Liquidity

TLP: The Liquidity Provider Token for t3

TLP is the liquidity provider token for t3.

By participating, liquidity providers earn fees from leverage trading, borrowing fees, and swaps, making TLP a cornerstone of the platform’s decentralized trading infrastructure.

Overview​

TLP represents an index of assets utilized for swaps and leverage trading on the t3 platform.

Users can:

  • Mint TLP: Using any asset from the index.

  • Burn TLP: To redeem any asset in the index.

The price of TLP is determined dynamically:

(Total worth of assets in the index, including open position profits and losses) / (TLP supply).

TLP Token Addresses​

Note that TLP is specific to the network you mint it on, it is not directly transferrable between networks and the price, ETH rewards for the tokens will differ between networks.

As TLP holders provide liquidity for leverage trading, they will make a profit when leverage traders make a loss and vice versa.

Buying TLP​

TLP tokens can be bought using the Buy TLP page.

ETH is also required to send the buy transaction.

Any of the TLP index tokens can be used to buy TLP, a list of the index tokens can be found on the Dashboard.

Fees will be lower for tokens that the pool has less of, check the Save on Fees section to get the lowest fees.

After buying your TLP tokens will automatically be staked and you will start earning Escrowed TMX and ETH rewards, you can check your rewards on the Earn page.

  1. Navigate to the Buy TLP page.

  2. Select Your Asset: Any token within the TLP index can be used for purchase. The full list is available on the Dashboard.

  3. Purchase (TLP is automatically staked)

Purchased TLP tokens are staked by default, enabling you to immediately start earning rewards, such as:

• Escrowed TMX (eTMX) rewards.

• ETH rewards (visible on the Earn page).

Fees are lower for tokens that are underrepresented in the liquidity pool. Check the “Save on Fees” section on the dashboard to identify optimal assets for minting TLP with minimal fees.

Selling TLP​

TLP tokens can be sold using the Sell TLP page. Tokens can be sold for any index asset at the prevailing redemption price.

Token Pricing​

• Dynamic Pricing: Minting is based on the lower index token value, while redemption is based on the higher value.

• Stablecoin Spread: For stablecoins, the spread is defined by the price feed price of the token to 1 USD.

• Impact of Pool Balance: The TLP price reflects token balances and spreads within the liquidity pool.

Token Weights​

Token weights adjust dynamically to optimize liquidity management and hedge exposure against open positions:

  • Balance-Dependent Fees:

    • Actions that increase imbalanced assets incur higher fees.

    • Actions that reduce imbalanced assets enjoy lower fees.

  • Dynamic Hedging: Token weights shift based on trader positions:

    • If traders are predominantly long on ETH, ETH receives a higher weight.

    • If traders are predominantly short, stablecoins are weighted higher.

Synthetic Exposure

TLP holders indirectly gain exposure to market dynamics through the weights:

  • Long Exposure: If token prices rise, TLP prices increase from trader losses.

  • Short Exposure: If token prices fall, TLP prices decrease from trader profits.

The token weights can be seen on the Dashboard.

Advanced Token Weighting

The fees to mint TLP, burn TLP or to perform swaps will vary based on whether the action improves the balance of assets or reduces it. For example, if the index has a large percentage of ETH and a small percentage of USDC, actions which further increase the amount of ETH the index has will have a high fee while actions which reduces the amount of ETH the index has will have a low fee.

Token weights are adjusted to help hedge TLP holders based on the open positions of traders. For example, if a lot of traders are long ETH, then ETH would have a higher token weight, if a lot of traders are short, then a higher token weight will be given to stablecoins.

If token prices are increasing, then the price of TLP will increase as well, even if there is a larger number of open long positions on the platform. The portion reserved for long positions can be treated as stable in terms of its USD value since if prices increase the profits from that portion will be used to pay traders, and if prices decrease, the losses of traders will keep the USD value of the reserve portion the same.

If a lot of traders are short and larger weights are given to stablecoins, then TLP holders would have a synthetic exposure to the tokens being shorted, e.g. if ETH is being shorted then the price of TLP will decrease if the price of ETH decreases, if the price of ETH increases then the price of TLP will increase from the losses of the short positions.

Risks​

Caution should be exercised when interacting with any smart contract or blockchain application. While risks are attempted to be mitigated through testing, audits and bug bounties, there is always a risk of vulnerabilities in smart contract code.

For details of contract operation please see t3 Contracts.

A non-exhaustive list of risks:

  • Smart contract risks

  • Counterparty risks: The TLP pool is the counterparty to traders, if traders make a profit that comes from the value of the TLP pool

  • Token risks: Bridged tokens may depend on the security of the bridge, pegged tokens have risks of de-pegging

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