Synthetic proactive market maker

WOOFi's sPMM model

WOOFi's swap uses a brand new onchain market-making algorithm called Synthetic Proactive Market Making (sPMM). The sPMM algorithm, which works in tandem with WOOFi's high-frequency onchain oracles allows professional market makers to simulate the price, spread, and depth of the order book on centralized exchanges onchain.

Furthermore, WOOFi is the only swap DEX that pays rebates to dApps that route order flow to it, so they don't always provide free service. WOOFi rebates 20% of its swap fee in stablecoins to the broker who routes the trades to it.

Learn more about WOOFi brokers.

High capital efficiency

WOOFi simulates the liquidity of both spot and perp markets on centralized exchanges which typically have better liquidity for majors than DEXs, so it is able to outperform AMMs in the execution of the same trade size, with a fraction of the TVL. WOOFi's sPMM liquidity pool can achieve 200%~1000% capital efficiency (i.e. volume-to-liquidity ratio) based on analytics, and with such a high turnover rate we are able to keep the swap fee as low as 2.5bps (i.e. 0.025%).

In addition, instead of having separate liquidity pools for each trading pair, WOOFi uses a singleton pool design that holds and manages all the assets including multiple base tokens and one quote token. The sPMM auto rebalances the assets in the pool by providing more favorable quotes to traders who send assets that are low in liquidity to the pool. This design further improves the volume-to-liquidity ratio and saves on gas fees for users.

With such a design, WOOFi is able to quickly provide high-quality trading execution for major assets on any blockchain without liquidity bootstrapping. WOOFi is particularly useful on the new blockchains that have thinner liquidity on major assets, as users do not need to pay exorbitant fees and suffer high slippage.

MEV protection

The sandwich attack is one of the main concerns for any size DeFi trader, and it's very common in AMMs. The price in AMMs is determined by the token balances in the liquidity pool, the exploiter sniffs out the pending transactions on the network and front-runs the victim's trade to push the price up. The victim buys at a higher price of asset Y, then the attacker sells at a higher price. As a result, it causes loss for the victim.

In WOOFi, the price is determined by the parameters of onchain price feeds and sPMM algorithm instead of the liquidity in the pool. It proactively updates the price on chain at a ~0.1% price deviation, therefore, the exploiter will not be able to artificially push the price up to front-run other users.