I. Introduction

What is Timeswap? Timeswap is an oracleless DeFi lending and borrowing protocol. The interest rate (APR – Annual Percentage Rate) is not determined by a price oracle but by an internal AMM inspired by Uniswap V2 (with a constant product function) adapted to the lending context. Borrowers deposit more collateral than the borrowed amount (over-collateralized). Lenders lend an asset and receive a fixed interest. At maturity, if the borrower does not repay, the collateral is transferred to the lenders and LPs.

Key Points:

• No external oracles: The market determines the rates.
• Permissionless markets: Anyone can create a market for any ERC-20 token.
• Non-liquidatable before maturity: The borrower is not liquidated before maturity. They decide at the end whether to repay or forfeit the collateral.
• Fixed-term positions: Everything is defined when opening the position (rate, maturity).
• Isolated: Each pool is independent.
• Suitable for all types of assets: Even tokens without oracles or price history.

Example: Imagine a pool ETH/USDC with a Transition Price (TP) of 800 USDC per ETH. If ETH is at 1000 USDC, a borrower deposits 1 ETH as collateral and borrows about 800 USDC. At maturity, if the price of ETH has remained above 800 USDC, the borrower has every incentive to repay to retrieve their ETH. If the price has fallen below 800 USDC, they may choose to default, leave the ETH, and keep the borrowed USDC.

II. Key features of Timeswap

• Oracleless: No dependence on a price oracle. Rate formation is internal, via user interaction with the AMM.
• Permissionless: Creation of markets for any ERC-20 token.
• Non-liquidatable: No liquidation before maturity. The borrower decides at the end.
• Fixed-term: The loan has a fixed maturity. The rate is determined at the time of the position.
• Market-driven interest (AMM): Rates result from supply and demand, without historical memory.
• Isolated markets: Each pool is independent, limiting risk contagion.
• Over-collateralized: The borrower deposits more collateral than the borrowed value, ensuring lender security.
• Immutable: Once deployed, a pool cannot be modified. Certain global parameters can evolve via governance ($TIME).

Position Tokens (ERC-1155):

• Lender: Bond Token (BT)
• Borrower: Collateral Claim Token (CCT)
• Liquidity Provider (LP): Liquidity Token (LT)

III. Market participants

1. Lenders: They deposit an asset (e.g., USDC) into a pool. They earn a fixed interest (paid upfront, in the form of a reduction in the borrower’s collateral). At maturity, depending on the borrowers’ actions, they recover the lent asset or the collateral. Lenders receive a Bond Token (BT).
2. Borrowers: They lock a collateral (e.g., ETH) and borrow an asset (e.g., USDC). They receive a CCT (Collateral Claim Token). At maturity, they can repay to recover their collateral or default by abandoning the collateral.
3. Liquidity Providers (LPs): They provide funds (one of the pool’s two assets, depending on the situation) and receive an LT (Liquidity Token). LPs act as counterparties, earn a fraction of the interest, and are exposed to “divergent loss” risk (similar to impermanent loss but related to interest rate dynamics).

Transition Price (TP): The TP is the pivot price. If the spot price of the collateral asset is above the TP, the borrower has an incentive to repay. Below, they have an incentive to default.

IV. How does a Timeswap pool work?

A pool is defined by:

• An asset pair (e.g., ETH/USDC)
• A Transition Price (TP)
• A maturity (e.g., 1 month)
• An interest rate determined by the market via the AMM
• A mechanism ensuring over-collateralization

Principle of the AMM (simplified view): The Timeswap AMM is inspired by x*y=k (Uniswap V2) but adapted for lending. Three reserves are manipulated:

• X (or Y): The asset being lent/borrowed
• Z: The interest per second in the pool
• d: Remaining duration before maturity

The interest rate is discovered by the balance between supply (lenders) and demand (borrowers). As lenders enter, they lower the rate. As borrowers enter, they raise the rate.

Example: Pool ETH/USDC, TP = 800 USDC/ETH, spot ETH = 1000 USDC/ETH.

• Borrower wants 800 USDC, locks ~1 ETH as collateral.
• At maturity, if ETH > 800 USDC, the borrower repays (retrieves ETH). Otherwise, they default (lenders and LPs receive the ETH).

V. Use Cases

• Borrowing without intermediate liquidation: No need to constantly monitor the market.
• Downside protection: In case of collateral drop, the borrower can leave the collateral and keep the borrowed funds.
• Capital efficiency: Borrow without selling assets to seize other opportunities.
• Any eligible ERC-20 token: Even without an oracle, a market can be created.
• On a new ecosystem (e.g., Monad): Quick launch of lending markets without oracle infrastructure.

VI. Practical interactions (User Guide)

How to Connect:

• Go to https://app.timeswap.io/

• Click on “Connect” and authorize your wallet.

