Credit to @scratchingthesarcophagus for this!
Tomb Finance FAQ
This may be very different from your experience at other farms, where you may be expecting the yield token to go UP in value. After all, TOMB is a token that is designed to (at the current moment) go down in price! So, this is your place to get direct answers to direct questions!
Let's start with a few of the most common head-scratchers.
#1 Question: Why would someone buy TOMB when it is above peg if it is specifically designed to meet the price of FTM, which is currently lower than TOMB’s?
#1 Answer: There are multiple approaches, but one angle is that those who enter the TOMB-FTM LP pool are betting that, in the medium to long term, the high APR will outpace inflation and impermanent loss. In other words, they are betting they will get more Tshare regardless of the LP price volatility than they would by just buying it at market price.
#2 Question: If TOMB has been built to meet the price of FTM, why isn’t it going down in a straight line?
#2 Answer: Those who buy TOMB to participate in the TOMB-FTM pool are placing buying pressure on TOMB, which can sometimes exceed the inflationary pressure. That’s why on some days the price of Tomb can actually be higher than the day before.
#3 Question: Why is there such crazy volatility even for the Tshare price? Isn’t it just TOMB that is engineered to go down in price?
#3 Answer: At present, the price of Tshare is largely dependent on speculative future value (what returns it will produce when staked), and therefore is directly influenced by the price of TOMB. The higher the price of TOMB, the more valuable Tshare is in the short term because the inflationary rewards have a higher dollar value. Therefore, the day-to-day volatility of TOMB will also likely have an effect on the price of TShare.
#4 Question: How can I figure out what my future TOMB rewards will be from the Masonry?
#4 Answer: Simplified example: say you have 1 Tshare staked out of 10 total Tshares staked in Masonry, so you will get 10% of the total Tomb emissions. If the Tomb circulating supply is 10,000 TOMB, and the current emission is 4%, then 400 TOMB will get printed, of which you will get 10%, giving you 40 TOMB for that particular epoch
#5 Question: Once Tbonds are emitted, does the Masonry stop printing TOMB until we are above peg again?
#5 Answer: Staking TShares will give you TOMB rewards when the price of TOMB is above the peg (FTM), but not when it is under the peg. Depending on the price of TOMB today, this could mean staking TShare will not print you any TOMB rewards.
#6 Question: There's so many autocompounding vaults, what the hell should I do!
#6 Answer: If you are in a TOMB-FTM LP autocompounding vault like Beefy, you are helping yourself because you create buy pressure on TOMB. If you are in a TSHARE-FTM LP autocompounding vault and you also hold Tshare elsewhere, the autocompounding vault will be suppressing its price since it is continuously selling Tshare. Every action has an equal and opposite reaciton, so DYOR. "
#7 Question (credit to @The Unified Theory): What is SEIGNIORAGE and how does it work?
#7 Answer: Seigniorage, as it relates to this project, is a method of using inflation and deflation to peg a currency - in this case $TOMB - to another asset. While the word seigniorage is unfamiliar to many people, there are actually many crypto projects that employ this mechanism.
The first, and probably most well-known is Ampleforth. Their “rebase” function automatically mints and distributes more $AMPL tokens to holders during times that $AMPL’s price is above peg, and automatically burns tokens when the price dips below peg.
$TOMB is similar in this regard. When the value of $TOMB is above its peg of 1 $FTM, new tokens are minted and distributed to everyone who has $TSHARES staked in the Masonry. This minting of new tokens is inflationary, and over time, as more tokens are created, the value of the tokens is driven down closer to the 1 $FTM peg.
When the price of $TOMB dips below the peg, the Masonry stops printing new $TOMB tokens, and the deflationary mechanism kicks in. While $TOMB is under peg, $TOMB holders are given the option to exchange $TOMB for $TBOND in the Pit. Doing so burns the exchanged $TOMB, reducing the total supply, and, over time, helps drive the price back up.
The main difference between tomb.finance and rebasing tokens like Ampleforth is that while rebases create inflation and deflation automatically via a set algorithm, $TOMB’s inflation and deflation is created in response to the choices of individual market participants. There are incentives built into the protocol that help to guide macro behaviors, but individual participants may employ different strategies at different time as they seek to optimize their yield. How you choose to manage your farms is up to you - there are opportunities to earn money in every scenario - and finding the best allocation among the various pools for your $TOMB, $TSHARE, and $TBOND holdings is critical to maximizing your profits.
#8 Question (thanks to @The Unified Theory ): Can something like what happened to Iron.finance happen to $TOMB?
#8 Answer: No. What happened to Iron.finance, as far as we can tell, was something called an “oracle exploit”. Since Iron was partially collateralized, it employed an oracle to monitor the value of its collateral and mint/burn $TITAN and $STEEL tokens in the proper ratio to maintain its peg.
