What is Tokemak (TOKE) | What is TOKE token

In this article, we'll discuss information about the Tokemak project and TOKE token.

Tokemak creates sustainable DeFi liquidity and capital efficient markets through a convenient decentralized market making protocol.

Sustainable liquidity includes several factors:

Sustainably produced — not powered by inflationary means
Democratically sourced
Capital efficient
Super fluid — flowed to markets where it’s most beneficial
Encourages a deep accumulation of assets to reduce slippage towards zero

We believe that Liquidity Mining has been an invaluable resource and has been extremely successful in bootstrapping liquidity during the early stages of DeFi’s short history. It was and is an important stepping stone for the movement, leading to an explosion of product creation and the onboarding of millions of users. Yet the fact remains: standing up liquidity for a new project is costly and inefficient. Current solutions to the problem of token liquidity are:

Engaging centralized market makers, a costly affair
Incentivizing their users through yield farming, an equally costly solution

Engaging with a market makers creates a unique set of challenges. A market maker is an entity that centralizes three rare resources: capital [money], market knowledge [strategy], and trading/pricing expertise [technology]. Current examples of these organizations are very centralized, often the brainchild and property of just one individual. DeFi has yet to produce a primitive which is capable of disaggregating these three things, which is why we as an industry have been leaning on TradFi for this service. The small steps we’re about to take here at Tokemak will result in a big leap for the future of finance. Vive l’avenir de la France.

Meanwhile, yield farming introduces inflationary tokenomics to bootstrap liquidity, and has a creeping impact on the overall health of the project, often strangling the project’s resources for innovation. The budgeting of so many tokens in pursuit of liquidity is akin to early internet entrepreneurs spending their budget on armies of IT professionals and massive server farms. It’s redundant and there’s a better solution —during the era of Internet 1.0, the answer was AWS as a utility for cloud server hosting; for Web 3.0, the answer is a utility for sustainable liquidity: Tokemak.

Infrastructure is defined as a technology upon which other things rely in order to function. A simple example is the electrical grid, without electricity your internet does not work. Similarly, without internet your Ethereum doesn’t work and without Ethereum your DeFi doesn’t work. Deep liquidity results in healthy markets and for DeFi, liquidity is the next critical infrastructure layer. DeFi can’t function without liquidity. You can’t complete a Uniswap trade without liquidity. On the internet, high speed “data-flow” underpins applications; our aim is to usher in the broadband moment for liquidity or “value-flow” in DeFi. This broadband liquidity will enable complex new products and behaviors to emerge. A future decentralized economy requires a performant DeFi base layer with sufficient liquidity for interoperability.

Enter the Tokemak

A tokamak (with an “a”) is a reactor used in nuclear-fusion for the magnetic confinement of plasma. Inside a tokamak, gases are heated to the point that they ionize into plasma, and energy is produced through the fusion of atoms. The heat from this reaction is used to produce steam and generate sustainable energy/electricity. Analogous to this, the Tokemak (with an “e”) has been architected to gather idle tokens in order to seamlessly generate and deploy sustainable liquidity.

Each asset has its own token reactor, where the protocol token, TOKE (toe-kuh), is used to direct liquidity. TOKE can be thought of as tokenized liquidity. When staking to a given asset’s token reactor, TOKE holders control not only where the liquidity gets directed, but also what market receives liquidity, pulling from Tokemak’s reserves of ETH and Stablecoins.

Tokemak is designed to be primarily used by:

Liquidity providers and yield farmers: any user can deposit single assets into the network to be utilized as liquidity
DAOs: DAOs can harness Tokemak’s liquidity flow in order to strengthen and direct liquidity for their project, offering an alternative to traditional liquidity mining
New DeFi projects: New projects will be able to inexpensively stand up their own token reactors and use the Tokemak’s protocol controlled assets to generate healthy liquidity for their project from its inception
Market makers: MMs can take advantage of the network’s store of assets in order to direct liquidity across various exchanges
Exchanges: exchanges can also leverage TOKE’s utility in order to gain access to deep liquidity to bolster their market depth

Tokemak is the first protocol that allows for increased transparency and democratization of liquidity provision, with the goal of becoming the primary vessel through which liquidity can flow freely and efficiently across networks.

The Token Reactors

How does it function?

