What is tS?

​
tS: (tails $S) Similar to sETH or rETH, tS is a Tails Exchange’s version of S representing multiple interest bearing derivative of Sonics native gas token S.

tS represents a groundbreaking approach to liquidity provision on perpetual protocols, enabling participants to act as market makers on Tails Exchange while simultaneously tapping into yields from multiple DeFi protocols. This innovative strategy, termed “multi-protocol rehypothecated yield optimization,” offers tS holders diverse streams of income.

​
Pool Mechanics

​
tS Vault Mechanics

Participants contribute assets to the tS vault, receiving tS tokens as representation of their share. Tails Exchange strategically allocates these assets across a range of protocols, including GMX, GNS, Ethena, and Aave, managing the positions on behalf of users. The allocated liquidity serves a dual purpose:

  • It’s utilized for market making on the respective platforms, generating returns through trading fees and price movements.

  • Tails Exchange leverages this liquidity to facilitate trading on its own platform, creating an additional layer of yield opportunities.

The platform aggregates yields from all sources - trading fees, interest from lending protocols, and rewards from liquidity provision - and channels them back to tS holders.

​
Advantages of Providing Liquidity to the tS Vault

Engaging with the tS vault offers several compelling benefits:

  • Full retention of rewards from integrated protocols (Lending protocols, other Perps protocols, LSD protocols)

  • A 50% share of Tails Exchange’s total protocol earnings

  • Exposure to potential gains from market making activities across multiple platforms

This multi-faceted approach to yield generation positions tS as a cutting-edge tool for maximizing DeFi returns.

​
Providing Liquidity

​
Minting and Redeeming tS

​
Minting

To mint tS, users need to use any supported S (FTM) based asset (such as S, aaveS, or stakedS ) and deposit it into the tS vault. The tS minted is based on the current tS price.

​
Redeeming

Redeeming tS is straightforward. Users enter the amount of tS and select a supported S based asset to redeem for the equivalent value. The tS is then burned, and the S based asset is sent to the user’s wallet.

​
Fees and Cooldown

Minting & Redeeming fees are dynamic based on market conditions, TVL, and other risk factors decided by the team. If we believe there is a high market risk, we may increase the fee to mint or redeem tS to protect the vault. Cooldown period: 1 day (24h) before minted tS can be redeemed.

​
Additional Features

Users can mint tS cross-chain using various meta-aggregators like Axelar, Li.fi, and more.

​
Why Choose tS?

tS provides liquidity for traders, allowing them to take positions with leverage. The relationship between tS holders and traders is as follows:

  • If traders take a loss, tS holders will make a profit.

  • If traders take a profit, tS holders will make a loss.

Rewards for providing liquidity and counterparty risk are based on the Sonic Chain where the tS was minted.

​
Risks Associated with tS

Although tS value is market neutral and not directly affected by crypto market volatility, holding tS still carries risks:

  • Counterparty risk: If traders make a profit, that profit is paid to the trader out of the tS pool.

  • Depegging risk: In the unlikely scenario that any of the supported FTM derivative depegs, tS could be affected. For example, if USDT depegs, the tS price would be affected because USDT backs the vault, making its depeg percentage negatively affect the tS price.

​
tS Liquidity Pool Mechanics

The open interest available for the platform is limited by the total FTM value (in units of FTM) available in tS. Traders cannot open a new position if the total platform open interest meets or exceeds the total TVL in tS.

A portion of all protocol-generated fees, including opening/closing positions, minting tS, borrow fees, and excess funding fees, as well as any losses from traders’ realized P&L and liquidations, go towards the tS vault, causing its price to increase over time. Any profits from traders’ realized P&L are paid out from the tFTM vault, causing its price to decrease.

The tS price is based on the number of USD and tS in the vault, at any time, where:

tS price = USD in vault / tS supply

​
Fee Distribution

50% of all platform fees are automatically distributed to tS holders. There is no need to stake tS to receive these fees; simply holding tS automatically accrues additional value over time. This is similar to LSD tokens like stETH or sUSDe, where the value of the token increases over time because the fees are added to the vault directly, increasing the value of the token.