Note: this article introduces a new DeFi protocol. For more information on DeFi, and to learn about this world, take a look at some useful explainers first. A good place to start is with Bankless or The Defiant’s DeFi 101.
What is Gro Protocol?
Gro Protocol is a DeFi yield optimizer that balances risk and offers leverage and protected savings through its tranching mechanism. It offers different products to match your personal yield and risk profile.
Use Vault to get leveraged returns by taking on more risk, or save with PWRD to get protected savings and yield at the same time.
Introducing PWRD and Vault
Power your savings with PWRD
PWRD is a protected savings product that offers low-risk access to high DeFi yields, baked into a reliable stablecoin. Receive high returns on your US dollars while knowing that your money is safe and secure.
Made up of a basket of stablecoins, PWRD risk is diversified and lower than other products in the market. To reduce risk further, PWRD is always at least 100% protected by the capital deployed in Vault. There is no cap on the amount protected, and the protocol makes sure there is enough Vault TVL to cover PWRD (and won’t let you buy more PWRD if not).
Even in the unlikely case scenario of a major stablecoin failure, your funds will be safe. It would take multiple simultaneous and major failures of protocols and stablecoins to touch the PWRD funds.
Technically, PWRD is designed as a stablecoin. But it is more stable than other stablecoins because Vault absorbs any price volatility of the underlying basket of stablecoins to make PWRD more stable than its components. Yield is delivered into a users wallet as a stream of new PWRD stablecoins.
Why would I use it?
PWRD is like an alternative to a savings account with the best interest in the market. You don’t need to worry about your funds and can enjoy life instead, knowing that your funds are earning much higher interest than in a 0.1% savings account.
PWRD is designed to be protected against capital loss up to its full amount through risk tranching, with none of the caps you get on other savings products. Leave funds in for a week, month or even years while keeping peace of mind.
Leverage your yields with Vault
Vault optimizes for the highest stablecoin yield and increases it through leverage. Gro Protocol optimizes yield under the hood by using a portfolio of stablecoin yield farming strategies that tap into lending, automated market making and protocol incentives (e.g. Harvest, Compound, Curve, Cream etc).
Vault returns are higher because they are leveraged using assets in PWRD. The two work together: more PWRD means higher Vault leverage and yield. But in return, any protocol losses are covered by Vault first.
Why would I use it?
Vault is for those who want higher yields and who can handle a little extra risk. Vault owners serve as the protectors of PWRD and their rewards increase as more assets are deposited into PWRD.
How is Gro Protocol differentiated in the market?
How does Gro Protocol work?
Gro optimizes yield under the hood by using a portfolio of USD stablecoin yield farming strategies that tap into lending, automated market making and protocol incentives (e.g. Compound, Idle, Curve, Cream etc).
The strategies are updated regularly so that funds flow to the best strategies available and optimize total yield. This doesn’t need any time, thinking or gas fees from protocol users — they can sit back and watch their funds grow.
Gro has a proprietary Risk Balancer that manages exposure to stablecoins and smart contracts so that the system can generate high yields while maintaining a balanced risk profile.
This means the protocol cannot be overexposed to any one protocol or stablecoin. If there is a failure in any stablecoin or protocol smart contract, the loss to the protocol is reduced. In particular, it should always be less than the level of deposit protection in place for PWRD users, meaning their funds are safe.
As well as optimizing yield and balancing exposure, Gro protocol has another important feature: risk and yield tranching. This means you can pick between more yield or more protection (and lower risk), depending on your preference. The two different tranches each have their own product.
Yield from one tranche (PWRD) gets transferred to the other (Vault) in exchange for protection. The yield share is based on PWRD TVL relative to Vault TVL (the utilization rate). This creates a dynamic incentive for Vault to take on risk for PWRD. When utilization is low, PWRD becomes more attractive since the cost of protection is cheap. When utilization is high, Vault becomes more attractive thanks to higher yields. This enables PWRD holders to be protected against loss of funds in case of stable coin or protocol failures, as losses will first be taken from the Vault.
When is Gro available?
Safety is our number one priority. That’s why we are currently in closed beta, doing a guarded launch with multiple audits and gradually opening up the code and access to the protocol over the coming days and weeks.
Gro makes DeFi easy. Welcome to Gro Protocol.