New Genesis Spools are live

Index

• Introduction
• Protocols supported at launch
• Audits
• Initial supported strategies for each protocol
• The Genesis Risk Model
• Genesis Spools
• Genesis Spool Incentivization
• The Future is DAO

Introduction

The new Genesis Spools went live on April 28 at 12.30PM UTC.

The Genesis Incentive Program for the Genesis Spools entails a rewards pool of 3 million $SPOOL tokens.

To use Spool with stablecoins or stake your $SPOOL tokens, go to https://www.spool.fi/, open the app, connect your wallet and enjoy. Staking stablecoins gives users a base yield generated through the diversified strategies Spool deposits into, as well as additional $SPOOL token incentives.

Rewards will commence 48 hours after launch to ensure everyone has enough time to do due diligence and stake.

The updated documentation regarding the new Genesis Spools can be found here: https://docs.spool.fi/

Protocols supported at launch

Spool supports the following protocols:

• Aave
• Compound
• Convex
• Curve
• Harvest
• Idle
• Yearn

More protocols and strategies will be added over the next quarter, once carefully vetted and approved by the DAO.

Audits

Spool has been audited by Quantstamp, Zokyo, and Peckshield. More than 124 smart contracts have been deployed and enhancements have been made to the old Genesis Spool contracts. For this reason, Spool asked the auditors to review those changes.

The DAO has taken every possible step to ensure the safety of the Spool Smart Contracts. However, Spool is an innovative protocol, which tests new waters of bespoke code. Due to its visionary offering, Spool is built from the ground up and has not been hard-forked from any existing protocols. It’s within all users’ best interest to execute caution when approaching new cutting-edge technologies. Just as Rome wasn’t built in a day, Spool’s intricate formulas have been tried and tested to the maximum density. Every trailblazer’s mythology produces risk, nonetheless, it’s within the risk that the greatest rewards are unveiled.

Initial supported strategies for each protocol

These protocols can all be broken down into a subset of usable “Strategies” within the respective protocol, in particular:

Aave: The AAVE strategy supplies the user’s respective Spool asset to the lending markets and will accrue APY for DAI, USDC, and USDT. Spool V1 takes AAVE token rewards accumulated through participation in the AAVE lending markets and sells them on Uniswap for the user’s respective Spool asset to be re-compounded on the next rebalance.

Compound: The Compound strategy supplies the user’s respective Spool asset to the lending markets and will accrue APY for DAI, USDC, and USDT. Spool V1 takes COMP tokens accumulated through participation in the COMP lending markets, and converts them into the user’s respective Spool asset to be re-compounded on the next rebalance.

Convex: The Convex Strategy supplies the user’s respective Spool asset to the Curve 3pool liquidity pool and stakes the respective deposit on Convex Finance and will accrue APY for DAI, USDC and USDT. Spool V1 takes the CVX and CRV token rewards that are accumulated, and converts them into the user’s respective Spool asset to be re-compounded on the next rebalance.

Curve: The Curve strategy supplies the user’s respective Spool asset to the 3pool liquidity pool, allowing other users to swap and transact more efficiently through Spool’s supplied liquidity. The LP tokens granted from this deposit are staked in the Curve Gauge to receive CRV token rewards and will accrue APY for DAI, USDC, and USDT.

Harvest: The Harvest strategy supplies the user’s respective Spool asset to Harvest Finance and will accrue APY for DAI, USDC, and USDT. Harvest Finance in turn supplies the deposited funds to Idle / Compound to generate optimal returns while auto-compounding.

Idle: The Idle strategy provides Idle with the user’s respective Spool asset and will accrue APY for DAI, USDC, and USDT. Idle then automatically rebalances between Compound and AAVE in order to generate the best returns with the asset provided. Spool V1 takes the IDLE token rewards that are accumulated and converts them into the user’s Spool asset to be re-compounded on the next rebalance.

Yearn: The Yearn strategy provides Yearn’s main stablecoin management with the user’s respective Spool asset and will accrue APY for DAI, USDC, and USDT.

The Genesis Risk Model

In order to efficiently rebalance between these protocols a Genesis Risk Model is provided. The Genesis Risk Model is the first Risk Model supported within the Spool Ecosystem. It utilises a quantitative method for assessing the risks associated with particular strategies and protocols. (If you would like to supply your own Risk Model for use within the Spool protocol, you can submit it to the Spool DAO to be vetted and voted in.)

