Farms / Investment Strategies

The Core Primitives of Dexponent

Farms are the fundamental building blocks of Dexponent, each representing a unique yield-generation strategy—ranging from staking and lending to advanced rebalanced index funds and AI-driven portfolios. Each Farm is deployed as an independent smart contract capable of handling various asset types (ERC20 or native ETH) while ensuring security, transparency, and performance.

When a liquidity provider deposits funds, the Farm mints claim tokens on a 1:1 basis with the principal. These tokens represent a verifiable claim on the underlying asset, enabling seamless transfers and secondary market liquidity. For instance, the minting is done as follows:

// Mint claim tokens 1:1 to the LP upon deposit.
claimToken.mint(msg.sender, amount);

At the time of deposit, an immediate bonus in $DXP tokens is also awarded. This bonus is calculated based on live pricing data from a Uniswap V2 pair, using a configurable bonus ratio. A snippet of the bonus calculation logic looks like this:

// Calculate bonusTokens = (principalAmount * depositBonusRatio * price) / (100 * 1e18)
bonusTokens = (principalAmount * depositBonusRatio * price) / (100 * 1e18);

Yield accumulation is tracked continuously, and when the maturity period is reached, liquidity providers can claim their yield net of protocol fees. The fee rate is determined dynamically by the Protocol Master:

// Retrieve fee rate from Protocol Master and compute net reward.
uint256 feeRate = IProtocolMaster(protocolMaster).getProtocolFeeRate();
uint256 fee = (pending * feeRate) / 100;
uint256 netReward = pending - fee;

For principal redemption—whether at maturity or via early withdrawal—LPs must burn their claim tokens, ensuring that these tokens consistently represent a claim on the deposited asset:

// Burn claim tokens to redeem principal.
claimToken.burnFrom(msg.sender, amount);

This design ensures that each Farm operates as a self-contained yield engine. Liquidity providers enjoy clear ownership over their principal through claim tokens, receive market-driven bonus rewards, and are protected by rigorous performance and fee mechanisms. Together, these features form a robust, transparent system that aligns incentives across all participants while delivering predictable, high-performance returns.