Preface
Recently, the LSD track has been experiencing a "surge against the market trend", with protocol tokens such as $LIDO and $SSV increasing dramatically, becoming the focus of heated discussions in the Crypto market. Tenderize, which is also on the LSD track, seems relatively deserted, seemingly out of tune with the atmosphere of other projects on the track.
But is it really not worth paying attention to? Please continue reading: ⬇️
Tenderize
Tenderize is a liquid staking protocol deployed on Ethereum/Arbitrum, supporting liquid staking of four assets: $MATIC/ $GRT/ $AUDIO/ $LPT. Except for MATIC, the remaining three assets may be unfamiliar to everyone.
Among them, Graph (GRT) is the leader in the decentralized indexing track, and Livepeer (LPT)/Audius (AUDIO) are representative projects in the decentralized streaming and decentralized music tracks respectively.
Background of the project
The founder of Tenderize worked as a smart contract engineer at Livepeer for 3 years, which is also the origin of the cooperation between the two projects.
Shortly after the mainnet was launched, the Tenderize team announced in July last year that it had completed a seed round of financing led by Eden Block. Eden Block did not invest in many projects, but it bet on Yuga Labs, the founding team of Bored Ape.
Operation Mechanism
Similar to most liquid pledge protocols, users deposit native assets supported by the protocol into Tenderize and obtain an equal amount of pledge certificates T-Assets, which represent the ownership of the user's native assets. T-Assets can be traded, transferred, and used as LPs to obtain Defi income.
By releasing the liquidity of pledged assets, users can obtain the dual benefits of node staking and Defi. Tenderize plays the role of a delegator, and user assets are collected and entrusted to node operators.
Cost Flow
Tenderize V1 will extract 10% of the node staking income, of which 5% will flow to the Tenderize Treasury (most of which will be used to add LP liquidity) and 5% will be used to incentivize LP.
Tenderize is about to iterate its V2 version, which is expected to be launched in the first half of this year. At that time, the node extraction income will be reduced to 0-0.5%, and all this income will be used to incentivize LP.
LP Power
This part is crucial. The reason is that the core of the Liquid Staking Protocol, in addition to releasing liquidity and improving capital efficiency, also has an emergency exit function. That is, there is no need to wait for the end of the unlocking period to redeem the pledged certificate back to the native asset through the LP pool.
Unlike other liquid staking protocols, Tenderize does not issue protocol native tokens, that is, there is no native token used as a Defi income incentive LP.
Currently, Tenderize’s LP incentives mainly come from two parts: 5% of node staking income + all fees generated by LP Swap (0.5%).
The V2 version node staking income incentive will drop sharply to 0-0.5%. At that time, it will be highly likely that the protocol native token incentive will be required to maintain sufficient liquidity.
If the LP pool does not have sufficient liquidity, the pledged assets will not be redeemed back to the native assets through the LP pool or will face very large slippage.
Cons
Currently, the node operator is selected and regularly evaluated by the Tenderize team (there is only one), and it is not permissionless. The V2 version will optimize this problem;
The pledge certificate T-Asset does not have many application scenarios to generate diversified returns.
Pros
Support the pledge of some leading assets in non-mainstream sectors, taking advantage of the segmented market;
The entire model can operate effectively without issuing native protocol tokens to incentivize LPs. There is reason to believe that token issuance will operate more efficiently in the future;
The V2 version will achieve 0 retention of treasury assets, and the contract will automatically distribute 0-0.5% of the node income to LP.
Ecological Progress
Since the mainnet launch in May 2022, the TVL of the Tenderize protocol has been in a steady growth trend, and the current on-chain TVL is US$1.93 million (see Figure 4).
The growth of the protocol TVL may also be caused by the increase in token prices, so let’s take a look at the number of active users on the chain (see Figure 5). It can be seen that the number of active users is also continuing to grow.
Token Status
The Tenderize protocol has not yet issued a coin, but according to the white paper, the protocol will clearly issue a native token, $TENDER.
$TENDER will primarily serve as a protocol governance token with voting rights.
As for whether there will be airdrops for early users, we can wait and see.
The above is a brief introduction to the LSD protocol Tenderize. For more detailed information, please refer to its white paper.
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