Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic


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Tokemak is expected to become a new generation of liquidity management infrastructure.

Original title: “Tokemak-a new generation of liquidity management infrastructure”
Written by: Rollin, Researcher at Mint Ventures

This article is the initial research report of Tokemak. Since its main product has not yet been launched and the detailed project documents have not yet been launched, it is an early project research. The report involves less data analysis and will focus on economic model analysis, industry comparison and data analysis. Supplemented.

Tokemak has issued coins, and its platform currency is Toke.

Core investment logic

Track width

The market’s demand for liquidity is strong and growing rapidly. This track has long-term and stable demand.

Unique innovation mechanism

Although there are many current liquidity mining track projects, market liquidity is still lacking. As a new liquidity management system, Tokemak is expected to open up a new path in the liquidity mining track and become a new generation of liquidity management infrastructure.

Compared with similar platforms, Tokemak’s competitive advantages are as follows:

  • Liquidity providers can conduct single-asset mining and do not need to bear the risk of impermanent loss (except in extreme cases)
  • Liquidity demanders (project parties or dex that need to establish token liquidity) can obtain sustainable liquidity and can manage token liquidity across exchanges
  • The platform automatically optimizes the distribution of liquidity

Luxurious financing background

Led by Framework Ventures, with participation from ConsenSys and Coinbase Ventures, it can provide a large amount of project cooperation resources for it in the early stage and complete the cold start soon.

Main risk

  • Product mechanism risk: The Tokemak model is novel, the main product has not yet been launched, and the business logic needs to be verified for a certain period of time.
  • The current market liquidity miners are people with higher risk appetite, and whether the market demand for liquidity with low risk appetite is strong remains to be verified.
  • The transfer of the risk of impermanent loss from the liquidity provider to the liquidity demander and the platform itself is an innovation and a risk. While providing security for liquidity providers, it also allows the platform to bear more downside risks.
  • Smart contract risk: The project contains a large number of original codes and functions, there are many audit problems, and the code risk is greater than that of mature products.


Toke’s current liquidity leverage ratio is close to 3, and the market valuation is reasonably low.

Basic situation of the project

Business Introduction

Tokemak operation mechanism

Reactor Tokemak establishes a reactor (asset pool) for each liquid asset. The reactor is mainly composed of two roles, the liquidity provider and the liquidity leader.

The following picture is an example of the Aave token reactor:

On the left is the Liquidity Providers (LP, Liquidity Providers): deposit a single asset into the token reactor to obtain the corresponding tassets voucher to ensure that the deposited asset can be exchanged back 1:1 when exiting. During the liquidity provision period, the non-TOKE token income obtained from the external liquidity of the reactor assets will be directly deposited into the Tokemak agreement and managed by the Tokemak DAO (composed of Toke holders). Liquidity providers only receive Toke rewards.

On the right is the liquidity directors (LD: Liquidity Directors): Use pledged TOKE to control the whereabouts of liquid assets in the designated reactor. They pledge their TOKE to a given reactor and use the pledge as voting power to direct liquidity to the Dex of their choice.

The current decentralized exchanges that can be guided by the reactor include Uniswap, Sushiswap, Banner, and Deversifi. Liquidity facilitators will also receive Toke rewards.

Reserve pool : The reactor of each asset will establish a corresponding token asset reserve pool (not Toke tokens), which is the first layer of protection against impermanent losses of the reactor. When an impermanent loss occurs, it is first paid through the asset reserve pool. The initial acquisition method of reserve pool assets is through DAO TO DAO communication, which will be further explained later.

If the docked dex is an order book model, the role of price makers is also required.

Pricers: Any non-automatic market maker (AMM) needs a third-party agency to provide real-time price information. Tokemak will reference Pricers to set the buy and sell order prices. Period: Tokemak runs on a periodic basis, and the “period” will initially be set to one week (DAO may vote for changes in the future). In the middle of the cycle, assets can be deposited, and LD votes can be rearranged. Assets will be deployed at the beginning of the new cycle, and LPs can also request their assets to be retrieved midway through the cycle, and assets can be retrieved at the end of the cycle.

tAssets : Liquidity providers will receive corresponding tABC tokens (tokens of tAssets) when depositing tokens into the token reactor. These tABC tokens represent your potential claims against your deposited token reactor assets and can be redeemed at a 1:1 ratio at any time (based on the cycle). tAssets are transferable, and those who own tABC tokens can request to retrieve the corresponding assets in the pool and receive rewards from these assets.

