Tectonic Crypto: Everything to Know

By  Beluga Research October 15, 2023

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Summary

  • Tectonic is a cryptocurrency and decentralized money market protocol built on the Cronos blockchain
  • It allows users to lend and borrow cryptocurrencies at competitive interest rates
  • TONIC is the native token of the Tectonic protocol and is used for governance, staking and rewards
  • Tectonic is a relatively new project, but has quickly gained popularity

Overview

Tectonic is a cryptocurrency and decentralized money market protocol built on the Cronos blockchain. It uses cutting-edge technology built on a decentralized, non-custodial and algorithmic platform. Tectonic uses various mechanisms to ensure the platform's security and stability, including over-collateralization, liquidations and risk management tools. Tectonic is a fork of the Compound protocol, but it offers several unique features and advantages. These innovative features include its TONIC rewards program and liquidator protection mechanism.

The Tectonic cryptocurrency operates on a cross-chain money market, allowing users to earn passive interest and easily borrow liquidity. Tectonic users also have the option of lending liquidity to obtain a rapid loan. The protocol was built with enhanced security features and an open-source architecture to set itself apart from previous platforms.

A Brief History

Tectonic was founded in 2021 by Particle B. The protocol launched its mainnet on December 23, 2021. Shortly after launch, Tectonic gained popularity due to its innovative features and strong team. The protocol also benefited from the overall growth of the Cronos ecosystem.

Tectonic also launched its TONIC rewards program in early 2022. The program rewards users with TONIC tokens for lending and borrowing assets on the protocol.

What is Tectonic Crypto?

Tectonic is a cross-chain money market that allows users to earn passive yield and access instant-backed loans. Tectonic also facilitates and decentralizes lending and borrowing, allowing users to earn attractive yields and passive income. It was launched in December 2021 on the Cronos chain. Tectonic is modeled after DeFi lending platform Compound. It aims to provide seamless money market functionalities that address several use cases. Investors can deposit crypto assets into Tectonic to earn dynamic yield without lockup periods. Tectonic intends to expand the number of tokens supported by focusing on assets from EVM-compatible ecosystems.

The fundamental components of Tectonic Crypto are the V Component, the Liquidation Module and the Community Security Module. The interest rate system employs a factor interest rate model based on market demand and loan pool usage. The Tectonic team determines and modifies interest rates according to the loan pool's dynamics. Tectonic also has a native governance token called TONIC. Holders of TONIC can use tokens to vote on proposals that govern the Tectonic protocol. TONIC holders can also stake tokens in the Community Insurance Pool to earn rewards and help secure the protocol.

TONIC tokens are distributed as follows:

  • 23% to the Tectonic team
  • 13% to the ecosystem reserve
  • 13% to network security
  • 50.9% to community incentives and rewards

Tectonic supports over ten crypto assets, including CRO, ETH, USDC and USDT. TONIC has a circulating supply of 230 trillion tokens and a market capitalization of over $30 million. Tectonic has over 100,000 users and has processed over $5 billion in loans.

Getting Started

  • Create a Crypto Wallet - If users don't already have a crypto wallet, they need to create one before using Tectonic. Many crypto wallets are available, so choose one that supports Tectonic.
  • Fund Crypto Wallet - Once users have a crypto wallet, they must fund it with the crypto assets users want to deposit on Tectonic.
  • Connect Wallet to Tectonic - Once the crypto wallet is funded, connect it to Tectonic. Go to the Tectonic website and click the "Connect Wallet" button to do this. Then, select a crypto wallet from the list of options.
  • Deposit Assets - Users can deposit or borrow assets once the wallet is connected to Tectonic. To deposit assets, click the "Deposit" button and select the asset users want to deposit. Then, enter the amount the user wishes to deposit and click the "Confirm" button.
  • Earn Interest or Pay Interest - If the user deposits assets on Tectonic, they will start earning interest immediately. The interest rate is determined by the demand for the asset the user deposited.

Unique Aspects

  • Cross-chain Money Market - Tectonic is a cross-chain money market protocol. It allows users to borrow, lend and earn interest on crypto assets across the Cosmos and Ethereum ecosystems. This makes it among the few money market protocols supporting cross-chain lending and borrowing.
  • Native Yield - Tectonic offers native yield on all deposited assets. This means users start earning interest when they deposit assets into the protocol. Unlike other money market protocols, Tectonic allows users to start earning yield immediately.
  • Dynamic Interest Rates - Tectonic uses a dynamic interest rate model that adjusts rates based on supply and demand. This means users can earn higher interest rates when there is more asset demand. This helps ensure that users always get the best possible yield on assets.
  • Liquid Staking - Tectonic allows users to liquid-stake Cosmos assets, such as ATOM and OSMO. This means that users can earn staking rewards while still maintaining the liquidity of assets. Many other money market protocols do not offer this unique feature.
  • Support for New Blockchains - Tectonic is constantly expanding its support for new blockchains.

Advantages

  • High Yield Earning Opportunities - Tectonic is a money market protocol that allows users to lend and borrow assets to earn yield. Users can earn up to 15% APY on idle assets, significantly higher than traditional savings accounts.
  • Secure - Tectonic uses various security measures to protect its users' assets, such as smart contract audits and insurance.
  • Access to a Wide Range of Crypto Assets - Users can borrow many crypto assets from Tectonic, including popular tokens like bitcoin and ether. This allows users to access necessary assets without selling TONIC holdings. Borrowed assets can be used for various purposes, such as trading, farming or staking.
  • Growing Ecosystem - Tectonic is part of the growing DeFi ecosystem on Polygon, Avalanche and Ethereum. This means there are many opportunities for users to interact with Tectonic and earn yield. For example, users can lend assets to liquidity pools on DEX platforms.
  • Future Potential - Tectonic is a relatively new project, but it could become one of the leading money market protocols in the DeFi space. Tectonic is also backed by some of the biggest names in the crypto industry.

Disadvantages

  • Low Liquidity - TONIC is a relatively new cryptocurrency, and as such, it lacks liquidity. This can lead to volatility in the price of TONIC.
  • Complex User Interface - The Tectonic user interface can be complicated and challenging to navigate, especially for new users. This can make using the platform to lend, borrow and trade assets difficult.
  • High Risk - Tectonic is a high-risk investment, especially for new investors. It is a new project with a limited track record and operates in a volatile and unregulated market. Additionally, the Tectonic crypto is very volatile and its price has fluctuated wildly since its launch.
  • Lack of Support - TONIC is a relatively new cryptocurrency, and as such, it has a limited amount of support from exchanges and wallets. This can make it challenging to buy, sell and store TONIC.
  • Regulatory Uncertainty - The regulation of cryptocurrencies is still being determined in many jurisdictions. This can make it challenging to invest in and use TONIC. For example, some countries have banned or restricted the use of cryptocurrencies. This can make it difficult for users in those countries to buy, sell and use TONIC.