The oracle exploit created a scenario where prices were being reported incorrectly, allowing $TITAN and $STEEL tokens to be minted for much less than it should have cost. Once people became aware that they were able to mint tokens for less than they could sell them for, many people raced to mint as many tokens as they could as quickly as they could and dump them on the open market for profit (a process known as arbitrage). This created a sort of “digital bank run”, as people sought to profit off this data discrepancy.
Since $TOMB is not collateralized, it does not employ an oracle, thereby making it completely impossible for this type of exploit to occur within the protocol.
#9 Question (thanks to @The Unified Theory ): How do the auto-compounding vaults on beefy.finance and reaper.farm work?
#9 Answer: Staking either $TOMB/$FTM or $TSHARE/$FTM LPs in these vaults rewards you with more of the same LP tokens that you have deposited.
They deposit your LP tokens in the same yield farms that are available to everyone on tomb.finance, and then, every 20 minutes, they harvest the $TSHARE that you’ve earned, sell a portion of if, use the proceeds to mint more LP tokens on SpookySwap, and deposit those LP tokens back into the tomb.finance pools, adding to your allocation. (You can actually do this yourself if you prefer not to have to pay fees to beefy/reaper; it’s simply a service offered as a time-saver for those that don’t want the hassle of going through the whole process themselves every 20 minutes.)
Note on the tokenomics of auto-compounding:
Both the $TSHARE/FTM LP and the $TOMB/$FTM LP pools pay rewards in $TSHARE:
If you’re in the $TSHARE/$FTM pool, 50% of your $TSHARE rewards are sold for $FTM each time the protocol auto-compounds.
If you’re in the $TOMB/$FTM pool, 100% of your reward is sold and used to purchase half $TOMB and half $FTM each time.
It is for this reason that many people consider auto-compounding $TSHARE/$FTM LPs to be a bad strategy, since you are essentially dumping on yourself every time the protocol auto-compounds.
#10 Question: If $TOMB is designed to peg 1:1 with $FTM, isn't it a bad idea to buy it while it's above peg?
#10 Answer: All yield farming tokens are inflationary. This means that every one of them is having their value slowly but surely eroded as the supply is increased.
$TOMB's value is also being pushed down by inflation; this is by design. What sets $TOMB apart from other inflationary tokens, however is the fact that $TOMB is designed to have a clear bottom; when $TOMB dips below its peg of 1 $FTM, mechanisms and incentives kick in that help drive the value of $TSHARE back up - something that most inflationary tokens aren't able to do.
Depending on what type of investor you are, you may choose to avoid any and all inflationary tokens, but avoiding $TOMB because it's "designed to go down", while investing in other projects that are also, technically, designed to go down (but that aren't transparent about that fact) is, in my opinion, somewhat irrational.
$TOMB's built-in bottom, combined with the planned usecases for the token that are sure to drive buy pressure (FTMpad, others TBA) could easily create an environment in which a token that's "designed to go down" actually does just the opposite.
#11 Question: I bought TOMB/TShare 3 minutes ago/yesterday/last week and now its market price is less than what I bought it for. How could this be!?
#11 Answer: "What things cost under earlier conditions is history; what the supply and demand are today is economics." -Thomas Sowell, Basic Economics: A Citizen's Guide to the Economy
#12 Question: What's the point of having a token that's pegged to the price of Fantom? Why wouldn't I just use $FTM?
#12 Answer (courtesy of @SaintG | Financially Tombed):
An algorithmic stablecoin pegged to Fantom can help alleviate a lot of the liquidity issues we've been experiencing on the Fantom network.
The Fantom Opera Network relies on Fantom to be staked and locked up in order to run its nodes securely and fast. This was the one of the biggest reasons there were issues recently when $FTM pumped to around $0.90 - there were millions of people trying to purchase $FTM from exchanges, but since there wasn't an adequate amount of Opera-native $FTM available, we ran into bottlenecks. Binance had to temporarily close their $FTM bridge and limit withdrawals of Opera-native $FTM due to the lack of liquidity.
If Tomb accomplishes what it is designed to do and pegs to $FTM's value, this will give people the opportunity to have a liquid asset that they can move and transact with freely while still benefitting from FTM's price as it rises.
Moreover, the tomb.finance team is building platforms that will offer unique usecases for the $TOMB token. The first project being developed is a new launchpad/incubator on the Fantom network, with more projects and usecases planned to be announced in the future.
#13 Question (thanks to @The Undertaker for leading by example): I'm invested in the project for the long term, and I feel guilty taking profits. Am I still a team player if I move profits somewhere outside of the project?
#13 Answer: Never put all your funds in one basket, even if it's TOMB. Always take gains along the way. We view it as a success if, over time, everyone gets their initial investment back into their wallets and continues playing with the profits that come after that.
#14 Question: I missed the airdrop, and I wish I could go back in time to qualify for it. What to do?
