Decentralized and oracle-less fixed time preference protocol
Timeswap is a fixed time preference protocol for users to manage their ERC20 tokens over discrete time. It works as a zero liquidation money market and options market in one. Users can lend tokens into the pool to earn fixed yields. They can also borrow or leverage tokens against other tokens, without the fear of liquidation. Liquidity providers (different from lenders) create markets for any pair of tokens, adding liquidity, and being the counterparty to all lenders and borrowers of the protocol. In return, they earn transaction fees from both sides of the market.
Timeswap utilizes a unique constant sum options specification and an ingenious duration weighted constant product automated market maker (AMM) similar to Uniswap AMM. It is designed to not utilize oracles, is capital efficient, permissionless to deploy, game theoretically sound in any state of the market, and is easy to use.
- Permissionless - Liquidity providers can create pools for any ERC20 pair, without permission.
- Oracle-less - Timeswap works without any oracles and it discovers the interest rate and collateral factor through free market arbitrage. Most importantly, this makes the tokens safe and immune to oracle manipulation attacks.
- Perfect Price Range - Timeswap V2 has implemented an ingenious feature where the collateral factor is always over-collateralized i.e. it stays above one hundred percent no matter how large the lending transactions are. Under-collateralized loan by definition is a guaranteed arbitrage. By limiting the price range to where it is always over-collateralized, increases the price efficiency and lower slippage costs for both lenders and borrowers.
- Self Healing - Timeswap's well-designed free market AMM has the ability to self-heal its state and price based on the preference of the free market no matter what the market price may become or how fast it changes. It does not matter how fast the spot price, interest price, and collateral factor of the pair go down or goes up. It does not matter if it is a bear market or a bull market.
- Symmetric Market - Timeswap V2 has a sound AMM having a perfect symmetry for lending and borrowing. This leads to efficient pricing for the market. Lenders can withdraw their funds before maturity given a small penalty, while borrowers can pay their debt with a discount before maturity. Liquidity providers can also withdraw their liquidity before maturity. This gives magnitude order more flexibility to all the users of Timeswap V2.
- Bidirectional Pool - In Timeswap V2, the pairs are now bidirectional, giving it greater capital efficiency and flexibility. Lenders can lend either token A and/or token B into the same pool, while borrowers can leverage on token A and/or token B in the same pool, using token A and/or token B as collateral.
- Gas Efficient - Timeswap does not use the Black-Scholes formula to determine the price of the option. Instead, the protocol provides the price based on a simple constant product formula very similar to Uniswap. This makes the protocol more gas efficient. This also makes it very easy for anyone to intuitively create money markets for their tokens, without the need of learning complicated financial formulas.
- Past Independent AMM - Timeswap is designed to be past-independent and not historically biased on the pricing. It does not have any historical data stored in the AMM that determines the price, which gives it zero past data bias, and pricing that perfectly follows the present decisions of the free market.
- Capital Efficient Liquidity - Timeswap V2's new design improves the liquidity capital efficiency by more than double, making it more lucrative for liquidity providers to join the protocol. The revenue mechanics and divergent cost mechanics have also been improved to further make liquidity provision more profitable.