Tomb Finance is a decentralized finance (DeFi) platform built to create and facilitate a token pegged on FTM and bring out new opportunities for both tokens.
Fantom is one of the rising blockchains today that deliver fast, secure, and affordable platforms for dapps right into the public’s hands. And new projects continuously unlock their potential to bring the best blockchain services that people from all walks of life deserve to access.
Table of Contents
Background
Tomb Finance is a DeFi platform built to create and facilitate a token pegged on FTM and bring out new opportunities for both tokens.
The project is currently backed by Harry Yeh, the founder and managing partner of Quantum Fintech Group, one of the blockchain industry’s most respected crypto hedge funds for high-net-worth investors.
What is Tomb Finance?
Tomb Finance is a Fantom-powered multi-token DeFi platform with the main goal of bringing massive liquidity to the Fantom ecosystem and providing more use cases to the network. The project also aims to peg its token, called TOMB, 1-to-1 with FTM.
The platform will use three major assets to achieve this goal: TOMB token, TBOND, and TSHARE, which will all be discussed in detail later.
TOMB
TOMB Token is Tomb Finance’s algorithmic token with the main utility of providing and adding use cases on the Opera Network. The protocol’s mechanism is responsible for influencing TOMB’s supply, which, in turn, impacts its price relative to the FTM token’s price.
The main difference between the TOMB token and other algorithmic tokens is that it is not pegged to a stable coin but instead pegged to the FTM token.
Why? Because Tomb Finance is confident in Fantom Opera’s capabilities and believes that both TOMB token and the protocol can unlock each other’s big potential.
The Tomb Finance team also desires to turn TOMB as the main medium of exchange on Fantom Opera, which can be attained by providing mirrored, liquid assets into FTM tokens.
Also, TOMB aims to correct the major mistakes of previous algorithmic tokens, which is the lack of use cases, resulting in the disinterest of investors to hold them.
The token will focus on improving its functionality and expanding its use cases to further improve its value and maintain its peg in the long run.
TOMB and FTM Synergy
Fantom’s ability to maintain its platform’s speed, and security, and provide cheap transactions depends on its validator nodes, who rely on the remaining staked and locked FTM tokens.
Validator nodes in the platform are anticipated to increase to sustain the platform’s continuous growth, which must also be backed by increased distribution of FTM rewards to provide them rewards. But the problem is FTM token has a limited supply of 3.175 billion tokens, which might look overwhelming at first, but would certainly run out as the platform progresses.
What will happen then if the entire quantity of Opera-native FTM runs out? This is where the TOMB token comes in.
Pegging TOMB to FTM
To prepare for that scenario and successfully help Fantom in the future, TOMB must succeed in holding its peg on FTM.
If TOMB can execute this, it can create a mirrored, liquid asset that can be transferred and traded without restrictions and benefit from the price appreciation of the native FTM token at the same time.
On top of these things, it can also produce high APRs for liquidity providers, making it a more attractive token for investors.
TBOND
TBOND, Explained
TBOND are tokens that can be used to stabilize TOMB token’s price around the peg (1 FTM) by decreasing the circulating supply of TOMB if the Time-Weighted-Average-Price or TWAP goes under the established peg.
When to Purchase a TBOND?
TBond can only be bought on contraction periods when the TWAP of TOMB token is under 1.
Also, with each epoch on contraction periods, TBONDs are issued in the quantity of 3% of the current circulating supply of TOMB, with a maximum debt of 35%.
In other words, if bonds reach 35% of the circulating supply of TOMB, the system won’t issue any bonds anymore.
Where to Purchase TBOND?
Platform users can purchase TBONDS whenever they are available through the ”Pit” Tab on Tomb Finance’s homepage.
There are no limits when it comes to buying TBONDS, as long as buyers have enough TOMB tokens to pay for their desired TBONDS amount. But users are reminded that there is a limited amount of TBONDS available per epoch while on contraction periods, which is 3% of the current circulating supply of TOMB. These TBONDS will be sold on a first-come, first-serve basis.
Why Purchase TBOND?
Purchasing TBONDs helps the TOMB token maintain its peg to the FTM, and by now, the benefits of keeping such a peg must already be clear.
Another reason to buy TBONDS is that they don’t have an expiration date, which means that they can be a viable investment in the protocol because holding them long-term can produce bigger benefits.
TSHARE
TSHARE represents a share of the entire quantity of TOMB tokens that will be produced in the future.
If the system detects that the TOMB’s price is exceeding the peg, it will distribute new TOMB tokens to those who staked TSHARE on Tomb Finance’s ”Masonry”
This mechanism may not immediately bring down the peg to 1-to-1, but it will do so in a gradual manner.
How Do TOMB, TBOND, and TSHARE Help Each Other?
When platform users stake their TOMB tokens, they receive TSHARE in return. If they sell their TSHARE to buy more TOMB, they help increase TOMB’s price. As a result, it makes TSHARE more valuable through rebases while reducing TOMB’s value in the meantime.
When users stake TSHARE, they receive TOMB in return and if they sell TOMB to purchase more TSHARE, they push TOMB’s price down. As a result, it reduces TSHARE’s value by decreasing the emissions of new TOMBs.
When they purchase TBOND, the TOMB tokens are burned, decreasing TOMBs’ supply and bringing their price up. It can make users’ TBONDs more valuable, but this outcome will still depend on crucial factors such as other platform users’ activities.
TOMB Finance DAO
Functions
Tomb Finance describes its DAO fund as a “second line of defense” on top of the platform’s Bond Mechanism.
Currently, the DAO fund is controlled by Tomb Finance’s developers but will soon be transferred to a governance system.
Important Reminders
- The core team managing the fund may not choose to invest the fund on projects deemed as ‘safe.’
- The team decides what specific assets the DAO will buy, manage and grow.
- When TOMB TWAP reaches a really high level, the DAO has the authority to sell some TOMB tokens to help bring back the peg and ready its reserves for buyback below 1.
- When TOMB TWAP nosedives below 1, the DAO has the power to initiate buybacks. The time to do this will depend on the team, and they are also allowed not to publicize it until after the protocol is back in expansion.
Conclusion
While many blockchain platforms are spreading themselves too thin by being everything all at once, Tomb Finance takes the opposite route by focusing on one goal: Establishing a token that can peg 1-to-1 on FTM. As a result, all its tools, mechanisms, and other solutions are focused on this single goal, and the platform’s laser focus would be its main asset to be one of Fantom’s most successful projects.
