Synthetic proactive market maker
WOOFi's sPMM model
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WOOFi's sPMM model
Last updated
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WOOFi's swap uses an onchain market-making algorithm called . The sPMM algorithm, which works in tandem with WOOFi's high-frequency allows professional market makers to simulate the price, spread, and depth of the order book on centralized exchanges onchain.
WOOFi is the only swap DEX that pays rebates to wallets, apps, and aggregators that route order flow to it. WOOFi rebates 20% of its swap fee in USDC back to the broker who routes the trades to it.
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Exchanges like Binance and WOO X typically have better liquidity for majors than DEXs, so by simulating centralized exchange liquidity, 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 historically achieves 200%~1000% capital efficiency (i.e. volume-to-liquidity ratio). This allows WOOFi to keep borrowing costs low, which results in lower swap fees for traders.
Instead of having separate liquidity pools for each trading pair, WOOFi uses a singleton pool design that holds and manages all the assets using multiple base tokens and one quote token. WOOFi 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 effective on new blockchains that have thinner liquidity on major assets, as users do not need to pay exorbitant fees and suffer high slippage.
Sandwich attacks are one of the main concerns for any size DeFi trader. Since the price in AMMs is determined by the token balances in the liquidity pool, an exploiter that detects a pending transaction can frontrun the victim's trade by pushing the price up, then selling back to them for a higher price.
In WOOFi, the price is determined by the parameters of 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 frontrun other users.