Since Decentralised Finance (DeFi) became widely known, the total value locked (TVL) in DeFi had impressive growth from just $8.4 billion in January 2019 to ~$90.95 Billion in October 2021 (source: Defipulse) out of which ~$43.82 Billion of assets are locked in lending and borrowing protocols which means ~50% of DeFi TVL is covered by this field.

Moreover, we can expect more in the raise of DeFi as institutions move to explore the potential of blockchain technology especially in the context of the world economy being severely affected due to the COVID-19 pandemic. Blockchain technology is applied to change the traditional financial system by covering many aspects of financial services such as online installments, cryptocurrency trading and its storage.

Even a celebrity like Mark Cuban (a star of “Shark Tank”, owner of the NBA’s Dallas Mavericks and has invested in Aave – a lending and borrowing protocol) shows his bullish on the future of DeFi with its advantages such as automated, permissionless characteristics. (source: https://www.cnbc.com/2021/06/14/mark-cuban-banks-should-be-scared-of-defi.html)

However, it can’t be denied that Defi still has many risks leading to negative result in investment based on asset or market price volatility especially in lending and borrowing protocol where the most TVL are concentrated.

To be specific, there have been numerous attacks on DeFi protocols which have resulted in millions of dollars being lost to bad actors. Some examples can be mentioned:

• Compound Finance had an incidence where approximately $100 million worth of loans were liquidated as the price of DAI/USDC is pushed by market pressures on Coinbase exchange during market volatility and Coinbase is used as an exchange to watch by oracle used for Compound.

• Harvest finance exploited for $24 million via price oracle attack.

• Value defi exploited for $6 million via price oracle attack.

• Cheese bank exploited for $3 million via price oracle attack. (source: https://cryptoslate.com/seeming-oracle-attack-causes-100m-in-ethereum-defi-liquidations/ https://insights.glassnode.com/defi-attacks-flash-loans-centralized-price-oracles/)

And it hasn’t stopped there, DeFi projects are seeing a significant increase in attacks using flash loans with the most common type of this attack is the flash loan-funded price oracle attack.

Therefore, the birth of new generation lending and borrowing platform - Timeswap with better performance is essential to help users preserve and optimize their assets.

In this article, let's take a closer look into Timeswap platform and how it can handle above problems.

Timeswap is the world’s first fully decentralized AMM-based money market protocol with advanced features such as self-sufficient, non-custodial, gas efficient and works without the need of oracles or liquidators.

The factor that makes the platform is able to perform the above features is its proprietary 3 variable AMM which is motivated by the constant product AMM used by Uniswap.

To be specific, let's learn about the mechanics of Timeswap's AMM model and how it support end-users.

The operation of Timeswap is based on a 3 variable constant product formula

X = Principal Pool is the amount of assets that can be borrowed and equal to the sum of the assets deposited by the lenders.

Y = Interest Rate Pool determines the interest amount per second of the pool, such that ratio Y/X is the per second average interest rate for the duration of the transaction to the maturity of the pool.

Z = Collateral Factor Pool determines the collateral to be locked by the borrowers, such that ratio X/Z is the average collateral factor. It's used to calculate the expected average loan to value at the time of the transaction.

K = Invariance Constant product.

In addition, there are two other pools:

C = Collateral Pool and is equal to the amount of ERC20 collateral tokens locked in the pool by borrowers.

A = Asset Pool and is equal to the amount of ERC20 asset tokens locked in the pool. It is the sum of assets lent by lenders & the debt paid by the borrowers.

With the operation of the above formula, when users (lenders and borrowers) interact with pools, they will change the variables such that the constant product is always maintained. Therefore, the TVL in Interest & Collateral will be decreased if users lend more assets into the asset pool, whereas, it will be increased if users borrow more assets from the asset pool.

As mentioned before, the dependency on oracles is the main cause of manipulation by bad actors. Timeswap dev team decides their platform evolvement as a self-sufficient protocol working independently without support from external price feeds or oracles.

Some key features can be highlighted:

Oracle-less – Without support of oracles, the unique 3 variable constant product AMM of Timeswap will determine the interest rates & collateral factors of pools.

Permission-less fixed maturity lending & borrowing - Timeswap liquidity pools are permission-less so users can create pools for borrowing and lending of any ERC-20 token with any other ERC-20 token as collateral with any maturity date.

Non-Liquidatable Loans - This is a beneficial feature for borrowers when they have the right to pay back their debts anytime before maturity. In case of borrowers defaulting, their collateral is distributed to the lenders of the pool. Hence, there is no liquidation penalty & dependency on liquidators.

