Introducing $TONIC Staking
Gm Tectonians,
we have been hard at work over the past weeks building the TONIC staking module. We are excited to announce that we are now in the final stages of review by our external security auditors and it will be live when the audit is complete.
In this article, we provide an overview of the TONIC staking module and how you can earn staking rewards. Let’s dive in!
What is TONIC Staking?
For Tectonians who have been with us for a while, you will know what TONIC staking is, how it creates massive token utility and how you benefit from it as a token holder.
For new Tectonians, a quick summary:
- TONIC staking is an upcoming feature on Tectonic allowing TONIC holders to deposit their tokens into the TONIC staking module, in return for yield rewards.
- Here’s the general idea: stakeholders receive rewards, including a share of protocol revenue generated from fees paid by borrowers
- TONIC staking will drive further utility for the TONIC token, it seeks to align incentives with the long-term believers of our protocol and benefits token holders.
- Other uses for staked TONIC include acting as community insurance if a shortfall event occurs and will eventually be used to vote on Tectonic’s governance proposals
- Staking is a standalone feature and not the same thing as our TONIC money market.
TONIC staking will initially launch with staking rewards and the other use cases, community insurance and governance, will be rolled out in the coming months.
How does it work?
Here is a high-level explanation of how staking works.
- TONIC token holders can stake TONIC into the staking module and receive xTONIC based on the TONIC : xTONIC exchange rate at the time.
- Being a yield-bearing token, the TONIC : xTONIC’s exchange rate increases over time, without any action on your part!
- As a result, when you withdraw your TONIC from the staking module, you will receive more TONIC compared to when you made the initial deposit.
Why does the TONIC : xTONIC exchange rate increase?
The protocol will direct 50% of all protocol revenue (from liquidation fees and loan repayment fees) into the staking module contract, which will be converted programmatically by smart contracts into TONIC via other decentralized exchanges, such as VVS Finance.
This is great news for you as a holder of TONIC tokens because this exerts buying pressure on TONIC markets. As more people borrow and repay their loans on Tectonic, the staking module will buy more TONIC off the market, resulting in a lower market supply.
Since the exchange rate between xTONIC and TONIC is determined by the quantity of xTONIC minted relative to the amount of TONIC, the xTONIC : TONIC exchange rate will only increase over time.
Is there any lockup period?
You can request to withdraw your TONIC any time, however there is a cooldown period of 10 days. After the cooldown period expires, you will be able to withdraw your TONIC.
The amount of TONIC you will withdraw is fixed at the time when you requested the withdrawal.
When will staking be available?
Staking will be going live imminently. We are completing the final phases of our smart contract security audit and can’t wait to get this into the community’s hands!
Watch this space — we will be sharing a detailed walkthrough of how to stake TONIC in the coming days. Stay tuned for more information!