Automatically optimize the distribution of liquidity

The Tokemak platform automatically balances the supply and demand relationship between liquidity providers and liquidity guides to the optimum through a dynamic rate of return balance mechanism, without the need for the community to determine the incentives for each reactor.

The balance method is shown in the figure below:

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic

Income seesaw : If a large number of ABC token assets are deposited on the left side of the reactor, and the amount of TOKE pledged by the liquidity leader on the right is small, the annualized rate of return (APY) will be in the liquidity leader (LD) of the reactor. ) Side increase, thereby encouraging LD to mortgage more TOKE and participate in guiding this liquidity. Conversely, if there is a large amount of TOKE pledged in the right side of the reactor, but the deposited ABC token assets are too small, the liquidity provider (LP) of the reactor will receive a higher rate of return (APY) to incentivize more Deposit more token assets.

Income redistribution: Toke’s reward is not based on the actual mining reward exchange of a certain token pool, but is determined purely based on the supply and demand relationship of the liquidity in the platform. This method of income distribution breaks the existing liquidity incentive model. Through the income seesaw mechanism, the liquidity income in the platform is distributed twice, so that the liquidity in the platform no longer depends on the income incentive of the second pool mining. mechanism.

For example, the project party wants to increase the liquidity of its tokens, but the mining yield of its assets against ABC/USDT on an exchange is very low. Under the traditional incentive model, the project party has to increase inflation. Model to incentivize liquidity providers. However, through the Tokemak platform, the project party only needs to hold and pledge a certain amount of Toke on the right side of the ABC asset reactor, and the revenue seesaw will continue to attract corresponding liquidity providers. Project parties can also conduct liquidity guidance according to their own needs. The more Toke pledged, the more long-term liquidity providers will be attracted.


Before Tokemak builds a new token reactor, it needs to obtain the corresponding token assets as a reserve pool. The non-Toke tokens in the reserve pool are initially replaced by the reserve Toke of the Tokemak protocol.

The method of obtaining reserve pool assets is through DAO TO DAO communication. Both parties can exchange or borrow the required tokens according to their respective needs to achieve mutual benefit.

If both parties use a borrowing method, they will use Rari Capital’s Fuse platform for decentralized lending. Fuse is an interest rate lending agreement for Dao, which was launched in March this year, so I won’t go into details here.

This DAO TO DAO model relied on the business development capabilities of the community in the early stage. The current project team has actively communicated with more than 20 DAOs, and the overall resources and business capabilities of the team are relatively excellent.

Main users of Tokemak platform

  • Liquidity providers (LP): can pledge their idle assets to provide liquidity and obtain corresponding returns.
  • Liquidity demanders (project party, Dex): can obtain the guidance of corresponding sustainable liquidity by holding and pledge Toke; can manage the liquidity of target tokens among multiple exchanges.
  • Liquidity guides speculators: The purpose is not to increase the liquidity of a project, but to share the high returns of the liquidity provider (LD) in a certain reactor.

project progress

Tokemak is still in the start-up phase, and plans to start it through a series of “zero cycle” events. The “zero cycle” consists of the following 3 steps:

DeGenesis : DeGenesis is an initial phase, from July 27th to August 6th. During this period, its whitelisted address can obtain the first TOKE release by submitting ETH and USDC. Tokemak finally raised US$21.65 million through DeGenesis, and the final price of TOKE was locked at US$8.

Genesis Mine Pool : An additional pre-launch stage where users can mortgage a single asset: ETH and USDC. The assets in the pool will be used to provide liquidity and obtain corresponding TOKE rewards. Even after the “zero cycle”, these mining pools will still maintain competitive incentives in order to continue to accumulate the necessary token pairs to deploy liquidity.

