WOOFi Earn provides passive yield generating strategies, where users simply deposit into a vault and let the automated strategies do the rest.
WOOFi Earn enables users to earn competitive yields while maintaining exposure to only a single asset. The Supercharger vault is the flagship product of WOOFi Earn, which amplifies yield for users by supplying liquidity in WOOFi's sPMM (synthetic Proactive Market Making) pools. WOOFi's sPMM approach is more similar to a typical exchange's order book than an AMM like Uniswap. The sPMM scans order book prices from centralized exchanges like Binance and calculates an appropriate trading price using WOO Network's market data oracles. Each Supercharger vault accrues yield from two separate sources: liquidity provision and external yield farming. The external yield farming generates a base yield on the deposited funds and generally involves a low-risk auto-compounding strategy like lending. Moreover, the WOOFi liquidity provider or sPMM pool manager (i.e. Kronos Research) may then borrow up to 90% of the assets within the vault at a fixed rate to provide liquidity on WOOFi. The vaults automate the process of compounding interest by harvesting rewards and reinvesting periodically. Importantly, this single-sided pool is designed to eliminate the risk of impermanent loss as the WOOFi LP mitigates the divergence risk by hedging its exposure on WOO Network's centralized exchange, WOO X. The Supercharger vault has a 7-day settlement cycle, and there is a 24-hour time window after each cycle ends for the LP to settle loans based on user requests. Users can withdraw with no fee or limit (except when the vault is under settlement) and may withdraw once the settlement is complete. WOOFi sets aside 10% of the TVL each week for instant withdrawals, though applies a 0.3% withdrawal fee to prevent abuse of the system.
WOOFi Earn vaults charge a 3% performance fee on harvest rewards. This 3% fee is then split up, with 2.5% used to buyback WOO token and distributed to WOO stakers and 0.5% used to cover the gas costs of harvesting and reinvesting. The fees are already included in the APY displayed for each vault.
Risks that are specific to WOOFi Earn's Supercharger vaults include a centralized component and hedging risk. The Supercharger vaults in its current form still have a trust element as the users allow the sPMM pool manager (i.e. Kronos Research) to borrow the deposited assets with no collateral and manage them by providing liquidity in WOOFi Swap. The sPMM pool manager uses its own trading strategy to stay market neutral so that users can always withdraw their initial deposit. However, there can still be a risk of losses during the hedging process due to a delay or reorg of the underlying blockchains.