Swapping TBTs

Exchanging TBTs for value

When a user swaps their TBT tokens, they can buy from or sell into a Liquidity Pool.

This functionality was introduced with the "Chronos" update.

TBT Liquidity Pools

These pools create a market between users who want yield now vs people who are willing to wait and potentially earn more.

On UniswapV3 anyone can add liquidity to a pool, with any range they want, for any TBT token.

Liquidity Providers of TBT pools earn fees from swaps. For some incentivized pools they can optionally stake their LP tokens to earn additional yield.

The implementation of UniswapV3 in the upgrade of the Flashstake Protocol was selected due to its concentrated liquidity and additional fee tiers, which allows TBT liquidity providers to choose the APR range they wish to add liquidity to and the level of fee they are willing to accept in exchange for enabling Flashstakes.

Selling TBTs

TBT Liquidity pools create an alternative route for upfront yield when Flashstaking by selling the minted TBTs into a liquidity pool all in the same transaction.

If you are holding a TBT token and speculate that interest rates will be going down, you would choose to sell your TBT token.

Buying TBTs

If you speculate that interest rates will be going up, you would choose to buy more TBTs.

Instant upfront-yield rates within the Flashstake Protocol are expected to be lower than the underlying protocol yield rate within efficient markets since instant yield comes at a premium.

Liquidity Math Example

As an example, Bob wishes to speculate on interest rates for stETH. The current Lido (stETH) interest rate is 5%. Bob creates a Uniswap V3 position in the range of 0.01 to 0.06 stETH per TBT. Bob initializes this pool with stETH as a single-sided position allowing Flashstakers to sell their TBTs.

That liquidity provided by Bob allows Flashstakers to receive instant upfront yield at a starting APR rate of 6%, but that rate will continue to go down as more TBTs are sold into the pool, and Bob receives those TBTs. A few months down the line, if the instant upfront-yield rate rises to 10% because Lido's stETH interest rate has also risen to around 10%, this would result in the TBT doubling in value since the interest rate has doubled.

Slippage

The use of liquidity pools also brings the potential for slippage, which is the difference in price between the quoted and execution prices. Slippage can be a concern for users as they may not be willing to accept a high slippage value. However, it is important to note that traders can still trade large numbers of tokens for another token if they are willing to accept a high slippage value.

Slippage in the Flashstake Protocol works similar to Uniswap V3 liquidity pools. Depending on available liquidity, the larger the number of tokens a user wishes to Flashstake, the larger the slippage will be resulting in a decreasing APR. For example, users can choose to Flashstake a significantly large number of stETH and accept a low APR, but this behavior is not expected in an efficient market.

The user is made aware of this on the frontend through the displayed APR and displayed number of tokens they will receive back as instant upfront-yield.

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