Reactor mortgage event : Beginning at the end of September (lasting 7 days), the first batch of reactors will be selected from the following candidate projects. Toke holders will vote for 5 project tokens. 5 reactors will be built first, and then new reactors will be created. many.

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic

The Tokemak team has established contact with more than 20 Dao. After voting for the 5 reactors to be created, the Tokemak team will conduct DAO TO DAO communication in order to obtain appropriate asset reserves. If they fail to obtain sufficient asset reserves , Will continue to communicate with the sixth project, and so on.

Code audit : Currently Tokemak has passed Bits preliminary audit and Omniscia audit.

Tokemak current operations

Tokemak is still in its early stages and the relevant detailed documents have not yet been released, but market feedback is good. TVL continues to rise steadily, and its market value exceeds Alpaca.

At present, Tokemak has only opened Toke’s first and second mining pools, and the main product (reactor) will be launched soon. The income of the mining pool is shown in the figure below:

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic

The market is optimistic about Tokemak’s later performance expectations.

Since the first Toke release of Tokemak, the price of Toke has risen from US$8 to US$50, and the current price has stabilized at around US$35. The total TVL of the platform is about US$500 million, of which US$300 million is the lock-up value of non-Toke assets, ranking 18th among similar wealth management products on the defillama platform.

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic

Toke’s current token circulation market value is 160 million U.S. dollars, and the coingecko market ranks 310 in total. In the revenue aggregator category, Toke ranks seventh, and its current market value exceeds Alpaca Finance.

It should be noted here that although Alpaca’s TVL is 1.3 billion U.S. dollars, which is much higher than Tokemak’s 300 million U.S. dollars TVL, this does not mean that Tokemak is overvalued. Because Tokemak’s token model is special, its token market value is not suitable for horizontal comparison with other projects. The token model will be explained in detail later.

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic

Team situation

The Tokemak project originally originated from a project called “Fractal”. But it needs to be pointed out that there is currently more than one project called Fractal. Tokemak’s predecessor “Fractal” is a market maker that provides liquidity for DeFi, not a Fractal project on the Polkadot.

Tokemak core team members include:

  • Carson Cook: PhD in Physics, Master of Electronic Engineering, worked in financial technology at McKinsey, and has experience in foreign exchange market transactions. Beginning in 2017, Carson began to get involved in the field of cryptocurrency market trading. At the beginning of 2018, Fractal was founded as a DeFi market maker dedicated to providing liquidity services for decentralized exchanges. It has been running for more than three years. The origin of Tokemak is from Fractal’s market maker experience.
  • Bruno: Worked in a Fortune 500 technology company, mainly responsible for designing Tokemak’s token economic model.
  • Craig: He has many years of experience in leading the business development and marketing of technology startups.
  • Paul: Responsible for design and community work.


In April 2021, Tokemak completed US$4 million in financing, with Framework Ventures leading the investment, with participation from Electric Capital, Coinbase Ventures, North Island Ventures, Delphi Ventures and ConsenSys.


Tokemak is a set of protocols to achieve sustainable DeFi liquidity. Its design purpose is to solve the problems of difficulty, instability and high cost of liquidity acquisition under the existing liquidity incentive model.

Tokemak has adopted a new liquidity management system. Different from the existing revenue aggregation platform, it faces both liquidity demanders and liquidity providers, and redistributes revenue according to the supply and demand of liquidity in the platform to maximize the efficiency of liquidity distribution within the platform. The emergence of Tokemak will help project parties to better acquire and manage the liquidity of their tokens, and is expected to become a new generation of liquidity management infrastructure.

The Tokemak team has rich experience and excellent financing background. The team has many years of experience as a centralized market maker in the DeFi field, led by Framework Ventures, and has an excellent investment lineup.

The project is still in its infancy stage, and the preliminary development is progressing steadily. The current project has launched the first and second pools of its platform token Toke, with a TVL of US$300 million (excluding Toke value), and a total TVL (including Toke value) of about US$500 million. The main product interface is planned to be launched at the end of September and open 5 A liquidity guiding pool of project tokens. At present, the team has conducted Dao to Dao communication with more than 20 projects, and the feedback intention is good. Many projects hope to help them better manage the liquidity of their tokens through Tokemak.

