Disclaimer: This article is for informational purposes only and is not legal, business, investment. Do not base investment decisions on it, nor consider it as accounting, legal, or tax guidance. Mention of specific assets or securities are examples and not endorsements. The author’s views may not reflect those of any affiliations and are subject to change without update.

“Like Uniswap, but for lending and borrowing” ; that describes exactly what the protocol is.

Similar to Uniswap, Timeswap can be regarded as an infrastructure that allows many protocols to be build on top of it - lego effect -

The synergy between protocols is a notable innovation in DEFi compare to TradFi, creating amazing opportunities to enhance capital efficiency while providing attractive source of yield for investors

This article explores various synergies I have think about, that can bring increased yield and efficiency to Timeswap users

Let’s deep dive into this subject, in this way :

• 1 - Quick introduction to Timeswap

• 2 - Synergy 1, enable yield leverage

• 3 - Synergy 2, bring sustainable and boost yield for LPs

• 4 - Synergy 3, delegate optimized yield management

• 5 - Conclusion

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1 -Quick introduction to Timeswap

TLDR, I will present it in a straightforward and concise manner.

Timeswap is zero liquidation money market and a fixed time preference protocol where:

• lenders earn fixed income

• borrowers leverage tokens against other tokens without any liquidation risk

• LPs act as the counterparty to both lenders and borrowers ; they’re the MM of the pools

It’s designed to work without oracles, fully flexible for users, is capital efficient, permissionless to use and game theoretically sound in any state of the market

Anyone can create a pool by setting up the initial APR, strike price and the maturity date. User activity within the pool will dynamically adjust the APR and CDP, incentivizing users to rebalance the pools

All AMMs are in fact an option market, and the rule doesn’t fail to Timeswap. The bidirectional of the pools allows Timeswap to manage arbitrages’ opportunities to ensure that the pools are always overcollateralized. Everything is handle in the backend - easy to use for users

Timeswap becomes the fundamental time preference primitive lego to build exotic and interesting DeFi products that need fixed period preference

An easy way to earn high real yield by being fully flexible, and get ultra competitive borrowing rates

If you want to learn more about it, you can read my article where I have covered al these detail in an accurate way

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2 - Synergy 1, enable yield leverage

Volatile yield means arbitrages opportunities and also means hedge and speculation

In the absence of market euphoria or fear, Timeswap's pools have traditionally evolved in the following manner :

This, offer great opportunities to long / short yield

2.1 Timeswap x Pendle

Here is a great thread to understand how Pendle works

What Pendle offers ? 🔸 protection against yield volatility : ❌ useless for TS because yield is already fixed 🔸 leverage your yield : ✅ buy YT token and get leverage if you think that the yield is too low compare to the potential pool utilization 🔸 LPing on YT/PT pool : ✅ 🔸 speculation on yield : ✅ Buy PT_token when you think the yield will 📉 and buy YT_token when you think the yield will 📈

In this way, you can incredibly increase your APR by following this kind of strategy :

🔴 buy PT_token🟢 sell PT_token and buy YT_token🟠 sell YT_token and lend directly on Timeswap

This is a short term optimization, but it can work

Difficulties with this strategy :

• Pendle pools need to be create at the same time than Timeswap pools and enough liquidity have to be deployed quickly

• It seems that Pendle is more suitable for staking strategies, for now

2.2 Timeswap x Timeless

Here is my article about how Timeless works

What Timeless offers ? 🔸 hedge your yield : ❌ useless for TS because yield is already fixed 🔸 speculation on yield : ✅ buy pyt_token when you think the yield will 📈 and buy nyt_token when you think the yield will 📉

Increase your APR :

🔴 buy nyt_token🟢 sell nyt_token and buy pyt_token🟠 sell pyt_token and buy nyt_token🟣 buy xpyt_token

Timeless architecture seems to be more appropriated as you can easily leverage both 'bearish yield' and 'bullish yield', simply by swapping them

Difficulty with this strategy : same than Pendle, about timing & liquidity

2.3 Timeswap x Voltz

Here is a great article about how Voltz works

What Voltz offers ? 🔸 transform variable yield into fixed yield to hedge your investment : ❌ useless for TS because yield is already fixed 🔸 increase yield on your lending : ✅

Voltz in an AMM for interest rates, that can be the secondary market for Timeswap. Pool contains fixed (FR) and variable rate (VR) - FR is determined by the yield in the voltz pool (LP deposit) - VR is determined by the yield available in Timeswap

LPs provide liquidity on both FR and VR and earn trading fees from this pool

So, you can take your lending position, zap it and put it into Voltz’s pool, then earn Timeswap lending fees + Voltz trading fees with no IL (single asset)

Difficulty with this strategy :

• you can earn extra trading fees but lose % of APR if the APR is lower at the maturity

• trading fees need to be high enough to incentive LP

The interest rates market provides a secondary market that presents arbitrage opportunities and the potential for higher yields, which is beneficial for Timeswap as it facilitates the quick stabilization of yields. These strategies will also be applicable when LPing resumes

Recently, ARB/USDC pool on Timeswap have been very volatile and the APR climbed above 90% ;

If you understood how Timeswap works and Timeless’ pools were deployed, you could earn xxxx% APR with this strategy :

Global market started to dump, including $ARB

1. USCD/ARB strike price was 1 ARB = 1,00$

2. So, if the $ARB was above 1,00$ at maturity, it would be better for borrowers to default as $ amount of the loan > $ amountof the collateral. In this case, lenders would have to ensure non profitable liquidations

3. Considering this, if the price of $ARB were to drop near 1.00$, it is expected that many lenders would exit, as Timeswap offers full flexibility. This, in turn, would lead to an increase in the APR.

