🏦Safebox

Thales utilizes AMMs (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:

• TIP-19 Changes to the AMM after First round
• TIP-44 Increase AMM Liquidity
• TIP-50 Utilize Safe Box
• TIP-59 Increase THALES Token Buyback Frequency
• TIP-71 Increase THALES Token Buyback Frequency
• TIP-78 Increase THALES Token Buyback Frequency
• TIP-87 Increase SafeBox fee of ThalesAMM.sol contract by +1%
• TIP-106 Increase THALES Token Buyback Frequency
• TIP-124 Pause Buyback and Burn Program for Thales Token
• TIP-126 Reduce SafeBox fee parameter by fixed -1% across all products

You can view the Safebox Contracts here:

• https://contracts.thalesmarket.io/mainnet-ovm/SafeBox
• https://contracts.thalesmarket.io/mainnet-ovm/SafeBoxBuyback

Safebox Fees

The following fees are collected from different Thales Market products across all chains:

Thales AMM Positional Tokens

TIP-19 proposed a way for the AMM to mitigate risk by introducing a SafeBox fee pool which will collect 2% of USD 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.

TIP-44 increases the SafeBox fee to 2%

TIP-87 increases the SafeBox fee to 3%

TIP-126 reduced SafeBox fees to 2% for Thales AMM contracts on all networks

TIP-144 reduced SafeBox fees to 1% for Thales AMM contracts on all networks

TIP-163 increased SafeBox fee to 2% across all Thales products

Overtime Sports AMM and Parlay AMM

TIP-60 introduced the Sports AMM and established initial SafeBox fee

TIP-72 introduced the Parlay AMM and established initial SafeBox fee

TIP-126 reduced SafeBox fees to 2% for Overtime AMM contracts on all networks

Uses for Safebox funds

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 USD on both Optimism and Polygon. TIP-50 also calls for the Thales Treasury DAO to move 20k of the 100k USD 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 USD to them. The initial proposal is to spend 300 USD per 24hr. At time of implementation, 1100 THALES was burned daily, allowing the program to operate for 150 days.

• TIP-59 increases the buyback frequency from every 24 hours to every 18 hours
• TIP-71 increases the buyback frequency from every 18 hours to every 12 hours
• TIP-78 increases the buyback frequency from every 12 hours to every 6 hours
• TIP-106 increases the buyback frequency from every 6 hours to every 4.8 hours
• TIP-124 paused Buyback and Burn as market conditions favor a more conservative approach
• TIP-141 resumed Buyback and Burn