How to Invest in TimeSwap on Notum

In 2024, cryptocurrency is one of the most popular ways to earn from investments. The world of decentralized finance offers a variety of strategies for any risk level that make the process of depositing assets as simple and profitable as possible. DeFi lending is a type of investment that appeared on the market quite recently, but has already gained popularity among crypto users around the world.

DeFi lending is a huge part of the DeFi sector with a total value locked of over $34.74 billion. It involves providing loans on various DeFi platforms, where investors can deposit their cryptocurrency to earn a profit, and borrowers can get an interest-bearing loan for their needs. Despite the significant similarity with traditional lending in banks, DeFi lending uses P2P dApps that provide proper level of transparency and security.

By investing in DeFi lending, investors independently lock their assets on a chosen platform, where borrowers can choose a loan using P2P lending. This way, an intermediary like a bank that charges a fee is not required, making decentralized borrowing more beneficial for both sides. Instead of third parties, DeFi platforms use lending pools, where funds are invested for subsequent distribution among users using smart contracts.

Today's article from Notum will introduce you to TimeSwap lending protocol, which allows users to seamlessly lend and borrow crypto assets. We will look at its distinctive features, strengths, as well as the risks associated with the protocol. In addition, we will pay attention to several investment strategies that allow investors to earn interest on their crypto in 2024.

TimeSwap: the Essentials

• TVL: $12,28M
• Risk Level: Low-Medium
• Blockchains: Ethereum, Arbitrum, Base, Mantle, Optimism, Polygon zkEVM, Polygon
• Foundation Date: 2020

TimeSwap is the first completely permissionless and oracleless protocol allowing users to lend and borrow crypto assets. Besides, the platform enables to create money markets for ANY ERC-20 tokens. It is important to note that all loans provided by TimeSwap are non-liquidatable and fixed-term.

The main purpose of TimeSwap’s existence is to revolutionize money markets using their unique 3 variable constant product AMM. You can study the core mechanism of Timeswap in detail here.

«Timeswap utilises a Duration-Weighted Constant Sum Product Market Maker (DW-CSPMM) to create permissionless lending/borrowing pools for any pair of ERC-20 tokens. Lenders, borrowers and LPs interact with the AMM, leading to the market's discovery of interest rates» - TimeSwap GitBook.

Since the protocol does not use oracles, it is also not subject to the oracle manipulation risks common in the DeFi space. Moreover, the oracleless nature of the protocol helps TimeSwap create lending and borrowing markets for ERC-20 tokens. The protocol is currently available across Ethereum, Arbitrum, Base, Mantle, Optimism, Polygon zkEVM, and Polygon networks.

Interesting fact: TimeSwap is among the top 10 most popular lending protocols in the DeFi space on Arbitrum and Base with a TVL of $6.38m and $382k respectively.

Thus, by offering a decentralized platform that operates without oracles, TimeSwap is making a kind of revolution in the decentralized lending market.

TimeSwap: Operating Principles

Timeswap has three main market participants, each of which plays its own role in the project ecosystem:

• Lenders. Users who fund the protocol's borrowing pools are called lenders. They earn a fixed interest for providing liquidity, and 10% of their earnings go to LPs as transaction fees.
• Borrowers. Users who take out loans on Timeswap are called borrowers. Lenders and LPs distribute assets between borrowers in exchange for a fixed interest in the form of collateral locked. Thus, the borrower must lock collateral equivalent to the amount of interest accrued on the borrowed principal amount. Once the borrower repays the loan and interest, the collateral is returned to them. As with lenders, 10% of interest paid by borrowers is sent to LPs.
• Liquidity Providers (LPs). Users who contribute single-sided assets to protocol pools are called LPs. They act as a counterparty for both participants (lenders and borrowers) for part of transaction fees.

TimeSwap pools use such parameters as:

• The asset pair of the pool.
• Transition price, or the level at which borrowers are likely to change their actions (if they want to repay their loans or not).
• APR or the annualized interest rate at which borrowing and lending happens.
• Maturity, or the time and date the lending pool expires.
• CDP, a metric that helps borrowers and lenders evaluate the collateral factor of their loan

More detailed information about Timeswap's pool parameters and examples can be found here.

Source: TimeSwap GitBook

TIME Token

The official protocol documents inform that TimeSwap will issue its own $TIME token with a total supply of 1,750,000,000 TIME. Early users and partners who supported the development of the protocol will receive the token as a reward when it is released. More detailed tokenomics will be available soon on the Timeswap Docs.

