How it works
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Protocol overview
Gro protocol is a yield optimiser with risk-tranching on Ethereum and automation on Avalanche. The aim of Gro protocol is to offer high yields for users who are willing to take on more risk, and a safer alternative for users who are risk-averse. The protocol facilitates this by keeping its portfolio exposures within a threshold, including exposures to underlying assets and external DeFi protocols.
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On Ethereum, Gro protocol consists of two native tokens (besides our governance token, GRO):
- ​PWRD: A rebasing, yield-generating stablecoin pegged to the dollar. Holders of PWRD are protected against failures in individual protocols and stablecoins by its sister product Vault (GVT). In return for such protection, PWRD shares part of its yield with GVT.
- ​Vault (GVT): GVT is a risk-bearing asset, not a rebasing stablecoin. GVT receives part of PWRD's yield in exchange for reducing the risk borne by PWRD holders. Yield transferred from PWRD to GVT is based on the utilisation ratio: the ratio of the value of PWRD to GVT in Gro.
Vault's higher yield compensates for the protection it offers to PWRD. The protection here is not against market risks (i.e. yield strategies delivering variable yields) but rather the risk of failures in a stablecoin or protocol (e.g., due to a protocol exploit). Such losses, if they incur, will first be absorbed by Vault holders, reducing the risk that PWRD holders will lose any assets. The utilisation ratio also determines how stablecoin assets are invested into underlying yield-bearing strategies.
Gro protocol balances internal assets based on the risk exposure to different assets and protocols. This involves setting allocation targets for stablecoin assets, which the Risk Balancer will try to meet when distributing stablecoin assets. In practice, Gro protocol measures the changing risk exposure; when the exposure is above a predefined margin, the system will rebalance by swapping assets. It uses Curve as the swapping layer, meaning that the system can make decisions on what assets to move in and out independent of what assets the end user deposits/withdraws. Gro protocol determines how much of each asset needs to be added or removed from the system through determining the delta, the difference between the target allocations, and the actual assets in Gro protocol.
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For more details about our products, please refer to the "Gro Products" section starting here:
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Last modified 1mo ago
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