

• 50% allocated to autoETH
• 30% allocated to balETH
• 20% allocated to autoLRT

To claim these rewards, please visit the 'Rewards' page in the Portfolio section and select one of the following options:

• compound interest rewards: Lock your TOKE for four weeks to receive autoETH receipt Token.
• Basic reward collection: directly extract the TOKE in circulation to your Wallet, and then use it in Liquidity pools such as SushiSwap or Curve.

TOKE Lock-up Position and Unlocking

• TOKE Lock-up Position: Users can lock TOKE for four weeks to earn autoETH. Once locked, rewards will start calculating immediately, and the Lock-up Position will automatically renew unless a withdrawal request is initiated.
• TOKE Unlock: Funds can be unlocked in the last week of the lock-up period. After unlocking, users can withdraw the balance and will no longer receive rewards.

Tokemak Application Guide

• To experience Tokemak's automated pools, please visit the 'Autopools' section of the tokemak.xyz website. Here, you can view available pools, historical performance, and underlying assets.

• To deposit, select an automated pool, connect your Wallet, then select the asset and amount, the protocol will automatically convert it to the base asset of the pool (e.g., ETH). You can set the Slippage tolerance range, enable 'auto stake', and your deposit will be staked together with the LAT receipt Token.
• Withdrawing is very simple, there is no lock-up or cooldown period; just make sure LAT Tokens are not staked, enter the withdrawal amount, and confirm to complete the withdrawal.
• To stake or unstake LA tokens, please go to the 'Portfolio' section, select 'Manage', and then choose to stake or unstake as needed.

Providing Liquidity on Tokemak

An important aspect of the Tokemak ecosystem is its ability to provide Liquidity for the TOKE/ETH pool. By depositing TOKE and ETH into the pool, users not only facilitate trading on Decentralization exchange, but also receive a portion of Money Laundering.

The benefits of providing Liquidity

• Earn fees: Liquidity providers can earn a portion of Money Laundering from trades within the pool.
• Additional Incentives: Tokemak typically provides additional incentives to Liquidity Providers, thereby increasing overall participant yield.

How to Provide Liquidity

Users can find links to access the TOKE/ETH pool on SushiSwap and Curve v2, click the link to provide Liquidity. The operation process usually includes the following steps:

1. Connect your Wallet to the selected Decentralized exchange.
2. Select the TOKE/ETH pool and choose the quantity of each Token you want to deposit.
3. Confirm the transaction and your Liquidity will be added to the pool.

Conclusion

Tokemak's Autopilot system simplifies the process of providing Liquidity and enhances the user experience by maximizing returns. It is through these initiatives that it is changing the way users interact with Decentralization finance. After understanding the mechanism of the automatic pool, claiming incentives, and providing Liquidity, users can fully unleash the investment potential of their assets in the Tokemak ecosystem.