The Spool Labs “Genesis” Risk Model quantifies “Risk Scores” based on the following select input parameters such as:

• The “Risk Free” annual percentage yield, this metric reflects the overall state of the market and therefore is an important input into a risk model. During a bull market where people are willing to pay high rates to borrow money, the “Risk Free APY” is higher than during a risk off period. Spool takes the current APY of a respective protocol and deducts the current “Risk Free Rate”.
• The current APY of a protocol: Since APY is a strong reflection of market perceived risk, the current APY of a protocol is one of the inputs to a risk model. Usually a higher APY means a higher perceived risk and vice versa.
• Audits: Audits are a metric that’s relatively difficult to quantify (quality of audit, its age etc.) hence why Spool takes audits as an integer value, but it has a low weighting in the overall risk score.
• Bug bounties: Bug bounties are dollar amounts (or crypto) that protocols / DAOs are willing to pay to whitehat participants upon discovering bugs, a high bug bounty usually implies that more white hat participants have reviewed the codebase of a protocol and this directly influences the risk of said protocol. In this case “Higher is better”.
• Time deployed: The longer a smart contract is deployed, the higher the probability that the code is “solid” in base. Additionally, more time deployed means more eyes on the codebase. Both of these are factors that decrease the risk of a certain protocol.
• Total TVL of a protocol, the value locked in a protocol, just as APY, reflects the market perceived risk of a protocol. More TVL generally speaking means more trust in said protocol and in turn a lower risk when using it.
• “Depth of Smart Contracts”, wrapper smart contracts are inherently more risky, hence why “Depth of Smart Contracts” (the amount of times a SC is wrapped / inherited) is incorporated into the risk score. This is relatively low weighting in the overall risk score.

The Spool Labs “Genesis” Risk Model then takes these inputs to construct a “Risk Score” based on the variances between the Spool’s selected protocols.

Risk Models are used to quantify risk for each strategy in a meaningful way thereby allowing Spool to appropriately allocate capital to generate Risk Optimised Returns.

Genesis Spools

The Genesis Spools will consist of two main Spools.

A low risk one, with a low risk tolerance set to “-8” and a high risk one, with a high risk tolerance set to “+8”, on a scale that ranges from -10 to +10. Risk tolerance can best be defined as the willingness of a user towards taking on relatively more risk for more yield.

This setup facilitates the majority of users that we’re expecting and is a perfect PoC to display the differences between the various ways Spool can be used.

Keep in mind that the goal of the Genesis Spools is NOT to deliver maximum yield or to access cutting edge high yield strategies. Instead, the intention of the Genesis Spools is to showcase and validate the architecture of the Spool contracts on mainnet by efficiently routing and rebalancing capital from a high volume of users whilst demonstrating scalability via economies of scale.

Spool’s product is infrastructure, not yield. Ultimately, the yields achieved through Spool are a function of what yield generating strategies a given Spool routes to. Therefore the “effective yield” achievable through Spool for end users will be a function of the array of yield generators they select + X, with X being efficiency gains Spool generates for the user via constant gasless rebalancing, auto-compounding, and optimization.

Genesis Spool Incentivization

In addition to the inherent base yield the Genesis Spools come with, users are able to earn additional $SPOOL token incentives by depositing into Genesis Spools. Incentives for Genesis Spools will last for at least 3 months and are intended to kickstart adoption of the Spool Protocol and to distribute governance tokens to protocol users.

$SPOOL received through the incentive program can be staked to receive $SPOOL rewards, Protocol Generated Revenue (PGR), and to accumulate governance power in the form of voSPOOL, which is further incentivized with $SPOOL rewards to ensure a decentralised distribution of voting power.

The Future is DAO

Putting the power, decision making and direction into the contributor’s hands is at the core of Spool’s model. Although the conception of Spool’s design came from few minds, opening its potential to the collective has been the motivation behind its prototype.

Spool’s impetus has been plugging away from dusk till dawn to bring this innovation to life. It’s with this effort that the new Genesis Spools will offer the most competitive risk-adjusted stablecoin yield on the Ethereum network for at least 3 months.

Through extensive auditing and security measures taken to ensure its user’s funds are secure, Spool’s formula has been scrutinised by specialists to ensure that the security model is optimised to deliver maximum security for user funds and the routing of these funds to underlying protocols.

Leading on from the above statement, a large bug bounty will be offered to the Spool community to stress test every fact of the protocol — more details of this will be announced in the coming days.

With a meticulously assembled roadmap in the pipeline, Spool is primed to extend the capabilities of the protocol. Underpinning this is an innovative token economics model designed to accrue value to the $Spool token and reward stakeholder participation.

Spool is the paradigm shift that brings together a fragmented and often inaccessible DeFi ecosystem through a series of composable tools that also serve to remove barriers to entry for TradFi entities, enabling them to effortlessly integrate DeFi offerings whilst satisfying their regulatory requirements.

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Spool is composable and permissionless DeFi middleware that connects Capital Aggregators with DeFi Yield Generators to dynamically, automatically, and efficiently allocate funds and ensure optimized yields, for custom strategies, managed by DAO-curated Risk Models.

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