On April 5th, a new project, Drip, was launched using Spool’s infrastructure.
Drip supercharges launch pools, allowing users to earn project tokens in exchange for yield earned through staking stablecoin and $ETH deposits into various DeFi strategies.
In three days, Drip has accumulated $7 million in total value locked (TVL.)
Between April 6th and 8th, 2024, Spool’s clearing process, DoHardWork (DHW), processed:
- 284 deposit and withdrawal transactions,
- Nearly 50 yield auto-compounding transactions
- The dozens of steps required for multi-step yield farming strategies
The cost? Only $776 in gas across three separate transactions.
What is DoHardWork (DHW)?
DoHardWork (DHW) is a function that can be called by any white-listed “Do Hard Workers.”
This function is an essential component of Spool, compounding yield, managing reallocation between strategies, and handling pending deposits/withdrawals for vaults.
DHW ensures that complicated and large function calls are handled together rather than called individually, leading to significant savings. What’s more, Spool reimburses any external party that calls the DHW function in $SPOOL, resulting in no end financial cost to the end user.
Why Affordable DeFi Matters
Yield farming is complicated. Ensuring you’re using your capital efficiently requires several key steps and considerations:
- Managing your portfolio positions across several yield-generating protocols
- Formulating strategies that require deposits to multiple protocols
- Precisely timing and accurately calculating your planned yield (APY)
- Auto-compounding your yield strategically to maximize your rewards
- Re-allocating your positions as APY and protocol risk factors evolve
There’s as much room for profit as there is for error.
Spool automates these processes for you, allowing you to accrue yield without requiring full-time portfolio management.
How Do Yield Farmers Save with Spool?
Saving on gas fees is simple with Spool:
1. Optimized deposits and withdrawals for portfolios using two or more protocols
Most yield farming strategies are multi-step. In a scenario where gas costs 25 gwei, depositing into each strategy separately costs between $30–40 per transaction. Fees easily reach >$100 in this scenario.
With Spool, you’ll pay $60–70 to deposit into a Spool Vault, regardless of how many steps are involved in that Vault’s strategy. The more sophisticatedly multi-step your strategy, the more you’ll save with Spool Vaults!
2. Optimized costs for multi-step strategies
Due to their sophistication, yield farming strategies generally involve multiple steps.
For example, a user seeking to earn a yield on their staked Ethereum with Convex has their work (and costs) cut out for them:
Spool handles each of these steps for you at a low cost of $0 — only pay to deposit and withdraw.
3. Optimized transaction slippages
In DeFi, many deposits and withdrawals must be made using decentralized exchanges (DEXs), which can have notoriously high slippage. Slippage entails an additional cost to the end-user and can result in unexpectedly low returns.
Spool saves these costs by only executing trades with correct slippage amounts.
4. Auto-compounding positions
Perhaps Spool’s most powerful gas savings mechanism is its auto-compounding feature.
Collecting your rewards, swapping them, and reinvesting them back into positions can quickly become expensive.
Let’s use Gearbox as an example, where you can earn organic yield from lending plus $GEAR rewards.
Currently, Gearbox offers stablecoin strategies on average, yielding 25% APY + 5% $GEAR rewards.
Compounding your $GEAR rewards into your existing stablecoin strategy increases this yield by an additional 8.9% per month when compared to not compounding. For example, a yield of 10% becomes a yield of 10.89% — a significant difference month over month.
Unfortunately, the multiple transactions required to swap your $GEAR into stablecoins and compound the position fundamentally limit this potential opportunity.
Unless you’re using Spool, which automates all of the above for you!
Spool.fi is a permissionless DeFi platform that connects Capital Aggregators with DeFi Yield Generators. Funds are dynamically and efficiently allocated to ensure optimized yields, for custom strategies, managed by DAO-curated Risk Models.
Spool was established as a DAO, with a selection of founding contributors representing a diverse cross-section of the blockchain community.