As a new liquidity solution and management tool for project parties and Dex, Tokemak deserves continuous attention.

Business analysis

Industry space

Liquidity is very important to the financial market. In an illiquid market, transaction efficiency is very low, market prices are easily manipulated, price discovery mechanisms fail, and the market is prone to a death cycle.

The characteristic of a liquid market is that there are buyers and sellers in the market at all times. If there are many buyers and sellers in a market, then the market’s liquidity is very high. Such a market is called a deep market. On the contrary, it has low liquidity and shallow market depth.

The early liquidity dilemma of token projects

For the blockchain startup team, in the early stages of the market, the project party had to distribute a large number of tokens (airdrops, single-coin mining, etc.) in order to promote the project. At this time, the value of project tokens is usually not fully understood by the market, and a large number of tokens will be sold. At the same time, there are very few people willing to provide liquidity for project tokens, and the liquidity of tokens is very poor. Undertaking the selling pressure of the market, the price of tokens and their true value are often out of anchor.

For example, if the project party airdrops 10w tokens, 50% of the tokens will be unconditionally sold, 50% will be held by value, and only 5% of the tokens will be used for liquidity mining. In the short term, 5% of the liquidity will not be able to accept 50% of the token sale. Even if half of the people approve and optimistic about the project, the lack of liquidity will cause the market price of tokens to fall sharply, deviating from the normal market value, and it is easy to cause viciousness. Circulation, seriously affecting the healthy operation of the project’s token ecology.

High subsidies attract liquidity

In order to avoid this situation, the project party usually adopts the two-pool single-currency pledge mining and the two-pool liquidity mining mode at the same time, and provides ultra-high subsidies through inflation to minimize short-term selling pressure and increase the generation cost. Currency liquidity.

High subsidy method, low efficiency and high cost

The original high subsidy method, the high subsidy in the early stage will attract a large amount of short-term liquidity. Even so, the slippage of many project token transactions is still high, and most project parties still cannot attract enough long-term liquidity providers. , Unable to provide sufficient liquidity for project tokens. The short-term liquidity of one day or one or two weeks attracted by the high subsidy method is meaningless, and the later period of return decreases, and the liquidity immediately dries up. Some teams will also choose to hire a centralized market maker at a high price to help them provide sufficient liquidity. This fee is still a huge expense for many founding teams.

The traditional way of obtaining liquidity is a high-cost, low-yield transaction for many projects. Tokemak hopes that through its own platform, it can help these projects to obtain sustainable liquidity in a better way.

Tokemak market size outlook

Opening up the long-tail asset TVL market Currently, the lock-up value of the DEX industry is around US$30 billion. Excluding stablecoin trading pairs, the market TVL is around US$20 billion. Uniswap, Sushiswap, Bannerr, and Deversifi exchanges supported by Tokemak have a total TVL of approximately US$12 billion. As shown in the figure below, TVL in the Dex industry continues to grow steadily.

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic

In Dex’s TVL, trading pairs of ETH, wBTC and stablecoins are the main trading pairs, followed by popular tokens. Most long-tail assets have a very low proportion of TVL. Taking UNI V2 as an example, statistics show that mainstream ETH, wBTC and various stable currency trading pairs account for more than 30% of TVL, and the top 50 market-making assets account for more than 60% of TVL, ranking transactions between 50 and 90 It accounts for about 20% of TVL, and the latter 50% of transactions account for less than 20% of TVL.

If Tokemak can help these projects ranked below 50 to create better token liquidity, this will bring considerable incremental TVL to the current decentralized exchange.

Tokemak’s current net TVL (excluding Toke value) is 300 million US dollars, both of which are the lock-up value of ETH and USDC. After the main product is opened, matching liquid assets will further flow into Tokemak, assuming a capital utilization rate of 50% -80%, TVL will grow to around USD 500-600 million after the project is opened.

