Tectonic Crypto: Earn Passive Income & Access Instant Loans

Traditional financial institutions have been the primary source of loans in the past. They’ve also provided a small stream of passive income for those who store cash with them. Now, however, the crypto world has advanced to provide a modern alternative to TradFi institutions. Tectonic offers both passive income and quick loans to its users. With the platform’s innovative design and key features, it’s already become a popular option in the financial sector.

What Is Tectonic Crypto?

Tectonic is a money market protocol with a decentralized, noncustodial and algorithmic platform. With the Tectonic protocol, users can borrow liquidity through a quick process and enjoy passive yield.

Tectonic operates on a cross-chain money market that provides users with a modern way to earn passive yield and borrow liquidity instantly. When users deposit their crypto assets with the platform, they can benefit from a solid return. In addition, token holders can stake their tokens to earn rewards. The yield is based on market conditions, and can be accessed immediately. 

Tectonic users can also borrow liquidity to obtain an instant loan. The protocol has advanced security mechanisms and an open-source design to distinguish itself from other similar platforms. For users’ benefit, Tectonic smart contracts are independently audited through respected third parties.

History of Tectonic

Gary Or, the co-founder and former chief technology officer of Crypto.com, serves as the mastermind behind Particle B, which launched Tectonic in December 2021. Particle B is a blockchain-based incubator, or accelerator, that supports high-value projects in the crypto market. Tectonic runs on the Cronos platform. Because of this, Tectonic’s native token, TONIC, is often referred to as a TONIC coin. In reality, however, it was developed as a token in the crypto market.

What Does Tectonic Aim to Achieve?

Tectonic’s developers focused on creating a platform that places governance in the hands of stakeholders and the community of TONIC token holders. The development team consulted with the community and stakeholders to establish all aspects of the Tectonic protocol. This includes the interest rate structure, token distribution, collateralization ratio and other relevant aspects of the platform’s design and functionality.

The Tectonic protocol’s design and architecture are based on Compound, an established protocol that has been thoroughly audited and tested. Tectonic protocol aims to meet a variety of its users’ needs through its advanced protocol, such as providing them instant loans and guaranteeing them a steady stream of passive income. 

How Does Tectonic Work?

Tectonic token holders benefit from contributing to the liquidity pool through a robust incentive program that includes interest and rewards. TONIC traders can borrow liquidity for shorting and farming, and TONIC holders can access several other cryptocurrencies through the platform without needing to liquidate their TONIC holdings. The other cryptocurrencies may be used for bonding, participating in initial coin offerings and more.

On a more detailed level, smart contracts control the Tectonic liquidity pool, which is the accumulation of users’ contributions. Because these crypto assets are controlled via smart contracts, they are fungible assets. These smart contracts then support prompt withdrawals. The assets in the Tectonic liquidity pool can also be used as collateral for borrowing in several different cryptocurrencies.

Tectonic has several built-in mechanisms and features to benefit its users. For example, it maintains a 10% liquidity cushion, and it’s currently developing an insurance fund. The fund will protect the pool against losses from borrowed crypto assets that aren't returned to the pool. In addition, the platform maintains an adjusting APY that’s based on market conditions. This supports a solid return for TONIC holders.

Features of Tectonic

While other cross-chain money market platforms are in use today, Tectonic stands far apart from the others. Not only has it been expertly designed with a variety of features that support borrowing and passive income generation, but its developers continue to make improvements to the platform. Its community and stakeholders are required to authorize the improvements to ensure that users will benefit from them. Let’s look at the features of Tectonic that support its functionality and uniqueness.

TONIC Staking

As mentioned, one of the ways for TONIC holders to profit from their tokens in the near future is staking. Although it’s still in development, this feature will enable holders to earn passive yield rewards simply by depositing their crypto assets in the TONIC staking module. The rewards are generated through the transaction fees that the platform’s borrowers pay. 

Staking will also support the TONIC insurance fund and be used for the platform’s governance actions. Once staking is available, users will be able to access it through the navigation menu on the website. The easy process requires users to input the TONIC token amount they wish to stake and submit their order. The unstaking process is equally easy, but a 10-day cool-down period prevents those assets from being immediately available to users.

