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Tomb Finance Fork Season
The total value locked (TVL) has ballooned to over $700M on Tomb Finance. The team had reached out to me to do a review soon after they launched. At that time I was busy and I had a history of poor experiences with algorithmic protocols. However, today Tomb Finance is top 3 in TVL within the Fantom network. Talk about FML.
Prior to Tomb, most algorithmic protocols were aimed at pegging to the dollar. Tomb Finance was the first to my knowledge who pegged to FTM. After establishing a fairly stable peg they’ve transitioned into adding more utility to TOMB. For example TSHARE holders will have increased access to IDOs launched on FantomPad. Also, since FTM has to be staked into nodes to support the network, TOMB can provide some liquidity relief.
I was planning write a mini summary on how the peg is maintained through economic self-regulation but this thread does an excellent job. I encourage you guys to give it read before aping into Tomb forks.
At a minimum these algorithmic assets are needed to maintain optimal on-chain liquidity. For this reason we’re seeing forks left and right on different chains. Some will target pegging to USD and others to the respective chains base asset. These forks can co-exist and it’s not necessarily a zero sum game. However, first movers who execute will likely command a lion share of the TVL. My senses tell me this the early stages of a Tomb fork mania. Some well intention forks will fail and others will rug. Either invest an amount you’re ok losing and/or derisk by taking out your cost basis. With that in mind here’s a few Tomb forks worth checking out.
United Finance
This is fork on Harmony that aims peg UNITE with ONE. Currently the peg is 11.8x above target. This makes providing liquidity to the ONE/UNITE risky because the protocol is designed to bring the peg to 1. This means your liquidity will depreciate significantly and may not be immediately offset by your yield. With this in mind, I decided to buy USHARE and stake it. I’m earning UNITE tokens which I’ll selling for ONE and/or providing liquidity to the ONE/USHARE pool. Once the peg approaches parity, I’ll begin selling USHARE to provide liquidity to the ONE/UNITE pool. I’ll also keep some dry powder on the side to purchase bonds during a contractionary period.
This is one of the better forks in my opinion. They have an ambitious road map with plans to bring more utility (therefore added value) to the USHARE token. They’ve already deployed a node to support the network. An audit has been complete with more planned in the coming months. Lastly, they’ve been verified by InterFi.
This means they’ve audited by a second firm and one of their team members has undergone a KYC. Their identity isn’t public but it was submitted to InterFi. This doesn’t make them rug or hack proof but it’s reassuring nonetheless.
ChargeDeFi
This project launched on the Binance Smart Chain with the intention to create an algorithmic stablecoin pegged to BUSD. They had a security incident and have outlined their compensation plan in this post. This demonstrates good faith and the teams genuine intentions to make this project work long term. However, another hack could lead to a bank run. Investing in a protocol with hyper growth potential requires users to diligently monitor their positions. All it takes is one adverse event to wreck a protocol.
The team claims to have built the protocol from scratch but it was obviously inspired by Tomb Finance. Unlike most forks they’ve added additional security measures and extended the epoch length to 8 hours. This means users will get STATIC tokens every 8 hours vs 6 hours. They’ve also added a zapper tool to their front page which makes it easier to onboard new users. For example, after you get some BUSD head over to their main page and click “ChargeDeFi Tools” at the bottom right hand corner of the screen. Next click “LP Zapper” to convert BNB/BUSD/STATIC/CHARGE into STATIC/BUSD or CHARGE/BUSD LPs with a single click.
After you provide liquidity you also have the option to auto-compound your yields with Beefy Finance.
I think this project has a good chance of creating a positive loop. This diagram below is the desired outcome. This requires everyone to hold and not withdraw too much capital. Essentially it faces the threat of the prisoners dilemma. Loss of confidence or an exploit could bring the entire loop to a halt. Or worse the loop reverses until the tokens are worthless.
Dibs Money
This project has created an algo coin pegged to the price of BNB. Unlike other forks who attempt to maintain a ratio of 1:1, DIB’s algo ratio is 1,000:1 to BNB. This means if the price of BNB is 500, DIBs target value is $0.50. Currently DIB is trading 21.7x above the target value. For this reason I decided to purchase DSHARE and stake it. I didn’t add a large position - instead I threw my lunch money at.
They created genesis pools to lure in members of large communities. I suspect most these people dumped their tokens. Given how reflexive crypto investors are, I think this was a huge mistake. They can still recover but they’ve lost some momentum. I was planning to wait for a big reversal to get in but decided to throw a little money at it incase they make a robust comeback. My tentative plan is to dump my earned DIBS for more DSHARE. This way I support the protocols positive loop and increase my DSHARE position in case they make a comeback.
Other Tomb Forks
Check out Tome Fork Watch’s Twitter account to learn about newest forks. Like I mentioned earlier many will rug or end up failing. Make sure to do your own due diligence and exercise prudent risk management. I suggest you guys check out my discord because we have seasoned DeFi farmers who are willing to help and share alpha. My community has become very good at identifying quality opportunities early.
Closing Thoughts
Long- term all successful projects will observe massive yield reductions as the risk is reduced and growth diminishes. Early adopters are being rewarded for maintaining the peg and taking on the high risk. For these reasons, I’m going to taking advantage of the high yields before the game gets saturated. Tomb forks are vital for cultivating and assuring robust liquidity within the network. Due to Tomb’s successful model we’re now presented with ample opportunities to replicate this success on other chains. For those who missed out on the OHM forks, this is your second chance.