Economies of Scale

Economies of Scale refers to an economic concept where the relationship between production costs per unit and scale of production is inversely correlated.

With Ethereum Transaction costs rising, it has become apparent that the ordinary participant in DeFi is priced out of using Ethereum. Spool is designed in such a way that an increase in participants and liquidity within Spool ensures a lower cost basis per participant. Spool achieves this through the following measures:

  • Spool Buffer System: The buffer system aggregates deposits and withdrawals, which makes the action of depositing and withdrawing significantly cheaper.

  • Smart Vault Inheritance: Any newly created Spool Smart Vault routes capital to the Master Wallet Contract and the existing Strategy Adapters. This routing of capital means that every new Smart Vault contributes to the growth of the entire ecosystem while being integrated within existing Smart Contracts. While individual Vaults track exposure separately, transactions can be batched whenever possible, which optimizes the shared costs for all other Vaults.

  • Costs of Compounding: The costs of compounding relative to the total value locked becomes smaller by aggregating all funds destined for one Yield Generator into a single Strategy Adapter. This aggregation makes compounding cheaper and allows more frequent compounds, which results in more yield generated for every user within the Spool Ecosystem.

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