Sandglass

TL;DR

Sandglass is a pioneering yield trading protocol built on the Solana blockchain. It allows users to trade the yield and principal components of yield-bearing tokens separately, creating new opportunities for both traders and liquidity providers. With an innovative AMM design and support for popular Solana assets, Sandglass is ushering in a new era of yield derivatives on Solana.

What is Sandglass?

Sandglass is a pool-based yield trading protocol that operates on the Solana blockchain. It introduces a new primitive to the Solana DeFi ecosystem: the ability to split yield-bearing tokens into their principal and yield components, which can then be traded independently.

This means that users can effectively isolate and trade the yield of a token separately from its price. Sandglass allows for taking positions on whether a token's yield will increase or decrease relative to its price, opening up new strategies for yield farmers and traders alike.

Under the hood, Sandglass uses an automated market maker (AMM) model specifically designed for yield trading. Unlike traditional AMMs that concentrate liquidity around prices, Sandglass' AMM is optimized to provide ample liquidity around current yield levels. This ensures efficient trading and price discovery for both principal and yield tokens.

How Sandglass Works

At its core, Sandglass allows users to deposit yield-bearing tokens into the protocol. These can be tokens that accrue value over time, such as staked assets (e.g., mSOL), liquidity pool tokens (e.g., RAY-USDC LP), or interest-bearing stablecoins (e.g., USDCa).

When a user deposits a yield-bearing token, Sandglass splits it into two separate tokens:

1. Principal Token (PT): Represents the underlying asset, without the yield. PTs are redeemable 1:1 for the original yield-bearing token at maturity.

2. Yield Token (YT): Represents the yield that the deposited token will accrue until maturity. YTs are like a claim on future yield.

Sandglass then creates an AMM pool for each token pair, allowing the PTs and YTs to be traded separately on the open market. Traders can buy or sell PTs and YTs based on their predictions of how the underlying token's yield will change over time.

For example, if a trader believes that the yield on mSOL will increase, they could buy mSOL YTs. If the yield does indeed go up, the trader can sell their YTs for a profit. Conversely, if a trader anticipates a decrease in yield, they could sell YTs or buy PTs.

Providing Liquidity on Sandglass

In addition to trading, users can also provide liquidity to Sandglass' AMM pools. By depositing yield-bearing tokens into a pool, liquidity providers (LPs) earn trading fees generated by the pool.

This creates a unique opportunity for LPs, as they can earn yield in two ways simultaneously:

1. From the natural yield of the deposited token (e.g., staking rewards for mSOL)
2. From trading fees generated by the Sandglass pool

LPs can further optimize their returns by adjusting their exposure between PTs and YTs, effectively choosing how much of their position is exposed to yield vs. principal.

Supported Assets and Maturities

Sandglass currently supports several popular yield-bearing tokens on Solana, including:

• mSOL (Marinade Staked SOL)
• bSOL (Solblaze Staked SOL)
• JLP (Jupiter LP Tokens)
• cUSDC (Kamino USDC)

For each supported asset, Sandglass offers multiple maturity dates. This allows users to trade yield over different time horizons, from short-term (e.g., 1 week) to long-term (e.g., 1 year).

The GLASS Token

GLASS is the native governance token of the Sandglass protocol. It serves several key functions:

1. Protocol Governance: GLASS holders can participate in governance decisions, such as adding new assets or adjusting protocol parameters.

2. Fee Discounts: Users can stake GLASS to receive discounted trading fees on the platform.

3. Liquidity Incentives: A portion of GLASS tokens are distributed to LPs as additional rewards, incentivizing liquidity provision.

The initial supply of GLASS is 100 million tokens, with a gradual emission schedule over several years. A significant portion of tokens are reserved for the community and ecosystem development.

The Sandglass Team

Sandglass was founded by a team of experienced DeFi developers and traders, led by CEO Ben Randolph. The core team brings a wealth of knowledge from both traditional finance and crypto, with previous experience at institutions like J.P. Morgan and protocols like 0x.

The project is backed by notable investors in the Solana ecosystem, including Jump Crypto, Alameda Research, and CMS Holdings. This strong institutional support is a testament to the potential of the Sandglass protocol.

Security and Audits

Security is a top priority for the Sandglass team. The protocol has undergone rigorous audits by leading blockchain security firms, including Certik and Halborn. These audits have verified the integrity of the smart contracts and the robustness of the protocol's economic model.

In addition, Sandglass has an active bug bounty program to encourage responsible disclosure of any potential vulnerabilities. The team is committed to maintaining the highest standards of security and transparency.

Roadmap and Future Plans

Looking ahead, the Sandglass team has an ambitious roadmap for expanding the protocol's capabilities and reach. Some key milestones include:

• Adding support for more yield-bearing assets, including LP tokens from major Solana DEXes
• Integrating with other Solana DeFi protocols for seamless yield trading across the ecosystem
• Launching a governance portal for GLASS holders to actively participate in protocol development
• Exploring cross-chain yield trading opportunities with other major DeFi ecosystems

As the DeFi landscape continues to evolve, Sandglass is well-positioned to be a leading player in the growing yield derivatives market. With its innovative design, strong team, and robust security, Sandglass is poised to unlock new frontiers of yield trading on Solana and beyond.