While Uniswap’s highly-touted v3 has been racing to the very top of TVL graphs as of late, the need for active management has kept some retail participants out of their pools — a difficulty that a brand new product in the Gelato Network is aiming to repair.
First teased in a community call a week, the Gelato Network has published today the details of their“G-UNI“ Uniswap v3 management system. G-UNI intends to perpetually maintain a liquidity variety of 5-10% over the current price of an asset pair, with an oracle network assessing prices and rebalancing liquidity pool place ranges each half hour. G-UNI also mechanically re-invests trading charges for compounding returns.
„Passive G-UNIs work by just providing very broad liquidity, very similar to Uniswap v2 that not has to be changed,“ a statement blog post reads. „It consequently can be completely free of anyone’s control as it does not require changes in its budget.“
While Uniswap v3 permits liquidity providers to earn more fees by concentrating their funds in specific prices, it opens them up to risk of impermanent loss in the event the prices of the trading pair moves past the provider’s specified array.
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The site post notes that G-UNI’s auto rebalancing brings the benefits of focused liquidity, but with the choice of passively managing the position in a manner more in accordance with Uniswap v2.
„The benefit of this includes that users can sit back and relax together with the issues that include monitoring LP positions are taken care of.“
Composability and incentives
Even though the new tool is going to be a boon to passive liquidity providers, the real benefits of G-UNI may be for additional DeFi protocols.
A self-described“Legendary Member“ of Gelato, Hilmar, noted that jobs are now able to incentivize concentrated liquidity in „pool two“ liquidity pools. Pool 2 is a colloquialism for a native governance asset paired with a popular base asset, for example ETH or MATIC.
Having an ERC20 wrapper around Uni V3 LP positions is very powerful, as this enables teams like Instadapp to offer“Liquidity Mining“ incentive schemes in addition to G-UNI.
This means you can now incentivize your community to provide liquidity around specific ranges
Projects often have to provide considerable liquidity mining incentives for participants in pool 2s, as liquidity providers take on the risk of the native governance token collapsing in price. Concentrated liquidity benefits might help stabilize native asset prices to some more regular selection.
Furthermore, G-UNI is a ERC-20 token as opposed to some NFT, which opens it up to a broader number of possible programs in DeFi. Many lending platforms take liquidity pool tokens as collateral, but are not yet broadly prepared for positions represented as NFTs; G-UNI will permit them to onboard v3 liquidity positions faster. Similarly, yield vaults like Yearn.Finance, that has been planning to integrate exchange positions for a while, might find it a lot easier to integrate ERC-20s.
G-UNI is going to be utilized out of the gate as part of the launching of Instadapp’s governance socialist. The group is putting aside 1,000,000 INST tokens for INST/ETH liquidity mining, together with 3/4ths of the benefits focused on a higher INST price liquidity array.
Per the Instadapp dashboard, the incentivized pools are currently live and offering 2,200percent and 1,800percent APY respectively.