[IDEAS] Tempus Leveraged Fixed Rates

This topic is to discuss the potential use cases for Tempus Capitals and Yields.

In order to increase the adoption of the protocol, we need to make sure that our primitives (Capitals and Yields) have the equivalent use case as the underlying yield bearing tokens. For example, if stETH can be used as collateral, we need to make sure that the Tempus stETH-Capitals (which in this example is basically locked stETH) can also be used for the same purpose.

The flow is as follows:

  1. Deposit 100 ETH or 100 stETH into Tempus

  2. Use DepositAndFix function to swap 100 stETH to 105 stETH-Capitals(locked stETH), redeemable for 105 stETH on the Maturity Date of the contract

It is worth noting that the 105 stETH-Capitals in this case have a mark-to-market value of 100 stETH, which will fluctuate based on how much the market implied yields change within the relevant pool. The 105 stETH-Capitals can be liquidated at any time by calling the CompleteExitandRedeem function. Tempus Labs is working on a reliable TWAP price feed for these primitives.

  1. Use 105 stETH (worth 100 stETH) to borrow stablecoins/ETH, and repeat the cycle (starting from step 1) to allow leveraged fixed rate yield farming.

To achieve this, Tempus needs to partner with another project who is an issuer of overcollateralized crypto-backed stablecoins, for example abracadabra.money or MakerDAO.

I’ve set up this topic so we can keep this important topic going.

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Great idea. Ideally, we can pilot this with one of the market leaders (as mentioned, abracadabra or MakerDAO), create a playbook, and then repeat it with other players in the ecosystem to maximize the use-cases for Tempus stETH-Capitals.

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That’s right. The first step that Tempus Labs is working on right now is creating a reliable TWAP price feed for Capitals and Yields (across all integrations - stETH, Rari USDC and DAI Vaults etc.) so liquidations cannot be exploited.

Once it’s ready (in two to three weeks from now), I think the best course of action is to propose a governance resolution to both MakerDAO and abracadabra to integrate Capitals and Yields as collateral to mint DAI and MIM.

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@garai have you talked to the Yeti Finance team? They’re working closely with Trader Joe’s and have a unique leverage protocol and their YUSD stablecoin. Could be a good integration for Tempus on AVAX