TenderTokens overview

Overview

TenderTokens (tTokens) are ERC-20 compliant tokens implementing an elastic supply model that automatically reflects staking positions and rewards. Each tToken represents a stake with a specific validator, creating a direct relationship between token holders and validator performance.

Technical Implementation

TenderTokens utilize an elastic supply model that automatically adjusts to reflect changes in the underlying staking position. The supply increases as staking rewards accumulate and decreases in response to slashing events or when users unstake their positions. This dynamic supply mechanism ensures transparent and automatic reward distribution among all token holders.

Price Mechanics

One of the key innovations of tTokens is their ability to maintain natural price parity with their underlying assets. This is achieved through arbitrage mechanisms and direct unstaking capabilities, eliminating the need for complex price oracles, external price feeds, or specialized pricing mechanisms in DeFi integrations.

Practical Example

Consider a user staking 100 LPT tokens. Initially, they receive 100 tLPT tokens in return. As their chosen validator earns rewards, their tLPT balance automatically reflects these earnings. If the validator earns 10% in rewards, the user's 100 tLPT becomes redeemable for 110 LPT, without any manual claim process.

Delegation Architecture

Delegation Vaults

At the heart of Tenderize's architecture are delegation vaults, unique to each validator on the network. These vaults serve as sophisticated staking proxies, maintaining separate accounting for each validator while managing the issuance and burning of validator-specific tTokens.

Operational Flow

The staking process begins when a user deposits tokens into a delegation vault, which mints equivalent tTokens and delegates the stake to their specified validator. For unstaking, users burn their tTokens, triggering the delegation vault to initiate the unstaking process and issue an NFT receipt for the future claim.

NFT-Based Unstaking Claims

Tenderize implements an innovative NFT-based system for unstaking claims using the ERC-721 standard. These NFTs represent unstaking positions during the lockup period and contain crucial information about maturity dates and amounts. Users can transfer or trade these NFTs on secondary markets, providing liquidity options during the unstaking period.

Protocol Economics

Fee Structure

The protocol implements a straightforward fee structure, charging a maximum of 0.50% on staking rewards while avoiding any fees on principal amounts. All collected fees contribute to the protocol treasury, supporting long-term sustainability. The protocol also accounts for and passes through any fees required by underlying protocols.

Future Index Products

Tenderize plans to implement validator indexes designed for passive users seeking simplified staking exposure. These indexes will comprise multiple validator-specific tTokens, with composition weights determined by WAGYU token staking. This system ensures algorithmic balance without requiring active governance intervention.

Risk Factors

Validator-Related Risks

Validator performance directly impacts corresponding tTokens, with slashing events and commission changes reflected in token value. The protocol actively monitors validator behavior and notifies users of significant changes or events that might affect their staked positions.

Technical Risks

While smart contract risk is inherent in any blockchain protocol, Tenderize prioritizes security through comprehensive audits, open-source code, and continuous monitoring. The protocol's use of standard ERC-20 and ERC-721 implementations helps minimize integration risks.

Security Measures

Protocol Safety

Security stands as a cornerstone of the Tenderize protocol, maintained through regular audits, open-source code verification, and transparent operations. The protocol employs continuous monitoring systems to ensure early detection of any anomalies.

User Protection

Tenderize implements comprehensive user protection measures, including automated notifications for slashing events and commission changes. The protocol maintains transparent validator metrics and provides clear documentation of all associated risks, ensuring users can make informed decisions about their staking positions.