Tetu
Tetu is a decentralized yield farming protocol built on the Polygon network.[1] The Tetu protocol offers multiple strategies for yield farmers to earn high and consistent DeFi returns with minimal risk.
Brief History
Tetu was launched on the 3rd of August 2021. Vsevolod Grigorovich, also known as belbix, co-founded the project as the leading smart contract developer. He quit his job to focus on the DeFi ecosystem, played a core role in developing the Harvest Finance community in 2020, and went further to lay the foundation for the Tetu innovation.
Using his technical skills and in-depth knowledge of DeFi, belbix collaborated with several other DeFi advocates to create the Tetu protocol. Some technical attributes of the Synthetix and Yearn protocols inspired the development of the Tetu protocol. Eventually, Tetu was launched in 2021, and its tokens were distributed to users through yield farming without hosting a presale or involving VCs.
Design and Usage
Tetu has a standard vault and a compound vault. The standard vault earns basic rewards for users, while the compound vaults improve rewards for yield farmers by compounding earned tokens and automatically adding yields to the initial stake. Tetu is a decentralized protocol for yield farming, liquid staking, and swapping.
Yield Farming
Tetu’s yield farming framework allows users to earn from every cent. By default, the yield farming system of the protocol distributes rewards in xTETU, which buys back TETU and accumulates interests for investors. Users participate in yield farming by depositing tokens into Tetu’s vaults. Tetu’s vaults optimize returns for yield farmers[2].
Tetu’s Vaults
Tetu vaults are built to provide a regular flow of rewards for volatile assets and higher rewards for stable assets. The regular vault is used by yield farmers who do not want to participate in yield farming with the freedom to unlock assets anytime. The diamond vault is for Tetu’s governance. Rewards from the diamond vaults are larger, and assets stored in the diamond vault are locked for a longer period.
Liquid Staking
Tetu offers the liquid staking option to users. With liquid staking, users can reap the rewards from their locked assets. Tetu has three liquid staking products with varying features and benefits. They are tetuQi, tetuBAL, and tetuMESH.
tetuQi
tetuQi are given to yield farmers who permanently lock Qi in QiDAO. Qi tokens are meant to be locked for four years. However, they automatically get locked again for another four-year cycle when the four-year duration is over. Thus, they are locked forever[3].
Users who deposit Qi in Tetu’s vault get tetuQi tokens in return. tetuQi is equivalent to Qi but can be swapped and sold, while holders get the same benefits of locking Qi permanently. Tetu users can also get tetuQi directly by buying the tokens from TetuSwap.
tetuBAL
tetuBAL is a liquid staking product that provides permanent liquidity on the Balancer platform for users. With tetuBAL, the Tetu protocol (Polygon-based) interacts with the Ethereum blockchain. tetuBAL users are granted governance rights and get more value for dxTETU. The extra rewards given to tetuBAL holders come from Balancer revenue earnings.
tetuMESH
tetuMESH makes participating in MESH staking possible. MESH staking participants get staking rewards and airdrop tokens as incentives. Participants also earn a proportion of the pool’s transaction fees. To get tetuMESH, users lock MESH in the liquidity pool. The MESH to tetuMESH ratio is 1:1, and users can exit the pool by selling their tetuMESH tokens.
Tetu’s Decentralized Exchange
TetuSwap is the decentralized exchange of the protocol. TetuSwap can integrate SmartVaults to SwapPairs, making it different from regular DEXs. Trading fees on TetuSwap (0.1% per transaction) are also relatively lower than the fees on regular DEXs (0.25% - 0.30%). The fees charged from transactions are distributed as rewards to users. Tetu distributes 45% of yield farming rewards to xTETU holders; another 45% is used to acquire protocol-owned liquidity, while the remaining 10% is used for Tetu’s investment fund.
xTETU
The xTETU token is an interest-bearing token given as an incentive to investors in TETU pools. It is the wrapped version of TETU. When users deposit TETU into yield vaults, they get xTETU in return. The quantity of xTETU does not increase, but its relative value with TETU increases over time. Users can convert their xTETU to TETU at any time without being penalized.
dxTETU
dxTETU is the governance token of the TETU ecosystem. When users stake dxTETU, they get higher returns than staking xTETU. The extra incentives dxTETU holders get comes from emission incentives and early exit penalties.
Audits
Certik, PeckShield, and DefiYield audit Tetu. In Tetu’s audit in December 2021, Certik had 13 findings[4]. Four of the findings were classified as minor findings, one medium, three major, and none were classified as critical. Five of the findings were classified as informational. So far, eight of the findings from the audit have been resolved, while Tetu has acknowledged the other five. When audited by PeckShield, no high-risk issues were found. After the second auditing by DefiYield, in the auditing report in 2021, DefiYield stated that the Tetu team had done a lot of work to remove all previously found vulnerabilities, including critical centralization issues, and no suspicious functions were revealed during the auditing process.