Quantum Liquidity refers to a brand-new mechanism put in place by Sphere Finance, made possible by their governance acquisitions in Tetu Finance, a partner & founding member of the Polygon Alliance. After successfully incubating Tetu Finance into Sphere’s ecosystem, the protocols have worked on creating a way to grow liquidity via farming a portion of it while the liquidity pair is still active. This achieves an “artificial” volume which wouldn’t have been possible to achieve any other way. The way projects in DeFi conventionally gain liquidity comes in a myriad of different methods:
- 1.Via mercenary liquidity - liquidity providers come and go depending on the returns they estimate they may earn from providing liquidity. This is not a stable way to earn liquidity as it can be withdrawn at any moment.
- 2.For OHM-forks - via bonds, which give discounted tokens that are freshly minted in exchange for liquidity. This is an easily abused system where investors can sell their staked tokens, provide liquidity to earn discounted tokens, resell them and repeat the process. This causes the protocol to be diluted, making stakers earn less and less on their investments due to having a shrinking share of the market cap.
- 3.Taxes - projects put a buy/sell tax, a portion of which goes to providing liquidity to the pair. While it is initially a good way to amass an awesome amount of tokens for the liquidity pair, it also suffers from continuous swaps to create the liquidity pair and is wholly dependent on trade volume, which is inherently volatile and extremely variable. If there isn’t enough volume, the liquidity grinds to a halt and is open to being depleted.
Sphere Finance aims to solve this by continuously farming a chunk of liquidity that is unused in vaults that are stimulated by Tetu Finance, thanks to the governance presence of Sphere in Tetu’s ecosystem. Sphere Finance currently owns 87% of all governance tokens in Tetu’s circulation, which makes way for deals to create vaults specifically meant for Quantum Liquidity. By V2, Sphere Finance will have moved its liquidity pair to TetuSwap, Tetu’s decentralized exchange, and earn yields on their liquidity and trade fees earned from their governance over Tetu. xTetu (locked Tetu) holders currently earn 33% of all trade fees earned from TetuSwap.
The answer is very simple - it is because it is a way to earn liquidity that does not depend on investors and mercenary market makers. We grow our treasury by ourselves, with our own vaults that are provided by our partner via our governance. On top of that, we organically earn our own trade fees, which we can use for various purposes. Traditionally, DEXes (Decentralized Exchanges) contract-sell all tokens once a quota is reached to earn income from the trade fees. This has a negative impact on the price, as it is a regularly high sell that is continuous & drains the liquidity that is meant for investors. We can either sell these fees ourselves to invest into alternative revenue streams, reinsert them back into the Liquidity Pool, or burn the tokens earned, which is the main function of our trade fees.
Quantum Liquidity as a Service or QLaaS refers to a premium service pioneered and offered exclusively by Sphere Finance. As the name suggests, Sphere Finance offers projects (both upcoming and established) Quantum Liquidity for a premium fee. In exchange for this fee, Sphere Finance will create a vault for the project’s liquidity pair and farm it, so they can enjoy the ever growing liquidity. The flowchart below details the manner in which these deals are facilitated.
A flowchart of QLaaS working
What this means: Projects apply to join the QLaaS program and pay an agreed upon fee, usually in the form of the project’s token. In exchange for that payment, they move their liquidity to TetuSwap’s custom-built Tetu vaults for Quantum Liquidity farming. The liquidity earned in these vaults is then utilized by the project as they wish. Sphere benefits by raising capital via price appreciation of the tokens, which act as an investment in the treasury alongside trade fees earned by trade volume on TetuSwap. The treasury can now either earn passive income on these tokens, or exchange them for another token to either buy a bigger share of xTetu to earn more trade fees, or to make a different investment.
This essentially creates a loop which continuously earns Sphere’s treasury income over time, which can then be distributed to $SPHERE holders.
For an additional fee, Sphere can burn its trade fees earned in order to give projects a deflationary mechanism that regularly burns tokens amassed by trade volume. The premium fee for that service is dependent on the project, and deals may vary.
Sphere Finance has already had numerous projects approach with the intention of utilizing QLaaS. This is an exclusive service which every DeFi project can benefit from, and in addition to being a robust revenue stream, will establish Sphere Finance as an invaluable asset to DeFi projects and investors alike.
We are revolutionizing DeFi.
Join our Discord server and drop a ticket under “QLaaS inquiries”. The team will get back to you and after examination of the project in question and its security, we will reach out with a verdict and offer. Good luck!