Tractor: Automating the Farm

Pinto is the most dynamic system in DeFi, and there is no close second. Accordingly, farming the protocol optimally requires constant account maintenance.

Tractor is a trustless, P2P intents protocol that allows farmers to delegate specific actions without surrendering custody of and discretion over their assets. Tractor empowers users beyond merely permissioning how many tokens a given contract can spend on one's behalf – which is standard EVM functionality – to specify which actions a party can take and incentivize a 'Tractor operator' to perform those predefined actions on their behalf in exchange for a tip.

Tractor not only empowers farmers to use the protocol optimally, it enables the protocol to implement novel incentive mechanisms that further improve its efficiency in ways that would otherwise be impractical without the dramatic decrease in friction for users created by Tractor.

Motivating Example: Cultivation System

The number of available Soil represents the number of Pinto the protocol is willing to borrow from the market. Selling out of Soil regularly, even in small quantities every Season (~1 hour), is much better for long term sustainability than selling none or a small number of Soil most of the time and large numbers once in a while.

Creditworthiness is a social phenomenon. Pinto offering more debt than the market is willing to purchase has negative effects on the perceived creditworthiness of the protocol, increasing the interest rate the protocol needs to pay to attract creditors. Furthermore, long gaps between loans makes it very difficult for the protocol and the market to properly price its debt, further raising interest rates.

Historically, Beanstalk and Pinto both fell into the category of having too much available Soil combined with infrequent but large loans, leading to excessively high interest rates on loans.

The Cultivation System was a Pinto Improvement which dramatically decreased the number of Soil available in any given Season, until there was demand for all the Soil that was available at a given interest rate. After demand was demonstrated in a given Season, the number of Soil would ramp up each following Season, until the supply of Soil reached the demand for Soil, at which point the number of available Soil would stay relatively constant until demand increased or decreased. This change dramatically reduced the number of instances where there was significantly more supply of Soil than there was demand.

However, the Cultivation System made it such that in order to lend a significant number of Pinto to the protocol, lenders had to lend to the protocol in relatively small quantities consistently over numerous Seasons. This created a significant degree of friction to lend to the protocol: it required being online every Season to lend because if supply wasn't met, the protocol would decrease the number of available Soil in response to the lack of demand. Therefore, while the Cultivation System enabled the protocol to rapidly respond to demand for Soil, without an easy way for farmers to express their demand every Season, the effectiveness of the Field was greatly diminished.

Enter Tractor

About 6 weeks after the deployment of the Cultivation System, the first Tractor use case was implemented: a Soil order book that enables farmers to sign a Tractor 'Blueprint' to lend Pinto at a minimum interest rate (among other parameters), allowing Tractor operators to fill their orders by Sowing on their behalf.

Prior to the implementation of the Soil order book, the Maximum Temperature, the highest interest rate offered by the protocol for loans each Season, was increasing perpetually, posing a risk to the long term sustainability of the protocol. After Tractor was implemented, the Maximum Temperature immediately started to drop from its high of ~1400% at the time Tractor was implemented to a healthier range around 750%. It has since dropped further to ~650%.

Tractors Everywhere

After the successful rollout of the first use of Tractor, development is actively taking place to bring the power of automation to everything farmers do on the Farm. The following are brief descriptions of new Tractor Blueprints that are in the pipeline.

Mow, Plant and Harvest

Pinto requires active claiming in order to maximize yield. In the Silo, Stalk that Grows from Seeds must be Mown in order to start earning a portion of Pinto mints. Additionally, in order for the Seeds associated with newly minted Pinto paid to Silo Depositors to start growing Stalk, they must be Planted. In the Field, when Pods become Harvestable (redeemable into Pinto), they must be Harvested and Deposited in the Silo in order to start earning additional yield. In the near future, a blueprint for Mowing Stalk, Planting Seeds and Harvesting Pods and Depositing the Pinto yielded, respectively, will go live, enabling farmers to maximally compound the yield they earn from the protocol without being behind their keyboards.

Dynamic Convert Bonus + Order Book

After the success of the Cultivation System and Soil order book in the Field, a similar system is being implemented in the Silo to support a Dynamic Convert Bonus. Through the Dynamic Convert Bonus, Pinto will be able to more granularly and strongly incentivize Converts that it desires in order to aid peg maintenance. The design for the Convert Bonus will follow the same model as the Field, starting with a small number of PDV worth of Converts eligible for a bonus and then increasing to meet demand. A Tractor Blueprint will support a Convert order book based on the price of Pinto, change in Seeds as a result of Converting and the Stalk bonus per PDV Converted.

Lending from Outside the Silo

The first Tractor Blueprint only enabled automated lending with Deposits already existing in the protocol. A forthcoming complementary Blueprint will support lending to the protocol using assets external to the Silo.

Seed Gauge Optimization

The number of Seeds awarded to the various asset types Deposited in the Silo is adjusted every Season to incentivize the alignment of the distribution of value in the Silo with its optimal distribution. A Tractor Blueprint will enable Depositors to automatically adjust their Silo Deposit distribution to maximize their Seeds, and therefore the yield they accrue from the protocol.

In Summary

As the most dynamic system in DeFi, Pinto requires regular and active management of positions in order to maximize yield. Tractor empowers farmers to optimally manage their positions without having to execute transactions on a regular basis. Through the decrease in friction associated with Tractor, a new design space for peg maintenance has been opened up, enabling more fine-tuned and sustainable incentives. The number of use cases supported by Tractor will increase in the coming months.