Release G-UNI as separate DAO from Gelato & rebrand it as Arrakis Finance

Proposal: Release G-UNI as separate DAO from Gelato & rebrand it as Arrakis Finance

Why?

Gelato as web3’s automation protocol wants to maintain a base level of neutrality with respect to the application layer, for reasons outlined here. 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.

How?

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.

What’s in it for $GEL holders?

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 we 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).

What is $SPICE?

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).

When can I lock my $GEL?

Shortly after this vote has passed, we 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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Wonderful!!

I see this as a long overdue catalyst that finally offers an opportunity for Uni V3 protocol and its community to go toe to toe with Curve. It both removes the barrier of LP position management and provides an alternative tokenomics to UNI that has the long-awaited revenue sharing property!!

One question and one suggestion from my side:
Question: once locked for $SPICE airdrop, will locked $GEL still be able to participate in staking from Gelato protocol?

Suggestion: team and investors, especially investors, should have an earlier snapshot deadline so that retails that have been exposed to greater value fluctuations can make a more informed decision on whether they would like to opt for the lockup.

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Great news and very interesting concept!

Two questions for me:

  1. The part you say “as well as vesting $GEL for team and investors that pushes back it’s cliff to the same date as the regular $GEL participants”, this comment is for those GEL being unlocked on September(and forward) ? This will change based on this new vested contract of SPICE?

  2. Exact early tokenomics of SPICE will be announced soon?Because i guess locking GEL and SPICE will be needed to have the full “benefits” of long term but depends on how much diluted you will be with the extra emissions of both GEL and SPICE entering the market.

Splitting G-UNI from Gelato but still keeping the bond i agree that will be mutually beneficial for both projects.

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Yep good questions @George

  1. Yes. Team and investor locked $GEL has a vesting cliff, I believe for most or all of these allocations the cliff is in September 2022. By pushing this cliff back to the same date as those locking liquid $GEL in the specified contract, these team/investor $GEL allocations would be locked and entirely inaccessible/illiquid until then. For team and investors to participate and receive their share of the 15% of $SPICE supply allocated to $GEL holders, they must opt in to pushing back this cliff. Note that a team member or investor does have the option to not participate and thus keep their existing $GEL vesting schedule and unlock date.

  2. Yes, more info about $SPICE tokenomics will be available in the coming days, and there will be more than enough info and lead time for any $GEL holder to make a fully informed decision about locking $GEL for $SPICE. Also important to reiterate that those locking liquid $GEL for a year will receive an immediately liquid airdrop of $SPICE, however team and investor $GEL allocations that participate will receive $SPICE that needs to vest (and thus is not immediately liquid).

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@kassandra.eth
Alright. Just read the post again, and I actually misunderstood the pushback of the cliff.

In that case, I feel that it’s somewhat unfair to the retail $GEL holders, because the effective $GEL lock-up period for airdrop for the investors would be much shorter than retails, e.g. if the lockup starts in April, the effective lockup period for investors is only 7 months instead of 12.

Indeed, investors do have vesting on the airdropped $SPICE, but I think given the cost basis of their investment on $GEL, it’s not that much of an offset to the significantly shortened lockup period.

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This seems like an extremely well thought out plan by a bunch of sharp people looking out for the best long term interests of all stakeholders.

Basically I see a combination of this: ve tokenomics + UniswapV3 efficiency + composability + Gelato's automation infrastructure supporting it all....to me; this = amazing.

I couldn’t be more excited for this and think the reasoning is spot on, and this will open many new doors for Gelato. Love it!!!

:icecream:

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So could this be understood as basically a Curve-layer on top of uni v3?

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I agree with your point and also this whole unvesting of GEL a year on(with GEL retail+investors+team) with that many tokens in the narket would result in turmoil even if everything is super bullish with SPICE. I would also prefer two different dates for retail and early stakeholders(investors+team). Also i would like transparency on how many from the early investors will go to that road of than having their GEL tokens unlocked after their decision.I think it is easy to track this since the current state is still locked and will be migrated to the new contract.

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That’s the closest analogy I think, basically a Curve v1 + v2, with a lot more flexibilities and a superior vote escrow mechanism imo

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Some questions and my thoughts.

  1. Does it mean the current G-UNI dev team will be spinning off from Gelato? How does this effect the development of Gelato network?

  2. My understanding of how vested airdrop done by Gnosis and CoW was possible is that because Gnosis wants to be the standard for various dapps which would implement the features and benefits of the network(CoW, batch tx etc.), it made sense for CoW to distribute the tokens to GNO ecosystem participants. As far as I know, Gnosis is planning even bigger ecosystem play by launching GPT token separate from GNO.

So will Arrakis’ spin off also mean that Gelato may go to a similar direction?

