Thales utilizes AMM’s (Automated Market Makers) to facilitate several products across all chains, including single asset UP/DOWN markets and Ranged Markets as well as Overtime’s Sports AMM and Parlay AMM, and while this system works well there is always the risk of a major market event that puts the AMM’s liquidity at risk.
To mitigate this risk, Thales has implemented a “Safebox” strategy where a small percentage of the fees collected from positional token AMM trades and other Thales products will be stored in a separate contract to be used as a safeguard against potentially detrimental market developments.
The following TIPs, as well as other TIPs that are currently in progress, have been submitted and reviewed by the community to establish this safebox strategy:
You can view the Safebox Contracts here:
The following fees are collected from different Thales Market products across all chains:
TIP-19 proposed a way for the AMM to mitigate risk by introducing a SafeBox fee pool which will collect 2% of sUSD value from each trade to act as a backstop in the event of AMM insolvency. The SafeBox will be shared among other Thales products and will be used at the discretion of the Thales Council, with possible uses including incentives to stakers once collected fees reach a point that it is economically viable to justify gas costs.
The funds collected in the Safebox contract are controlled by the Thales Council. While these funds are used to secure AMM from insolvency, once the contract contains a certain threshold, these funds will be used to benefit stakers.
Current strategy for Safebox funds:
Buy Back and Burn (see TIP-50, implemented 5/30/22): Tip 50 calls for the use of fees collected in the SafeBox contract to begin the buyback and burn program for THALES tokens. At the time of writing the TIP, the SafeBox was holding about 22k of sUSD on both Optimism and Polygon. TIP-50 also calls for the Thales Treasury DAO to move 20k of the 100k sUSD in profits captured by the AMM to the Safebox contract. TIP 50 proposes that buying and burning THALES at current prices will provide more benefit to stakers than simply returning sUSD to them. The initial proposal is to spend 300 sUSD per 24hr At time of implementation, 1100 THALES was burned daily, allowing the program to operate for 150 days.