The TONIC Tectonic Token was launched On December 23 – In this essay, we will share details regarding the Tectonic project and the TONIC token. The TONIC Tectonic Token is a Tectonic (TONIC) digital asset.

Tectonic's decentralized non-custodial algorithmic money market protocol allows users to participate as liquidity providers or borrowers.

Liquidity is provided to the market by suppliers in exchange for passive income, while borrowers can borrow liquidity with excess collateral.

Reference to protocol design and architecture at Tectonics Compound, protocols verified and certified. The native token of the Tectonics protocol, $TONIC, supports a lucrative incentive scheme.

Overall, the Tectonics protocol intends to provide users with safe and seamless cryptocurrency money market functionality, enabling many use cases to be realized by the system itself.

Assets supplied to the protocol by “HODLers,” who do not have to manage their assets, may generate additional interest income.

TONIC Tectonic Token Fundamentals

In the case of possible shorting or maximizing yields, traders may borrow certain cryptocurrencies to fund their short-term trading outlook (e.g., farming)

Users can gain access to other cryptocurrencies for different purposes (e.g. participating in ICOs, bonding), without having to sell the original assets

TONIC Tectonic Token Fundamentals

Provision of Tectonic Assets

Tectonics allows users to supply as liquidity providers by supplying the platform with their cryptocurrencies (assets).

The tectonic protocol aggregates the supplies from each user into a pool of assets managed by the smart contract, making it a commensurate resource for the protocol, while letting users withdraw their supplies at any time.

Liquidity providers earn tTokens (eg, tETH, tUSDC) in exchange for the assets they supply, enabling them to redeem those assets at a later date. The deposit rate, which is based on the supply and demand for assets, determines how much the tToken is worth.

Borrowing Assets from Tectonics

Using the assets provided as collateral, users can borrow backed cryptocurrencies from the Tectonic asset pool to use for any purpose.

To determine the amount of loanable assets against each pledged asset, the Collateral Factor (ie the Loan to Collateral ratio) is assigned to each of these assets.

Users can only borrow up to 75% of collateralized assets if their Collateral Factor is set to 75% or higher (see chart below).

If the value of the collateralized asset decreases, or the value of the borrowed asset increases, a portion of the outstanding loan will be liquidated at the current market price minus some liquidation discount.

Assets and market conditions affect how much borrowed assets must be liquidated. Users can prevent liquidation events from occurring, either by increasing the amount of collateral (i.e., providing additional assets) or by repaying part of their loan.

Interest on each loan will be compounded and can be repaid at any time. The Collateral Factor of each asset depends on a variety of factors, including its availability in reserves and the market value of the asset.

The Tectonic team currently defines these ratios and their parameters, but as the protocol evolves and the necessary protocols become available, the community will be able to set these parameters through the Tectonic governance process.

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