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic Tokemak lock-up amount (2021/9/27)

If Tokemak can increase the liquidity of the decentralized exchange by 10% for the intermediate asset pool and the tail asset pool, its TVL will rise to 1.2 billion US dollars, which will be consistent with the current TVL of Alpaca (a leveraged mining project on the BSC chain) , Will be ranked 5th among similar projects in DeFillama. If the liquidity can be increased by 30%, the TVL of the Tokemak platform will reach US$2.4 billion, second only to the current TVL of YFI and ranking third in its class.

Project competition landscape

Before analyzing the competitive relationship between Tokemak and similar projects, let’s first understand the hidden lending relationship in the Tokemak mechanism.

Tokemak’s liquidity provider transfers its own impermanence risk to the liquidity leader, and at the same time trusts its liquidity to the platform agreement and uses it for targeted use by the liquidity leader. This is equivalent to the liquidity provider lending its own assets to the liquidity leader and obtaining the corresponding loan income.

This is different from AAVE’s over-collateralized lending model, Tokemak’s lending has a leverage effect. The asset platform loaned through the AAVE platform is uncontrollable, and the security of the asset can only be ensured through over-collateralization. The fund utilization rate of this type of lending platform is usually less than 50% or even lower. The Tokemak platform cleverly uses smart contracts to connect the liquidity market making and lending business. The platform assets are managed by the agreement, but a certain use right is transferred to ensure the security of the assets without the need for pledge, which greatly improves the efficiency of the use of funds. . With one Toke, the liquidity of multiple Toke values ​​can be guided.

In this regard, the leveraged mining platform and Tokemak’s lending principles are the same, and there is also a certain overlap between the users of the two. We take Alpaca Finance as an example for comparative analysis.

Competitive advantages

Competitive relationship with Alpaca

On both Tokemak and Alpaca platforms, there are lending pools with ETH/USDT/DAI and other configuration assets, which are their main competitive parts.

The following figure shows the yield and utilization rate of Alpaca’s single currency loan:

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic

Alpaca’s matching single currency assets will be automatically matched as market-making trading pairs and deposited on the exchange to obtain higher returns. BUSD and BNB (about 50%), the most used assets on the Alpaca platform, have a loan yield of about 10%.

The rate of return of the matching asset pool depends on the end-of-asset return, asset utilization, and the method of income distribution. In the long run (without considering the incentives of short-term platform tokens), both Alpaca and Tokemak’s asset end returns come from the liquid market-making market, and the comprehensive return rate is close. The effective utilization of matching assets and the platform’s income distribution mechanism will Become their main difference .

What advantages and differences does Tokemak have that can improve the utilization rate of its platform assets and the efficiency of revenue distribution?

Tokemak competitive advantage

Single asset provides liquidity

The liquidity provider on the Tokemak platform provides a way for a single asset.

For the start-up team, the early-stage project team will have a lot of their own tokens, but the early-stage team is unwilling to sell their own tokens in large quantities. There are only a large number of unilateral assets. On the Tokemak platform, the project team can make good use of Its own single currency token assets provide sufficient liquidity for its own projects.

For other token holders, there is no need to match asset pairs, just provide idle unilateral assets to share the benefits of liquidity supply.

Transfer of risk of impermanence loss

Tokemak transfers the risk of impermanent loss that liquidity providers may face to liquidity guides.

When an impermanent loss occurs, the liquidity provider is first protected by Tokemak’s reactor reserve pool, and then the liquidity leader in the reactor is rewarded Toke and pledged Toke for the second layer of protection.

In essence, the liquid asset provider on Tokemak just lends its idle assets to the liquidity leader through the Tokemak protocol. Compared with a lending platform like aave, the liquidity facilitator borrows corresponding assets in Tokemak, does not need to carry out excess pledge, and does not need to bear the risk of liquidation, and it also has a good leverage effect.

For liquidity providers, without considering contract risks, lending their liquid assets to a platform such as aave is worse than lending to Tokemak. The return on liquidity supply is usually higher than the return on inefficient lending.


All the pledged assets of Tokemak will receive corresponding tToke tokens, which have liquidity. This is similar to the ytoken in Yearn Finance, which will have more liquidity and combined play in the future.

Can pool liquidity across exchanges

Tokemak platform can bring together the liquidity of multiple exchanges, which is very convenient for project parties to manage the liquidity of their tokens among multiple exchanges.

