Tarot Protocol is a Fantom-based decentralized lending protocol that allows users to initiate lending and borrowing transactions in isolated lending pools.
Decentralized Finance (DeFi) is the future of global finance, and whether you like it or not, it will soon achieve worldwide acceptance, wiping out most of today’s standards in money management. But services jumping into the DeFi trend is not always a ‘seal of quality’, as their efficiency heavily depends on their blockchain platforms, services, tokenomics, rewarding systems, and other crucial aspects.
The Tarot Protocol was created to test the capabilities of the Fantom Opera mainnet in Defi services and develop improved services as the project progresses.
It aims to balance the platform’s ‘learning phase’ and the users’ ability to earn securely using decentralized and automated systems.
What is Tarot?
Tarot Protocol is a Fantom-based decentralized lending protocol that allows users to initiate lending and borrowing transactions in isolated lending pools. The platform is made up of smart contracts that execute non-custodial and permissionless markets to achieve 100% decentralized lending and leveraged yield farming.
Tarot’s core and periphery contracts are forked from the Impermax’s system and are deployed on the Fantom network, and these contracts are permissionless, non-upgradeable, and require only minimal governance.
Fantom Opera: A Refresher
Fantom Opera is an advanced Proof-of-Stake layer-1 platform capable of delivering fast, low cost, and efficient scalable transactions. It works so fast it can achieve an average 1-second transaction finality and thousands of transactions each second.
To put its speed into perspective, Bitcoin and Ethereum will take several minutes just to validate transactions, while Fantom can effortlessly finish validations in just two seconds.
With Fantom running inside the Tarot platform, users can rest assured that every transaction inside the ecosystem would be fast and secure, enabling them to grow their assets without any inconveniences.
Lenders and Borrowers
If one wants to be a Lender, he can earn passive yield minus the impermanent loss by simply supplying tokens to any of Tarot Protocol’s lending pools.
And to be a Borrower, one is required to deposit LP tokens in a lending pool before he can borrow additional tokens in the token pair.
This mechanism will allow borrowers to use their LP tokens to gain even more LP tokens and enable them to initiate leveraged yield farming and increase their LP rewards.
TAROT Token is the platform’s governance token and allows holders to participate in decisions that can directly affect the distribution of protocol fees, fee rates, interest rate model, and other critical areas.
It has a max supply of 100 million tokens, and apart from its governance utility, TAROT has no value outside the Tarot Protocol.
Tarot Farming Rewards
Tarot Farming Rewards is a four-year liquidity program created to help participants unlock the full potential of the TAROT Token.
It will distribute 59% of the token’s total supply to the platform’s three major participants: The borrowers, stakeholders, and leveraged yield farmers. This is an essential part of the Tarot Protocol because a fair and secure farming rewards program is critical for the long-term success of the platform.
How To Earn Tarot Farming Rewards?
There are two ways to earn Tarot Rewards
- Initiating a leveraging or borrowing transaction in a farming pool.
- When borrowers open a new borrowing or leveraged position in a recognized farming pool inside the Tarot platform.
Lending Pools equipped with Tarot Vaults will reinvest additional rewards to produce even more assets.
Also, there are two other things they will do with the rewards: First is that rewards are accrued on investors who deposit or leverage their LP token collateral in the lending pool.
Second, rewards are periodically reinvested to purchase more LP tokens on investors’ behalf to increase their earning opportunities.
Tarot Supply Vaults are lending aggregators that help platform users earn yield from various Tarot lending pools through automated strategies.
This type of strategy is used to allow participants to earn blended supply rates with increased liquidity, giving them two benefits at the same time.
Users may only make a single deposit in a Supply Vault to earn yield from different Tarot lending pools.
TarotDAO is self-sustaining, community-governed, modular, and flexible, which are the ideal traits of an efficient decentralized organization.
It allows the community to submit ideas, provide opinions, and express support for proposals that can improve the Tarot platform.
It also helps the community tap Tarot’s capital efficiency through reserve management strategies and protocol treasury.
Tarot DAO implements a four-step process in governance which is composed of a pending proposal, discussion, snapshot vote, and implementation, and will all be discussed in detail below.
The pending proposal is the first step in Tarot’s governance process, where the community must submit proposals on the platform’s official Discord channel.
While everyone in the Tarot community can submit proposals that can further improve the platform, they must follow a non-negotiable proposal template which can be found in this link.
The discussion phase allows the community to be well-versed on a proposal, weigh its pros and cons, and determine its true potential for the Tarot platform before it can be allowed to enter into the voting phase.
The snapshot voting phase is where the community will vote for the proposals that have gone through the discussion phase and have been fully understood by the members.
The community will vote for their preferred proposals by allocating the voting weight of their ‘xTAROT,’ which is short for ‘staked Tarots.’
If more than half of the xTAROT voting weight signals “YES” on a project, it will finally move into the implementation phase.
While all projects that have reached this stage mean they have gone through the community’s complete review and approval, it’s still up to the Tarot team when to implement them exactly.
The team may decide to wait for the right time to roll out some projects (even with their big potential) due to various reasons, which include resources, timing, technology, and other critical aspects.
Current and would-be users are reminded that Tarot Protocol remains to be an experimental platform, which means that it carries big opportunities and big risks at the same time.
And as with any investments, users should only invest amounts they are willing to lose, and they should be aware that they can potentially lose all their deposited tokens on this platform.
We’re not saying that the Tarot Protocol should be avoided, but since it’s still in its experimental stage, it is currently for investors with decent war chests who are willing to lose a chunk of their investments to gain new opportunities.
Other risks that users should know include Tarot interface glitches, deposit and withdrawal delays, and inaccurate display of information.
The Tarot Protocol has efficiently shuffled its deck of DeFi services to provide a secure way for users to earn even with its current experimental status.
We can say that it has a big potential, but investors with a low-risk appetite may want to look at other established DeFi platforms with proven mechanisms and decent track records to minimize the danger of losing their assets.