What is Hourglass?
Hourglass is a protocol that facilitates liquidity for time-locked and semi-fungible assets. The protocol supports these primary user bases today:
Frax and Convex Liquidity Providers
Frax gauges require users to lock their tokens for variable periods of time, forcing them into an illiquid and non-transferrable position on their staked assets in exchange for time-boosted yield. Hourglass bypasses this restriction by minting time-bound tokens (TBTs) when users deposit assets through the staking interface, eliminating the tradeoff between liquidity and opportunity that users previously faced when yield farming with Frax.
Put another way—prior to Hourglass, users who wanted to maximize their yield by staking in some of the most popular Frax pools on Convex, like the frxETH / ETH pool, had to suffer through long term locks on their invested capital. Now, they can stake into the same pool through Hourglass and receive a liquid wrapper, tradable anytime on the Hourglass Marketplace.
Web3 Protocols and DAOs
Almost every protocol or DAO in the web3 ecosystem could benefit from incentivizing locked liquidity. Here are a few examples of how incentives like governance tokens, revenue sharing, or anything else, can contribute to powerful and lasting network effects:
DEXs can incentivize time-locked liquidity providers to improve the UX for their traders and loyal LPs, and bolster their long-term composability with money markets and aggregators
Lending Markets can incentivize time-locked lending liquidity to reliably keep borrow rates low and encourage usage
Stablecoins can incentivize time-locked liquidity to prevent depegs (locked liquidity can't be sold in a bank run)
Asset Managers like banks can use locked liquidity (a.k.a. certificates of deposit) to align terms on their assets/liabilities and prevent bank runs
Liquid Staking Protocols can incentivize time-locked liquidity to guarantee LST composability, book revenue, and minimize user churn (withdrawals)
L1s, L2s, and bridges can incentivize locked liquidity to bootstrap usage and network effects in their application ecosystems
Insurance protocols can incentivize locked liquidity to create systematic guarantees about coverage on long-term liability
Please reach out to developers of the Hourglass protocol on Discord if you're a reader who works with DAOs, protocols, or companies that could benefit from the above paradigm.
Protocol Overview
The Hourglass protocol is comprised of two core components:
A staking interface where users can stake assets in exchange for time-bound tokens (TBTs) which represent ownership shares of a time-locked vault earning boosted yield
An order book style marketplace for buying and selling TBTs
But first, what exactly are time-bound tokens?
Time-Bound Tokens
Time-bound tokens are a fast growing asset class of liquid wrappers for tokens staked in DeFi protocols that are committed for a period of time.
At a high level, most crypto protocols are composed of multiple network participants, such as liquidity providers, traders, and stakers. These protocols value long-term participation, and providing boosted rewards for their committed users is a good incentive mechanism.
Time-bound tokens are the "receipts" that a user receives once committing to a protocol. For example, if Alice holds 10 Frax Ether (frxETH), and she stakes it into the Frax protocol for one month, she would receive back time-bound tokens (TBTs) worth approximately 10 frxETH (plus her expected rewards). Frax now has guaranteed liquidity in its frxETH product for the next month, and Alice gets extra rewards, and can transact with her position's value! Everyone is happy. Additional motivation, details, and examples can be found below.
Hourglass Staking
Hourglass' first component is a dashboard that issues time-bound tokens on top of lockup staking vaults. Users can access it here, and it currently supports the Frax and Convex ecosystems. Other protocols interested in implementing their own time-boosted staking program can reach out on Twitter, or wait until the permissionless Hourglass protocol development guide is released. User guides for the staking app can be found below.
Liquidity and composability for these time-bound tokens can be found on the Hourglass marketplace.
Hourglass Marketplace
DeFi’s largest apps, Uniswap and Aave, have enjoyed widespread adoption for their permissionless liquidity and lending of largely fungible tokens. These protocols have built incredibly simple, elegant solutions by pooling tokens together and calculating a heuristic on the pooled amount.
This strategy doesn't work well for time-bound tokens because they cannot be pooled together. Time is non-fungible, or more precisely semi-fungible (it can be approximately but not exactly aggregated).
Hourglass solves this problem by implementing a simple RFQ marketplace where users leverage cryptographic signatures to buy or sell their time-bound tokens. The market can be accessed here, and tutorials are shown later in the docs.
Further Reading
Hourglass, like all open source software that engages with tokens, comes with its own set of risks which should be fully understood before leveraging any of the features outlined above. Moreover, Hourglass is not available for use in certain jurisdictions—please see our Terms and Conditions.
Looking for pitchFXS and Governance Related Tools?
All of the original governance related material is still available on the Pitch site, and documentation can be found in the link below.
Questions? Feedback?
Get in touch with us at research@pitch.foundation.
All Content in these Documents are information of a general nature and do not address the circumstances of any particular individual or entity. Nothing in these Documents constitute professional and/or financial advice, nor does any information therein constitute a comprehensive or complete statement of the matters discussed or the law relating thereto.
There are risks associated with investing in cryptocurrencies and participating in decentralized governance. Hourglass encourages all interested parties to undertake appropriate precautions before making any investments or participating in governance measures. Please see our user agreement before engaging with the protocol.
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