Provide sustainable liquidity, no excavation and selling pressure

The Tokemak platform brings together all the various token rewards obtained for liquidity services and deposits them in Tokemak’s Dao reserve pool. The agreement will not sell these non-Toke assets without major impermanence losses. . These non-Toke assets will serve as the underlying assets supporting the value of Toke and provide continuous liquidity services to the market.

Traditional liquidity incentives (incentives for liquidity mining through inflation) provide liquidity for the market, but also increase the selling pressure caused by more mining and sales. And with the rapid decline of liquidity mining incentives, liquidity will also shrink significantly. This short-term liquidity incentive is of little significance.

Seesaw dynamic rate of return mechanism to better distribute revenue and manage liquidity

Through the Tokemak platform, the liquidity demander can adjust the Toke pledge amount according to its liquidity demand. The rate of return will be dynamically adjusted according to the difference in the strength of the supply and demand sides, and the liquidity supply and demand will automatically be adjusted to an optimal balance point. superior. This is also one of Tokemak’s main innovations, which is not available in other liquidity income projects in the current market.

C. Tokemak differentiated service objects

Liquidity provider:

Those with low risk appetite: Any user can deposit a single asset into Tokemak to provide liquidity without incurring impermanent losses (except for extreme risks). Similar to the aave platform or the Alpaca platform, it lends its own assets to the agreement and charges interest.

Liquidity leader:

DAO: DAO can use Tokemak’s liquidity to strengthen and guide the liquidity of its projects as an alternative to the traditional liquidity mining model.

New project: The new project can build its own token reactor at low cost. Tokemak generates healthy liquidity for its projects from the very beginning in a low-cost manner.

Dex: Dex can use the Tokemak platform to strengthen its market depth.

In the long run, Tokemak’s service target is not the current two-pool liquidity miners who are attracted by high returns, but the low-risk preference users who are willing to hold some token assets. They are unwilling to bear the impermanent losses caused by market making, and their assets are left unused in their hands. Tokemak can effectively help them make use of idle assets.

In addition, Tokemak’s more important service target is to b end, which is those DAOs, new projects or Dex who want liquidity. Their original liquidity acquisition method is too costly and unsustainable. Tokemak can effectively reduce the liquidity acquisition cost and obtain more stable liquidity.


The foothold of the Tokemak platform is to help liquidity demanders better manage and guide liquidity, not simply from the perspective of maximizing the income of miners. Its mechanism design is significantly different from most existing liquid mining aggregation platforms.

Tokemak has many original designs to realize functions such as low-risk market making, continuous liquidity acquisition, liquidity management, and seesaw dynamic rate of return. Tokemak is a new set of decentralized liquidity management tools and solutions.

Token model analysis

Token distribution

Tokemak’s protocol token TOKE has a total supply of 100 million, and the specific distribution is as follows:

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic

  • Total supply: 100,000,000 TOKE
  • 30,000,000 TOKE (30%): Reward release (24 months release)
  • 5,000,000 TOKE (5%): In the “Cycle Zero” (Cycle Zero) DeGenesis event and CoRE (Reactor Mortgage Event), TOKE will be issued for the first time
  • 9,000,000 TOKE (9%): DAO reserves, these reserves can be used to replace non-Toke assets in DAO TO DAO communication.
  • 16,500,000 TOKE (16.5%): Contributor (12 months cliff + 12 months linear release)
  • 14,000,000 TOKE (14%): Team (12 months cliff + 12 months linear release)
  • 17,000,000 TOKE (17%): Investor (12 months cliff + 12 months linear release)
  • 8,500,000 TOKE (8.5%): DAOs & Market Makers (12 months cliff + 12 months linear release)

It is worth noting that the proportion of the Toke reward release part is lower than other projects. On the contrary, the proportion of the team, investors, and contributors is close to 50%, and the concentration is relatively high.

Token value capture

The value of Toke tokens includes Tokemak Dao’s governance rights and liquidity distribution rights.


Toke holders have the governance right of Tokemak Dao and control the income of Tokemak agreement through Dao.