Market-driven interest & collateral – When users (lenders, borrowers and LPs) interact with Timeswap pools by performing transactions, this results in the change of assets supply, hence changing the interest as well as collateral required for each transaction. Therefore, capital efficiency and risk management are ensured greater than other lending and borrowing protocols.

Minimal attack vectors – Due to the independent operation without oracles or liquidators, attack vectors on the protocol are minimal.

With the above features, Timeswap is operated under open market-making model. Therefore, market conditions at different particular times will decide the interest rates and collateral requirement. This makes Timeswap decentralized and independent without oracles or liquidators.

In addition, the protocol allows users to fully decide their own risk and reward profile while performing lending or borrowing transactions. Lenders have a proportional ​claim to the underlying collateral staked by borrowers in case of default via the insurance token mode.

Decentralised Finance has been such a buzz since its stellar growth in 2020, this shows the optimistic signals of the segment. DeFi can bring new challenges as well as new opportunities in the future.

However, despite of technology advantages, DeFi projects has not yet achieved certain results. This is because there have been many problems of current DeFi projects leading to fraud and suspicious activity that need to be upgraded and improved.

This results in a lack of trust by the monetary authorities. They see DeFi as a threat rather than an opportunity and not ready to for this technology integration.

But in spite of that, this financial system is new, we still believe that the best is yet to come and DeFi has a bright future ahead as the world is increasingly accessible to digital and decentralized future.

The number of use cases for DeFi are exponential in many different fields such as gaming, prediction markets, transactions and payments and DeFi platforms also have more improvements to gain the community trust.

A good example can be mentioned is Timeswap - the world’s first fully decentralized AMM-based money market protocol completely overcomes weaknesses related to oracles or liquidators.

Based on highlighted features such as Oracle-less, Permission-less fixed maturity lending & borrowing, Non-Liquidatable Loans, Market-driven interest & collateral and Minimal attack vectors, Timeswap is promised to be a potential lending and borrowing protocol in the future next to other giants like AAVE, Compound.

As the world turns towards finding new technological solutions, DeFi is becoming more powerful and thanks to Timeswap - the power is at your fingertips!

That is all for now, let me know what you think and join Timeswap community find out all the amazing things!

Twitter: https://twitter.com/TimeswapLabs

Discord: http://discord.gg/timeswap

Telegram: http://t.me/timeswap

Youtube: https://www.youtube.com/channel/UCY8rACVXfPNP-P3M0cCvuEw

Since Decentralised Finance (DeFi) became widely known, the total value locked (TVL) in DeFi had impressive growth from just $8.4 billion in January 2019 to ~$90.95 Billion in October 2021 (source: Defipulse) out of which ~$43.82 Billion of assets are locked in lending and borrowing protocols which means ~50% of DeFi TVL is covered by this field.

Moreover, we can expect more in the raise of DeFi as institutions move to explore the potential of blockchain technology especially in the context of the world economy being severely affected due to the COVID-19 pandemic. Blockchain technology is applied to change the traditional financial system by covering many aspects of financial services such as online installments, cryptocurrency trading and its storage.

Even a celebrity like Mark Cuban (a star of “Shark Tank”, owner of the NBA’s Dallas Mavericks and has invested in Aave – a lending and borrowing protocol) shows his bullish on the future of DeFi with its advantages such as automated, permissionless characteristics. (source: https://www.cnbc.com/2021/06/14/mark-cuban-banks-should-be-scared-of-defi.html)

However, it can’t be denied that Defi still has many risks leading to negative result in investment based on asset or market price volatility especially in lending and borrowing protocol where the most TVL are concentrated.

To be specific, there have been numerous attacks on DeFi protocols which have resulted in millions of dollars being lost to bad actors. Some examples can be mentioned:

• Compound Finance had an incidence where approximately $100 million worth of loans were liquidated as the price of DAI/USDC is pushed by market pressures on Coinbase exchange during market volatility and Coinbase is used as an exchange to watch by oracle used for Compound.

• Harvest finance exploited for $24 million via price oracle attack.

• Value defi exploited for $6 million via price oracle attack.

• Cheese bank exploited for $3 million via price oracle attack. (source: https://cryptoslate.com/seeming-oracle-attack-causes-100m-in-ethereum-defi-liquidations/ https://insights.glassnode.com/defi-attacks-flash-loans-centralized-price-oracles/)

And it hasn’t stopped there, DeFi projects are seeing a significant increase in attacks using flash loans with the most common type of this attack is the flash loan-funded price oracle attack.

Therefore, the birth of new generation lending and borrowing platform - Timeswap with better performance is essential to help users preserve and optimize their assets.

In this article, let's take a closer look into Timeswap platform and how it can handle above problems.

