Traditional financial institutions have been the main source of loans. They’ve also provided a small stream of passive income for those who bring cash. However, now the world of cryptocurrencies has evolved to provide a modern alternative to the TradFi setup. Tectonic offers its users both passive income and direct loans. Thanks to the platform’s innovative design and key features, it has already become a popular option in the financial sector.
What is Tectonic Cryptography?
Tectonic is a money market protocol with a decentralized, non-custodial and algorithmic platform. The Tectonic protocol allows users to borrow cash and enjoy passive income in a quick process.
Tectonic operates on a cross-chain money market which offers users a modern way to earn passive income and lend liquidity instantly. When users deposit their crypto assets on the platform, they can benefit from stable returns. Additionally, token holders can use their tokens to earn rewards. The yield is in line with the market and immediately available.
Tectonic users can also borrow cash for a quick loan. The protocol has advanced security mechanisms and an open source design to differentiate itself from other similar platforms. For the convenience of users, Tectonic’s smart contracts are independently verified by reputable third parties.
History of tectonics
Gary Or, co-founder and former CTO of Crypto, is the head of Particle B, which launched Tectonic in December 2021. Particle B is a blockchain-based incubator or accelerator that supports high-value projects. on the cryptocurrency market. Tectonic runs on the Cronos platform. Therefore, the original Tectonic TONIC token is often referred to as the TONIC coin. However, in reality, it was developed as a token in the cryptocurrency market.
What does Tectonic want to achieve?
Tectonic developers have focused on creating a platform that puts management in the hands of stakeholders and the community of TONIC token holders. The development team consulted with the community and stakeholders to determine all aspects of the Tectonic protocol. This includes the interest rate structure, token distribution, collateral ratio, and other relevant aspects related to the design and functionality of the platform.
The design and architecture of the Tectonic protocol is based on Compound, an established protocol that has been thoroughly vetted and tested. The Tectonic protocol aims to cater to the diverse needs of users with its advanced protocol, such as providing instant loans and ensuring a steady stream of passive income.
How does tectonics work?
Tectonic token holders benefit from participating in the liquidity pool through a strong incentive program that includes interest and rewards. TONIC traders can borrow liquidity to short and farm, and TONIC holders can access more other cryptocurrencies through the platform without having to liquidate their TONIC holdings. Other cryptocurrencies can be used for staking, participating in initial coin offerings, and more.
At a more detailed level, smart contracts control Tectonic’s liquidity pool, the accumulation of user payments. Because these cryptocurrencies are controlled by smart contracts, they are tradable assets. These smart contracts therefore support fast withdrawals. Funds in Tectonic’s liquidity pool can also be used as collateral when borrowing in various cryptocurrencies.
Tectonic has several built-in mechanisms and features for the benefit of the users. For example, it maintains a 10% cash buffer and is currently developing an insurance fund. The fund protects the pool from losses of borrowed cryptocurrencies that are not returned to the pool. Additionally, the platform maintains an adaptive APY based on market conditions. This supports solid returns for TONIC holders.
There are other cross-chain money market platforms in use today, but Tectonic is far from the rest. Besides being expertly designed with multiple features that support lending and passive income, the developers are constantly improving the platform. Improvements must be approved by the community and stakeholders to ensure the benefit of the users. Let’s take a look at the features of Tectonic that support its functionality and uniqueness.
Deactivate the TONIC
As mentioned above, TONIC holders will be able to profit from their tokens through staking in the near future. While this feature is still under development, it allows owners to earn passive income commissions by simply depositing their crypto assets into the TONIC staking module. The rewards are generated through the transaction fees paid by the borrowers of the platform.
Staking also supports the TONIC insurance fund and is used for platform management. When a bet is available, users can access it via the website’s navigation menu. The simple process requires users to enter the number of TONIC tokens they wish to wager and place their order. Turning it off is just as simple, but a 10-day cooling-off period prevents these resources from being immediately available to users.
Maturity lock safes
The Tectonic Platform Maturity Lock Vaults support another avenue for passive income generation. Token holders can choose from a number of fixed periods to support long-term growth, ranging from six to 48 months. Yields increase significantly for extended retention periods in the Maturity Lock Vault. The prizes offered to these holders are paid in TONIC tokens and come from community incentives. To participate in the Maturity Lock Vault, token holders must stake a minimum of 100 tokens. Once this is done, the Maturity Lock Vault feature will be enabled.
Delivery of the property to Tectonic
TONIC holders can participate in a liquidity pool which allows users to borrow from the pool. Smart contracts regulate the delivery of tokens. This aspect of the platform design makes the pool a fungible asset. Users who add their own crypto assets to the pool will receive tTokens in return. This allows them to later retrieve the original tokens from the pool. The value of tToken is determined by interest on deposits. This interest rate is based on the economic principle of supply and demand.
We borrow properties from Tectonic
From the liquidity pool, users can borrow money in the form of various available cryptocurrencies. Supported (not TONIC) are CRO, WETH, WBTC, USDC, USDT, DAI and TUSD. This allows users to borrow liquidity without having to sell their TONIC token holdings. Tectonic maintains a collateral factor, the ratio of loanable funds to the user’s assets. If the value of the secured assets decreases, a portion of the assets will be liquidated and the liquidation discount will be applied. This liquidation mechanism can be avoided if the user increases his guarantee or repays part of the loan balance. A higher interest rate is charged on borrowed money.
The Tectonic Insurance Fund, currently under development, is expected to be released in the near future. The balance of the fund is formed by an increase in interest, for which all borrowers are responsible. 10% of the interest collected goes to the insurance fund. The purpose of the insurance fund is to create a financial buffer that protects the pool from losses related to non-payable loans.
When the safety factor is not satisfied due to a decrease in the value of the collateral or an increase in the loan amount, the liquidation mechanism is triggered. The purpose of the study is to maintain the solvency of the Tectonic protocol. The Tectonic UI has a Lava Bar on the user dashboard. When Lava Bar reaches full capacity, liquidation can occur. When the bar reaches a full point, users can repay part of their loan or increase their collateral to avoid liquidation.
Tectonic Core is the risk management layer of the Tectonic protocol. It maintains a margin factor which determines the minimum margin required by the user and initiates a liquidation mechanism. When a user submits a transaction request, the approval or rejection is processed through Tectonic Core.