A “simple” breakdown of the network roles and functionality:

Liquidity Providers (LPs) deposit assets into a token reactor. LPs will earn yield on their single asset deposits in the form of the TOKE. Initially, there will be select whitelisted projects that will have a token reactor in which to deposit (eventually this will be opened up to more projects). These assets will then get deployed as liquidity across various exchanges with various pairs, and mitigated exposure to impermanent loss.
TOKE is the native network token that is earned through participation in the protocol. It’s utilized for directing liquidity (more below) and governance. TOKE holders will comprise the Tokemak DAO, which will oversee the accrued protocol controlled assets and grow the allowed whitelist of assets and markets. TOKE also acts to collateralize the network (conceptually similar to AAVE, in this case used for the aforementioned IL mitigation). IL risk is transferred from LPs to LDs via the TOKE staking mechanism. This will be explained in finer detail in an upcoming tokenomics post.
Liquidity Directors (LDs) utilize TOKE to control liquidity direction. They stake their TOKE into a given reactor and use that stake as voting power to direct liquidity to an exchange of their choosing. Voting power from TOKE in a given reactor is directly proportional to the amount of TOKE staked and the amount of assets in that specific reactor.
Pricers: For any non-AMM exchange (order book or RFQ venue) where a third participant is required to provide real time pricing, Tokemak sources Pricers (normally these would be called ‘market makers’) in order to set the bid/offer prices. More information coming soon on the Pricer network.
Cycles: Tokemak operates on a cyclical basis, and a ‘Cycle’ will initially be set to one week (something that a DAO may later vote to change). Mid-Cycle, assets can be deposited and LDs’ votes can be rearranged. Assets are deployed when a new Cycle begins. LPs may also request to withdraw their assets mid-Cycle and may withdraw during the Cycle’s conclusion.
t(Assets): When an LP deposits assets into a reactor, they’ll receive a corresponding amount of t(Assets) which is reflective of their claim for the deposited assets. The t(Assets) are then burned upon redemption of their underlying funds. This is conceptually similar to c(Assets) on Compound or a(Assets) on Aave.

The Balance

Incentives and Keeping a Token Reactor Balanced

In its simplest form, users are playing a game of balancing the reactors. The reactors incentivize a ‘balance’ between the value of assets deposited and TOKE staked through a variable APY.

If there is a significant amount of assets deposited into a given reactor, and a minimal amount of TOKE directing that liquidity, the APY will be boosted on the LD side of the reactor, encouraging LDs to stake more TOKE and participate in directing that liquidity. The same logic holds in reverse — if there is a large amount of TOKE staked in a reactor, but a small amount of assets deposited, the LP side of the reactor receives an increased APY to incentivize further asset deposits.

This balance creates an incentive feedback that encourages more liquidity to flow when TOKE stakers (LDs) are requesting it, while also ensuring a sufficient supply of TOKE is directing the liquidity and collateralizing the system.

TOKE emissions will be detailed in an upcoming tokenomics post.

The Black Hole

The Black Hole Effect

As Tokemak pushes liquidity across the ecosystem, it will pull in value. Over time, this value can be used to supplement the LPs’ assets and ensure the protocol can provide liquidity and market making services without third party participants. This will enable Tokemak (and TOKE holders) to generate more value in addition to the base function of liquidity provisioning. This “black hole effect” will be described in more detail in a future post.

The Ignition

Cycle Zero

Cycle Zero will mark the beginning of Tokemak. Cycle Zero will be comprised of three phases in the following sequential order:

The DeGenesis Event: There will be a preliminary period in which DeFi users will have a chance to participate with ETH and Stablecoins for access to the first emissions of TOKE.

Collateralization of Reactors Event (C.O.R.E.): C.O.R.E. will be the initial collateralization period where a group of whitelisted token reactors will compete to be the first active projects selected for Tokemak’s full launch.

Genesis Pools: There will be an additional pre-launch phase where users will be able to stake single assets: ETH, USDC, DAI, and sUSD in order to earn TOKE emissions. These pools will remain competitively incentivized even after Cycle Zero, in order to continue to accumulate the necessary pairs to deploy liquidity.

TOKEnomics

Protocol Bootstrapping / Incentivization

Tokemak emits its native protocol token TOKE as an incentivization to Liquidity Providers and Liquidity Directors. Liquidity Providers deposit assets to be utilized as liquidity and Liquidity Directors stake TOKE to direct those assets across various decentralized exchanges. In addition to directing liquidity, TOKE is also used to collateralize the system and the (fixed) supply has been designed to be slowly emitted as the network’s liquidity grows.

