LP sets the time when liquidity is locked in the agreement to obtain higher returns.
Written by: Babywhale, Foresight News
On the evening of May 16th, Beijing time, Hourglass, a time-bound tokens infrastructure, announced the completion of a $4.2 million seed round of financing, led by Electric Capital, with participation from Coinbase Ventures, Circle Ventures, Tribe Capital and Hack VC.
Hourglass allows users to lock liquidity in the agreement for a fixed period of time to obtain more liquidity incentives, and also enables the agreement to better attract and coordinate liquidity. In addition, Hourglass is another new attempt in the field of DeFi+NFT.
Hourglass mechanism design
Hourglass allows users to lock liquidity within a fixed period of time (currently supported by the agreement in months). Users can lock LP tokens in the agreement through the front end of Hourglass and obtain a time-bound token in ERC-1155 format. Time-bound token, which contains the time for the user to lock the liquidity, before the expiration, the user cannot redeem the LP token.
Currently, Hourglass supports the liquidity of frxETH/ETH trading pairs on Curve. Since the current protocol logic of Frax Finance has basically been chained, Hourglass can set a mechanism to increase rewards above the lock-up time.
In addition, Hourglass has also set up a trading market for users who may need to cash out during the lock-up period. Users can sell or buy at a certain discount (because the buyer needs to bear the opportunity cost and time cost). An ERC-1155 token that expires at a certain time. The order book formed by the pending orders of buyers and sellers is actually a game between the two parties in terms of discounts.
Such a mechanism setting can enable users to use existing liquidity to obtain higher returns, and it can also enable the protocol to better manage liquidity. For example, when the agreement is fully prepared for how much fixed liquidity will be in the next month and how much liquidity will leave the agreement, it can timely inform users of some possible fluctuations in short-term yields or lending rates. In addition, the predictability of protocol income also allows the protocol to better allocate funds in daily operations, and will not affect the operating expenditure plan due to the sudden withdrawal of liquidity.
In addition, Hourglass will also support Lido's NFT withdrawal transaction in the future, which allows users who have applied for withdrawal but are waiting to withdraw to cash in advance at a certain discount. But it takes a while to confirm that the contract is safe. Overall, Hourglass is a platform that helps users and protocols manage liquidity and realize illiquid assets.
The attempt of DeFi+NFT
Hourglass is a project that combines DeFi and NFT that the author has been looking forward to. Due to its programmability, NFT can be used to represent certain positions, such as LPs or some investment exposures. However, the transactions and liquidity of these financial NFTs have not yet had a good solution. In fact, Lido's stETH solution is similar to this idea, but converts the pledged ETH 1:1 into tokens in ERC-20 format. However, for example, the NFT with a time lock in the Uniswap LP or Hourglass protocol can only be traded as a whole because it cannot be divided.
There may be more solutions for such NFT liquidity in the future, but how to set up such NFT trading or liquidity mechanisms, and how to stimulate the outbreak of this type of demand through ease of use are still issues that the market needs to think about.
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How does the protocol retain liquidity? A Quick Look at Time-Bound Token Protocol Hourglass
Written by: Babywhale, Foresight News
On the evening of May 16th, Beijing time, Hourglass, a time-bound tokens infrastructure, announced the completion of a $4.2 million seed round of financing, led by Electric Capital, with participation from Coinbase Ventures, Circle Ventures, Tribe Capital and Hack VC.
Hourglass allows users to lock liquidity in the agreement for a fixed period of time to obtain more liquidity incentives, and also enables the agreement to better attract and coordinate liquidity. In addition, Hourglass is another new attempt in the field of DeFi+NFT.
Hourglass mechanism design
Hourglass allows users to lock liquidity within a fixed period of time (currently supported by the agreement in months). Users can lock LP tokens in the agreement through the front end of Hourglass and obtain a time-bound token in ERC-1155 format. Time-bound token, which contains the time for the user to lock the liquidity, before the expiration, the user cannot redeem the LP token.
Currently, Hourglass supports the liquidity of frxETH/ETH trading pairs on Curve. Since the current protocol logic of Frax Finance has basically been chained, Hourglass can set a mechanism to increase rewards above the lock-up time.
In addition, Hourglass has also set up a trading market for users who may need to cash out during the lock-up period. Users can sell or buy at a certain discount (because the buyer needs to bear the opportunity cost and time cost). An ERC-1155 token that expires at a certain time. The order book formed by the pending orders of buyers and sellers is actually a game between the two parties in terms of discounts.
Such a mechanism setting can enable users to use existing liquidity to obtain higher returns, and it can also enable the protocol to better manage liquidity. For example, when the agreement is fully prepared for how much fixed liquidity will be in the next month and how much liquidity will leave the agreement, it can timely inform users of some possible fluctuations in short-term yields or lending rates. In addition, the predictability of protocol income also allows the protocol to better allocate funds in daily operations, and will not affect the operating expenditure plan due to the sudden withdrawal of liquidity.
In addition, Hourglass will also support Lido's NFT withdrawal transaction in the future, which allows users who have applied for withdrawal but are waiting to withdraw to cash in advance at a certain discount. But it takes a while to confirm that the contract is safe. Overall, Hourglass is a platform that helps users and protocols manage liquidity and realize illiquid assets.
The attempt of DeFi+NFT
Hourglass is a project that combines DeFi and NFT that the author has been looking forward to. Due to its programmability, NFT can be used to represent certain positions, such as LPs or some investment exposures. However, the transactions and liquidity of these financial NFTs have not yet had a good solution. In fact, Lido's stETH solution is similar to this idea, but converts the pledged ETH 1:1 into tokens in ERC-20 format. However, for example, the NFT with a time lock in the Uniswap LP or Hourglass protocol can only be traded as a whole because it cannot be divided.
There may be more solutions for such NFT liquidity in the future, but how to set up such NFT trading or liquidity mechanisms, and how to stimulate the outbreak of this type of demand through ease of use are still issues that the market needs to think about.