Fundamental Attributes of Tomb Finance’s Decline.

Tomb Finance comfortably rose off the coat tails of $FTM, the question remains, did it have to deteriorate alongside it?

Given it is an algo-pegged protocol, it is by design that Tomb would lose strength.

However, there are a few key issues that exacerbated its decline.

Firstly, introducing auto-compounding vaults put downward pressure on the $TSHARE token.

By design, auto-compounding vaults sell the reward token into the staked liquidity pool tokens. During a large in-flow of liquidity into $TSHARE, this was ideal and may partially explain the latency of $TSHARE’s movement in response to $FTM and $TOMB’s more congruent ascendence.

However, once liquidity in-flow slows down, auto-compounding vaults are harmful to the value of a reward token and can be devastating during a bear market.

The second problem for Tomb Finance is fragmented liquidity. Not only did the rise of overnight Tomb Forks take liquidity from Tomb Finance because the appeal of such DeFi protocols tends to be limited to those that sufficiently understand the product, but from them having introduced their own variations on Tomb, such a lif3 protocol.

Creating a duplicate of an existing product does not create new users. It primarily takes Pete to pay Paul.

The third problem is a lack of market diversification. Indeed, Tomb has recently launched a layer-2 on Fantom; Tomb Chain, that facilitates their products.

However, their products appear to be limited to existing seigniorage protocols, arguably adding a layer of complexity for the end user. Although, having $TOMB as the token required to pay for gas fees on Tomb Chain is an effective way to create a non-speculative use case which will only become more pertinent as further DApps are added to their network. Further, holding $TOMB unlocks discounts for activities through partner projects.