Tokemak Dao’s governance includes control of protocol fee distribution, calibration cycle length, addition of new token reactors, modification of protocol security measures (reserve/deployment ratio + TOKE mortgage parameters), etc.

Tokemak agreement revenue has a strong cumulative effect

Most platform tokens realize their value by charging service fees (transaction fees, revenue sharing, etc.), and Toke tokens will capture all the benefits of liquidity provided by the platform.

Tokemak will only pay TOKE rewards to liquidity providers (LP) and liquidity guides (LD), and all non-Toke asset income obtained by providing liquidity to the outside world will be fully retained by the agreement. This means that Tokenmak will continue to accumulate market-making income, which will be deposited as the agreement’s pending profit and risk reserve. As time and scale increase, the underlying assets will slowly accumulate, increasing the intrinsic value of Toke.

Singular point

Tokemak continues to accumulate its own non-Toke asset reserves. When the assets accumulate to a certain level, its liquidity can be self-sufficient and reach a certain singularity. After reaching the singularity, Tokemak does not need a third-party LP, nor does it need to continue to issue TOKE rewards. Instead, TOKE holders will decide how to use these asset reserves to provide liquidity.

Liquidity distribution rights

Toke holders have the right to distribute liquidity of all platform assets in the agreement. Any user who wants to obtain liquidity through Tokemak needs to hold and pledge Toke to obtain the corresponding liquidity distribution rights.

Benefits and risks

While Toke tokens obtain all Tokemak’s liquidity value, they will also bear corresponding risks. When an impermanent loss occurs, the liquidity provider is first protected by Tokemak’s reactor reserve pool, and then the liquidity leader in the reactor is rewarded Toke and pledged Toke for the second layer of protection.

Different from the independent clearing mechanism of other aggregator platforms, when the market fluctuates sharply, the first sacrifice is the Toke reserve pool, which is equivalent to diluting Toke’s agreement assets, which is essentially an insurance that everyone buys together.

The agreement ensures that LP can retrieve the original amount of assets to the greatest extent, but it also means that Toke will withstand more fluctuations in value.

Five core questions

What business cycle is the project in? Is it the maturity period, or the early and mid-term development?

Tokemak is currently at an early stage and faces many uncertainties. In terms of business model, the liquidity management market has a lot of room for development, with high business ceilings and strong sustainability. However, the main product of the platform has not yet been launched, the white paper has not yet been released, and many details have not yet been disclosed. Whether the project team can launch the product as originally planned, whether the code can run smoothly and safely, and whether the business model can run through remains to be verified.

Does the project have a solid competitive advantage? Where does this competitive advantage come from?

Tokemak is strong in innovation: As a new generation of liquidity solutions, it has many bright spots and advantages. Aiming at the current pain points of liquidity management, it solves the problem from the perspective of the liquidity demand side. Currently, there is no direct competitor.

Excellent financing background: Project Ventures lead investor by the Framework, as well as Coinbase, Delphi Ventures and ConsenSys parameters to vote, DeFi areas are very good and rich resources of institutional investors.

The background of the team and the business direction of the project are very consistent: the team has been doing a centralized market maker business in the DeFi field before, which is exactly the same as the business direction of the project, and has sufficient experience advantages.

Is the long-term investment logic of the project clear? Is it in line with the general trend of the industry?

Liquidity management infrastructure is of vital importance in the DeFi field. It is a pain point in the current industry and is in line with the general trend of industry development. However, because its business model is relatively novel and has not yet been validated by the market, it is currently impossible to determine the medium and long-term investment value.

What are the main variables in the operation of the project? Is this factor easy to quantify and measure?

Whether Tokemak can attract enough liquidity demanders in the early stage depends on the operational capabilities of the community. From the perspective of community operations, the community has good business resources and relevant professional experience. Tokemak mainly relies on the virtuous circle of the agreement itself in the middle and late stages, and its reliance on community operations will be greatly reduced.

What is the management and governance of the project? What is the level of DAO?

Tokemak’s team, investors and contributors have a relatively high proportion of tokens, and the team has a strong control over the project. In the short to medium term, the project will most likely be operated and managed by the founding team. In the long run, Tokemak is run through the Tokemak Dao composed of Toke holders.