While Tokemak begins with TOKE inflation as incentives, we believe that TOKE’s utility and inherent value as tokenized liquidity will allow the protocol to evolve beyond the need for further TOKE emissions. Recall that TOKE holders direct the TVL of the protocol as liquidity. Eventually, the incentivization structure can evolve into a distribution of protocol generated rewards and possibly a share of accrued protocol controlled assets (PCA). That’s the long term view — in the near term, let’s discuss the tokenomics and emissions:

TOKE is rewarded to several participants in the protocol:

Genesis Pools

The Genesis Pools are the main depositories of common quote assets required for liquidity pairing. At launch, these assets are: ETH, USDC, DAI, and sUSD. We expect these pools to offer competitive, higher-than-average % APR for single asset stake pools.

Liquidity Providers (LP)

Liquidity Providers, those that provide assets to be utilized as liquidity, receive a variable APR (in TOKE) based on a shortage or excess amount of assets in a given token reactor. That shortage or excess depends on the balance of the liquidity provided compared to the amount of TOKE staked in that same reactor.

Liquidity Directors (LD)

Liquidity Directors, users that stake their TOKE in a reactor in order to direct LP and Genesis Pool assets to various exchanges, also receive variable APR (also in TOKE), adherent to the same rules described previously.

Equations that govern the rewards for LPs and LDs will be detailed in our Gitbook releasing soon.

TOKEnomics and Emissions

Here’s the breakdown for TOKE distribution:

Total Supply: 100,000,000 TOKE

30,000,000 TOKE (30%): Reward Emissions

5,000,000 TOKE (5%): Cycle Zero’s DeGenesis Event and CoRE (Collateralization of Reactors Event), the first distribution of TOKE

9,000,000 TOKE (9%): DAO Reserve

16,500,000 TOKE (16.5%): Contributors (12 month cliff +12 month linear vest)

14,000,000 TOKE (14%): Team (12 month cliff +12 month linear vest)

17,000,000 TOKE (17%): Investors (12 month cliff +12 month linear vest)

8,500,000 TOKE (8.5%): DAOs & Market Makers (12 month cliff +12 month linear vest)

The emissions schedule for protocol participants (30M TOKE) is currently designed to be emitted over 24 months/104 weekly Cycles, however, these emissions could extend past this length of time. The token emissions are dependent upon a few variables and may be adjusted initially in order to keep the Genesis Pools appropriately incentivized. Those other variables include:

Token Reactor Balance: When a token reactor is in a state of imbalance (described in further detail below), the APR will adjust variably to incentivize LDs to stake more or less TOKE and LPs to provide appropriate liquidity.
TOKE Slashing: In the event TOKE needs to be used as a backstop to make LPs whole (described in further detail below), TOKE rewards from a specific token reactor may be pulled back into the PCA to be distributed at a later time.
TOKE Price: The TOKE price informs the quantity of tokens emitted in order to sustain the desired APR for LPs.

Tokenized Liquidity

TOKE can be thought of as a homogeneous form of tokenized liquidity. It’s representative of the ability to direct any of the deposited LP assets in the form of liquidity.

When an LD stakes TOKE into the protocol, the LD is given votes proportional to the TOKE staked which can then be allocated to any number of token reactors within the system.

The staked TOKE’s voting power is determined by the amount of TOKE in a given token reactor. If there is a large supply of assets in a token reactor but a small amount of TOKE directing those assets, those TOKE have a greater liquidity directing power. However, in this described imbalanced state, the APR offered for TOKE staked to that reactor will adjust variably to attract LDs to stake more TOKE. In this sense, the higher APR is meant to compensate for the slightly higher ‘risk’ taken due to fewer LDs collateralizing the reactor — the reverse state is also true: overcollateralization will lead to a decreased APR.

While the contract spend approval and staking process are standard gas transactions, the TOKE voting process is a simple signature to mitigate gas costs.

Once an LD stakes their TOKE, there are several ways the user can vote:

Token-level voting: If an LD wants to direct the liquidity of a particular asset but doesn’t have a preference as to where that liquidity goes, they can simply stake to that respective asset’s token reactor.

Exchange-level voting: TOKE voting allows LDs to control liquidity down to the exchange/venue to which it gets directed. In this instance, an LD allocates votes to a token reactor, opens an expanded UI view and votes that liquidity to a specific exchange.

Generalized voting: LDs may choose to allocate their votes across the entire protocol (all reactors) and receive a pro-rata APR (blended risk). This particular user allows their TOKE to direct liquidity across projects and venues without granular selection. (Note: This feature will be rolled out after launch)

Remember: Tokemak operates on weekly Cycles. When an LD commits votes for directing liquidity, those directional changes will only go into effect at the beginning of the next Cycle. LD’s can rearrange their votes up until the rebalancing phase, a brief rollover period after which assets may be withdrawn and votes are locked (more on this in an upcoming Medium post).

