Tectonic TONIC

Tectonic is a cross-chain money market for earning passive yield and accessing instant-backed loans. Investors can deposit their crypto assets into Tectonic to earn dynamic yield without lockup periods while borrowers can borrow liquidity by supplying their crypto assets as collateral.

Tectonic is modeled after Compound and aims to provide seamless money market functionalities that address several use cases for its users:

• Investors with excess crypto capital can generate additional interest on their idle assets without actively managing them.
• Traders can borrow crypto assets and capitalize on short-term or long-term financial opportunities like staking or yield farming.
• Users can access cryptocurrencies to participate in IDOs without liquidating their underlying collateral.

After its mainnet launch in December 2021 on the Cronos chain, Tectonic plans to increase the number of supported tokens by focusing on assets from EVM-compatible ecosystems. In the future, the project promises to launch leverage yield farming and a governance module for its TONIC token.

Tectonic was incubated by Particle B, a startup accelerator dedicated to incubating projects built on Cronos and the Crypto.org chain. It was founded by Gary Or, an entrepreneur, hacker, and product designer with a keen interest in blockchain technology. As the former CTO of Crypto.com, Or has over ten years of full-stack engineering experience, in which he oversaw the end-to-end development of crypto products across payment, trading, and financial services.

Tectonic is composed of three core modules within the protocol: an interest rate mechanism, a liquidation module, and a community insurance module.

The interest rate mechanism adapts a variable interest rate model similar to that of money market protocols like Compound. Interest rates are algorithmically determined based on the utilization rate and supply and demand in the lending pools. The Tectonic team sets interest rates and other parameters at the beginning of a lending pool, with rates being divided into two stages. Before a threshold of high utilization is reached, interest rates follow a linear curve. After, rates are set according to an upward-sloping curve to reflect the increased demand for liquidity.

The liquidation module liquidates its undercollateralized borrowing position and offers a liquidation discount to liquidators to incentivize keeping the system stable. Before a predetermined amount of liquidators is reached, the core team will also act as one of the liquidators. Later, a governance vote will decide if the core team will be removed from its liquidator position.

The community insurance module is set to go live in the first quarter of 2022 and is to act as a mitigation tool in case of a so-called shortfall event. Tectonic defines this as an event that can harm the protocol’s health, such as smart contract risk, liquidation risk, or oracle failure risk. Users can stake their TONIC and receive stTONIC in return to safeguard the protocol. However, in a shortfall event, their stake may be slashed as the funds are used to mitigate the damage caused. Stakers will also be able to lock their positions for a minimum of 90 days and accrue a share of swap fees from the protocol.

Tectonic is powered by TONIC, its native governance and utility token. TONIC holders can stake the token to secure the protocol through its community insurance module and use it to vote on governance proposals after Tectonic has transitioned to a DAO model. Token holders can submit and vote on proposals or delegate votes for proposals following the governance guidelines.

The total supply of TONIC is 500 trillion according to the following token distribution:

• Community (50.9%): participation incentives and liquidity mining / staking rewards
• Team (23%): according to a 48-month vesting schedule.
• Ecosystem reserve (13%): for ecosystem partner collaboration, advisors, and other community initiatives in the future
• Network security (13%): for security audits, protocol operations, infrastructure upgrades, protocol liquidity, listing requirements, and other.

Tectonic is built on Cronos, an Ethereum-compatible blockchain launched to run in parallel to the Crypto.org blockchain in a similar fashion to how Binance Chain and Binance Smart Chain work. Cronos is built on the Cosmos SDK, utilizing a proof-of-authority (PoA) consensus mechanism. Furthermore, it also supports the Inter Blockchain Communications (IBC) protocol of Cosmos, allowing it to bridge to the Cosmos ecosystem of DApps.

Despite Tectonic’s sound use case and its innovative choice of settlement layer, the extremely high token supply will prevent it from reaching one cent. However, if the cryptocurrency market recovers from its correction at the end of 2021, TONIC could revisit its all-time high of $0.000004029.

TONIC is available on Crypto.com Exchange and Hotbit.

If you want to learn more about how to start buying cryptocurrencies, you can read more in our guide.