This article will deeply analyze Themis’ latest economic model, exploring its core concepts and mechanisms, advantages and innovations, risks and challenges.

I. Introduction

With the continuous development of blockchain technology, DeFi derivatives projects have gradually become the focus of the market. The innovation of user experience, further financial innovation, optimization of decentralized governance solutions, and the implementation of new liquidity mining and incentive mechanisms have enabled decentralized derivatives trading to enter a period of rapid development. The rapid development of the industry is inseparable from the right opportunity. It is a mistake to be too early or too late! The improvement of infrastructure is crucial to the development of a project or even an industry. This is not difficult to conclude from the development history of dYdX.

In this context, the old derivatives protocol Themis officially landed on Blast L2 in May 2024, opening a new chapter. As the core part of DeFi derivatives projects, the economic model directly affects the success or failure of the project. A reasonable economic model can attract more investors and users and promote the sustainable development of the project. This article will deeply analyze the latest economic model of Themis, explore its core concepts and mechanisms, advantages and innovations, risks and challenges, whether it can open up new valuation space with "derivatives" + narrative in the future, and the potential dividends and opportunities behind it.

2. Current Status of Derivatives Trading

In the field of derivatives contract trading, centralized exchanges still dominate, but it is undeniable that decentralized derivatives protocols have developed rapidly in the past two years, with the total open interest increasing nearly 10 times.

However, on the chain, the spot trading volume of DEX represented by Uniswap still significantly crushes the trading volume of top decentralized derivatives trading protocols such as dYdX and GMX. In the final analysis, the development of on-chain derivatives protocols such as GMX, dYdX, Drift, etc., which have been in the leading position for a long time, is far from keeping up with the narrative changes. According to DeFiLlama statistics, as of April 15, 2024, the total scale of DeFi in the entire network reached 86 billion US dollars, but the total TVL of derivatives protocols was only 3 billion US dollars, and decentralized derivatives exchanges accounted for only 3.48% of the TVL.

Therefore, as the most imaginative narrative in the on-chain DeFi track, the derivatives market urgently needs new ideas to break through;

As an emerging Ethereum second-layer network, Blast aims to provide higher transaction throughput and lower transaction costs to solve the congestion and high gas fee problems of the Ethereum network. At present, Blast has been successfully launched, with the main network TVL approaching 2.5 billion US dollars and a total of 860,000 users. It is expected that in May, Blast will conduct an airdrop event to distribute tokens to users participating in the network. With the performance and cost advantages of Blast L2, coupled with Blast's own traffic effect, many derivatives that are limited by the Ethereum main chain can be gradually implemented. This may be the reason why Themis Protocol made another move after two years and deployed it to Blast L2.

3. Themis Project Overview

Themis Protocol is a decentralized derivatives trading platform built on Blast L2, aiming to provide users with efficient, secure and transparent derivatives trading services.

Judging from the project and team experience, Themis Protocol has always been regarded as an old-fashioned protocol in the DeFi field that has been tested by time and the market. As early as September 2023, it has laid out the derivatives trading sector. Its products include: Themis Swap, THS Pool, ETH Pool, tbTrade, etc.

May 2022

Deployed on BSC Chain for testing;

May 2023

Deployed on Filecoin (FEVM) and officially running;

September 2023

ETH bonds were launched, the treasury construction plan was officially launched, and the decentralized derivatives exchange beta version was launched, providing up to 50 times leverage trading;

April 2024

As of April 2024, the treasury will have collected more than 1,200 ETH

May 2024

The protocol is deployed on Blast L2, and the treasury ETH assets are migrated to Blast. The ETH pledged in the protocol becomes the first asset of ETH PooI;

4. Product & Model Introduction

The importance of economic models to DeFi derivatives projects is self-evident. A reasonable economic model can attract more investors and users and promote the sustainable development of the project. The economic model of Themis Protocol fully considers the characteristics of the project and market demand in its design, and achieves the economic sustainable development of the project through innovative mechanisms and strategies.

Themis platform organically integrates treasury construction incentives, governance token minting, staking, liquidity construction, user growth incentives, and transactions through five identities.

