rewrite this title Timeswap Releases V3, One Of DeFi’s Most Capital-Efficient Composable Primitives 

by
Alisa Davidson

Published: January 15, 2025 at 4:16 am Updated: January 15, 2025 at 4:16 am

by Ana

Edited and fact-checked:
January 15, 2025 at 4:16 am

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Oracle-less lending and borrowing protocol Timeswap has announced the launch of its V3, designed to become the most capital-efficient, composable primitive in decentralized finance (DeFi). The protocol enables the creation of time-based financial products, including lending, borrowing, yield trading, and options, all leveraging the same underlying liquidity.

One of the key features of Timeswap V3 is unified liquidity across maturities. The protocol consolidates liquidity from multiple timeframes, eliminating the fragmentation common in traditional fixed-term products. For example, instead of maintaining separate pools for different maturities like weekly, monthly, and quarterly, Timeswap V3 integrates these into a single structure. This innovation improves liquidity, reduces slippage, and simplifies asset management for users.

At the core of Timeswap V3 is the Time Bound Token (TBT) protocol, which divides token ownership into specific time periods. This provides precision in yield control, allowing users to own or trade yields for defined durations. It also offers flexibility in strategies, enabling advanced financial approaches such as yield stripping and time-based borrowing. The protocol’s efficiency in market dynamics streamlines trading and liquidity provision by utilizing a unified token structure.

Additionally, the hook architecture in Timeswap V3 enables seamless support for a wide variety of assets, including yield-bearing tokens, governance stripping, and real-world assets like rental agreements. This flexibility encourages innovation, providing developers with the tools to build customized financial solutions on the platform.

Another standout feature is the AMMB liquidity model, which combines the automation of Automated Market Makers (AMMs) with the precision of order books. Liquidity providers (LPs) can set their own interest rate spreads, optimizing returns. LPs distribute their positions across fixed bid/ask interest rates, similar to limit orders, allowing users to transition between time periods with minimal fees and slippage.

Unlike traditional AMMs with fixed or dynamic fees, Timeswap V3 empowers LPs to define their own fees within each pool. This flexibility prevents toxic flows, deepens market liquidity, and aligns with the strategies of LPs.

Potential Practical Applications Of Timeswap V3

One of the key practical applications of Timeswap V3 is in Money Markets. By utilizing concentrated liquidity, V3 aims to be the most capital-efficient money market in DeFi, offering customizable curves for unique assets such as Liquid Staking Tokens (LST), like-to-like assets, and yield-bearing assets. The Hook-based architecture enables seamless integration of various asset types and strategies without requiring custom implementations for each. With V3, it’s also possible to build custom financial products, including liquidations similar to those in traditional money markets.

Additionally, V3 can be applied to yield trading. By leveraging TBT, users can trade future yields at a lower capital cost, enabling them to swap short-term yields for long-term asset control.

Furthermore, at its core, Timeswap’s design mimics an options structure, where lenders effectively sell put options to borrowers. This product and liquidity can be represented via the user interface (UI) as an options exchange, providing detailed information such as Greeks, implied volatility, and option chains.

All three of these applications can be built using unified liquidity, enhancing capital efficiency. Most importantly, with Timeswap V3, the platform is now positioned to directly compete with established protocols like AAVE and MORPHO—something that was previously unfeasible due to the inefficiencies in Timeswap V2.

What Is Timeswap?

Timeswap is the first oracle-less lending and borrowing protocol. By design, all loans on Timeswap are non-liquidatable and fixed-term, eliminating the need for oracles and the risks associated with oracle manipulation, a common issue in DeFi. Timeswap’s independence from oracles enables the creation of lending and borrowing markets for any ERC-20 token. Timeswap is currently live on multiple networks, including Arbitrum, Mantle, Polygon PoS, Polygon zkEVM, and Base.

Its V2 is the first oracle-less lending protocol in DeFi to achieve scale since its launch in February 2023. Since then, the protocol has facilitated over $150 million in transaction volume, serving more than 30,000 users and reaching a peak Total Value Locked (TVL) of $15 million. Timeswap’s objective is to build a protocol that captures the time value of any asset in the most capital-efficient way.

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About The Author

Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

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Alisa Davidson

Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

More articles