What is TMV?

Stablecoin is a token with a price pinpointed to a narrow range around the reference value. In most cases it is $1. Unfortunately, the offer in the stablecoin segment is so far mainly represented by centralized options. Most claim that each token is secured by an equivalent amount of USD deposited in real accounts, where the term “real” stands for centralized bank accounts. We are not going to further speculate about the way these accounts are audited, the subject has been covered well enough. Yet, what totally ruins the basic concept of cryptocurrencies itself, that is, the idea of decentralization, are issuers of these stablecoins who can easily block your funds. As these tokens are widely spread and offered in large volumes, users tend to disregard these issues and accept the situation by force of habit.

On the other hand, a collateralized stablecoin is the most transparent way to issue tokens that can anytime be over-collateralized by another asset. Also, there are tools to both ensure rate stability and maintain adequate collateral of each token. TMV is an over-collateralized stablecoin; its price continuously gravitates towards $1 and ETH is used for collateral.

Any user can start their own TMV “printing press” in a special-purpose storage called TBox that takes ETH for collateral and issues TMV. So, every TMV token is over-collateralized with a security in ETH. Thus, outstanding TMVs are never made out of nothing. In other words, neither the Timvi team themselves, nor any third party have any means of affecting the TMV issue volume other than via a TBox.

Also, a TBox owner can take back their ETH collateral any time. It only takes paying back the TMV withdrawn before. None of these transactions is subject to any additional fee other than that payable to the Ethereum network.

The current ETH rate is obtained from Chainlink decentralized oracle.

Now, let’s consider probable scenarios given the volatility of ETH.

Scenario 1. ETH rises

Let’s assume that Donald has 10 ETH now priced at $1,000. Donald believes that within a month ETH will hit $200 bringing the total value of his assets to $2,000. So, his potential profit is $1,000. Is there anything more Donald can do to boost his revenues? Well, actually, there is. He can create a TBox with a solid collateral, withdraw 500 TMV from it and use coins to buy 5 ETH more.

If Donald’s expectations prove right and ETH trades at $200 within a month, he will have 15 ETH on the total, or $3,000. He then will have to pay back 500 TMV to the TBox to recover the collateral in ETH. So, the revenue formula is this: $3,000–500 TMV = $2500. The resulting profit is $1,500 or 50% more than he would get without a TBox.

If ETH falls, Donald will either have to increase the TBox collateral or pay back some of the withdrawn TMV to avoid recapitalization that is triggered whenever a TBox collateral level hits the threshold causing a minor loss of about 3% of funds in the USD equivalent.

Scenario 2. ETH falls

Let’s assume that Mike has 10 ETH equivalent to $1,000 at the present rate. Mike plans to buy a bike, but he is reluctant to sell his ETH. So he creates a TBox to get a perpetual zero-interest loan against a collateral. He deposits his 10 ETH as a collateral. There is some risk, but Mike is sure that ETH is to rise. So, Mike ends up with 850 TMV in his pocket; he can now go to any decentralized exchange and convert TMV to ETH or to any other asset that can be later converted to USD to pay him a bike.

Now, Mike still has a TBox with a collateral of 10 ETH. To recover his coins he has to pay 850 TMV back. And he now has a bike to get to his office or just to have a leisure ride.

Yet, Mike’s expectations failed to come true. ETH declined to the point where his TBox turned toxic, i.e. available for recapitalization. Mike failed to intervene fast enough to take care of an additional collateral in his TBox.

On the other side there is still Donald closely monitoring the market. Once Mike’s TBox became toxic, he recapitalized it and earned profit. Losing about 3% from this event, Mike was not too upset. Later he paid back TMV required after recapitalization and withdrew the remaining collateral. And, bear in mind that by this time he had already bought a nice bike.

The recapitalization mechanism ensures that all outstanding TMV are over-collateralized. It is triggered whenever collateral of a TBox falls below the critical level. Then each system user can deposit TMV to this TBox, get an equivalent in ETH and 6% from this amount as a reward. Recapitalization brings the TBox collateral back to an acceptable level.

On the one hand, the owner of a recapitalized TBox loses a fraction of their money, yet saves most part of it; on the other hand, the user who initiates recapitalization makes profit.

While aimed at full decentralization, at the starting stage Timvi project has two centralization points in its smart contracts.

One is the option to change the oracle that determines the ETH price. Timvi team do trust Chainlink and believe it is the best solution in the market now, but the change option is still available.

The second is the option to change the collateral threshold at which a TBox becomes available for recapitalization; yet, the option works in a very tight range.

We would like to eliminate these centralization points in cooperation with the community while migrating Timvi to the DAO model.

Now let’s consider two simple steps that need to be taken to issue your own TMV.

2. Click/tap Create new and fill the following fields: the amount of ETH to be offered for collateral and the amount of TMV you would like to isse. Note that the indicator on the left shows the TBox utilization percentage. The closer it is to 86,79%, the more likely a decline in ETH will expose your TBox to recapitalization.

Once the transaction is confirmed, you get over-collateralized stablecoins in your account, TMVs. Congratulations, you are awesome!

Now a final bonus lifehack for bearing with us and reading the article to the end :)

If ETH is one the rise, your TBox can issue more TMV. In an ideal case you can boost your profits from the rate rise. All you need is to convert TMV withdrawn from the TBox to ETH (e.g. via DEX Uniswap) and to pay the resulting ETH back to the TBox thus enabling further TMV issue. This loop will work indefinitely till the Ethereum fee becomes too big compared to the transaction amount. Thanks to this trick, you start with as little as 1 ETH and get a TBox collateralized with about 6.8 ETH; of course, to get the collateral back, you will have to pay back TMV amounting to some 85% of the collateral. But, given that ETH rises by 10%, your profit will still amount to 62% of the original collateral in USD equivalent compared to only 10% gained from just holding ETH.

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