Tokemak’s proposal
Tokemak, an innovative protocol that generates deep, sustainable liquidity for DeFi. Furthermore, it does so while lowering overall risk, complexity, and cost.
An increasing number of protocols and DAOs are excited to be taking part in Tokemak’s important role of providing efficient liquidity throughout the DeFi ecosystem.
What is Tokemak?
Tokemak is a decentralized market maker or a liquidity provider that has been deconstructed and separated into different roles, such as Liquidity Providers (LPs) and Liquidity Directors (LDs), plus the essential trading tech required for setting bids and offers in the targeted markets. It is both a trading protocol and a DAO, and its native token, “TOKE”, can be thought of as “tokenized liquidity”.
What’s their mission?
Current market makers must manage three main categories: market knowledge, trading, and pricing, each of which is subject to many different biases. Tokemak’s vision is to create a flow of value within DeFi, which they call “broadband moment for liquidity”.
What problems do they solve?
DeFi projects often find the cost of acquiring liquidity prohibitively expensive, wasting capital that could otherwise go to development of the project. For investors, the risks of providing liquidity may be too great given the exposure to elevated risk of impermanent loss.
Tokemak addresses these issues by directing their tokens to exchanges that offer the best price, which, in turn, allows for tighter pricing and higher trading volume.
How do they achieve this solution?
Tokemak’s solution is their unique “Token Reactors”, which are inspired by the Tokemak Reactor.
Token reactors aim to incentivize single sided swaps instead of using liquidity pool tokens (dual-sided swaps) and thereby deepening and optimizing the bids, offers, and pools on exchanges (as directed by the TOKE holders). Participants can be single-sided LPs who input a token into a reactor or a “Genesis Pool”, or LPs who input TOKE into reactors, allowing them to control the direction of the liquidity flow.
Want to learn more about Tokemak?
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