What is Tomb Finance?
As of now, the general crypto market is in a volatile period and your investments are jumping up and down with percentages unimaginable to mainstream finance. This is not for the faint-hearted. However, what if we tell you that there are other possibilities in the crypto space for periods like this, such as the DeFi world? What if there is a way you can generate the same kind of returns but in a more comfortable and steady way?
Let me introduce you to Tomb Finance..
Tomb.finance, the first ecosystem running around an algorithmic token pegged to FTM on OPERA Fantom. Led by a group of battle-hardened algo-devs, Tomb was inspired by the original idea behind Basis as well as the improvements developed by its predecessors, bDollar and Soup. Tomb aims to distinguish itself from previous attempts by implementing immediate utility for the $TOMB token, giving market participants a reason to hold it aside from closed-loop ponzinomics.
Tomb.finance is designed as the first algorithmic token pegged to FTM instead of a stablecoin, on Fantom Opera. It works around a solution that can adjust the token supply to move the price of the token itself up or down, in the direction of a target price to bring programmability and stability to the price. Tomb is a multi-token protocol that consists of the following tokens: Tomb (TOMB), Tomb Shares (TSHARE), and Tomb Bonds (TBOND).
Now, I am sure a lot of questions arise such as; what is the DeFi world, what are algorithmic stable coins, and how do we benefit from it?
DeFi is short for “decentralized finance”, an umbrella term for a variety of financial applications in cryptocurrency or blockchain geared towards disrupting the financial system.
The DeFi world is full of promising properties, and has been growing exponentially under the influence of the bull market.
One of these promising properties are Algorithmic stable coins. Algorithmic stable coins are quite a new segment of cryptocurrency, designed to achieve price stability and to balance the circulating supply of an asset by being pegged to a reserve asset.
So let’s put it in simple terms; the algorithmic stablecoin uses an algorithm underneath which issues more coins when the price increases, and buys them off the market when the price falls.
This results in giving traders the comfort to reap many benefits of crypto assets, which for investors in Tomb Finance would be Fantom.
Algorithmic stable coins are a true and fair representation of decentralization as the code is dynamically taking care of the supply and demand of the stablecoin of the protocol.
How does Tomb Finance work?
Tomb Token
The protocol works around the main token TOMB. This is the algorithmic stablecoin and the use of the other tokens in the ecosystem revolve around the price and functions of Tomb. In the “Cemetery” users can pair their Tomb with FTM and provide liquidity to earn rewards.
When the price of Tomb is above 1 FTM (adjusted to a time weighted average or “TWAP” over six hour periods), the protocol is in what is called an expansion phase, or more simply inflation phase. To bring the price down toward the peg of 1 FTM, more Tomb is minted at a specific percentage of supply in six hour blocks (epochs). Instead of this supply just going to a contract or to LP farmers, 18% is sent to the DAO Fund to perform buybacks when Tomb falls below peg, 2% to Development/Marketing fund and 80% is distributed into the Masonry where users receive Tomb for staking the protocol’s second token, Tshare.
Tshare Token
Tshare is the second token in the Tomb Finance ecosystem. It can be used to pair with FTM and provide liquidity in the Cemetery to earn more Tshare rewards.
It’s second and arguably main use is to stake in the Masonry. When the protocol is in the expansion phase mentioned above, every six hours the freshly minted Tomb is paid out to Tshare stakers in the Masonry. There are lock times of 36 hours for Tshares and 18 hours for claiming rewards in the Masonry.
With inflation of Tomb, the price will eventually come down assuming demand cannot keep up at some point. This is where the third token of the protocol comes into play, among other features such as the DAO.
TBONDS, DAO and Gatekeeper Mechanism
When the price of Tomb falls below 1 FTM, it is time to stop inflating the supply and start deflating. Typical inflationary yield farms try to prop their price up by burning dev allocations or charging users deposit fees to buyback and burn the native token.
Tomb Finance uses a different approach, allowing users to burn supply themselves and profit from doing so when Tomb goes back above peg.
When Time-Weighted-Average-Price (TWAP) of Tomb is below 1, users can burn their Tomb for TBOND. TBONDS are redeemable for Tomb plus a bonus multiplier the once the price is above one, with the bonus going up the higher above peg the price is.
The DAO mechanism is a fund that receives 18% of minted Tomb in the Masonry while in expansion phase, This fund generally buys low and sells high among other ways of being profitable and is used to perform random buybacks of Tomb when it is below peg.
The Gatekeeper system is a tax on selling Tomb and creating LPs that is either resent to the DAO or instantly burned depending on the price of Tomb.
For now, I suggest you head over to Tomb.finance and see the protocol in play and familiarize yourself with it. In our upcoming articles we will take a more in depth look on how to earn a passive income with the project.
Website: https://tomb.finance/
Discord: discord.gg/vANnESmVdz