4. ARB dump and you Long on Timeless by buying pyt_USDC/ARB_Timeswap

5. APR reach 80%, now you sell pyt_USDC/ARB_Timeswap and buy nyt_USDC/ARB_Timeswap because you’re confident on $ARB and yield will return to normal

6. APR return to normal, then you sell nyt_USDC/ARB_Timeswap to buy xpyt_USDC/ARB_Timeswap

Provided that there is sufficient liquidity on Timeless...

This is not a simple task because :

• it adds another smart contract risk

• need to handle the Timeswap' bidirectionality pools

• why not simply lend when APR is high ? => because it's hard to get high APR, it doesn't last long

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3 - Synergy 2, bring sustainable and boost yield for LPs

LPing resumes soon - this last feature is not available yet in the V2 but it's a key component of the AMMLPs improve the depth of liquidity, they earn swap fees and ensure liquidations

LPing can be highly profitable, but it also comes with its challenges. During V1, there were instances where LPing offered attractive APRs of over 100%, but there were also periods when losses occurred due to IL

How? Well, with a low CDP, borrowing in Timeswap was incredibly affordable and served as an effective hedge. Since Timeswap is a non-liquidatable protocol, you have the option to choose whether or not to default based on the price at maturity.

Ex. :I use ARB as collateral to borrow USDC, with a 105% CDP ($ARB = 1,30$)At maturity, $ARB = 1,10$The borrowed USDC exceeds the value of the collateral

Therefore, defaulting in this scenario is the optimal strategy, as LPers ensure the liquidation and incur the loss of the delta resulting from the dump of $ARB

In other word, LPers assume the financial risk of the borrowers

A new trilemma is born with Timeswap ; how to make sure that :

🧠 For lenders : have max flexibility and exit at any moment🧠 For borrowers : no liquidation🧠 For LPs : earn rewards without IL

The V2 of the protocol addresses the concerns of lenders by introducing full flexibility, enabling arbitrage opportunities, and ensuring borrowers do not have to worry about liquidation risks. However, the tradeoff for this enhanced functionality is the requirement for a high CDP. While borrowing rates may be low, a CDP of 160% may still be perceived as unattractive by some

What about the LPs ? Welcome Gammaswap

Timeswap is the infrastructure protocol and Gammaswap the lego protocol that can seamlessly be integrate with it

Gammaswap creates a new market where you can :

🔸 Short volatility by being short_gamma : you can provide liquidity as you normally do in AMMs to earn trading fees + borrowing fees from GS_poolsSimply word : you earn basic yield + extra yield

🔹 Long volatility by being long_gamma :that means you borrow the GS_LP token deposited by the Short gammaWhen the borrower repays, he receives the collateral + impermanent gain - borrowing fees

IG depends on the LP position in the underlaying AMMIf the lender suffers from IL, borrower benefits from it because he has to repay less as the position decreases because of the IL : we called it IGInversely if there is no IL, the borrower has to pay fees earned by the lender

It can be use on top on DEXes already existing to ;- increase capital efficiency- improve price discovery- create a new source of real yield

Gammaswap technology is ultra scalable :

• Swap AMM like Uniswap

• NFT AMM like Sudoswap

• Option AMM like Rysk

• Lending borrowing AMM like Timeswap

Do you want more detail about GSwap ? Here, you will find a great analysis

So, Timeswap needs a solution to protect LPs from IL and Gammaswap allows to boost LPs’ yield. Let's see how these 2 protocols can work synergistically

Ex. DAI/ARB pool

1) LPers can go directly on GSwap and mint a GS_Timeswap_DAI/ARB position2) In the backend, GSwap deposit the LP into TSwap 3) In this way, users can borrow these liquidities to Short / Long / Straddle with leverage thanks to the simplified GSwap's interface 4) LPers are lenders on GSwap and earn base fees from TSwap + borrowing fees from GSwap

This is not a perfect solution to avoid IL, but it can compensate it

With this synergy, you will be able to leverage assets used for lending / borrowing, making the capital efficiency 📈 and the yield 📈

It could help to solve the Timeswap's trilemma !

