In a pioneering move, cryptocurrency startup Hourglass has introduced a first-of-its-kind marketplace dedicated to trading Time-Bound Tokens (TBTs). These unique tokens represent staked assets in a decentralized finance (DeFi) protocol, with their value contingent on the asset’s lock-up duration.
The Hourglass Marketplace: A New Trading Frontier
Hourglass’ innovative platform brings a fresh dynamic to trading by allowing users to swap their place in line for accessing their locked assets. The marketplace facilitates the transfer of ownership rights of a protocol-locked asset to a potential buyer. As put by Charlie Pyle, the founder of Hourglass, it’s now possible to trade a time-bound token, effectuating a simple change of ownership.
Collaboration with Lido Version 2 Deployment
This new marketplace was unveiled in tandem with the rollout of Lido’s Version 2. Hourglass’ strategy is to tokenize Lido’s withdrawal queue, preventing potential exit route bottlenecks that could last weeks or even months. This development will allow users to trade their withdrawal queue position, providing interim liquidity.
Lido, a top-tier liquid staking platform within the DeFi sector, currently holds over $12 billion in total value locked (TVL) across the Ethereum ecosystem.
Understanding the Functionality of the TBT Marketplace
The TBT marketplace works by providing liquidity to users for their locked assets via a secondary market. The user gets to trade time duration rights of these assets. The Hourglass platform can handle a wide range of transactions, such as trading locked frxETH (Frax ether token) or facilitating early exits from Lido’s withdrawal queue. For instance, a user who stakes 10 Frax ether for a month will receive 10 TBTs that can be traded on the marketplace.
Navigating the TBT Marketplace
The marketplace operates similarly to other secondary markets, offering discounts on TBTs based on the duration of asset lock-up. Pyle explained that the discount rates are variable and depend on the lock-up duration. The TBTs, issued by Hourglass custodian smart contracts, are semi-fungible tokens compliant with the ERC1155s standard, and they are non-custodial.
TBTs, which represent ownership of locked assets, are managed by custodian smart contracts. When the lock-up period ends, users can redeem their matured TBTs for the asset. Importantly, Hourglass will not impose any trading fees on the platform.
Hourglass’ Investment Success
Hourglass recently raised $4.2 million in its seed round, with Electric Capital leading the round. Other notable investors include Coinbase Ventures, Circle Ventures, Tribe Capital, hack.vc, and several angel investors.