Maturity Lock Vaults

The Maturity Lock Vaults on the Tectonic platform support another avenue for passive yield generation. Token holders can choose from a range of fixed time periods to support long-term growth, ranging from six to 48 months. The yield increases substantially for longer hold times in the Maturity Lock Vault. The rewards provided to these holders will be paid in TONIC tokens and will come from community incentives. To contribute to a Maturity Lock Vault, token holders are required to stake at least 100 tokens. Once this is accomplished, the Maturity Lock Vault feature is enabled.

Supplying Assets to Tectonic

TONIC holders can contribute to the liquidity pool, which allows users to borrow from the pool. Smart contracts manage the supply of tokens. This aspect of the platform’s design makes the pool a fungible resource. Users who supply their crypto assets to the pool receive tTokens in return. This enables them to later retrieve their original tokens from the pool. The tToken value is determined by the interest rate for deposits. This interest rate is based on the economic principle of supply and demand.

Borrowing Assets from Tectonic

From the liquidity pool, users can borrow assets in the form of several available cryptocurrencies. Those supported (other than TONIC) include CRO, WETH, WBTC, USDC, USDT, DAI and TUSD. This permits users to borrow liquidity without having to sell their TONIC token holdings. Tectonic maintains a collateral factor, which is a ratio of the funds available for borrowing to the user’s assets. In the event that the collateralized assets’ value declines, some assets will be liquidated and a liquidation discount will apply. This liquidation mechanism can be avoided if the user increases their collateral or repays some of their outstanding loan balance. Borrowed funds will be subject to a compounded interest rate.

Insurance Fund

Currently being developed, the Tectonic Insurance Fund is expected to be released in the near future. The fund’s balance builds up through the compounded interest rate for which all borrowers are responsible. Of the interest collected, 10% will be allocated to the insurance fund. The purpose of the insurance fund is to create a financial buffer that protects the pool from loss related to non-liquidated loans.

Liquidation Mechanism

When the collateral factor isn’t met on an established loan, such as through a decrease in collateral value or an increase in the amount borrowed, the liquidation mechanism is triggered. The purpose of liquidation is to maintain the solvency of the Tectonic protocol. The Tectonic interface has a Lava Bar on the user dashboard. Once the Lava Bar reaches full capacity, liquidation may occur. As the bar reaches the full point, users can repay a portion of their outstanding loan or increase their collateral to prevent liquidation.

TectonicCore

The TectonicCore is the Tectonic protocol’s risk management layer. It maintains the collateral factor, which establishes a user’s minimum collateral required, and triggers the liquidation mechanism. When a user submits a transaction request, approval or denial is processed through the TectonicCore. On a deeper level, the TectonicCore weighs risks against user balances to determine a risk score.

Tectonic Crypto Road Map

Although Tectonic launched in December 2021, the platform’s development has continued. A key part of the after-launch development occurred in February 2022, when news about the development of staking was released. Staked tokens qualify users for passive yield that’s funded through borrowers’ loan fees. Early users who were part of the wallet snapshot in January 2022 could receive a token airdrop, which could be staked as desired. An allocation of 0.1% of the total token supply was for the airdrop.

Looking ahead, Tectonic will be bolstering its community governance process. For example, facets of the collateral factor are expected to be governed by the community in the near future. This and other aspects of governance depend upon the continued growth of the platform. As mentioned earlier, Tectonic is also working to establish an insurance fund. An allocation of 10% of loan interest charges will be stored in the insurance fund. If a loan cannot be liquidated, the insurance fund will replenish the liquidity pool for those funds. This will support the financial health of the platform going forward.

TONIC Tokenomics

The Tectonic platform is a decentralized finance (DeFi) system fueled by Cronos. Its native token is TONIC. Tectonic launched with a supply of 500 trillion TONIC tokens. The Tectonic team received an allocation of 23% of the tokens. The ecosystem reserve benefited from 13% of the tokens. Another 13% supports network maintenance and security. And, as already mentioned, 0.1% of the tokens were used in the airdrop. The remaining 50.9% is available for community rewards and incentives.