However, this is not a simple task because :

• Bidirectionnality of the pools must be taken into consideration

• TSwap pools are not perpetual, it will require to manage repayment at maturity

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4 - Synergy 3, delegate optimized yield management

You only have 5 pools in Timeswap today, but not everybody want neither have time to monitor witch pool has the best yield and how to optimize the yield

That is why Timeswap’s optimized yield management is something I hope to see in the near future

Let’s see in this order :4.1) Optimization and leverage with Timeswap4.2) ALPHA : how I got 158,27% on USDC4.3) InstaDpp use case

4.1) Optimization and leverage with Timeswap

The protocol have 4 active pools on Arbitrum today :

Let’s imagine you have plenty of gDAI earning fees from Gains Network and you want to leverage your yield

You could use Timeswap to borrow some DAI at a significantly low CDP and quite low APR, then swap your DAI for USDC and lend them on USDC/ARB and USDC/plsARB pool - you will earn 13% extra real yield

With numbers (hypothetical example) : I have 20000 gDAI earning 9% APR on Gains Network for 1 year I borrow with Timeswap at max CDP (105%) as I don’t have to worry about liquidation - the maturity date is also one year away The amount borrow is 19000 DAI with 7,5% interest rate I swap 19k DAI for 19k USDC Then I use it to lend in others pools where you can easily have 25% APR

amount earn with Gains : 1800$ interest paid : 1425$ amount earn with Timeswap : 4750$ total earned = 5125$ APR = 25,6%

Fine. But, why do all of that for +0,60% ?

APR are ALWAYS moving on Timeswap, sometime double or triple, sometimes go near to 0,50%

Imagine, interest rate of DAI dump until 2%, you could repay all your loan and borrow again at the lower cost

Moreover, by consistently monitoring the APR like I did, you can readily seize opportunities and effortlessly capture 35-40% APR returns

4.2) ALPHA : how I got 158,27% on USDC

I’m going to explain a hidden gem strategy that allowed me to earn 3 digit APR on a single stableBefore reading this, you should have to perfectly understand how Timeswap works.I had this idea the 25 April by understand this :

• You don't need to worry about missing out on lucrative lending opportunities. When you come across a 30% APR, simply jump in, and if you're fortunate enough to encounter a 75% APR later on, you can withdraw your previous position and lend again for a more attractive interest rate

• As LPs are not yet available, lenders bear the responsibility of liquidation based on their pool share and the percentage of CDP their lending position covers

Then, I had the idea to “hunt liquidation”

During the period when no pools were reaching maturity, I was lending on the USDC/plsARB and USDC/ARB pools.However, when the USDC/plsARB pool reached its maturity date on May 14th, I made the decision to lend all my USDC just a few hours before the maturity. This turned out to be a highly profitable move, as I received a substantial amount of plsARB due to numerous liquidations that occurred when plsARB dumped, because the strike price was at 0,70$ so the CDP was super high

Then, the 15th May I lent all my USDC into the USDC/ARB few hours before the maturity and received great amount of USDC that correspond to liquidations

I’m now lending for 35% in several pools, waiting for the next opportunity

plsARB is not liquid yet! But if I send them for 1,15$, the APR received during this period is 158,27% !!

If you’re not comfortable with the collateral asset, withdraw before the maturity

I’m not chilling my strategy everywhere, just want to give alpha for people who read my article :) Imagine how degen this strategy will be if there were 15 pools available on Timeswap …

4.3) InstaDapp use case

InstaDapp is a great example in this context, as it offers a remarkably user-friendly platform for investing in advanced DeFi products. Other protocols are maybe more suitable such as Defi Saver but no matter, it’s just for an example purposes only

With all what we discussed above, you notice that there are many opportunities to improve yield and users experience on DEFi

Imagine if the Dapp creates 2 vaults, base on your risk-preferences :

1st vault : Wise You deposit USDC into the vaultThen your stables are automatically used where it is most neededIn this way, you don’t have to think about maturity date and neither take time to jump on high yield opportunitiesThis implies that the vault have to ensure moving funds from a pool to another one will not create a too high price impactIt's close to the idea of CLMM on Uni_v3 = concentrate the liquidity where there is the highest demand, thereby enhancing the capital efficiency of Timeswap once again

2nd vault : DegenYou deposit USDC and your favorite alts (it can be WETH and ARB)Then the vault manage leverage with your alts as collateral and use the USDC to both hunt hight yield and liquidationsThis solution offers significant profit potential, and its profitability will further increase as Timeswap continues to onboard new pools

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5 - Conclusion

The success of a protocol depends on its integration and partnerships. Nobody growth alone.

Timeswap perfectly understand it by replicating an existing solution but in a new market and improve it to make it more suitable

Permissionless pools, easy to use for passive DEFiers with a yield that can be incredibly boosted for degen DEFiers ; that’s a key for adoption

Yield speculative protocols, protocols that allow you to buy volatility or turnkey vaults with sophisticated strategies are the examples I have think about when I used Timeswap in a more in-depth way.

No doubt I will be surprise by the others ideas crypto degen will have, no doubt

I hope you enjoy it fren, see you soon