Protocol Design
Last updated
Last updated
The protocol is architected to enable the creation and management of diverse investment strategies—collectively known as “Farms.” Each Farm represents a distinct yield-generation strategy ranging from conventional staking and lending pools to more sophisticated methods such as collateralized debt obligations (CDOs), rebalanced index funds (e.g., a Memecoin Index Fund), and even more novel financial primitives like AI-agentic Farms with TEEs. Central to this design is a modular system that ensures secure, on-chain deployment and dynamic risk management across all strategies.
When a Farm is created, liquidity providers deposit their principal into a non-custodial pool and receive claim tokens—a dedicated ERC-20 token minted on a 1:1 basis with their deposit—that represent a direct claim on the underlying asset. These claim tokens not only enable seamless transfers and secondary market trading of principal claims, but they also serve as the redemption mechanism for retrieving staked assets upon maturity or early exit. Additionally, the protocol awards an immediate bonus in its native $DXP tokens at the time of deposit. This bonus is computed based on live market pricing from a AMM pool on the principal asset of that farm against DXP (or, when necessary, created via the router) and a configurable deposit bonus ratio, ensuring that LPs receive upfront value that reflects real market conditions.
Risk management and performance validation are achieved via the Sharpe Consensus, a mechanism driven by a decentralized network of verifiers. These verifiers use statistical and AI-driven benchmarking to dynamically assess and rank the performance of each Farm on a block-by-block basis. They employ a Proof of Returns methodology to set risk-reward benchmarks, and their stake—and potential slashing for poor performance—ensures that only well-performing strategies thrive. In parallel, an integrated insurance pool offers hedging solutions, enabling market participants to safeguard against underperformance, thus aligning incentives across all stakeholders and bolstering overall network discipline.
The protocol supports both permissioned & permissionless Farm creation. Institutional Farm Owners, leveraging their brand and reputation, can launch curated strategies, while retail participants are empowered to deploy innovative yield strategies without centralized gatekeeping. Ultimately, liquidity providers choose where to allocate their funds based on transparent, risk-adjusted metrics, while the entire ecosystem benefits from decentralized governance via vDXP-weighted voting. This unified, modular framework not only enhances security and operational efficiency but also creates a self-reinforcing network effect—a durable competitive advantage in the rapidly evolving DeFi landscape.
