Wombat Exchange
Wombat is a coverage-ratio stableswap AMM. The protocol API read on 2026-08-15 reported about $1.45M of pool TVL across Base, Ethereum, Optimism, Arbitrum, Avalanche, Binance, Monad, Polygon, Scroll and Hyperliquid L1, plus about $52,500 separately tagged as staking. Stableswap softens but does not remove the AMM problem: LP inventory and exit terms change as pooled assets move off peg. The shared v1 AMM-LP dossier therefore controls regardless of size or single-token entry.
- Ships a product line without impermanent-loss exposure that merits its own review
Watched nightly: a warning on its venues or files, or a cited document that changes, reopens the memo. The first confirmation is due 2026-11-15.
The research file
Applicability to the surveyed record
Wombat documents a coverage-ratio stableswap AMM in which single-token deposits become pool liabilities, LP tokens represent claims on an underlying pool asset, and swaps change each asset’s cash-to-liability coverage. Although this differs from a conventional two-token LP, Wombat explicitly identifies impermanent loss when global equilibrium coverage falls and therefore remains within the shared AMM-LP exclusion.
Current observation and perimeter
The DefiLlama protocol API read on 2026-08-15 classified Wombat Exchange as a DEX and showed approximately $1.45M pool TVL. It reported nonzero balances across Base, Ethereum, Optimism, Arbitrum, Avalanche, Binance, Monad, Scroll and Hyperliquid L1 plus a zero Polygon balance, and separately tagged approximately $52,500 as staking. The staking breakout is not added to LP TVL and does not change the mechanism-based class.
Control and exit applicability
Users may withdraw their deposited asset or choose another pool asset, the latter being a withdrawal plus swap. Coverage-ratio imbalance can impose a withdrawal fee, depegged assets can push pool coverage and fees toward protective limits, and the seven-member Emergency DAO can disable or re-enable pool functionality; single-sided entry therefore does not make the LP claim equivalent to unencumbered spot custody.
Why the class rule decides
The shared v1 AMM-LP dossier controls because returns still arise from providing balance-sheet liquidity to an invariant-priced swap pool and remain exposed to coverage-ratio, peg, fee, and pooled-exit conditions. Reopen only for an economically separate Wombat product without LP exposure, then review its cash flows, pool and proxy controls, chain and asset dependencies, audits and incidents, coverage and depeg behavior, executable liquidity, stressed withdrawal, and named non-AMM alternatives.
Class rule
The amm lp class is outside the approved structures, so every protocol in it is not approved until the rule changes. The rule is about the structure, not an adverse finding about this protocol, and it is not a client instruction. The events that would reopen it are listed with the memo.
Sources
The claims above trace to these. Where a number could not be independently verified, the thesis says so.
- Wombat Exchange — coverage ratio · primary · accessed 2026-08-15
Supports: AMM model, asset liabilities, cash-to-liability coverage, deposit and withdrawal accounting - Wombat Exchange — dynamic pool · primary · accessed 2026-08-15
Supports: stableswap invariant, oracle-priced pools, global equilibrium, impermanent loss - Wombat Exchange — risks · primary · accessed 2026-08-15
Supports: peg risk, coverage-ratio risk, Emergency DAO, pool pause authority, audit limitations - Wombat Exchange — liquidity provision and withdrawal · primary · accessed 2026-08-15
Supports: single-token deposit, LP token, withdrawal, cross-asset withdrawal, deposit gain - DefiLlama — Wombat Exchange survey record · secondary · accessed 2026-08-15
Supports: current TVL, current chain perimeter, DEX category, survey observation
Inherited controls
The research above describes the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The layer with the most administrative power sets the position’s effective control; that describes control, not quality or suitability.
| Chain | Verdict | Control | Control constraint |
|---|---|---|---|
| Base | Approved with limits | Mixed control | Coinbase, one regulated US company, operates the only sequencer, and admin keys can upgrade bridge contracts within ~7 days. |
| Ethereum | Approved | No freeze key | No sequencer, no upgrade key, no operator who can be compelled. Rule changes require social consensus. |
| OP Mainnet | Rejected | Mixed control | Ethereum forced inclusion limits sequencer censorship, but the Foundation and Security Council can co-sign an immediate upgrade before a client can exit. |
| Arbitrum One | Approved with limits | Mixed control | a single sequencer orders >99% of transactions and admin keys can upgrade bridge contracts on a ~7-day timelock. |
| Avalanche | Approved with limits | Governed, no freeze | no party can freeze or seize C-Chain funds, but one vendor writes the only production client and Messari measured over a third of stake hosted on AWS. |
| BNB Smart Chain | Rejected | Issuer can freeze | the validator set concentrates around one company, and the chain has been halted by decision. |
| Monad | Approved with limits | Governed, no freeze | the L1 has a public validator path, but its short production record, single initial client lineage, and Foundation-directed delegation keep stake and operations concentrated. |
| Polygon PoS | Rejected | Mixed control | a public validator set orders transactions, but a 5-of-9 multisig can instantly upgrade staking and canonical bridge contracts, while a 5-of-8 controls custom child tokens. |
| Hyperliquid / HyperEVM | Rejected | Issuer can freeze | a 21-validator permissioned set operates both the chain and its bridge. One compromise reaches both. |