Tangent Finance is a decentralized finance (DeFi) protocol designed to provide a decentralized, over-collateralized stablecoin named USG. The protocol's architecture focuses on maximizing capital efficiency by backing USG with productive, yield-bearing assets from other established DeFi protocols.

Tangent also offers a suite of products, including specialized borrowing markets, a savings vehicle for its stablecoin, and a mechanism for unlocking the liquidity of locked governance tokens. ^{[1] [2]}

Overview

Tangent Finance operates with the core purpose of creating a "DeFi native dollar," USG, that is both censorship-resistant and capital-efficient. Its tagline, "Unbounding liquidity," reflects its mission to allow users to extract more value from their deposited assets.

Unlike stablecoins backed by fiat currency or non-productive crypto assets, USG is minted by borrowing against yield-generating collateral, such as Liquidity Provider (LP) tokens. This structure allows users to borrow against their assets while those assets continue to earn yield. ^[1]​

The protocol is designed around the principle of composability, integrating with numerous other DeFi platforms to source collateral and create new yield opportunities. Its governance is managed by holders of its native token, TAN, which also functions as a mechanism for sharing protocol-generated revenue with token holders.

While the protocol has established multiple products and integrations, information regarding its specific launch date, founders, and development team is not publicly available. ^[1]​

Core Products

Tangent Finance's ecosystem is composed of several interconnected products that facilitate the creation of its stablecoin, offer yield opportunities, and unlock asset liquidity. ^[1]​

USG Stablecoin

USG is the native, decentralized stablecoin of the Tangent protocol. It is an over-collateralized stablecoin, meaning that the total value of the assets held as collateral within the protocol is greater than the total value of all USG tokens in circulation. This model provides a buffer against collateral price volatility and helps maintain USG's price peg to the U.S. dollar. ^[1]​

Users generate USG by depositing approved collateral into Tangent's vaults and borrowing against it. A key feature of USG is that its collateral consists of productive, yield-bearing assets from other DeFi protocols. This allows users to maintain their exposure to the underlying yield of their assets while simultaneously accessing liquidity in the form of USG. ^[1]​

Collateral Types

The collateral accepted by the Tangent protocol includes LP tokens and other yield-bearing tokens from a variety of integrated DeFi platforms. Supported protocols for collateral include:

• Curve
• Convex
• Pendle
• Stake DAO
• Spectra ^[1]

Borrowing Markets

Tangent provides two distinct markets for borrowing USG, each offering a different model for handling the yield generated by the user's deposited collateral. This allows borrowers to choose a strategy that best aligns with their risk tolerance and yield optimization goals. ^[1]​

Full Rewards Market

In the Full Rewards Market, borrowers deposit their yield-bearing collateral and are entitled to keep 100% of the rewards and yield generated by those assets.

To compensate the protocol, the loan taken out in this market accrues interest. The interest rate is dynamic and adjusts based on market conditions, particularly the price of the USG stablecoin.

This mechanism allows the protocol to influence borrower behavior to help maintain the USG peg; for example, a higher interest rate could be used to incentivize loan repayments if USG's price falls below its target. ^[1]​

Zero Interest Market

The Zero Interest Market allows users to borrow USG without paying any loan interest under normal market conditions.

In exchange for this 0% interest rate, the borrower forgoes a portion of the yield generated by their deposited collateral, which is then directed to the protocol. The borrower retains the remaining portion of the rewards.

This market is designed for users who prioritize avoiding loan interest over maximizing their collateral's yield. As a safety measure, this market includes a backstop mechanism where a dynamic interest rate can be temporarily activated if the market price of USG falls below a predetermined threshold, creating an incentive to restore the peg. ^[1]​

sUSG (Savings USG)

sUSG, or Savings USG, is the yield-bearing counterpart to the USG stablecoin. It functions as a native savings account within the Tangent ecosystem, allowing holders to earn a passive return on their stablecoin holdings.

When a user deposits USG into the sUSG vault, they receive sUSG tokens, which automatically accrue yield. The Annual Percentage Yield (APY) is variable and is sourced from various protocol revenue streams. ^[1]​

Technically, sUSG is an ERC4626 token. This is a standardized token vault framework on the Ethereum blockchain that makes yield-bearing tokens more composable and interoperable.

Due to this standard, sUSG can be easily integrated into other DeFi protocols, aggregators, and platforms that support ERC4626, expanding its utility across the wider DeFi landscape. ^[1]​

LiquidBoost

LiquidBoost is a product designed to address the issue of locked capital in DeFi governance systems. Many protocols, such as Curve (veCRV) and Convex (vlCVX), require users to lock governance tokens for extended periods to gain voting power and boosted yield rewards.

LiquidBoost allows users to deposit these locked governance tokens and in return receive a liquid derivative token. This derivative represents their underlying locked position but remains liquid and can be traded or used as collateral in other DeFi applications.

This process "unbounds" the liquidity of the locked assets while still allowing the user to generate an additional layer of yield through the LiquidBoost system. ^[1]​

As of a point-in-time snapshot, the Total Value Locked (TVL) in LiquidBoost was reported as $1,262,343. Example APRs for different assets within LiquidBoost included:

• sdCRV: 29.00%
• cvgCVX: 19.05%
• sdPENDLE: 24.10% ^[1]

Governance and Tokenomics

The Tangent ecosystem is governed by its native utility and governance token, TAN. ^[1]​

TAN Token

The TAN token serves two primary functions within the protocol: governance and revenue sharing. ^[1]​

• Governance: Holders of the TAN token have the ability to participate in the decentralized governance of the Tangent protocol. They can vote on proposals that determine the future direction of the project, including changes to system parameters, the addition of new collateral types, and other significant protocol updates. ^[1]
• Real Yield: Tangent operates on a "real yield" model, where a portion of the revenue generated by the protocol is distributed to TAN token holders. To become eligible for these revenue distributions, users must stake or lock their TAN tokens. This mechanism aligns the interests of token holders with the long-term success and profitability of the protocol. ^[1]

Integrations

To support its collateral-backed stablecoin and other products, Tangent integrates with a number of prominent DeFi protocols. These partnerships enable the use of various yield-bearing assets within the Tangent ecosystem. Key integrations include:

• Curve
• Convex
• Stake DAO
• Frax
• Aladdin
• Pendle
• Spectra ^[1]

Security

The security of the Tangent Finance protocol has been assessed through multiple audits conducted by third-party blockchain security firms. These audits serve to identify potential vulnerabilities in the smart contracts and ensure the safety of user funds. The protocol has been audited by the following firms:

• SHERLOCK
• EGIS SECURITY
• pashow ^[1]