Unleashing liquidity
for Tao

TaoBank is a decentralized borrowing protocol that allows you to draw interest-free loans against $wTAO used as collateral. Loans are facilitated in $taoUSD (a low-volatility stablecoin soft-pegged to the US dollar) and need to maintain an overcollateralized ratio. TaoBank as a protocol is non-custodial, immutable, and governance-free. Learn more in our documentation

TaoBank was born as a response to the call for asset holders in the Bittensor community to unlock liquidity for their $TAO tokens without necessarily selling them. Their need for DeFI products and solutions around $TAO is the overarching inspiration behind TaoBank

In order to interact with TaoBank protocol, you simply supply your $TAO ($wTAO) and amount. After supplying, you can borrow against your supplied $wTAO up to 60% LTV

Interacting with the protocol requires transactions and so transaction fees for Ethereum Blockchain usage, which depend on the network status and transaction complexity.

Your collateral is kept in the vault. The Vault maintains two balances: one is the asset ($wTAO tokens) acting as collateral and the other is a debt denominated in $taoUSD.

No platform can be considered entirely risk free. The risks related to the TaoBank platform are the smart contract risk (risk of a bug within the protocol code) and liquidation risk (risk on the collateral liquidation process). Every possible step has been taken to minimise the risk as much as possible-- the protocol code is public and open source. Additionally, TaoBank will launch a bug bounty campaign.

$TBNK is used as the centre of gravity of the TaoBank protocol governance. $TBNK is used to vote and decide on the outcome of the protocol. Apart from this, $TBNK can be staked within the protocol to provide security to the protocol/suppliers. Stakers will earn staking rewards and fees from the protocol. Documentation on tokenomics and governance is available in the documentation If you are unsure about any specific terms feel free to ask any team member or moderator in the community chats

Redemption is an action of depositing $taoUSD into the Vaults of other users and withdrawing the equivalent value of collateral. Redemptions take place when a profit can be made by buying $taoUSD below peg to acquire collateral at $1 per $taoUSD. When $taoUSD is redeemed for $wTAO, the system cancels the $taoUSD debt from Vaults, and the collateral asset is drawn from their collateral. Protocol owned whitelisted addresses execute redemptions to prevent any exit of funds from the protocol. Profits from redemptions will be used to increase the liquidity for $TBANK and $taoUSD.

In case of liquidations, Vaults are offered on a Dutch auction where bidders can buy the collateral assets for $taoUSD. The initial price of the Vault is set to the value of the collateral. Then, the price gradually drops over the specified time period (voted via governance), enabling the bidders to realize an immediate arbitrage gain as the value of the Vault debt is usually expected to be lower than the value of the collateral assets. If there are no bidders during the Dutch Auction, the auction is canceled and the liquidation is handled by the protocol.

Feel free to refer to the documentation for a deeper dive into TaoBank mechanisms.