ITSA DeFi Insight: Taking a look at Tokemak

How it works

Tokemak focuses on creating sustainable liquidity in DeFi through a decentralized market-making protocol. Each asset has its own pool called a reactor, where the protocol token, TOKE, is used for directing liquidity. Users supply only one token to the pool (called a reactor), and TOKE holders become Liquidity Directors, who vote on where the liquidity should flow. The TOKE crypto asset is designed to represent a homogeneous form of tokenized liquidity throughout the Tokemak platform — from staking to liquidity providing and yield farming via Token Reactors and Pair Reactors. Token Reactors are essentially specialized token pools for user-provided assets on Tokemak. Users deposit their assets into their desired Token Reactor. At the same time, liquidity directors allocate TOKE crypto assets to a specific Token Reactor to direct the liquidity of that asset to different DEXs (like Uniswap). Liquidity directors (LDs) are users who stake the TOKE they earn by allocating votes to a specific Token Reactor. Pair Reactors are token pools composed of ETH or stablecoins paired with TOKE. Non-TOKE assets deposited into Token Reactors will be paired with assets in Pair Reactors and deployed as liquidity to exchanges.

Cycles

T-Assets

T-Assets are tABC tokens that a Liquidity Provider receives on a 1:1 basis when they deposit tokens into a Pair or Token Reactor. T-Assets represent the LP’s underlying claim to the deposited assets. T-Assets are transferable; however, whichever wallet holds the tABC tokens can claim the underlying deposited assets. When withdrawing T-Assets, users need to consider the pending Cycle withdrawal period.

Figure 1: T-Assets example of SUSHI LP (source: https://docs.tokemak.xyz)

TOKE token

Tokenmak’s native token TOKE serves several purposes:

  • The token is staked into Token Reactors in order to vote on directing deposited assets across exchanges.
  • TOKE is also the network’s incentivization and reward token for LPs and LDs.
  • TOKE holders can vote on DAO decisions.
  • Protocol risk mitigation as it acts as a backstop for potential losses incurred during liquidity deployment, e.g., if an LP attempts to withdraw its assets and cannot be made whole.
  • Liquidity Providers earn TOKE at a variable APR.
  • Liquidity Directors earn TOKE at a variable APR.

Classifying TOKE according to the ITC

Figure 2: ITC Classification of TOKE (Source: https://itin.itsa.global/6NRFYK7G6)

The International Token Standardization Association (ITSA) e.V.

The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.

  • The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
  • The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to market capitalization of classified tokens.
  • ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.

Remarks

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International Token Standardization Association

International Token Standardization Association

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The International Token Standardization Association (ITSA) is a not for profit organization working on holistic market standards for the global token economy.