Tokemak
Tokemak is a liquidity aggregator designed to give users the ability to provide liquidity and earn protocol incentives for staking various crypto assets. Users actively vote where to deploy liquidity in order to maximize yield for all depositors.
- Documentation
- Auditors
- Please see our FAQ on experienced auditors
- Website
- Token: TOKE
- Tags: Yield
- TVL: $32M (Rank #88)
- TVL Ranking by Yield: #6
- Blockchain: Ethereum
- Chain TVL
- Ethereum: $32.04M
- Code reviewed by several experienced auditors including Omniscia and Quantstamp
- Public team promotes accountability
- No documented protocol hacks since launch
- Core protocol launched in 2021; maturity over a year reduces technical risk as smart contracts are moderately battle-tested
- Top 10% by total value locked reduces risk
- Governance decentralization is in the roadmap
- At least one critical governance issue documented
- Low voting power concentration reduces risk
- Protocol could be susceptible to negative feedback loops
- Tokemak pools funds from investors and runs weekly polls to determine where to allocate those funds to maximize aggregate yield; earnings from such allocations are paid in the protocol's token, TOKE
How Tokemak works
Tokemak wants to serve as the Amazon Web Services (AWS) for Web3 by ushering in a broadband moment for liquidity or value flow in DeFi. Current solutions to solve this liquidity issue are either to engage a centralized market maker or incentivizing users through yield farming. However, these methods can be costly and highly inefficient. Tokemak was designed with this fundamental problem in mind. It is designed to be used primarily by liquidity providers (LPs), DAOs, new DeFi projects, and exchanges. Each asset on Tokemak has its own "token reactor" that accepts a particular asset to be deployed as liquidity across DeFi. TOKE is the native utility token that is used to direct the liquidity for each token reactor. LPs on Tokemak receive impermanent loss protection, with the cost offset by trading fees earned and ultimately backstopped by TOKE holders. Liquidity directors (LDs) utilize TOKE to control liquidity across Tokemak. LDs stake their TOKE in a given reactor and use that stake as voting power to direct liquidity to an exchange of their choosing. Voting power from TOKE is directly proportional to the amount of TOKE staked and the amount of assets in that specific reactor.
How Tokemak makes money
Tokemak earns all trading fees earned from its liquidity provision to various exchanges in return for bearing the risk of impermanent loss. These fees are then retained in the Tokemak treasury as Protocol Controlled Value (PCV). Over time, Tokemak intends to accumulate enough trading fees such that it will be able to direct liquidity independently, without the need for LPs. This point of self sufficiency is referred to as the "singularity". At this point, value accrual for TOKE is driven by the amount of liquidity that each TOKE controls.
How you make money on Tokemak
You can provide single-sided liquidity on Tokemak to earn protocol rewards (paid in TOKE). You can also stake TOKE to earn a proportional share of all token reactor yields (paid in TOKE).
