Spool: Infrastructure for Composable Capital Deployment
DeFi yield can seem magical at times.
It feels so magical that users are sometimes tempted to go “all in’’ by concentrating capital in a single protocol and ignoring the risk of being wiped out by an exploit, smart contract failure or sudden change in yield profile.
More often than not, this behaviour is not driven by inherently risk-seeking behaviour, but because the current DeFi user experience railroads us into concentrating our funds. It’s just easier to deposit all capital into a single smart contract and be done with it, especially for smaller investment sizes.
To avoid such occurrences, yield-seeking DeFi investors are currently presented with a choice, either;
1) use a robo-advisor, wallet, or other similar automated yield management tool that offers a rigid set of pre-selected investment strategies, or
2) undertake the laborious task of manual portfolio construction and regular rebalancing to account for changing yields.
Existing yield management tools offer very little in the way of customisation and investors are often subject to a ‘one-size-fits-all’ solution that is unlikely to really ‘fit’.
Alternatively, manual portfolio diversification can be expensive (due to frequent rebalancing gas fees), tedious, and requires significant time and expertise in order to apply the necessary mathematical modelling to optimise results.
DeFi has reached over $50 Billion in TVL this year, but for this growth trajectory to continue, effective infrastructure is required that allows the dynamic creation of risk-managed and automated investment products that address these issues and are tailored to both professional and retail investors.
Introducing Spool
Spool is DeFi infrastructure, or ‘piping’, that allows users to build fully customised, risk-mitigated, ROI optimised, and automated yield-generating strategies… simply and effectively.
Spool allows anyone to create an automated yield-generating DeFi portfolio (a “Spool”) covering complex tasks, such as risk evaluation, risk/reward based portfolio construction, and rebalancing, in order to deliver the most optimal risk-adjusted yield from the custom strategies deployed, based on the user’s indicated risk tolerance.
Once created, a Spool can forever be accessed via a single deposit address. Any deposits are seamlessly added to the created strategy based on the optimal allocation as calculated by the Portfolio Constructor.
The Vision for Spool
Spool is designed for the existing crypto ecosystem, while also considering future sources of capital flowing into DeFi from traditional finance or new fintechs.
As middleware, it is intended as a toolbox for anyone to create automated yield-generating strategies that can act as a standalone and personal “custom vault” or as a tailor-made service offering for a community of users.
Some examples:
- DeFi power-users that have a clear strategy for their portfolio in mind, but lack the time or inclination to execute it manually
- DeFi newcomers that wish to automatically follow a yield strategy created by a trusted 3rd party
- Capital aggregators (like wallets or exchanges) that want to easily create a custom DeFi vault for their users with their own strategy and branding
- Community leaders seeking to provide a custom yield strategy for their community
- Market neutral funds looking to create and easily maintain complex stablecoin-based strategies for their capital
Spool is decentralised middleware, which means the creation of a Spool is completely free and available to anyone. Experimentation is encouraged, and with a full scripting environment, the possibilities are endless.
SpoolDAO — A DAO-First Approach
Permission-less middleware requires efficacy, transparency, and subject matter expertise.
To ensure that the core principles of decentralisation are adhered to from the outset, control was ceded to the DAO from day one. However, decentralisation is a process.
In order to guarantee that Spool can fulfil its vision, the DAO has been seeded with a broad spectrum of DeFi and blockchain experts that will jointly vote on proposals determining the short-term development of Spool.
By setting a professional and productive tone from the beginning, new members of the DAO will encounter an organised environment that supports purpose and relevance.
Please refer to the website for more information on the DAO Founding Contributors.
The Road Ahead
Over the coming weeks we will be releasing more information about the Spool Roadmap, Founding Contributors, and how interested parties can participate.
Additionally, We will soon release more information on the distribution of SPOOL tokens, the native governance token for the Spool DAO.
We look forward to welcoming you to Spool as we embark on this journey to democratise access to DeFi.