Protocol Collateralization

To mitigate impermanent loss for Liquidity Providers, there are several mechanisms used in addition to TOKE acting as network collateralization.

Tokemak, at a protocol level, views impermanent loss from the perspective of the negative change in quantity of one of the assets deployed to an AMM trading venue. In other words, Tokemak tries to ensure that LPs can withdraw the same quantity of assets they initially deposited into the system. This approach combined with other specifics of the protocol allows for rebalancing of assets that should prevent a net loss on the protocol level except in extreme market conditions.

More detailed analysis and examples will be found in our Gitbook (launching soon), but as a quick overview: if a certain percentage of the assets deployed are requested to be withdrawn by the LPs (taking into account new deposits), bailout mechanics may become necessary in order to make the LPs whole, while simultaneously keeping the PCA in a net-neutral state:

Tokemak makes LPs whole by drawing the asset in deficit from the PCA reserve
Tokemak draws system-wide asset surpluses into the PCA (this will cover a large portion of the net-negative asset flow from the PCA reserve)

In the event a specific token reactor receives a large amount of withdraw requests, and that deployed liquidity had faced a certain amount of IL, and the protocol’s reserve of assets cannot cover the immediate amount requested to be withdrawn, the TOKE staked to that reactor comes into play as a backstop.

First, the potential TOKE rewards for LDs of that token reactor get struck (as minimally as possible) in order to ensure the LPs can be made whole. In the unlikely event the preliminary mechanisms and those future rewards won’t cover the amount required to replace the LPs assets, the LDs’ principal TOKE at stake will get struck proportionally.

Tokemak DAO

It wouldn’t be a DeFi protocol without a little governance action. TOKE holders comprise the Tokemak DAO. This will eventually play an essential role as the protocol matures, the PCA grows, and the mechanics of the system evolve.

Examples of potential DAO actions include: controlling protocol fee distribution, calibrating the length of Cycles, adding new token reactors, modifying protocol safety measures (reserve/deployment ratio + TOKE collateralization parameters).

How and Where to Buy TOKE token?

TOKE token is now live on the ETH mainnet. The token address for TOKE is 0x2e9d63788249371f1DFC918a52f8d799F4a38C94. Be cautious not to purchase any other token with a smart contract different from this one (as this can be easily faked). We strongly advise to be vigilant and stay safe throughout the launch. Don’t let the excitement get the best of you.

Just be sure you have enough ETH in your wallet to cover the transaction fees.

You will have to first buy one of the major cryptocurrencies, usually either Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance (BNB)…

We will use Binance Exchange here as it is one of the largest crypto exchanges that accept fiat deposits.

Once you finished the KYC process. You will be asked to add a payment method. Here you can either choose to provide a credit/debit card or use a bank transfer, and buy one of the major cryptocurrencies, usually either Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance (BNB)…

☞ SIGN UP ON BINANCE

Step by Step Guide : What is Binance | How to Create an account on Binance (Updated 2021)

Next step

You need a wallet address to Connect to Uniswap Decentralized Exchange, we use Metamask wallet

If you don’t have a Metamask wallet, read this article and follow the steps

☞What is Metamask wallet | How to Create a wallet and Use

Transfer $ETH to your new Metamask wallet from your existing wallet

Next step

Connect Metamask Wallet to Uniswap Decentralized Exchange and Buy, Swap TOKE token

Contract: 0x2e9d63788249371f1DFC918a52f8d799F4a38C94

The top exchange for trading in TOKE token is currently BKEX, Uniswap (V3), AOFEX, Hoo, and Uniswap (V2)

Find more information TOKE token:

☞ Website ☞ Explorer ☞ Social Channel ☞ Social Channel 2 ☞ Social Channel 3 ☞ Coinmarketcap

🔺DISCLAIMER: The Information in the post isn’t financial advice, is intended FOR GENERAL INFORMATION PURPOSES ONLY. Trading Cryptocurrency is VERY risky. Make sure you understand these risks and that you are responsible for what you do with your money.

🔥 If you’re a beginner. I believe the article below will be useful to you ☞ What You Should Know Before Investing in Cryptocurrency - For Beginner

⭐ ⭐ ⭐The project is of interest to the community. Join to Get free ‘GEEK coin’ (GEEKCASH coin)!

☞ **-----https://geekcash.org-----**⭐ ⭐ ⭐

Thank for visiting and reading this article! Please don’t forget to leave a like, comment and share!

#bitcoin