Valuation of the new token model is not easy. Tokemak’s unique token value model cannot be compared with similar projects in horizontal valuation. Here, we use one of the simplest and most intuitive indicators–liquidity acquisition leverage ratio, to estimate Toke.

Liquidity acquisition leverage ratio = Toke pledged TVL/liquid asset TVL

Liquidity acquisition leverage is how many times the liquidity leader can control for each Toke. The higher the leverage, the higher the value of Toke, the more conservative the valuation, and vice versa.

Toke value is equal to the platform’s continuous liquidity acquisition value and the corresponding impermanent loss risk premium. The asset itself has 1x liquidity. The current Tokemak’s leverage ratio is in the range of 2-3 times. Combined with the risk premium, under conservative estimation, we use 3x leverage as the anchor point of reasonable valuation for estimation.

We use the following parameter assumptions to estimate the value of Toke.

  • Leverage ratio is 3 times

  • The capital utilization rate of the initial non-Toke asset TVL is 50%

  • Toke pledge participation rate is 80%

  • Release 1,250,000 Toke every month in the first year

Tokemak total TVL refers to the assets of the liquidity provider of the platform and TVL, excluding the value of Toke.

The initial value of Tokemak’s total TVL is calculated based on the 50% initial capital utilization rate:

Tokemak total TVL initial value = current non-Toke asset TVL (360 million US dollars) * (1+0.5)

Toke price (estimated) = Tokemak total TVL (non-Toke assets) / Toke leverage / Toke quantity

The valuation under the condition of slow growth of TVL:

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic Note: Tokemak total TVL does not include Toke’s TVL

With the non-Toke asset TVL growing at a rate of 20% per month (close to the Toke inflation rate), Toke’s early reasonable estimate of the price has stabilized around the 50 yuan range.

The valuation under the condition of rapid growth of TVL:

Comprehensive analysis of the decentralized liquidity agreement Tokemak: business model, competition mechanism and valuation logic Note: Tokemak total TVL does not include Toke TVL

在规模快速增长的情况下,即TVL 增长速度高于Toke 的流通市值时,Toke 的估值价格稳步上升。

平均年化收益率= 每个月Toke 激励数量*Toke 价格/(Tokemak 总TVL+质押的Toke 市值) * 12

根据以上计算公式,第一年,协议每个月释放125 万个Toke,均用于平台激励,资产平均年化收益率变化如下所示:

全面解析去中心化流动性协议 Tokemak:业务模式、竞争机制及估值逻辑

从测算中可以看出,Tokemak 前期通过代币通胀可以为平台带来不错的收益激励,但随着代币释放越来越多,用于奖励的代币占比越来越小,激励效果边际递减,这可能会对未来TVL 的增长带来一定压力。

中长期来看,代币稀释影响减弱,平台激励收益将逐渐趋于市场平均水平,Tokemak 是否能成长为一个自增长的流动性管理平台,我们拭目以待。

注:以上估值模型仅作参考,Toke 价格对Toke 质押率和Toke 杠杆率的敏感性均很高。



  • 在市场极端牛市和极端熊市时,无常损失较大,Toke 承受的损失也较大,将增加Toke 价格的下行压力。
  • 对于流动性需求方来说,Toke 能带给他们的杠杆价值是最重要的,当池子内TVL 大幅下跌时,Toke 的杠杆价值也将下跌,加上协议面临的无常损失风险,可能会形成死亡螺旋。
  • 由于当前产品还未上线,很多产品细节还未公布, Tokemak 的市场需求究竟有多大,是否能吸引足够的闲置资产还未知。


  • Tokemak 是一个全新的项目,大量的原创代码,项目是否能顺畅运行,是否具备抵御黑客攻击的能力,需要时间验证。


  • Tokemak 涉及到很多DAO TO DAO 的业务沟通,项目初期的发展和DAO 的业务能力有较大的绑定关系。



《Introducing: Tokemak | The Utility for Sustainable Liquidity》


《CoRE — Collateralization of Reactors Event》

《What is Tokemak?》

《Carson Cook: Tokemak Is The Decentralized Liquidity Engine for DeFi》

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