  1. What differentiates G-UNI separation proposal to Cowswap split is that GEL is supposed to have a utility for being a governance token as well as a central piece for aligning interests of executors in the network.

So instead of merely locking up GEL for the supposed SPICE, we can have the staking mechanism on the current Gelato executor network with time lock to decide the pro-lata amount of the spin off tokens.

Logic here is that having to give up the immediate liquidity on GEL token should not be interpreted as contribution to the ecosystem, but rather, the result of the contribution.

Glad to see forum is alive. But I urge the GEL community to join the discussion and freely express their thoughts.

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it is a complete insult to GEL token holders. taking away (‘spin-off’) 100% of G-UNI from us and then airdrop 15% of that. What about no spin-off, lets keep it and use revenue from G-UNI and benefit to GEL token holders like token buy-back/burn? That way Gelato will become desirable and successful project, which respects investors and attracts new business

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going to delay the start date of the vote by 24 hours (15 March 2022 17:00 UTC) to give a little more time for all the healthy discussion going on as people formulate their opinions. This will give people until the end of the week (Friday 18 March 2022) to decide how they want to cast their vote.

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there are a lot more nuances to that that you are not considering.

  1. G-UNI will be even more successful with a strong token model, i.e. emissions to high earning G-UNI pool. This would currently mean that we would have to pay out GEL to these pools, which would over the short to medium term lead to more pressure on the price. With a new token, this would not affect GEL holders
  2. The narrative will be much easier for users and investors. Right now Gelato and G-UNI already get confused a lot, whereas if you separate the concerns, people can invest in what they really believe in, which is either G-UNI as automated liquidity management system vs Gelato as a general purpose automation infrastructure for web3
  3. Having 15% of something very valuable is significantly better than having 100% of something less valuable. Moreover due to instant liquidity, GEL holders will be able to accumulate more SPICE at the very beginning by getting a boost on SPICE emissions due to them having locked SPICE right at the beginning.
  4. Isolation of risk. As you know we recently had to use some of the GEL treasury to pay refunds to those who lost some of their money in the December Sorbet Finance vulnerability. These risks also paint a bad picture on Gelato as an infrastructure, which actually had nothing to do with it. Isolating projects into their own communities help to isolate the risk of these things happening in the future.

I see this proposal by @kassandra.eth as a clear win win for a) the customers (e.g. frax, fei, angle) who are looking for extra token incentives on top of their native rewards, b) for GEL holders who get an additional airdrop and enjoy the upside of a project with very high potential and c) for Gelato as a development team because it can focus exclusively on the infrastructure rather than having to venture into the application layer which distracts form our core mission

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Too much of a rush for such an important decision…I believe this should have taken a week more for debate

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This is a completely ridiculous proposal without first specifying the full tokenomics of $SPICE. As is, GEL holders have no idea what they are giving up 85% of their ownership of the G-UNI product for.

Are the remaining 85% of $SPICE earmarked, solely, to liquidity mining and to the Arrakis DAO? Great! Absolutely a good proposal.

Most any other allocation looks like a cynical siphoning off of the vast majority of the one Gelato product with any real prospect of actual value accrual.

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We will go into more depth and detail in subsequent posts but here are the basics of the $SPICE distribution

Screen Shot 2022-03-14 at 12.07.52 PM

The 50% emissions to LPs will be released over a 7 year period:

16% will be released linearly in year 1
11% in year 2
8% in year 3
6% in year 4
4% in year 5
3% in year 6
2% in year 7

How these emissions will be distributed to LPs (gauge system similar to Curve) is out of scope for this post but will be described in detail soon.

Note that initial circulating $SPICE supply will only be 2.5% (user airdrop) plus the GEL airdrop for liquid $GEL staked (assuming all vesting and liquid $GEL locks this would be another ~2% roughly, though could theoretically be much more if not all of the vesting $GEL participates). The project airdrop will be delivered in 6 month vote escrowed $xSPICE so will not be immediately liquid.

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This feels really rushed in a very quite market. Give us time to understand and to have meaningful conversations about it. What about a community call for instance?

I’m 100% behind gelato’s team, but I’m not sure this is very favorable for $GEL holders.

When investing in startups, investors understand that the product can change course and even shift 360°. I’m wondering why G-UNI should be threated differently. It’s clearly a fruit of $GEL and revenue from it should flow towards it’s early believers.

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yes, a community call is a great idea! Let’s set one up for tomorrow!

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Definitely understand the comments on timelines seeming rushed in regards to scheduling the vote, but I’m confident we can reach a happy compromise there and give proper time for discussion and for formulating decisions, but also still move fast during this time window of opportunity. Developments in terms of upcoming G-UNI integrations mean that if it is indeed the will of the voters to go through with this, it may make practical sense to try to do so rather quickly - happy to speak more about this in the aforementioned community call.

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Why tomorrow? Give people some time :slight_smile:

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