Through the use of tokens, lending and borrowing activities are supported. Those who supply tokens receive passive income for their contributions, while liquidity borrowers can use their crypto assets for shorting, ICOs, yield farming and staking.

Tectonic Price Prediction

The current price for a TONIC token is approximately $0.00000015. When the token launched in December 2021, its price was $0.0000004027. Its peak price was $0.000001903. As is the case with all crypto tokens, the value fluctuates considerably and is subject to change due to a variety of factors, such as supply and demand, and whale activity. Cryptopolitan predicts the TONIC token price will be $0.00000013 by year-end, also forecasting potential prices of $0.0000004 by 2025, $0.00000083 in 2027 and $0.000000365 in 2031.

Is Tectonic Crypto Legitimate?

Security is a top concern for many cryptocurrency users and investors. The Compound protocol is rightfully recognized as being among the most secure in use today, having been audited and tested comprehensively. The Tectonic protocol is rooted in the Compound protocol, so it has extensive security measures in place. In addition, the blockchain ecosystem security reviewer SlowMist has also audited Tectonic to confirm the adequacy of its security measures.

Even with these security measures in place, however, it’s important to note that the Tectonic protocol has only been in use since December 2021. Both the platform and the token continue to be actively developed. Furthermore, despite being used for both passive income generation and borrowing, the utility of the platform hasn’t been fully proven, and continues to evolve as the team furthers its development. While Tectonic is a legitimate platform, users should proceed cautiously until the platform is firmly established.

Is TONIC a Good Investment?

The current TONIC token price is notably low, so investing in a large number of tokens requires only a nominal investment. While the price is expected to increase in the next few years, it’s subject to extreme volatility. Nonetheless, because of the low cost of entry, the risk to investors is relatively small.

Tectonic offers financial benefits for TONIC holders. For example, staking rewards can yield passive income, and additional returns are offered through locking tokens in vaults. While borrowers will be responsible for interest charges on borrowed funds, they can also benefit from their loans. For example, without cashing in their TONIC tokens, they can borrow against them for potentially profitable farming, staking and more.

Tectonic has built-in mechanisms and features to ensure the integrity of its liquidity pool. This supports the investment of those who stake tokens and contribute to the pool. The protective measures include the pending release of an insurance fund and a liquidity mechanism.

Overall, an investment in the TONIC token may prove to be financially lucrative. However, with numerous factors that could influence token value, there are risks to consider. Furthermore, even with the Tectonic Insurance Fund and liquidity mechanism, there could be a potential for loss in the liquidity pool. This risk stems from the newness of the platform. Given these factors, TONIC token users should make investment decisions with an ounce of caution.

The Future of Tectonic Crypto

Tectonic Crypto is a well-designed platform in the crypto market, and its design and functionality have continued evolving since its development. One of the planned updates for Tectonic is the creation of an insurance fund that will be sourced from the interest that borrowers pay. Specifically, 10% of that interest will be collected, and will serve as financial protection in the event that some of the loans aren’t liquidated properly.

In addition, developers are currently working on creating and launching a staking mechanism designed for TONIC token holders to earn rewards. This aspect of the platform’s design encourages users to maintain their holdings, which in turn supports a larger liquidity pool. These are only some of the many planned developments for Tectonic.

The collateral factor for borrowing liquidity from the Tectonic pool will also be updated in the near future. Specifically, the parameters and ratios for the collateral factor are currently managed by the platform’s team. In the future, they’ll be regulated via community governance processes. Tectonic’s developers continue to consult with their stakeholders and community to identify new opportunities for growth and improvement.

Closing Thoughts

While Tectonic is a relatively new crypto platform, it has been well-designed with security and utility in mind. It offers users passive income and the ability to borrow crypto assets instantly. With its many current features and planned developments, it’s a platform with tremendous current and future potential as well as some risk.