Vault Builder:

Vault builders pledge ETH in Themis Vault, enter the ETH Pool, and obtain tETH. tETH is proof that vault builders hold vault shares. tETH is not tradable but can be redeemed for ETH. Holding tETH can earn 65% of the transaction fees of derivative exchanges and an annualized currency-based return of about 4%. Early vault builders can also receive dual rewards of Blast points and Themis points.

THS-ETH Liquidity Builder

After THS-ETH liquidity builders add liquidity, they obtain THS-ETH LP, and then use LP to purchase LP bonds (Bond) and mint governance tokens THS. The price of LP bonds is discounted relative to the THS transaction price, and LP is managed by the Themis treasury.

THS Stakers

THS pledgers can obtain the right to pledge THS by minting SC. After staking THS, THS enters the THS Pool and pledgers obtain sTHS. The amount of sTHS increases by compound interest according to the rebase cycle. The rebase cycle is 8 hours and the compound interest rate is 0.2%. Pledgers will obtain a higher annualized return (APY= 792%). sTHS holders will also receive a 25% share of the transaction fees of the derivatives exchange.

Invite THS stakers

SC is the Scale Code of Themis Libra. SC is an indicator of the user's contribution to the growth of protocol users. THS stakers get high returns (0.2% -8 hours). They need to spend an additional 20% of the THS value of USDB to mint SC tokens. Inviting THS stakers and node users who have made greater contributions to the growth of protocol users can all receive SC token rewards. Burning SC can increase the release speed of THS staking income. The price of SC tokens rises unilaterally. The earlier you get it, the greater the profit margin.

Derivatives Trader

Derivatives traders earn ETH from the Vault by shorting or going long on a certain asset, or lose ETH and it goes into the Vault. In the long run, traders will lose their positions, and the Vault will be over-collateralized. When the over-collateralization reaches 20%, 55% of the excess will be used to repurchase THS from the THS-ETH Pool for destruction, and 35% will go into the Treasury as a THS minting reserve, while increasing the THS support price.

tbTrade: Perpetual contract trading with range liquidity based on treasury fund pool

tbTrade is a decentralized perpetual contract exchange built by Themis Protocol based on Blast. As an old DeFi protocol, Themis previously launched the V1 version of derivatives trading on Filecoin (FEVM) and has undergone multiple iterations and updates in the past year. After polishing and security audits, the latest tbTrade version was finally launched and launched on Blast.

The new version of tbTrade takes into account the advantages of the limit order (LOB) order book and AMM, which can control risks while maximizing the utilization of vault funds and providing a better trading experience. In order to safeguard the interests of vault builders, tbTrade has set up a 4-fold protection mechanism.

  • Treasury reserves

In extreme cases, the Themis treasury contract is activated, and the reserve funds are used to mint THS for sale to supplement the treasury deficit.

  • Dynamic spread rates

By automatically adjusting the dynamic spread rate, we can attract arbitrage funds and balance long/short positions.

  • Funding Rate

Through the automatic adjustment of funding rate, the funding rate is transferred between long/short positions to balance long/short positions.

  • Profit capping mechanism

The maximum profit is 800%. A transaction can only earn a maximum of 800% and the position will be automatically closed when the profit reaches 800%.

Early users can provide ETH as liquidity to the vault, and the vault ETH acts as the counterparty of traders on tbTrade. Users deposit ETH collateral to open long or short positions, providing users with up to 50x leverage trading. Synthetic asset targets will be added in the future, such as ETH/USDT, BTC/USDT and other mainstream crypto assets against the US dollar price index, foreign exchange, commodities, etc.

V. Summary

As an old#DeFiprotocol, we can look forward to the future performance of Themis after landing on Blast L2. At the same time, Themis community management has also revealed that this migration and deployment of Blast chain will launch new tokens and points rewards. Users can enjoy derivatives trading services while obtaining potential airdrop opportunities. I believe that with the efforts of the team and the support of the community, Themis will achieve greater success in the DeFi field.
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