Welcome to this post, where we are going to see how tranquil finance works, a lending & borrowing protocol in harmony, besides offering liquid staking with its advantages of the native token of the network, ONE.
Tranquil Finance has become one of the most used platforms in Harmony, due to its market maker function with deposits and being able to borrow with your cryptocurrencies, and the liquid staking it offers to make ONE staking in an easy and simple way. Reaching more than 300 billion $ deposited on its platform.
What is Tranquil Finance
Tranquil Finance is an algorithmic money market and liquid staking protocol on the Harmony ONE blockchain.
The money market allows users to supply and borrow assets, while receiving or paying interest in a completely permission-free and decentralized manner. Interest on loans and borrowings is set based on market demand, and loans are overcollateralized to ensure solvency at all times, with liquidation mechanism if a collateral price drops too much in value, and the user does not deposit more funds or repay part of the loan.
Another feature of Tranquil Finance is liquid staking, stONE, which allows the user to staked by ONE to earn rewards and at the same time be able to use it in Harmony’s DeFi ecosystem, such as using it as collateral in Tranquil Lending. They estimate that stONE will become the preferred currency in Harmony, as ONE naturally loses its value due to inflation if not staked with it.
Let’s see first the most outstanding part of the protocol, which is the liquid staking of ONE that we can use later to get more annual profitability by depositing in markets, or use as collateral to borrow other cryptocurrencies.
If we go to tranquil finance, in stONE we can find the total number of tokens that are delegated to the platform, the amount of stONE in circulation, the change from stONE to ONE, which over time increases the amount of ONE you will get for 1 stONE, as it is the functioning of the liquid staking, and the amount of rewards achieved.
If you have never heard about liquid staking let’s see what it is, since it is a fairly new concept but lately implemented by many protocols, due to its great advantages.
Staking consists of delegating your tokens to a validator in exchange for rewards, which is the annual % you receive for delegating your tokens and securing the network. The main problem is that when you delegate your tokens they are locked and you cannot use them. This means that to access your tokens again you have to stop delegating them. In this case, liquid staking, when you delegate your tokens, you receive another token, in this case stONE. This token appreciates in value per ONE, so when you want to exchange your stONE for ONE, you will receive more ONE than you put in.
This is the way you receive the rewards for delegating your ONE in the liquid staking, with the appreciation of the stONE token with respect to ONE. And the main advantage is that you can use stONE in other protocols or platforms to get a higher return, or use it as collateral to borrow as we will now see. Unlike normal staking, which you would not be able to do anything with delegated tokens.
With this clarified, it is as easy as going to stake below and indicate the amount of ONE you want to place. The minimum is 101 ONE. Indicate the amount, and below you will see the change, and the amount of stONE you receive, which is less than the amount of ONE you have, as it is worth more, plus the estimated annual %. Click on stake, confirm in your wallet and that’s it. You will already have stONE in your wallet, and you will be generating more ONE with the liquid staking.
You can change your stONE for ONE at any time, but keep in mind that you will have to wait 7 days approximately after making the unstake to access your ONE. This is the time the Harmony network has to stop giving your tokens to a validator. Click on unstake, and confirm in your wallet, and after 7 days you will be able to claim your ONE.
Another option is to exchange stONE for ONE in an Exchange like sushiswap and avoid this 7 days waiting period. Keep in mind that you will receive less ONE, although sometimes it can be worth it if you don’t want to wait 7 days, to receive a little less ONE.
You can also make an LP Token of stONE and ONE to get rewards on the TRANQ platform token and bring liquidity to sushiswap so that users can exchange without waiting the 7 days their stONE for ONE.
In markets, the operation is the same as other lending protocols such as AAVE. Here you can deposit the tokens that you can see, in exchange for the annual % that you can find in APY, in addition to using it as collateral.
