twAML is an extremely new term recently introduced by the TapiocaDAO project. This term refers to the liquidity lock period that will receive incentives, used in TapiocaDAO’s DSO. This technology also helps perfect the OLM product for mass adoption in the DeFi market.
So what is twAML? What’s special about it? Let’s find out in this article!
To understand more about twAML, you can read the following articles:
- What is TWAMM? Why Was TWAMM Developed In Uniswap V4
- What is TapiocaDAO? TapiocaDAO Cryptocurrency Overview
- What is OLM? Pros and Cons of OLM in DeFi
- What is Bond Protocol? Bond Protocol Cryptocurrency Overview
What is twAML?
twAML is fully written as Time Weighted Average Magnitude Lock and is a combination of Time Weighted Escrowing and Average Magnitude Lock, which in this case is understood as the size of the liquidity being held. lock up).
twAML takes index data as input time and Liquidity volume is locked to produce a result used in TapiocaDAO’s DSO is TAP Token price discount percentage (5% to 50%). This result will change dynamically based on environmental conditions and is applied to OLM.
The protocol uses AML to maximize allocative efficiency of twTAP and oTAP of Tapioca. twAML is used in oTAP by Tapioca and DSO (The program incentivizes DAO sharing options) and in twTAP, it creates a democratized governance system and equitable fee-sharing mechanism.
twAML is built on year core principles :
- Sustainable approach to stimulate economic growth.
- Low costs and high benefits in economic stimulation.
- Promote and reward loyalty.
- Create protocol-owned liquidity (POL).
- Dynamic response to economic activity.
Mechanism of Action
twAML has a relatively complicated calculation formula so we will not mention it here. The main input is the liquidity lock time and locked liquidity volume along with a number of other secondary indicators to give the necessary results. is the percentage to buy TAP Token discount.
twAML combines with DSO (DAO Share Options) to produce the result that after each epoch (weekly) the liquidity provider will receive an amount of Tokens and has the right but not the obligation to buy at a discounted price.
When system stagnation or decline (user stops liquidity deposit), AML will issue Higher discounts for lower duration commitments to enable growth. On the contrary, when the system is economic growth (many users are depositing capital)AML will Reduced discount for average deposit term. Even in times where the commitment to receive a large discount may be for a short period of time, users will still be incentivized to lock in longer than necessary to lock in the maximum discount for a longer period of time.
One game mentioned here is human competition. If a previous locker receives a 25% discount, then with the same amount of liquidity, the later locker must lock for a longer time to receive the same discount as the previous locker. Because more liquidity is added, that situation occurs. And if this growth reaches its maximum level, liquidity is committed for 4 years.
Application Of twAML
twAML is mainly applied in OLM or DSO models to provide discounts for more sustainable novel incentive programs. Additionally, it is also used to help make protocol revenue more equitable through DAOs, such as TapiocaDAO’s twTAP.
Personal Projection
twAML is a very useful new technology in the DeFi market, especially when applied in OLM to help solve the difficult problem of Liquidity Mining or other problems of using Tokens for incentives. The birth of this technology is a major turning point and can help the DeFi market and projects develop in the future.
Summary
So I have clarified what twAML is? Hope this article provides you with a lot of useful knowledge!
