Cronos Ecosystem Spotlight: Tectonic
Read on to find out about Tectonic Finance, their latest updates on Cronos, and why they have chosen Cronos as their home chain to build on
Today, we are excited to feature Tectonic Finance, a decentralized money market protocol on Cronos that allows users to lend and borrow their on-chain assets with ease.
Let’s dive right in!
Can you share more about Tectonic and the team behind the project?
Tectonic is the largest money market protocol on Cronos. With over USD120m in TVL, our platform provides users with access to instant loans and passive yield across 15 markets.
Tectonic caters to various types of users, including:
“HODLers” wanting to earn passive interest from supplying assets;
traders looking to borrow tokens in order to capitalize on trading and yield farming opportunities;
or users wanting access to other cryptocurrencies for multiple purposes (e.g., participate in ICO, bonding), without having to liquidate their original assets.
Tectonic is backed by a small, international team of BUIDLers who are passionate about bringing crypto to the masses. We come from diverse professional backgrounds, but share the same goal of wanting to make DeFi useful and accessible.
Tectonic recently announced a couple of new product updates such as new token listings and collateral swaps, can you share more about them?
This year, we listed 6 new tokens (ATOM, ADA, VVS, XRP, LCRO, and LATOM). Lending and borrowing are core functions of Tectonic, so we work to continuously grow our portfolio in order to provide more choices for users.
However, adding new token listings comes with respective risks and challenges. For example, smaller cap tokens are especially prone to high fluctuation (and even price manipulation) which introduces risk to Tectonic’s TVL. Due to these concerns, we launched isolated pools in March 2023. This has enabled us to contain risk within each pool and list smaller caps or newly launched tokens such as LCRO and LATOM. You can read more about this feature here.
In addition to the above, we also recently launched the first 2 features within our leverage management tools series: Repay with collateral and Collateral Swap.
Currently on Tectonic, a user needs to repay a loan with the same asset they used to borrow. This means that they need to have a sufficient amount of the asset, plus interest accrued, in their wallet in order to repay the loan. The “Repay with Collateral” feature now gives users two ways to repay their debt: either using tokens in their wallet or using their deposited collateral. The goal is to give users more accessible ways to pay back their debt, which is beneficial to the protocol in helping to contain risks and bolster overall resilience.
Separately, if a user wants to switch out his collateral with another asset, he has to manually repay his debt, remove his supplied asset and supply another one. The “Collateral swap” feature allows users to complete this move in a single transaction. This function is also important from a user’s perspective with regard to risk management. For example, if collateral token A price is declining rapidly, a user can quickly switch it to collateral token B in order to avoid getting liquidated. This also benefits Tectonic as it could help lower the probability of inheriting bad debt.
Tectonic has been live on Cronos Mainnet since late 2021. How has your growth been since then?
In 2022, our focus was on building the community, developing our tokenomics, and better data visualization so as to monitor key risk and performance metrics. This year, our focus has been on expansion - in terms of more token listings and more relevant features for users.
Since our launch in December 2021, we have built a total user base of 16k borrowers (with USD68m worth of borrowings) and 55k suppliers (backed by USD191m worth of collateral). On the social front, we also have a strong community of 64k followers on Twitter, 10k on Discord, and 6k on Telegram.
What are the interesting upcoming features or products that Tectonic will be launching?
As mentioned, an area of focus for us this year has been in building up our arsenal of leverage management tools in order to cater to a broader risk profile or investment criteria. We aim to make it easier for users to execute their investment views using Tectonic. We have already released Repay with collateral and Collateral swap, and the next one within this series will be Long/short.
A long/short strategy is one of the best use cases of a money market protocol. For example, if a user is bullish on token A, he can open a long position (i.e. supply on Tectonic). In contrast, opening a short position on token B (i.e. borrowing to sell a token) means that he believes the price of this asset will fall. In the past, if you wanted to obtain leverage through borrowing, it would be time-consuming and capital inefficient. You would have to go on a lending protocol like Tectonic, borrow an asset against your collateral, go to a DEX like VVS, swap the borrowed asset for collateral, go back to Tectonic, and borrow again to “leverage up”. This one-click long/short strategy will make this process easier. Users will be able to earn yield and TONIC rewards in addition to profit from a price decline.
Going forward, we plan to build even more tools to help users either manage their debt positions and/or take a profit. We’re still exploring this based on user needs and community feedback and will provide updates at a later date.
Why did you choose Cronos as the chain to launch on?
We chose to build on Cronos for various technical reasons. For example, we liked that the network was able to handle thousands of transactions per block - and at a low cost. Additionally, our long-term plans are to take Tectonic cross-chain. Apart from having Ethereum-based assets on Tectonic, Cronos, being IBC enabled, will allow us to facilitate the lending and borrowing of any Cosmos-based assets.
From a business perspective, we chose Cronos as it allowed us to tap into the massive retail user base within the Crypto.com ecosystem. Also, as alumni of the Cronos Labs incubation program, we received and continue to receive invaluable support which has allowed us to become the leading money market protocol on the chain.
For a user new to Tectonic, where can they learn more about your project and get started?
One of the best ways to learn more about Tectonic is by visiting the website for an overview of our offerings and links to our resources and community. For more detailed information on core features, head over to our gitbook, which provides step-by-step tutorials, technical documentation, and FAQs.
If users have more specific questions, our wonderful community managers are also here to help and can be reached on our Telegram and Discord channels. These platforms are also great ways to interact with the wider Tectonic community.
Furthermore, stay up to date on our latest developments by following us on Twitter and Medium!