#14 Answer: Tomb does not retroactively qualify people for airdrops as this impacts the investors who were engaging with the project and qualified when that airdrop took place. Until time travel exists, the best thing to do is keep engaging with the project in an organic way, and the likelihood of your qualifying will increase. We won't announce what to do ahead of time in order to discourage airdrop hunters who detract from the overall growth and success of the project.
#15 Question: What do the different titles mean within the community?
Grave Diggers are the team
Cemetery Keepers are the community moderators
Masons are OGs
Necromancers are Discord sponsors
Senior Zombies are verified people who were eligible for the first airdrop
Zombies are verified people
Bodies are unverified people
#16 Question: What is FTMPad and how will it benefit Tomb investors?
#16 Answer: TLDR: FTMPad is a launchpad/incubator for the hottest new projects on the Fantom network!
As a Tomb investor, you will have the first seat at the table.
Tomb will buy you a seat to buy a certain % of the pre-sale rights, and this TOMB is then burned and removed from circulation.
Then, you use FTM to buy the tokens based on the total allocation you’ve reserved with TOMB.
This effectively means that if you are in masonry printing TOMB, you’re getting a free seat to all the newest projects on FTM because you’re printing the same TOMB others will have to buy to get involved with the launchpad.
Additionally, the details haven’t been fully ironed out yet, but there are discussions around having a certain % gain for Tshare stakers that would be airdropped to them as a reward for governance.
#17 Question: What happens if I interact with the Masonry in any way?
#17 Answer: Any interaction with the masonry will reset both timers. That's 3 epochs (18 hours) to withdraw your TOMB rewards, and 6 epochs to unstake your Tshare (36 hours).
#18 Question: Have candidates for the first FTMpad project already been approached, and if so may we know more about what the potential candidates' objectives are in the Fantom ecosystem?
#18 Answer: Yes, the team will pick the first project for our launchpad. After that, governance will decide. We will just be providing possible projects for our pad and we will decide which one to launch based on votes.
As we've seen with 5-6 other launchpads on FTM chain now, they all failed after their first launch. Either due to rugs or mistakes from the teams. We want to make sure we have a 100% smooth launch.
And as we're running a lot of things simultaneously right now we decided to do the first launch ourselves as else we would have to set up the whole governance system as well.
#19 Question: How long will it take for Tshare to pay itself off from $TOMB rewards, based on current prices?
#19 Answer: This will vary constantly as the APR in the masonry fluctuates, along with other variables such as the price of $TOMB. For a quick estimation, however, you can do the following:
- Take the total APR shown in the masonry, and divide that by 365 to get the daily APR. (In this example, we will say the daily APR is 5%.)
- Multiply that daily APR by the current market price of the total Tshare you have staked to see what your daily rewards are.(In this example, we have 5 Tshares, each worth $500, for a total amount staked of $2500. Your daily return is $2500 * .05, which comes out to $125/day.)
- Take your initial buy-in price for Tshares, and divide it by your daily rewards. If you bought these 5 Tshares at a higher price of $700, for example, in the current market conditions you will recover your initial investment ($3500) in 3500/125 = 28 days.
#20 Question: Is there a tax or gatekeeper fee for swapping Tomb for TBonds when it is under peg?
#20 Answer: There is no tax when swapping Tomb for Tbonds.
#21 Question: What is an expansionary epoch?
#21 Answer: An expansionary epoch is the amount of TOMB that is printed by Tshares and entered into the total circulating supply.
To simplify the explanation with a hypothetical example, let’s say an epoch is 3 days long and there are $100 dollars in the circulating supply. If the money printer grows the supply by 10% of the existing circulating supply each day, at the end of the 3 days you'd have 1001.111.1*1.1 = $133.
Then, let’s say the emissions decrease to 5% per day. You’d then have have $133 *1.05 *1.05 *1.05 = $153 at the end of this second epoch.
#22 Question: How much of Tomb's circulating supply will the Masonry print next epoch?
If Tomb circulating supply <5M, then 2.5% expansion per epoch
If Tomb circulating supply <10M, then 2% expansion per epoch
If Tomb circulating supply <20M, then 1.5% expansion per epoch
If Tomb circulating supply <50M, then 1.25% expansion per epoch
If Tomb circulating supply >50M, then 1% expansion per epoch
#23 Question: Where can I get the most accurate price feed for Tomb and Tshare?
#23 Answer: The most reliable place is the tomb.finance website itself!
#24 Question: Are there liquidity issues? I'm trying to sell $TOMB and the transaction isn't going through.
#24 Answer: If TOMB is near peg, check the gatekeeper tax/fee and make sure to adjust the slippage accordingly.
#25 Question: What is this gatekeeper everyone is talking about? Where can I find more information?
Check out @CryptoSphinx explanation here and here!