Lesson

Wombat Exchange: Advancing into Stableswap 2.0

Wombat Exchange is a hyper-efficient multichain native on the BNB Chain, focused on re-engineering the stableswap experience with its innovative algorithm design. Wombat’s vision is to fuel DeFi growth and push boundaries through superior capital efficiency, increased accessibility, and greater scalability with the adoption in a multi-chain world.

Stableswap is a critical foundation for DeFi. We have witnessed massive success like that of Curve Finance. As DeFi grows, the need for newer innovation becomes more evident. Wombat Exchange has foreseen these needs and is here to bring it all.
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What is Wombat Exchange?

As a multi-chain stableswap native to BNB, Wombat Exchange is focused on re-engineering the stableswap experience through its algorithm design.

Our vision is to fuel DeFi growth and push boundaries through superior capital efficiency, increased accessibility, and greater scalability with the adoption in a multi-chain world.

Wombat Exchange has pushed forward in various aspects of an AMM platform. Minimizing slippage, maximizing capital efficiency, and laying the groundwork for being a multi-chain stableswap has attracted a great number of traders, which consequently enticed more liquidity providers because of the platform's trade volume.
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What’s a stableswap 2.0?

An idea or a product termed 2.0 is typically more advanced than its predecessors. Same as DeFi 2.0 provides solutions far more superior than the earlier projects in the space, a stableswap 2.0 follows the same principle.

Wombat utilized a concept from traditional finance called Coverage Ratio, a.k.a. Asset-Liability Management which puts us at an advantage compared to other stableswaps. It allowed us to address issues like high slippage, inferior capital efficiency, and lousy user experience.

In the aspect of math, Wombat uses a modified invariant curve (an improvement of Curve's algorithm) which makes it highly scalable. The algorithm provides accuracy in the swaps and gives out precise and gas-efficient calculations. This allows Wombat to adapt into different chains, even in the ones suffering from finality and blocktimes. The ingenuity of Wombat Exchange makes us a potential contender of Curve Finance.

Projects in the space tumbled one after another during the brutal bear market of 2022. In the making of our stableswap, we have foreseen these events and constructed a system that protects users’ funds, first and foremost. The concept of Equilibrium Coverage Ratio was brought by us to maintain overall system health, spotting risks, and managing them before tragedy strikes.

For a protocol to thrive, a robust ecosystem is the key. Wombat has its eyes set on building its own thriving ecosystem for the longer term. An incubation lab is a part of our roadmap where it can support future projects building on top of our foundation. The synergy of these projects will generate countless benefits for Wombat's governance token holders, as providing value to its users is undeniably woven into our mission.

How does Wombat's liquid staking pool work?

Wombat's main pool consists of USDC, USDT, DAI, and BUSD, which are the well-established and time-tested stablecoins.

Apart from the main pool, Wombat enabled different pools designed to safely list stablecoins of more volatile nature. This gives users the choice to engage in stablecoins with varying levels of risk. Our job is to mitigate these risks and safeguard the other pools from being affected by a certain token should catastrophic de-pegging happens.

The liquid staking pool is an exception as it contains yield-bearing tokens, including stkBNB and BNBx, where its exchange rate changes over time. Thus, external oracles are required for an accurate swap calculation.

Due to its relatively volatile nature, the liquid staking pool has a stricter coverage ratio requirement on each token, and extra fees will be charged, which helps to penalize users that trade too far away from the pegged price.

Slashing or penalties resulting in losses of the underlying BNB pool of the liquid staking provider is extremely rare. If this happens, losses are expected to be compensated by the liquid staking providers to maintain the liquid staking token peg to the base asset BNB.

Users are able to swap freely within these assets and earn WOM + BNB from staking these yield-bearing tokens on Wombat.