In this edition, we’re briefing you on Tenet.
Tenet is a Layer-1 blockchain, which allows the issuing of the $LSDC stablecoin via restaking pre-existing LSTs. Keep reading to learn more about the mechanism behind the protocol, $TENET tokenomics, and how to qualify for allocated airdrop rewards…
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Background on Tenet
Tenet Protocol is a new blockchain based on Cosmos SDK with a unique consensus mechanism dubbed Diversified Proof of Stake (DiPoS).
This concept utilizes a basket of LSDs to enhance network security, reduce the risk of network attacks, and provide an additional opportunity for yield.
The protocol focuses on Liquid Staked Tokens (LSTs) and their utility.
The project essentially allows other network’s LSDs to be restaked, on Tenet.
This secures Tenet and also enables governance participation for the restakers.
In return, users receive Tenet LSDs, which can be used in the LSD DeFi space, particularly as collateral for an over-collateralized stablecoin, $LSDC.
Tenet's name reflects its principles and is a nod to Christopher Nolan's movie, under the same name.
The protocol aims to create a better stablecoin from a layer-1 perspective.
Tenet's Layer-1 Innovations and DeFi Integration Strategies
Gareth, DeFi Architect at Tenet, explains that Tenet functions more as a 'dApp chain' focused on specific use cases rather than competing with Ethereum or other layer-2s.
The layer-1 framework allows for a diverse range of assets to secure the network and participate in governance, creating a more inclusive and secure environment.’'
Gareth sees governance issues in the two categories of existing stablecoins.
The approach taken by Tenet leverages the governance layer of layer-1 for the stablecoin, allows for adaptability and evolution with the DeFi space.
Initially, the Tenet team will select the first batch of Liquid Staking Derivatives (LSDs) for staking and governance weight on the Tenet network during the beta mainnet phase.
But in the future, adding new LSDs for staking will be permissionless through governance proposals, which the network's stakeholders will vote on.
Governance in the Tenet ecosystem operates on two levels: chain-level and incentive distribution.
Chain-level governance votes on chain upgrades and protocol updates
Incentive distribution through gauge voting decides on the allocation of rewards within the ecosystem.
Governance separates from incentivization, with veTENET holders having a significant role in deciding where rewards are distributed, including third-party protocols and liquidity provision across various networks.
$LSDC is an over-collateralized stablecoin mintable against stake positions.
LSDs can be leveraged to mint $LSDC, using a 'clip' system for collateral, which earns yield on the staked LSD and compounds Tenet rewards, increasing the collateralization ratio.
This is a unique aspect of the layer-1, with it’s focus on yield-bearing collateral and governance.
There is also the upcoming introduction of meta LSD, aimed at reducing liquidity fragmentation and risk by offering a diversified basket of LSDs from different issuers.
These 'meta' assets will be adopted across the DeFi ecosystem, providing a more stable and diversified investment vehicle.
Anze understands the cross-chain strategy implied, seeing the potential for integrating liquidity from other chains into the Cosmos ecosystem, providing users on the Tenet chain with reduced risk exposure through these basket assets.
There is a lot of potential of LSDs in the multi-billion dollar industry, with more opportunities for growth as more assets become liquid.
The Tenet team stresses the importance of integrating yield into everyday DeFi operations to provide users with the best possible financial outcomes.
DeFi's Future & LSD Category: Tenet's Role and UX Focus
DeFi has evolved, shifting from initial yield farming practices, which didn't provide real value, to a focus on protocols generating actual Ethereum yield for users.
LSDs have emerged as a way to offer a 'risk-free' rate of return to users by staking assets to secure networks.
LSDs form a key segment within the trend toward real yield, and growth is anticipated in the LSD market.
Even if the market does not grow, the majority of existing LSDs remain untapped and present a substantial opportunity for platforms like Tenet.
Tenet aims to be a central player in this space, not competing with LSD issuers but benefiting from a diverse range of issuers. He says a broader vision where Tenet could extend into collateralizing yield-generating RWAs, not just limiting itself to LSDs.
Despite market cycles, there is still a positive trend in building and adoption within the crypto space. User experience (UX) plays a massive role in mass adoption.
While the current poor UX can be navigated by experts, it's a significant barrier for general users.
To tackle this, Tenet focuses on simplifying complex protocols on the Tenet side, making them user-friendly, especially for retail investors.
Tenet UX
Tenet is making efforts to streamline the process of investing in Ethereum through staking and restaking, using a user-centric design for their Tenet dashboard, which he refers to as a super app. He explains the goal to eliminate technical barriers and facilitate seamless transactions for users, aiming for just a few clicks to perform complex DeFi operations.
Tenet is currently live on the mainnet, focusing on integrations and preparing for the restaking of LSDs.
They are undergoing auditing, and updating their website, branding, and documentation.
They will launch their new website and provide a development update the next day, outlining the progress and next stages for Tenet.
Gareth recommends following Tenet on Twitter for updates and joining their public Telegram chat for direct communication and support, noting that he and the team members frequently engage with the community there.
$TENET Tokenomics
The Layer-1 actually implements veTokenomics, with those who lock $TENET for veTENET being able to decide the distribution of rewards.
Locked veTENET will also be given out to partnering LSD protocols, encouraging further restaking.
Here is the tokenomics split for the $TENET token:
Block Rewards & veTokenomics - 30%
Block rewards are the crucial component of the Tenet Layer-1, and veTENET is used to decide the flow of these rewards.
Team - 10%
The team allocation includes a 12-month cliff and a 20-month vesting schedule.
Treasury - 15%
The treasury is reserved for acquisitions, incentives, and fundraising, unlocking over 15 months.
Public Sale & KOLs - 10%
10% of this 10% supply is unlocked upfront, with the rest being subject to a 3 month cliff and 20-month linear vesting.
Advisors & Consultants - 6%
This allocation is subject to the same terms as the team’s.
Grants & Ecosystem Development - 10%
These tokens unlock over 28 months. Grants include $TENET, reimbursed tokens, stablecoins, vested veTENET, and even perpetual veTENET.
Liquidity & Market Making - 5%
This allocation aims to provide traders on both centralized and decentralized platforms with sufficient liquidity for trading. The tokens follow a partial release at TGE with the remaining supply unfolding over 15 months.
Marketing & Partnerships - 5%
Tokens are released in phases over 28 months. In the future, marketing and partnership allocations may come with lock-up stipulations.
Airdrops - 4%
The airdrop allocation will be released over 28 months.
Reserve - 5%
Reserves are released over 28 months.
How to Participate and Earn $TENET Airdrop?
During the initial launch of Tenet via season 1, emphasis will be placed on getting users to restake early. This makes sense as it is the key differentiating factor of the Layer-1. Early stakers will be rewarded with additional yield, which comes from the 4% of $TENET supply dedicated to airdrops.
The team has specifically outlined several key actions that users can take to qualify for their incentives program, dubbed ‘Tenet Drop‘:
Bridging to Tenet via LayerZero
Staking TENET on Eva Staking
Holding Tenet Scanner NFTs
Testing LSDC on our current testnet
Participating in our public testnet campaign
Providing liquidity on Maverick Protocol
Bonding and swapping on Tendieswap
Bridging NFTs using Merkly
Minting Tenet Troopers on Mercle
among others
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