Reduce Liquidation Risks
An aggregate of high-quality price feeds determine when liquidations occur. This keeps positions safe from temporary wicks.
Save on Costs
Enter and exit positions with minimal spread and zero price impact. Get the optimal price without incurring additional costs.
Open positions through a simple swap interface. Conveniently swap from any supported asset into the position of your choice.
We’ve recently announced the switch for Tethys from being a DEX to a Leveraged yield dApp. Before the switch, leveraged yield part (Tethys Market) was embedded as a feature; after the switch, it will be the main component of Tethys Finance V2. There were many reasons for this switch, but the most important thing is we’re not stopping and keep building on the Metis Andromeda network.
If you’re unfamiliar with Tethys Market, it allows users to leverage their farming returns by borrowing LP tokens. LP tokens secure the loans as collateral that users can leverage up to 20x. This process is inspired by the Tarot protocol and has proven to be secure over time and an essential yield-generating piece of the Web3 economy.
Liquidity isolation and shared borrowable pools
All leveraged yield pools are currently isolated. For example, if there are “METIS-USDC” leveraged yield pools on Netswap and Hermes, the liquidity used for borrowing will be separated and only utilized within the pool it was supplied to. Suppliers must supply METIS and USDC for both “METIS-USDC” pools, drastically reducing capital efficiency. For example, imagine there are 5 “METIS-USDC” pools on different DEXes; users must supply the liquidity for each one separately.
The reason for this is security. If METIS-USDC LP gets hacked on Netswap, the METIS-USDC pool for Hermes will not be affected. While this is a reasonable precaution, it is unnecessary if Netswap LP and Hermes LP contracts implement the same Uniswap V2 pair.
Tethys V2 will have shared borrowable pools as well as isolated borrowable pools. It will be determined by protocol admin (and governance) whether the lending pool should be allowed to utilize shared liquidity (and what percentage of it) or should the pool be isolated.
With this change, borrowers will access much deeper liquidity while allowing more straightforward UX for suppliers.
Tethys Market has a borrower incentive program when TETHYS are distributed over time to borrowers of different pools. At this moment, the admin decides the proposition of the TETHYS distribution to the pools. For V2, we’re implementing veTokenomics, so users will vote for emissions by locking their TETHYS tokens as veTETHYS.
veTETHYS is vote escrowed TETHYS. Users can lock TETHYS for a period between 7 days and 4 years to mint veTETHYS. The longer you lock, the more veTETHYS you get for the same amount of TETHYS. veTETHYS will be created to incentivize token purchases, encourage long-term investing, and develop a strong TVL directly linked to lock boosting.
New interest rate model Currently, Tethys Market has a conservative interest rate model. We’re adjusting interest rate parameters to be steeper. This should result in more incentives for suppliers to add assets to the pool when the utilization % is high. We believe this change will keep the protocol at a healthy utilization level, especially with a shared liquidity mechanism.