Protocol Architecture

Users are directed to a brief enrollment process when creating their first Position within Hedgemony. While enrolling, the user's wallet (EOA) will generate a dedicated contract account which can grant Hedgemony contracts the necessary permission for executing trades and redirecting assets on the user's behalf. Although these contract accounts can execute actions in the absence of a user, for example in the case of a limit order, no actions can ever be executed without prior user consent which comes through opening a Position or by adopting a Strategy). Hedgemony was designed as an antifragile system that does not keep direct custody of assets to avoid singular points of failure. It instead incorporates a variation of account abstraction to seamlessly facilitate advanced user functionalities.

The metadata of these contract accounts is used as a subledger to notate the state of the user's position. History of these changes are tracked and presented in a simple human readable format through the Hedgemony user interface and the Hedgemony Explorer. When users invoke changes to underlying assets, they simply connect their enrollment wallet and signal the amendment or deactivation request. All changes are written to the user's contract account.

There are two overarching layers to the Hedgemony protocol: a swap layer and a yield layer. The yield layer depends upon and is subordinate to the swap layer. In the swap layer, users are doing exactly what the name states: swapping assets. This is the bread and butter of the platform and is built for speed, simplicity, and pure optimization. Straight Swaps are also always available to any user whose main priority is near instantaneous trade execution. With this type of interaction, the user does not open a Position, does not need to enroll with a contract account, and opts out of any protocol incentives including those offered within the yield layer.

After conducting position-generating swaps, a user may elect to augment a Position through the yield layer. This is where they are offered additional cross-protocol redelegation options for assets within their position. Note that users can interact with the yield layer without conducting a swap in advance; in this context, a user's pre-held assets are sent directly to their contract account in lieu of invoking the swap router. By redelegating swapped assets into third-party partner protocols, users give up localized custody; however, they gain exposure to various additional forms of yield, revenue, and leverage.

Overview of Swap & Yield Layers