Introduction

Missing Puzzle in DeFi

After DeFi summer, DeFi has developed various functionalities including lending/borrowing, trading, derivatives and yield aggregation. But one is still missing in the current system. That’s the risk-free interest-paying instrument. What is the risk-free rate in DeFi now? From major lending protocols like AAVE, the risk-free rate of depositing stables is around 1%, while the treasury is paying over 5%* on the least risky asset in the world. This is wrong as the investment universe in DeFi is incomplete. This incompleteness is harming the user, because every DeFi user, at least whoever is holding stables, is being underpaid.

The launch of TProtocol will drastically alter the current DeFi picture and add an important missing piece, making DeFi users able to benefit from the mid-term interest rate gap between the stables and rising treasury. TProtocol will provide permissionless interest bearing tokens backed by the treasury with short duration. The redemption price of this treasury token will increase over time as interest from treasury accrues into the tokens.

DeFi Yield Crisis

The missing treasury isn’t a problem when yield farming can provide extremely high APR. But this is unsustainable. The high APR is based on the high valuation and emission rate of the utility tokens. As the market becomes mature and utility tokens are priced in a more rational manner, yield will decrease significantly just as now.

Everything changes in today’s bear market. Protocols struggle to make profit and the valuation of utility tokens go down significantly. The absolute risk-free rate in assets is around 5%. But the typical yield from stables is around 2% even if farming incentives are included. Theoretically, this yield should be at least not lower than the 5% as it also comes with the counterparty risk, operation risk and smart contract risk.

TProtocol targets the rate gap and takes advantage of the reverse psychology that no one else has employed in the DeFi market before. With TProtocol, DeFi users will be able to participate in the revolutionary minting procedure and no longer be underpaid even if the crypto market is cooling down.