Ecosystem Summary
The main constraints of WHEAT Mutual which WHEAT will address are:
Cover Demand: Maximize cover sales through WHEATCore and WHEATShield, which maximizes rewards thereby attracting more capital to increase cover capacity.
Cover Capacity: Maximize cover capacity by capturing and staking ETH back into the WHEAT Mutual ecosystem to boost cover capacity.
Having the ability to address both the supply-side and demand-side constraints puts WHEAT in a unique position to maximize cover sales and there by rewards for stakers, while minimizing costs for buyers.
The current WHEAT system is composed of the following products and tokens:
$WHEAT is the governance token of the protocol, functions include voting on updates to smart contract code, fee model constants and claims assessment.
WHEAT Yield Vault allows users to deposit their WHEAT tokens in the Nexus Mutual ecosystem and earn yield without requiring KYC.
$WHEAT FARM is the yield bearing token of the WHEAT yield vault (replacement for ETH). WHEAT accrues staking rewards, increases coverage capacity on nexus mutual, and circumvents the mandatory staking lockup period.
WHEAT FARM Tokenized Coverage is a wrapper for WHEAT Mutual coverage with many security improvements over the original tokens.
WHEAT Staking Pool allows users to stake WHEAT to sell coverage and earn yield through WHEAT’s Smart Cover System and Shield Vaults.
WHEATCore Smart Cover System is our first product that facilitates smart yet simple, dynamic, pay-as-you-go WHEAT Mutual coverage on your funds to protect them against smart contract risks.
WHEAT Vaults are protected vaults for LP tokens with autopayments, powered by arCore. Users can deposit their LP tokens and enjoy fully or partially collateralized smart contract insurance coverage. Cover fees are subtracted from the yield generated from pool fees — that means you never have to pay manually or deposit funds up front.
Uniswap LP token staking vault
Sushiswap LP token staking vault
More soon
WHEATDAO is sufficiently decentralized at launch while maintaining organizational agility. The proxies are controlled with a new hybrid system. There is a timelock owned contract which controls everything with two owners: a team multisig and a full DAO.
To return WHEAT
The WHEAT FARM vault will maintain a reservoir to provide liquidity (for ETH/WHEAT), which refreshes the WHEAT balance every week on Mondays (to coincide with Nexus staking rewards distribution). In addition to the WHEAT added through rebalancing, all deposits from users during the week will also be kept in the reserve and serve to provide additional liquidity until the next Monday when retaking occurs. Funds may be withdrawn at any time given sufficient liquidity is available.
The amount of WHEAT FARM to keep in the reserve is calculated as a percentage of the total Assets Under Management (WHEAT). The default value at start will be set at 10% WHEAT. Adjustments can be made through governance as required.
f = Amount of funds to keep in the contract in reserve
WHEAT = Total amount of funds under the vault’s control
r = The percentage, in a decimal format, of WJEAT to keep in reserve each week
f = r * WHEAT
f=r∗ WHEAT
If this reserve completely runs out of funds, users may not withdraw until next week when the newly unstaked WHEAT will refill the reserve.
Claims Process
In the case of a successful claim and payout on a contract that WHEAT was staking on, the vault will lose its stake (proportionally based on the share of the staking pool and the size of the claim) resulting in a lower conversion rate of WHEAT.
In the case where a claim is made and is anticipated to succeed, informed users may withdraw their WHEAT FARM in return for WHEAT from the reserve. The maximum drain is limited by reservoir size and market forces will equalize the price of WHEAT FARM over time.
Additional controls such as layer 2 insurance solution and automatic rebalancing of WHEAT pricing to reflect losses due to potentially successful claims will be introduced in the future to protect investors from risk of loss.
Withdrawal limit on swaps from the WHEAT Vault
The maximum withdrawals of WHEAT per refill cycle is limited to the size of the reservoir plus any deposits made through the cycle, which are not staked until the end of that cycle. The reserve size can be optimized to ensure users have sufficient liquidity throughout the cycle, leave enough for staking to maximize rewards, and limit large drawdowns from the vault; this balance will be adjusted through governance as needed.
In reality, we anticipate very little conversion of WHEAT to WHEAT FARM since users can sell their WHEAT directly for ETH through the various LPs.
