Protocol Overview
Last updated
Last updated
Each Farm incorporates a unique yield generation mechanism, covering traditional approaches such as staking and lending pools, as well as advanced financial constructs like CDOs, delta neutral strategies (e.g., a Memecoin Index Fund with hedged long/short positions to reduce market volatility while maximising yield), and algorithm driven benchmarking Farms secured by Trusted Execution Environments (TEEs).
The protocol’s architecture is fundamentally modular, enabling secure on-chain deployment, real time adaptability, and strong risk management across all Farm implementations.
The Dexponent Protocol operates as the Master Contract and serves as the central hub of the ecosystem. This contract governs the protocol’s native tokens and maintains an authoritative registry of all Farms, including the RootFarm. This contract oversees deposit bonuses for non-root Farms, handling features like pinned bonuses, reversal mechanisms, and cooldown periods while also managing how Farm generated revenue is distributed.
Revenue splits are calculated and disbursed among verifiers, yield strategists (Yield Yodas), and Farm owners, with a protocol fee to maintain operational reserves and partially redirect liquidity in the RootFarm. Additionally, the Master Contract includes cross-chain functionality via an IBridgeAdapter interface, allowing seamless updates and interactions across different blockchain networks.
Risk assessment and performance validation in the protocol are handled by the Sharpe Consensus, a decentralised verification system powered by a network of verifiers. Using statistical analysis and benchmarking techniques, it evaluates and ranks Farm performance with every block. At its core is the Proof of Returns methodology, which sets risk reward thresholds that verifiers use to score strategies. To participate, verifiers must stake assets, and those who provide inaccurate or suboptimal assessments face slashing penalties, ensuring accountability and alignment with the protocol’s performance objectives.
Complementing this, an integrated insurance pool offers hedging options, allowing participants to mitigate risks associated with Farm underperformance. Together, these mechanisms strengthen network integrity while encouraging accurate assessments and high quality strategy execution.
The protocol supports a dual track approach to Farm creation: permissioned and permissionless. Institutional Farm Owners can launch curated strategies, capitalising on their established credibility, while retail stakeholders are equipped to launch innovative yield generation mechanisms without requiring centralised approval. Liquidity providers can allocate their funds based on clear, risk adjusted performance metrics provided by the Sharpe Consensus. Governance is fully decentralised, with voting power proportional to vDXP token holdings. The modular design ensures security, operational efficiency, and scalability, creating a sustainable ecosystem that grows stronger as more participants join.
