G-UNI, the protocol governing Uniswap V3 LP, is preparing to become independent from Gelato
Gelato as web3’s automation protocol wants to maintain a base level of neutrality with respect to the application layer, for reasons outlined here 3. G-UNI is an in-house DeFi application built by Gelato core developers to showcase the power of Gelato’s automation infrastructure. It is a framework for managing Uniswap V3 Liquidity Positions by leveraging automation under the hood, and has found organic product market fit and significant traction.
To add some metrics, G-UNI has a current TVL of over $500m, it is by far the largest LP on Uniswap v3 and a number of major DeFi projects (MakerDAO, Aave, Fei, Frax, Angle and many more) already use the product as the go-to liquidity management solution for Liquidity Mining, Protocol Owned Liquidity, and as Collateral among other use cases.
A small team at Gelato has been focusing on G-UNI full time, and the concerns for G-UNI development and Gelato core infrastructure development diverge more and more as time goes on. In short, G-UNI has grown into a widely used application in its own right, not simply a showcase for Gelato automation, and should be treated as such. As Arrakis Finance, G-UNI would become an entirely separate DeFi application that happens to use Gelato automation, clarifying the domain and mission of both projects considerably.
If accepted, this proposal would give a green light for the deployment of the Arrakis DAO contracts, the release of its native governance token $SPICE, and an upgrade of the G-UNI Factory and G-UNI Pool implementation contracts which would point protocol fee revenue to the Arrakis DAO rather than Gelato. All of which would happen in the coming months.
Behind the scenes there would be the formation of an autonomous Arrakis entity and team of Arrakis developers. Just to clarify: Arrakis will still be using Gelato automation for automated management of the vaults, of course. And as Arrakis scales and adds more active automation to its products it would hope to provide significant usage to Gelato in the form of an increased number of transactions executed via Gelato’s Executor Network.
The concerns around Gelato neutrality and having a razor sharp focus on Gelato’s core mission (which is automation rather than liquidity provision) are in themselves good reasons to accept the proposal. However, $GEL token holders need to be compensated for funding and fostering the birth of Arrakis with all the resources that have been allocated on G-UNI. In a proposal similar to the CoW spin-off from Gnosis they propose that 15% of the $SPICE supply be distributed to long term $GEL token holders.
Anyone who owns $GEL would be able to lock their tokens for one year, signaling long term commitment and alignment with the Gelato protocol, in exchange for an allocation of Arrakis’ $SPICE token. $GEL balances locked in the specified contract for the year (as well as vesting $GEL for team and investors that pushes back it’s cliff to the same date as the regular $GEL participants) will split the 15% of $SPICE pro-rata.
For those holders who lock $GEL in the specified contract, they will be able to claim their $SPICE immediately, as part of the initial $SPICE airdrop. The team and investors who participate by extending their cliff on vesting $GEL will commit to a linear vesting of their $SPICE allocations over 2-4 years (exact duration to be confirmed).
The $SPICE token will be a “vote escrowed” token, meaning that holders can bond it for up to 6 months to receive $xSPICE which provides them with voting rights, a share of the fees generated by all Arrakis vaults and a “boost” on further $SPICE emissions for also providing liquidity in Arrakis vaults. Crucially it is the job of the voters to help the protocol determine how inflating $SPICE supply is directed as incentives to the different tokenized Arrakis LP positions, as well as vote on other protocol related matters such as whitelisting managers/strategies (liquidity management strategies, be they fully automated or overseen manually by a manager entity, must be explicitly onboarded by the DAO).
Shortly after this vote has passed, the will announce the exact date of the snapshot before which $GEL holders must have locked their tokens in order to be eligible to receive $SPICE. More details about Arrakis and the tokenomics would be forthcoming so that anyone can make a fully informed decision.
Building G-UNI under Gelato has been a complete pleasure. I personally think this split will only strengthen both endeavors, and can be a highly amicable and value generating decision. Let’s discuss in here, with a vote slated to start soon on 14 March 2022 17:00 UTC.
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