Benefits of a Token Reactor

The conventional pool 2 liquidity mining incentives typically draw in transient capital focused on extracting short-term value, often disregarding the long-term success of a project. Deepool aims to connect with the right type of liquidity providers - those interested in holding a DAO's token for the long haul but cautious about impermanent loss associated with traditional 50/50 liquidity provision.

A 'tPool' integrates the concepts of pool 1 and pool 2. Instead of promoting a pool 1 on a Project or DAO's dApp, they can encourage participation in a tPool. Here, users single-stake their tokens in a Deepool Token Reactor, then transfer their tABC tokens to the DAO's native dApp. Once staked there, they start accumulating native ABC tokens, while their original assets are employed as liquidity. Additionally, the DAO begins to earn DPT as the possessors of the tABC tokens.

By deploying a Token Reactor with a tPool, a DAO can gain the following advantages:

• Impermanent Loss Mitigation: Deepool utilizes advanced deployment strategies coupled with impermanent loss mitigation mechanisms, ensuring liquidity providers can reclaim the same quantity of assets they deposited. This approach attracts liquidity providers who are invested in the long-term success of the protocol. Detailed explanations of these mechanisms can be found in the Guard Rails and Impermanent Loss Mitigation section.

• Generalized Liquidity: With Deepool, liquidity becomes flexible, allowing for seamless redirection across different exchanges. The system's design ensures optimal efficiency when all participants act in their self-interest. As long as Liquidity Directors adjust their votes to maximize rewards, liquidity will naturally flow to where it's most needed. Further details on deployment logic can be found in the relevant sections.

• From Cost Center to Revenue Generator: Instead of spending vast sums to attract short-term liquidity providers, Token Reactors enable DAOs to generate revenue from idle treasury funds, helping to balance token emissions. Additionally, liquidity providers are required to contribute only a single asset, with the base asset supplied by Deepool's pair reactors.

• Direct Liquidity: Both Liquidity Providers and Liquidity Directors receive rewards in DPT. This arrangement allows DAOs to use their rewards from holding tAssets to directly enhance their influence over the assets within Deepool, aligning with their interests.

• Maximizing Total Addressable Liquidity: Token Reactors empower DAOs to significantly expand the total addressable liquidity for their token. Previously, eligible liquidity providers were limited to those adept at managing LP positions and willing to accept the risk of impermanent loss. Token Reactors change this by enabling all token holders, including DAO treasuries, to engage in liquidity provision with single-sided exposure.