Token Generation Event for $TIME token is planned for the first half of 2024.

At this point, Timeswap has released the TIME premine, which serves as an incentive mechanism for protocol participants. The protocol states that during the pre-mining stage, participants receive non-transferable TIME tokens. During the TGE, these tokens can be later claimed for $TIME at a 1:1 ratio.

Why Try Lending with TimeSwap?

TimeSwap is an innovative protocol offering lenders, borrowers, and liquidity providers several unique features that set it apart from its competitors. Let's pay attention to the main ones.

Pros

Oracleless lending

Timeswap does not use oracle services, which means there are no oracle manipulation attacks. Also, the oracleless nature of the protocol allows support lending and borrowing markets for ERC-20 tokens.

Permissionless pools

Timeswap allows any user to lend, borrow, and provide liquidity to any existing pools. The protocol also makes the creation of markets for ERC-20 tokens available to everyone.

Fixed-term loan duration

Since all lending and borrowing transactions on the platform have a pre-defined duration and a fixed interest rate, users receive some kind of security guarantee.

Flexible withdrawals

Platform participants can withdraw their funds when needed, which makes the lending process on the platform more comfortable.

Non-liquidatable loans

Platform users can borrow against their tokens with no need to actively manage loans, making the process more automated.

Overcollateralized loans

The protocol is designed in such a way that borrowers cannot obtain undercollateralized loans at any time and at any price, which gives lenders a guarantee of security.

Isolated markets

Since all protocol pools are isolated from one another, this ensures pool participants that the risks of that pool do not affect the results of others.

It should also be noted that the TimeSwap protocol has undergone several large audits among leading security firms, namely Code4rena, Peckshield, and Trust Security.

TimeSwap: Investment Strategies

To start investing in TimeSwap pools, users need to connect one of the wallets offered by the platform. After that, they can explore pool options, select a network, and search for tokens they want to invest in. Today we'll look at two popular TimeSwap pools with high rewards that are worth keeping an eye on in 2024.

ARB / USDC.e on Arbitrum One 
Total APR - 34.03%, TVL - $1,58M

This ARB/USDC.e pool on Arbitrum One allows users to invest their cryptocurrency and receive a fairly large APR of 34.03%. This pool has the largest TVL on the platform ($1.58M), which indicates the proper level of security of this investment strategy and trust on the part of investors.

Source: TimeSwap Markets

WETH / PT-weETH on Ethereum 
Total APR - 66.59%, TVL - $713K

Another popular investment strategy on TimeSwap allows users to invest their WETH and PT-weETH assets to generate high returns. The APR for providing liquidity to this pool is 66.59%, while the total value locked exceeds $713K.

Source: TimeSwap Markets

Other investment opportunities on TimeSwap can be found here.

TimeSwap: Risks and Disadvantages

TimesSwap undoubtedly offers users a huge number of advantages such as market-driven interest rates, isolated pools, independent AMM, and non-liquidatable leverage. However, along with this, the protocol has a number of risks that should be taken into account before providing liquidity.

Cons

Slippage

Despite the convenience of flexible withdrawals offered by the platform, it may result in slippage.

Platform's complexity.

TimeSwap allows users to invest in different pools on 7 different networks. Thus, the large number of opportunities and positions on different blockchains can be difficult to navigate, especially for inexperienced investors.

Risk of smart contracts

As stated, TimeSwap has passed several major audits, which indicates the platform’s security. However, they still do not guarantee 100% safety. Thus, vulnerabilities and bugs in smart contracts can negatively affect users’ funds.

Transaction fees

By providing liquidity on Timeswap, 10% of the funds earned by lenders is paid to liquidity providers.

Notum’s Verdict

Time Swap is a unique lending protocol with innovative features and multiple benefits. The platform offers users oracleless lending, permissionless, fixed-term, and non-liquidatable loans, anytime withdrawals, isolated markets, and much more.

The protocol has a medium level of risk and does not require active participation, which makes the investment process simple and comfortable. TimeSwap offers borrowers and lenders pools on seven different networks with favorable interest rates and simple withdrawals.

When using TimeSwap, users should also be aware of the disadvantages, such as the possibility of slippage, the risk of smart contracts, transaction fees, etc. However, despite some shortcomings, TimeSwap remains a popular platform that allows you to receive high rewards with minimal involvement.

Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.