Project Insight: Wombex Finance From Wombat Exchange

by BSC News

October 27, 2022


Wombex Finance is here to boost yields on Wombat Exchange and underpin the BNB Chain protocol's governance system through the veToken model.

Wombex Finance on BNB Chain

Wombex Finance is a new Decentralized Finance (DeFi) on BNB Chain, referred to as a fork of Convex Finance and built to function within the Wombat Exchange ecosystem.

The purpose of Wombex is to boost returns for Liquidity Providers (LPs) and to power the Wombat governance system.

According to its documentation, Wombex is designed to leverage Wombat’s veToken model for the benefit of LPs and veToken holders.

Before we delve into how Wombex works, let us take a quick look at how the veToken model functions on Wombat.

Wombat’s veToken Model

Vote escrow, also known as “Ve,” is a typical scheme for governance tokens. Its effectiveness has led to a meteoric rise in its popularity. With this model, users of a protocol can lock the protocol’s tokens for a stated amount of time. The primary reason for locking tokens is to gain access to governance rights and other benefits, such as a share of the protocol fees, etc.

Wombat users can obtain the exchange’s veToken veWOM by locking (staking) WOM tokens for a period between seven days and four years. Holders of veWOM earn greater APR from stablecoins deposited in Wombat’s lending pools.

Meet Wombex

Described as combining the power of liquidity providers and WOM token holders, Wombex's primary function is to boost returns for all LPs (whether they hold WOM or not) with protocol-owned veWOM.

WOM stakers gain access to a stable income stream from their staked WOM with an option to exit a position at any time using the wmxWOM liquid derivative.

Let’s take a look at how Wombex offers utility for these two kinds of Wombat users.

Liquidity Providers

When LPs deposit liquidity through Wombex instead of directly to Wombat, they receive greater yields. The additional yields that they receive come from boosting WOM rewards using Wombex veWOM holdings. Wombex deploys its protocol-owned veWOM tokens to boost yield to all the funds supplied to it and splits WOM rewards received on its veWOM between all LPs.

In addition to extra rewards, LPs on Wombex receive $WMX, which is issued pro rata for each mined WOM. They are also entitled to earn swap fees.

WOM Stakers

These are Wombat users that lock their WOM tokens for a period between seven days and four years to mint veWOM. This results in boosted rewards for this cohort of users.

WOM holders can stake their WOM into Wombex-owned veWOM position, and in return, they receive wmxWOM in return. This is a liquid staking derivative of veWOM, and they can receive rewards by owning the same.

Holders of wmxWOM can receive rewards by staking their wmxWOM tokens into an LP mining contract to receive WMX rewards and a share of protocol fees which are pegged at 5% of all mined WOM.

Also, holders of wmxWOM can deposit it as liquidity into the wmxWOM/WOM trading pair on Wombat and stake the LP token they receive in return into an LP mining contract to earn WMX for providing liquidity.

The WMX Token

Wombex’s native token is WMX. The protocol is centered around vote-locked WMX, referred to as vlWMX. Users must lock their WMX tokens for 16 weeks in order to gain utilities such as sharing in protocol fees and participating in governance.

As stated upon the launch of Wombex, holding vlWMX tokens enables holders to:

  • Receive a share of protocol fees (charged in mined WOM) for staking WMX in vote-lock
  • Govern Wombat using veWOM protocol holdings (meta-governance), influence the direction of rewards emission, or sell governance power on secondary market (so-called bribes)
  • Govern Wombex protocol, including treasury, emission schedule, and other parameters via vote-locking WMX (vlWMX)

Speaking to BSC News on its reception since launch, Wombex stated that it has been able to grow its count of users by “leveraging information distribution to major BNB Chain communities.”

“After we attracted attention, users saw that we offer a product that can help them to boost their earnings, earn more on stablecoins, and staked BNB, as well as offer them much bigger earnings on their WOM tokens,” Wombex said.

It recently concluded its Initial Farm Offering (IFO) on leading Decentralized Exchange (DEX) PancakeSwap, which resulted in a 4,700% oversubscription for the Public Sale allocation.

As of Oct. 26, its total value locked (TVL) stood at $80 million, according to the Wombex website.

What Is Wombex Finance:

Wombex Finance combines the power of Wombat Exchange Liquidity Providers and WOM token holders to offer users better incentives. Wombex gives WOM holders the opportunity to earn more on their WOM by staking WOM into wmxWOM (Wombex-owned veWOM) and also provides Liquidity Providers a boost for WOM rewards.

For more information about Wombex Finance, visit the following media links:

Website | Twitter | Discord | Medium | Telegram

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