Lending:

• Choose a pool, lend the asset, approve the transaction.
• You receive a Bond Token (BT).
• At maturity, claim principal plus interest.
• If you exit early, you will incur slippage (reduction of your gains).

Borrowing:

• Choose a pool, deposit the collateral, borrow the asset.
• You obtain a Collateral Claim Token (CCT).
• At maturity, either you repay (and recover your collateral) or you default.

Providing Liquidity (LP):

• Add funds according to the TP.
• You receive a Liquidity Token (LT) and a share of the interest.
• You can exit before maturity, but slippage applies.

VII. Comparison with traditional DeFi protocols

Unlike Aave or Compound, which use external oracles (Chainlink, etc.), Timeswap has no external dependencies. This reduces the risk of price manipulation and allows instant acceptance of any ERC-20 token.

VIII. Tokenomics, rewards mechanism, and governance (TIME)

Timeswap plans a governance token, $TIME

• Total Supply: 1,750,000,000 TIME
• Premine: Early supporters will receive non-transferable tokens, claimable at TGE (Token Generation Event) at a 1:1 ratio without vesting.
• Rewards: A linear decay reward system encourages users to enter early and maintain their positions.

The Rewards APR (lenders, borrowers, LPs) decreases linearly over time (time decay).

IX. Rewards mechanism

Rewards are distributed decreasingly over time. The earlier and longer you commit your funds, the better your reward APR. Rewards can be adjusted by governance to target specific pools.

Reward APR Formula:

• Reward APR (lenders) = (USD value of rewards for lenders / USD total value lent) × 100% × (seconds per year)
• Same for borrowers and LPs, with their respective metrics.

X. Scenarios and integrations (example with Monad)

Timeswap could immediately launch an oracleless lending market for that token. This would stimulate the local DeFi ecosystem without waiting for oracle integration.

XI. Audits, security, and official links

Timeswap has been audited. Reports are available on the official website, ensuring the robustness and reliability of the smart contracts.

Official Resources and Documentation:

• dApp: https://app.timeswap.io/

• Twitter: https://x.com/TimeswapLabs

• Discord: https://discord.com/invite/timeswap

• Telegram (announcements): https://t.me/timeswap

• Medium: https://timeswap.medium.com/

• Whitepaper: https://timeswap.io/whitepaper.pdf

• Dune Analytics: https://dune.com/timeswap-labs/

• Branding/Media Kit: Available on their site.
• FAQ, Glossary, Deep Dive: On the official site.

XII. Glossary

• AMM (Automated Market Maker): An algorithmic mechanism determining prices (here, the interest rate) without an order book.
• APR (Annual Percentage Rate): Annual interest rate.
• Over-collateralization: Depositing more collateral than the borrowed value to limit default risk.
• Bond Token (BT): ERC-1155 NFT representing the lender’s position.
• Collateral Claim Token (CCT): ERC-1155 NFT representing the borrower’s position.
• Liquidity Token (LT): ERC-1155 NFT representing the liquidity provider’s position.
• Transition Price (TP): Pivot price above or below which the borrower decides to repay or not.
• Slippage: Difference between expected price and execution price, caused by low liquidity or high volatility.
• Non-liquidatable: No liquidation before maturity.
• Oracleless: Without external price oracle, rates are established through user interaction.

Additional Notes:

• Timeswap is already deployed on Arbitrum, Mantle, Polygon PoS, Polygon zkEVM, and Base, demonstrating its multi-chain compatibility.
• Positions are represented by ERC-1155 NFTs, reflecting ownership of time value (interest, collateral).

XIII. Conclusion

Timeswap reinvents lending and borrowing in DeFi by eliminating reliance on oracles. The internal AMM allows rates to be determined freely, without external manipulation. Isolated markets, non-liquidation before maturity, and permissionlessness make it a universal tool. Whether for a curious beginner or a seasoned expert, Timeswap offers a new, transparent, and robust approach to decentralized finance.

In sum, Timeswap brings simplicity (no oracles), security (over-collateralized, audits), flexibility (any ERC-20 token), and fairness (rates determined by the market, not an external source). It’s a flagship protocol to consider for any DeFi ecosystem, established or emerging.

XIV. Disclaimer

This article is provided for informational purposes only and does not constitute financial or investment advice. Please conduct your own research and consult a qualified financial advisor before making any investment decisions. The author and MonadHub.xyz are not responsible for any financial losses or damages resulting from reliance on the information provided.

As Monad develops and associated projects evolve, we emphasize that this article is dynamic and subject to updates. We are committed to deepening our research and maintaining transparency for the community.

We thank you for your understanding and kindly ask that you do not hold us strictly responsible for outdated or missing information. Your support and feedback are invaluable for continuously improving this content.
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Author: Yool