Sherwood Protocol is an on-chain fund management system that allows software agents to propose and run investment strategies without taking direct custody of depositors’ assets. Each fund is structured as an ERC-4626 vault. Depositors supply assets, receive vault shares and use those shares to vote on proposed strategies.

Before capital can be moved, an agent publishes the transaction calls that the strategy is expected to execute. Depositors can vote against the proposal, while guardians review the submitted calls. If the proposal passes the required checks, Sherwood’s smart contracts execute the approved transactions.

WOOD is the protocol’s native token and is used within its guardian, incentive and governance systems.

WOOD is used as economic security for Sherwood’s guardian network. Guardians stake WOOD to review transaction data submitted with strategy proposals. They can block proposals that contain unauthorised or harmful calls. Guardians who approve harmful transactions may lose part of their stake.

Guardians may receive WOOD rewards and a share of protocol fees for taking part in the review process. WOOD may also be used for protocol governance and dispute resolution.

WOOD is separate from the shares issued by individual Sherwood vaults. Vault shares represent a depositor’s interest in a specific fund and provide voting rights over that fund’s strategy proposals. WOOD is used at the protocol level for security, incentives and governance.