Tell us about yourself and Spool
I am a Co-Founder of Faculty Group and a Core Contributor to Spool DAO. Spool is a decentralized finance protocol and platform that radically simplifies investing in DeFi. Spool was born in a very unique way. Instead of forming a startup with a dedicated team and building a prototype, the early contributors to Spool came together in a DAO to jointly create the vision for the protocol using our different backgrounds in blockchain, DeFi, DAOs, and economics.
This collaborative brainstorming and development process led to what Spool is right now: A platform that allows all types of users to flexibly compose portfolios of yield-generating DeFi strategies that are auto-compounding, auto-rebalancing, and protected by professionally created and maintained risk models. In short, Spool is the infrastructure that allows anyone, individuals and institutions, to build their own decentralized financial service. That service is open to everyone to invest in and the creator of the service can benefit from a performance fee if they wish.
What does Spool bring to the world of Decentralized Finance? What are its benefits?
Spool ensures that capital always goes where it is most efficiently used, considering the capital providers’ unique specifications and profile.
It does not compete with any existing DeFi protocols, instead, Spool synergizes these protocols by routing reliable capital to them as long as they can provide a competitive risk-adjusted return. At the same time, Spool does not set any fixed rules for creators. Users define their own personal risk appetite by either selecting or building their own risk models. This grants users flexibility in risk for their meta-strategy by selecting which underlying DeFi primitives they want exposure to in order to generate the yield they seek. On the other hand, new DeFi primitives now have a straightforward strategy to bootstrap liquidity. By having their strategy made available to Spool users, they gain exposure to all of Spool’s users and real liquidity, as long as their risk-adjusted yield keeps up with the other strategies Spool supports. In that sense, Spool creates a meritocracy that gives newcomers a shot if they have a compelling product. Your yield is high while risk model creators rate your protocol as secure? Congratulations, Spool will provide you with ample liquidity from its users while you keep focusing on building great products.
How can one build a DeFi product using Spool? Do you need special knowledge for this or can anyone do it?
Overall, it’s really easy. Spool Smart Vaults remove the complexity that comes with setting up and managing a portfolio of DeFi yield generators. If you want to build a vault that mirrors your own strategy for your friends and family to use while retaining custody over their funds? This should take you all but 5 minutes.
Do you want to integrate a vault into a personal finance app that you want to grow? We have an SDK to completely whitelabel that product for your own use. In that case, Spool acts as a reliable backend to build great user experiences and onboard new capital.
If you are looking to build a complex product that leverages yield strategies, Spool acts as a reliable building block. We remove a very complex and error-prone step from the development process and cut out tons of strategy maintenance needs in the long run.
All these different use cases run on the same architecture. This means that one could even scale the very same vault they created in the first example through the second and third cases.
What can we hope to see from Spool in the future?
Currently, Spool supports only stablecoin-based strategies. The next challenge is to vastly increase the variety of strategies available to protocol users. Requests from current and future users help shape the way for new features and a better
architecture that allows us to unite all potential use cases under a single hood. Think along the lines of support for volatile assets such as ETH, BTC, in addition to staking derivatives. This could unlock hundreds of billions in liquidity for relatively simple, yet very productive and innovative yield-bearing strategies. Or, going down a completely different avenue, implement features that allow traditionally regulated institutions to easily follow KYC and AML rules in a way that current DeFi does not support. Thus enabling them to finally put billions of dollars in capital to use in DeFi. Spool is pursuing all of these things with one clear vision in mind: Enabling a new generation of fair, flexible, and viable financial services built on real yield provided by innovative decentralized finance products.