On the other hand, in borrow markets, you will be able to see the annual % that you will have to pay for borrowing. In some tokens, as they have incentives from the platform to be used, they will even pay you an annual % to borrow. Although you have to keep in mind that this will eventually decrease and eventually you will have to pay to borrow on all tokens. But for the moment, you can take advantage of these options to get extra annual % with your tokens.
Continuing with the example and using the stONE, we are going to deposit it. At this moment, they are giving an extra 8.54% for depositing our stONE in markets. Click on stONE, and we must click on approve stONE and confirm in our wallet. At the top we must indicate the amount, and click on deposit, and confirm in our wallet the transaction. With this, we will be getting this extra % that you can see in APY, paid in the token of the TRANQ platform.
If we want to use our stONE or another token as collateral, we must enable this option in collateral. You will see your wallet open and you will have to confirm the transaction. This way we will be able to borrow. If we go to borrow markets, we can choose which cryptocurrency we want to borrow.
If you don’t want to expose yourself to risk and there is still a positive annual % for borrowing in stONE, it is a great option to maximize your ONE rewards. To find out how much we can borrow as maximum, click on the cryptocurrency we have deposited in supply markets, and below you will see collateral weight. This % indicates the amount we can borrow before our position is liquidated.
If we go to borrow and for this example we will use stONE, above we click on safe max, being the same token, there is no risk of being liquidated and we can use the maximum collateral allowed. In other cryptocurrencies, take into account the risk of being liquidated if any of the two tokens fluctuate a lot in price. Click on borrow, confirm in your wallet and you are done.
Click on go to my dashboard and you will find all the information about your positions. You can also see the TRANQ rewards you are generating. You can click on claim to claim your rewards at any time and confirm in your wallet. At the top you will see the amount deposited in $, the annual % you are getting for that deposit and loan you have made, and the balance borrowed. Below, you will see the % you have borrowed over the maximum you can borrow. For example, if you have 80%, it means you still have 20% to borrow or before being liquidated if any of the tokens fluctuate in price and reach 100% of that percentage.
In the case of deposited and borrowed stONE there is no such risk. But be aware if you borrow other tokens with your stONE, or have deposited another token as collateral. The last thing you want is to be liquidated and lose your tokens.
TRANQ is Tranquil Finance’s protocol token. In TRANQ, you will find several ways to use the token to earn rewards. 75% of all protocol commissions will be distributed to the TRANQ staking fund.
As a next step for Tranquil Finance, this protocol will be an essential part of Defira and the gaming world. You can earn the game’s governance token, FIRA , by blocking and staking your TRANQs.
Above you can find the price of the TRANQ token, the amount in circulation and the market capitalization it has. Below in APR you can see the % you can get for staking TRANQ, and the different rewards you receive in more detail if you put the cursor over the token.
The first thing we must do is to click on approve to be able to staking in any of the options that we will now discuss. Click on approve and confirm in your wallet and that’s it.
In TRANQ we find different staking options, flexible staking with a lower %, and blocked staking where you must block your TRANQ for an estimated time and you can get more annual % in the staking. With a penalty of 50% if you want to withdraw your TRANQ from the staking before. The blocked staking is for 6 months, and you will also receive rewards in other tokens such as DEFIRA which is a game in collaboration with tranquil finance.
Finally, we found xTRANQ, which was a way to block tokens for 49 days to users who participated in the launch of their token.
The operation is very simple, click on stake and confirm in your wallet the transaction. To withdraw it, it will depend on whether you have staked in the flexible one or in the blocked one and therefore you will have to wait the time of 6 months to be able to withdraw your tokens.
It is worth mentioning that the markets rewards for depositing and borrowing are given in TRANQ, so it is a quite inflationary token and it is an aspect to take into account if you plan to buy it and place it in staking. Still, the rewards in staking are quite elvish.
I hope it has helped you to get to know one of the best platforms on the Harmony network, with ONE liquid staking options. Remember that if you don’t have an account with binance, you can create one below.