DEX2.0 Tarina Exchange opens a new trend in crypto Exchange
As a DEX2.0 product, Tarina Exchange is not only a secure, low-cost decentralized trading platform for trading users but also a liquidity control and management platform for protocol project parties or token issuers.
What is it?
Tarina is an AMM based on Uniswap v2. It allows swapping between two tokens in a liquidity pool in a fully decentralized way.
The first initial twist is that Tarina, unlike Uniswap v2, also supports low slippage trades between pegged assets like stablecoins.
Users who provide their liquidity in a whitelisted Tarina pool receive liquidity mining rewards in the form of TARINA, the governance and revenue token for the Tarina protocol.
Tarina token exists in two forms: the main one is TARINA which is tradeable but doesn’t grant you voting power or revenue. The other one is veTARINA which is a locked state of TARINA. ve stands for vote escrowed, a popular new DeFi primitive, which was first introduced by Curve Finance.
If you own TARINA and wish to participate in Tarina governance and receive a share of protocol revenue, you lock your TARINA and turn it into veTARINA. Locks can last between one month and four years and can be extended at any time. Different lock lengths mean you receive different amounts of veTARINA:
- 1 TARINAlocked for four years = 1 veTARINA
- 1 TARINAlocked for two years = 0.5 veTARINA
- 1 TARINAlocked for six months = 0.125 veTARINA
Your veTARINA balance decays linearly over time if you don’t extend it. Once your lock expires, you can withdraw your TARINA.
Once your lock is created, you receive trading fees (protocol revenue) from the gauges you voted for, a boost as well as voting power to direct TARINA emissions — but more on that below.
Another important change from existing ve models is the concept of ve(3,3) where lockers also receive a share of emissions based on the circulating supply. The idea behind this change is to prevent dilution of existing early lockers.
The percentage of emissions received by existing lockers is below:
veTARINA.totalSupply( ) / TARINA.totalSupply( )
This creates some interesting game theory as more people locking will reduce the amount of TARINA given to liquidity providers in any given week.
TARINA lockers increase their holdings proportionally to weekly emissions. This makes the value proposal of locking very attractive as your lock does not get diluted by new TARINA emissions.
On Tarina, all trading fees will go to users who voted for the gauge attached to the pool. Liquidity providers receive TARINA and trading fees are given to those who vote for it thus creating a positive feedback loop where a pool generating a lot of fees will attract more voters and more TARINA incentives.
If the pool is not whitelisted and does not have a gauge, trading fees then go to liquidity providers. Anyone can deploy a gauge for a pool if both tokens are whitelisted.
Several Tarina mechanisms are borrowed from Curve Finance. The core one is the gauge system which has been gaining attention thanks to the so-called Curve wars and Convex bribes. Having deposited liquidity into a pool, liquidity providers will stake the LP tokens they receive into the corresponding gauge, where they begin earning TARINA emissions.
The concept is simple, every week TARINA emissions will be distributed starting from 2,000,000 per week decaying at a rate of 2% per week. veTARINA holders decide which liquidity providers receive those emissions.
Having the power to dictate which pools are to receive TARINA emissions is extremely valuable for protocols that wish to deepen their on-chain liquidity.
It’s equally important for ve-holders, who have an interest in directing emissions towards pools that will net the most fees for themselves.
Emissions are updated on a weekly basis on Thursdays at 00:00 UTC.
Just like on Curve, on top of deciding where TARINA emissions should go, lockers can also boost their TARINA rewards. Based on how much veTARINA a user owns, they may be able to receive up to 2.5x more TARINA rewards.
Each gauge has a working balance which can be calculated as per the formula below:
LP incentives weight without binding veNFT = LP amount * 40%
LP incentives weight after binding veNFT = min ((your LP amount*40%+(total LP lock-up amount * your NFT voting weight/total voting weight)*60%), your LP amount))
This is the main reason behind the success of Convex, as it allowed liquidity providers to earn boosted rewards without the need to maintain a 4 year long ve-lock.
The concept of bribes was made by popular by Convex which came to control a large share of Curve voting power. As users kept chasing high CRV rewards, protocols realized they could grow their protocol and on-chain liquidity by bribing veCRV holders to vote for their pool.
On Tarina, it’s possible for anyone to attach bribes onto a gauge and those who vote for it are then able to claim them.
Tarina also introduces the concept of negative voting which allow users to prevent emissions from going to a pool.