Timeswap is the world’s first fully decentralized AMM-based money market protocol with advanced features such as self-sufficient, non-custodial, gas efficient and works without the need of oracles or liquidators.

The factor that makes the platform is able to perform the above features is its proprietary 3 variable AMM which is motivated by the constant product AMM used by Uniswap.

To be specific, let's learn about the mechanics of Timeswap's AMM model and how it support end-users.

The operation of Timeswap is based on a 3 variable constant product formula

X = Principal Pool is the amount of assets that can be borrowed and equal to the sum of the assets deposited by the lenders.

Y = Interest Rate Pool determines the interest amount per second of the pool, such that ratio Y/X is the per second average interest rate for the duration of the transaction to the maturity of the pool.

Z = Collateral Factor Pool determines the collateral to be locked by the borrowers, such that ratio X/Z is the average collateral factor. It's used to calculate the expected average loan to value at the time of the transaction.

K = Invariance Constant product.

In addition, there are two other pools:

C = Collateral Pool and is equal to the amount of ERC20 collateral tokens locked in the pool by borrowers.

A = Asset Pool and is equal to the amount of ERC20 asset tokens locked in the pool. It is the sum of assets lent by lenders & the debt paid by the borrowers.

With the operation of the above formula, when users (lenders and borrowers) interact with pools, they will change the variables such that the constant product is always maintained. Therefore, the TVL in Interest & Collateral will be decreased if users lend more assets into the asset pool, whereas, it will be increased if users borrow more assets from the asset pool.

As mentioned before, the dependency on oracles is the main cause of manipulation by bad actors. Timeswap dev team decides their platform evolvement as a self-sufficient protocol working independently without support from external price feeds or oracles.

Some key features can be highlighted:

Oracle-less – Without support of oracles, the unique 3 variable constant product AMM of Timeswap will determine the interest rates & collateral factors of pools.

Permission-less fixed maturity lending & borrowing - Timeswap liquidity pools are permission-less so users can create pools for borrowing and lending of any ERC-20 token with any other ERC-20 token as collateral with any maturity date.

Non-Liquidatable Loans - This is a beneficial feature for borrowers when they have the right to pay back their debts anytime before maturity. In case of borrowers defaulting, their collateral is distributed to the lenders of the pool. Hence, there is no liquidation penalty & dependency on liquidators.

Market-driven interest & collateral – When users (lenders, borrowers and LPs) interact with Timeswap pools by performing transactions, this results in the change of assets supply, hence changing the interest as well as collateral required for each transaction. Therefore, capital efficiency and risk management are ensured greater than other lending and borrowing protocols.

Minimal attack vectors – Due to the independent operation without oracles or liquidators, attack vectors on the protocol are minimal.

With the above features, Timeswap is operated under open market-making model. Therefore, market conditions at different particular times will decide the interest rates and collateral requirement. This makes Timeswap decentralized and independent without oracles or liquidators.

In addition, the protocol allows users to fully decide their own risk and reward profile while performing lending or borrowing transactions. Lenders have a proportional ​claim to the underlying collateral staked by borrowers in case of default via the insurance token mode.

Decentralised Finance has been such a buzz since its stellar growth in 2020, this shows the optimistic signals of the segment. DeFi can bring new challenges as well as new opportunities in the future.

However, despite of technology advantages, DeFi projects has not yet achieved certain results. This is because there have been many problems of current DeFi projects leading to fraud and suspicious activity that need to be upgraded and improved.

This results in a lack of trust by the monetary authorities. They see DeFi as a threat rather than an opportunity and not ready to for this technology integration.

But in spite of that, this financial system is new, we still believe that the best is yet to come and DeFi has a bright future ahead as the world is increasingly accessible to digital and decentralized future.

The number of use cases for DeFi are exponential in many different fields such as gaming, prediction markets, transactions and payments and DeFi platforms also have more improvements to gain the community trust.

A good example can be mentioned is Timeswap - the world’s first fully decentralized AMM-based money market protocol completely overcomes weaknesses related to oracles or liquidators.

Based on highlighted features such as Oracle-less, Permission-less fixed maturity lending & borrowing, Non-Liquidatable Loans, Market-driven interest & collateral and Minimal attack vectors, Timeswap is promised to be a potential lending and borrowing protocol in the future next to other giants like AAVE, Compound.

As the world turns towards finding new technological solutions, DeFi is becoming more powerful and thanks to Timeswap - the power is at your fingertips!

That is all for now, let me know what you think and join Timeswap community find out all the amazing things!

Twitter: https://twitter.com/TimeswapLabs

Discord: http://discord.gg/timeswap

Telegram: http://t.me/timeswap

Youtube: https://www.youtube.com/channel/UCY8rACVXfPNP-P3M0cCvuEw