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Decentralized Finance: Ethereum Provides The Infrastructure Necessary Programming and Running Decentralized Services

This document discusses three topics: 1. DeFi which aims to replace centralized financial services by allowing people to borrow, lend, trade assets on blockchains like Ethereum without centralized authorities. Benefits include being open, fast, and having low fees. 2. Web3 which uses decentralized blockchains at its core and enables new models where users participate as shareholders by owning tokens. This shifts ownership from centralized institutions. 3. Tokemak which is a decentralized market making platform and liquidity router that aims to generate sustainable liquidity for DeFi more cheaply and easily than traditional centralized solutions. It allows liquidity providers and directors to earn yields and control liquidity flows.

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Shantan Pinninti
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38 views2 pages

Decentralized Finance: Ethereum Provides The Infrastructure Necessary Programming and Running Decentralized Services

This document discusses three topics: 1. DeFi which aims to replace centralized financial services by allowing people to borrow, lend, trade assets on blockchains like Ethereum without centralized authorities. Benefits include being open, fast, and having low fees. 2. Web3 which uses decentralized blockchains at its core and enables new models where users participate as shareholders by owning tokens. This shifts ownership from centralized institutions. 3. Tokemak which is a decentralized market making platform and liquidity router that aims to generate sustainable liquidity for DeFi more cheaply and easily than traditional centralized solutions. It allows liquidity providers and directors to earn yields and control liquidity flows.

Uploaded by

Shantan Pinninti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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shantanvc@gmail.

com S S V C Tulasi Naidu Pinninti

Decentralized Finance
DeFi, which is a short term for decentralized finance, aims to replace centralized
financial services. It’s an alternative to the decades old financial services
industry where a major part of the innovation has been in the front-end and not
as much when it comes to back-end services. It aims to replicate what banks and
other major financial institutions usually do, that is, borrow, lend, trade assets
and more on public blockchains, primarily on Ethereum [Ethereum provides the
infrastructure necessary programming and running decentralized services].

Some of its benefits include it being open, pseudonymous, flexible, and fast. This
is because it has almost no barriers of entry, an internet connection and a crypto
wallet are all what are needed to start using the financial services and there is
no need to provide any personal details to perform transactions on the public
blockchain. The conversion from one asset to another and transfer of assets
from one platform to another can be done without permissions from a central
authority, with less waiting time, and by paying less that what the traditional
institutions usually charge. The interest rates on assets which are held can be
realized as quickly as a minute.

web3 / Web 3.0


Web 2.0 is how we use and interact with the web (mostly) at present. The main
fundamental difference between web2 and web3 is that web3 has
decentralization at its core.
Web3 uses a stack of technologies which are based on decentralized
blockchains. It enables new social and business models where users participate
as “shareholders” by owning any protocol’s cryptocurrencies or tokens. This
model shifts the ownership away from centralized web2 institutions.
Some of the web3 use cases include DeFi protocols, gaming communities where
gamers would be able to pay the developers directly and content creators selling
their work through NFTs [NFTs are tokens which are used to represent ownership of items.
They let users tokenize things like art, collectibles and many more things].

Limitations for web3 current include scalability, UX, accessibility and cost.

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[email protected] S S V C Tulasi Naidu Pinninti

tokemak.xyz
The current state of liquidity in DeFi is unpredictable, fragmented, and
expensive. Builders of new crypto and web3 projects bear huge costs while
pursuing liquidity solutions. The traditional market making solutions available
are highly centralized, and expensive.

Tokemak is designed to generate sustainable liquidity for DeFi and upcoming


tokenized applications. It can be considered as a decentralized market making
platform and a liquidity router. It sits a layer above the decentralized exchanges
and allows for control over where the liquidity flows. It also offers s cheaper and
easier way to provide and source liquidity.

Its high-level protocol functionality:

Tokemak enables users to provide liquidity and control.

Liquidity Providers deposit single-sided assets into individual Token Reactors [A


Token Reactor is simply another name for a specific asset's Tokemak reactor]and/or
Genesis Pools and earn yield in the form of TOKE

Liquidity Directors stake TOKE into individual Token Reactors, vote on how the
liquidity gets paired and to what exchange venue it will be directed. They also
earn yield in the form of TOKE.

TOKE is generalized or tokenized liquidity. TOKE holders will be able to generate


liquidity on demand for which tokens they want, and on which exchange they
want, by controlling and directing Tokemak's TVL.

The protocol captures fees by providing liquidity across DeFi. As time passes, this
allows Tokemak to build a healthy reserve of various assets in Tokemak's PCA
(Protocol Controlled Assets). The PCA is controlled by TOKE holders through
decentralized governance.
[PCA: Tokemak's treasury, the assets within the protocol which are utilized for liquidity
deployment and trading fees accrued from providing liquidity.]

Tokemak allows for opportunities for new and existing token projects and DAOs,
by helping them achieve strategic liquidity deployment, control, and ownership.

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