Historically, the most common places to obtain loans have been the nation’s banks and other conventional financial organizations. Those that keep their cash on deposit with them are also eligible for a modest amount of passive income that they offer. The world of cryptocurrencies, on the other hand, has progressed to the point where it can now give a contemporary alternative to traditional financial institutions.
Tectonic provides its users with the ability to earn passive income as well as obtain quick loans. Thanks to its cutting-edge technology and suite of essential functions, the platform has quickly emerged as a preferred choice in the financial industry. Let’s take a look at what Tectonic crypto is and how it works.
What Is Tectonic Crypto?
Tectonic is basically a money market protocol with cutting-edge technology based on a decentralized, noncustodial, and algorithmic platform. Users are able to borrow liquidity through a streamlined process with the Tectonic protocol, allowing them to take advantage of passive yield. Tectonic crypto runs on a cross-chain money market that enables users to earn passive interest and borrow liquidity quickly.
When users make deposits of their digital currencies with the platform, they are eligible to receive a healthy return on those investments. Moreover, token holders have the ability to stake their tokens in order to gain incentives. The yield is immediately available and is depending on how the market is performing at the time.
Users of Tectonic have the additional option of borrowing liquidity in order to acquire a quick loan. To differentiate itself from other platforms of a similar nature, the protocol was designed with advanced security features and an open-source architecture. Independent audits of Tectonic smart contracts are carried out by reputable third parties for the benefit of the platform’s users.
Gary Or, who was also one of the co-founders of Crypto.com and served as its former chief technology officer, is the brains behind Particle B, the company that introduced Tectonic in December of 2021. Particle B is an incubator or accelerator based on the blockchain that provides support for high-value initiatives in the cryptocurrency market. The Tectonic platform utilizes the Cronos network. As a result of this, the native token of Tectonic, known as TONIC, is frequently referred to as TONIC crypto. In point of fact, it was designed to function as a token for use in the cryptocurrency market.
How Does Tectonic Crypto Work?
Tectonic crypto holders receive benefits as a result of their contributions to the liquidity pool in the form of interest and other perks as part of a complex incentive structure. Traders of TONIC can borrow liquidity for shorting and farming, while holders of TONIC can access many other cryptocurrencies through the platform without having to liquidate their TONIC holdings. Traders and farmers can borrow liquidity for shorting and farming. The other cryptocurrencies could be utilized for bonding, taking part in initial coin offerings, and a variety of other activities.
At a level of detail that is more granular, the Tectonic liquidity pool is controlled by smart contracts. This pool is the accumulation of the contributions made by users. These crypto assets are fungible in nature due to the fact that smart contracts are used to regulate their ownership. The quick processing of withdrawal requests is then enabled by these smart contracts. The assets that are held in the Tectonic liquidity pool can also be utilized as collateral for loans made in a variety of other cryptocurrencies.
Tectonic crypto was designed with a number of useful methods and features pre-installed for its users. As an illustration, it keeps a 10% liquidity cushion, and it’s also in the process of building an insurance fund right now. The fund will protect the pool against losses that may occur as a result of crypto assets that have been borrowed from the pool but are not returned to it. In addition to this, the platform keeps an adjustable APY that is determined by the current state of the market. This bolsters the return that TONIC crypto holders can expect to get.
Tectonic Crypto’s Main Features
Even if there are now other cross-chain money market systems in operation, Tectonic crypto differentiates itself from the competition in a significant way. Not only was it skillfully crafted with a range of features that allow borrowing and the generation of passive income, but its developers are also continuously making improvements to the platform.
It is necessary for the community as well as the stakeholders to provide their approval for the upgrades before users can reap the benefits of them. Let’s have a look at the features of Tectonic that contribute to its functionality and make it one of a kind.
1. TONIC Staking
Staking is one of the ways that current holders of TONIC tokens can profit from those tokens in the not-too-distant future, as was previously explained. This functionality, which is still in the process of being developed, will make it possible for holders of TONIC to earn passive yield incentives simply by staking their cryptocurrency assets using the TONIC staking module.
The borrowers on the site are responsible for paying the transaction costs, which in turn produce the rewards. The TONIC insurance fund will also be supported through staking, and the platform’s governance activities will make use of the funds. When it becomes available, users will be able to access it using the website’s navigation menu once the staking feature has been implemented.
Users only need to input the total number of TONIC tokens that they intend to stake and then submit their order in order to complete the straightforward process. The procedure of unstaking is just as straightforward, but there is a 10-day cool-down period that ensures the assets will not be immediately accessible to users.
2. Maturity Lock Vaults
Maturity Lock Vaults, which are part of the Tectonic crypto platform, provide yet another potential route for the generation of passive yield. The holders of tokens have the option of selecting from a variety of set time periods to support the network’s long-term growth, ranging from six months to 48 months.
When held for longer periods of time in the Maturity Lock Vault, the yield achieves much greater levels. The incentives that will be delivered to these holders will be in the form of TONIC tokens, and they will originate from the community. Token holders are required to stake a minimum of 100 tokens in order to make a contribution to a Maturity Lock Vault. When this objective has been met, the Maturity Lock Vault feature will become active.
3. Supplying Assets to Tectonic
TONIC holders have the ability to make contributions to the liquidity pool, which in turn enables users to borrow from the pool. The distribution of tokens is controlled by smart contracts. Due to the way the platform was designed, the pool can be used in a variety of different ways. In exchange for contributing their crypto assets to the pool, users are rewarded with tTokens.
Due to this, they will be able to collect their original tokens from the pool at a later time. The percentage of interest earned on deposits serves as the basis for calculating the value of tTokens. The economic concept of supply and demand serves as the foundation for this particular interest rate.
4. Borrowing Assets from Tectonic
Users may borrow assets in the form of the many cryptocurrencies that are readily available from the liquidity pool. Other than TONIC, supporting cryptocurrencies include CRO, WETH, WBTC, USDC, USDT, DAI, and TUSD. This allows users to obtain liquidity without selling their TONIC tokens. Tectonic crypto manages a collateral factor, which is a ratio of the user’s assets to the funds available for borrowing.
In the case that the value of the collateralized assets decreases, certain assets will be liquidated and a liquidation discount will be applied. This liquidation procedure can be prevented if the user improves their collateral or makes partial loan repayments. Borrowed funds are subject to a rate of interest that is compounded.
5. Insurance Fund
The Tectonic Insurance Fund is currently being developed, and its release is anticipated to take place in the not-too-distant future. The fund’s balance increases as a result of the compounded interest rate, which is something that each borrower is liable for paying. 10% of the interest that is collected is going to be put into the insurance fund. The insurance fund’s primary objective is to establish a financial cushion that will shield the pool from any losses that may be incurred as a result of non-liquidated loans.
6. Liquidation Mechanism
The liquidation mechanism is activated when the collateral factor on an existing loan is not met, such as through a fall in collateral value or a rise in the amount borrowed. The goal of liquidation is to preserve the Tectonic protocol’s solvency. On the Tectonic interface’s user dashboard is a Lava Bar. Once the Lava Bar reaches its peak, it may be liquidated. As the bar fills up, users can repay a percentage of their unpaid…