The Harmony ecosystem has been something we’ve been closely watching for many months. At the end of October, Tranquil Finance, Harmony’s first algorithmic money market protocol launched. We had the chance to sit down with 0xYamcha, Founder and Lead Developer of Tranquil to chat about what it’s like launching a new project in this day and age. Keep in mind that new projects, no matter how awesome they are, can be risky ventures, particularly those with low market caps. If you join a new project, be prepared for wild price swings early on!
Harmony is one of the fastest growing ecosystems in all of crypto. With transactions being nearly free (unlike Ethereum) and fast speeds, it’s easy to see why. However, just like most new projects, there’s not a lot going on yet in Harmony, but that’s about to change. But – this article isn’t about Harmony. It’s about Tranquil Finance, a project that has catapulted itself into the spotlight on Harmony as it’s first algorithmic money market protocol. We’re particularly interested here because it presents an opportunity to watch a new project grow in real-time (from scratch!), as well as the prospects that the Tranquil Finance project physically has.
Decentralized Finance – DeFi- is a hotly used word today. Some folks may find it difficult to comprehend. Here’s an example. You buy a house that’s worth $200,000. You have paid of $50,000 in your mortgage and the price of your house has appreciated $50k. So, you have $100k in equity. In the mortgage market (in simple terms) you have to pay a bank to establish a line of credit to use your own equity (the equity is your collateral), and it has very strict rules. With a house, you “owe” (typically) some amount of money on it. In crypto, you own the entire value of the tokens you have, right? So in theory, the dollar value of your tokens serves as collateral and just like with home equity, you can borrow against it! It’s a bit complicated, but that’s an easy way to look at it. When you borrow, especially if your tokens are staked, you’re receiving staking rewards, and if you re-stake, reinvest (etc.) you can greatly increase the returns you’re already getting by holding a token. Additionally, you can also “loan” your tokens out and receive interest, too!
Enter Tranquil Finance
Protocols for lending and borrowing exist on other platforms. Projects like Compound, AAVE, and Benqi are examples. However, right now, none of these are available on Harmony. A huge downside in the Harmony ecosystem right now is that there aren’t any options at the moment to borrow and lend. An especially big downside is that there are hundreds of millions of dollars worth of staked Harmony and nothing that can be done with that collateral. Harmony staking pays 9-10% rewards, but we can do better.
One of the most exciting parts about Tranquil’s roadmap is the stONE token that it is building. I personally have a lot of ONE staked and am eager to use that collateral to increase my rewards. When Tranquil releases the stONE staking derivative, users will be able to receive their ONE staking rewards while also using it as collateral to stake, swap, or reinvest as they please. A double benefit is that by being early into the Tranquil project, both this capability and the general growth of the Harmony ecosystem as a whole create huge upward price pressure. With over $66million in Total Value Locked in the first week of being live, it’s clear that a lot of other people too are excited about Tranquil.
Tranquil’s roadmap also includes a lot more capabilities with how people can use their collateral – leveraged trading, options, perpetual swaps, and more. In fiat – the bank is doing this (loaning out your money and gaining interest, etc.). In crypto you can become your own bank.
An Interview with the Founder
Since Tranquil is about as new as it gets (less than a week since launch), it’s also fascinating to watch and learn about all of the growing pains that most investors never see. Crypto has really just started to become mainstream, so most of us weren’t participating when the household crypto projects we know were nascent. I was really happy to be able to pick the brain of 0xYamcha, Founder and Lead Developer of Tranquil Finance on starting Tranquil and what it will be. Enjoy the conversation, I found it to be really enlightening
MoC: Why is having a lending protocol important in the first place? What impact will this have one the Harmony ecosystem?
0xYamcha: A lending/borrowing protocol is a critical DeFi primitive for every blockchain. It allows the user to leverage their assets in new and powerful ways. For example, you can take a loan against your ONE instead of selling it and avoid a potential nasty capital gains tax hit. It also allows users to borrow assets in order to trade with leverage or for short selling.
With the launch of Tranquil Finance, users on Harmony ONE can now use their assets in very flexible and creative ways without incurring potential trading fees or tax obligations. These capabilities will help increase the utility of all assets and grow the DeFi ecosystem on Harmony.
MoC: How would you say the last couple months have gone from a development and anticipation standpoint? What are the days leading up to the launch like? Did everything go according to plan?
0xYamcha: We were completely taken back by the sheer passion of the community response when we first announced the project. We were definitely not expecting such a strong and large community to form this quickly around Tranquil Finance. Although we had some growing pains because we were initially unprepared, we are very proud of our community that has been built so far.
Development wise, we were set back substantially by the delay of Chainlink, which was originally scheduled to launch mid-October. We had to design a completely new oracle stack in a short amount of time, and we were literally coding and testing until the last few hours to launch. Technically, though, other than a few small bugs, the launch went smoothly, and we were very proud to have delivered a functional, high-quality app under significant constraints.
MoC: Fast forward – If Tranquil’s roadmap is realized – what will this do for the Harmony ecosystem in general? How do these “new capabilities on Harmony” compare to other networks?
0xYamcha: In addition to having a robust money market for all major assets on Harmony, our next task is to build a liquid staking token — stONE. Right now, a huge amount of ONE is staked, which means it is locked up can’t participate in the DeFi ecosystem. By staking ONE into stONE, users can not only get validator staking rewards, but they will also be able to use stONE as collateral on Tranquil Finance (and other DeFi applications).
This would be a game changer for the Harmony ecosystem in general, potentially unlocking additional value for the billions of ONE that are currently staked.
MoC: What inspired you to make this project in the first place?
0xYamcha: I’ve been a huge fan and user of DeFi, but Ethereum has been basically unusable due to it’s high gas fees, especially for a money market. For example, depositing and enabling collateral for all my assets would take 10 transactions, totaling well over $1000 on Ethereum. Not only is Harmony almost free, transactions are also committed extremely quickly.
Money markets have always been one of my favorite type of DeFi apps, and I have assets deposited in them on almost every major blockchain. Harmony was distinctively missing such a protocol, however, so we decided to go ahead and build it ourselves.
More Info
For more information on Tranquil Finance head over to Tranquil Finance
To see some amazing NFT art created through our collaboration with BurrstingStudioz (including a piece on Tranquil), check out CoinBusters x BurrstingStudioz
The Tranquil & Harmony themed piece is currently listed for auction on OpenSea: Tranquility of the Mind
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