Arrakis Finance

Built on Uniswap V3, Arrakis deploys automated liquidity management strategies.

Basics

• Based in:
• Founded in: 5-2019
• Mainnet release: 3-7-2020
• Behind Gelato Network

History

• Started out as just Gelato which Allowed (5-2-2020) users to create a personal bot that automatically interacts with different applications on Ethereum.

• From their Mainnet announcement (3-7-2020):

"In February 2020 Gelato published its Alpha release. The alpha hid away most of what Gelato actually is meant to be behind a Web Interface, which meanwhile has been deprecated. This early phase showcased how Gelato can be leveraged to equip end-users with their own IFTTT-like Ethereum bots that can execute arbitrary actions on their behalf, in just one or two transactions, without them needing to write a single line of code. For many users, this opened the door to a new kind of decentralized app usage — an automated, yet fully non-custodial one. However, underneath this simple UI a new smart contract protocol was hiding that now has been audited and deployed onto Ethereum Mainnet."

Audits & Exploits

• Bug bounty program can be found [insert here].
• Got audited by G0 Group (17-6-2020).

Bugs/Exploits

• From Week in Ethereum (18-12-2021):

"Gelato G-UNI Router vulnerability, $26 million secured with no funds lost, alerted by samczsun, revoke approvals given to vulnerable contract."

Governance

DAO

• From their blog (6-5-2021):

"All token holders will be able to have a say in the future direction of the protocol via voting on proposals in the Gelato DAO. The goal is that in the long run, developers that use Gelato to automate their smart contracts functions will govern over the protocol in order to determine the “rules” by which the Executor bots that serve the network have to adhere by. Decisions include setting fees for Executors, deciding on developer incentive schemes, and enforcing that Executors always execute transactions in the best interest of the end-user."

Token

Utility

• Governance, staking & slashing (6-5-2021)

Tech

• Whitepaper can be found [insert here].
• Code can be viewed here (11-7-2020).

Implementations

• Built on: Ethereum, and will expend to Polygon, BSC 'and more' (6-5-2021).

• From Cointelegraph (8-10-2021):

"The Gelato Network currently supports smart contracts on Ethereum, Polygon and Fantom and will add additional support for Binance Smart Chain, Arbitrum, Optimism and Avalanche.

How it works

• From Cointelegraph (8-10-2021):

"Gelato automates Ethereum smart contract operations by using what it calls “arbitrary logic” and bots. Its most prominent use case is addressing liquidity and volatility issues with cryptocurrency trading. The protocol can protect traders from severe losses by automatically rebalancing portfolios and executing trades on their behalf. Third-party servers and systems are required to monitor smart contracts and conditions for their execution. Gelato does away with the intermediaries by using a decentralized network of bots to carry out these operations, simplifying decentralized finance (DeFi) for end-users."

Upgrades

• From EthHub (20-4-2021):

"Gelato v2 is a major upgrade for the platform with features that make developers lives easier."

Staking

• From their blog (6-5-2021):

"For Executor bots, in order to be able to participate in executing transactions in the Gelato Network and thus earning rewards from doing so, they will need to acquire & stake $GEL. Staking will allow executors to earn the ability to reserve “slots’’ which give them the exclusive right to earn fees from executing transactions in a certain period of time.

Potentially slashing the stake of Executors bots will serve the purpose of disincentivizing bad behavior, such as censoring or front running transactions, making such actions uneconomical. The Gelato DAO will have the power to enforce these decisions and the obligation to monitor the behavior of Executors. Executors will become more accountable for their actions which will enable us to further decentralize who can run these Nodes as well as providing some interesting future functionalities such as executing transactions based on off-chain conditions."

Their Other Projects

Arrakis Finance (SPICE)

• From Bankless (15-4-2022):

"Arrakis (formerly known as G-UNI) is a Uniswap V3 liquidity management protocol. A recent spin-off of Gelato, a smart contract automation network, Arrakis solves several key pain points that come with providing liquidity to and building atop Uniswap V3. As experienced DeFi users will know, Uniswap V3 utilizes a concentrated liquidity model. Rather than do so across all price ranges, as is default with Uniswap v2, an LP on V3 can “concentrate” their liquidity by only providing it across select price ranges of their choosing. While this greatly improves capital efficiency, it substantially increases the difficulty of market making on the exchange, as it magnifies the risk of impermanent loss. In addition, due to the differentiation in price ranges selected per liquidity provider, V3 LP tokens are represented by ERC-721 NFTs rather than the more composable ERC-20 tokens.

Arrakis solves this by providing the ability for protocols to access a suite of different automated strategies for providing liquidity for their token on V3. This includes the ability to provide over a “full range,” allowing LPs to get a similar experience and risk profile to doing so on Uniswap V2. Arrakis also enables increased composability by converting LP positions from ERC-721s into ERC-20s known as G-UNI tokens. In doing so, it increases the ease for other protocols to build on Uniswap V3, as ERC-20s are far more composable than their NFT counterpart. We’ve already seen this in effect, as users can borrow against G-UNI tokens within Rari Capital’s Fuse, allowing them to access increased capital efficiency along while simultaneously earning trading fees.

Arrakis has experienced significant adoption, with more than $465 million in TVL and counting protocols such as Frax, Fei and Aave among their customers.

Like CRV, the protocol will utilize a vote-escrow model in which tokenholders can lock their SPICE to receive xSPICE. With xSPICE, holders will be entitled to cash flow from protocol revenue, 25% of fees earned from providing liquidity, the ability to vote on SPICE emissions that are allocated across different pools, as well as boosted rewards when LPing to said pools. Given this token design, the launch of SPICE could potentially kickstart “The Uniswap Wars,” which could see DAOs accumulate the token to build up liquidity on the exchange. Were that to be the case, it would also be prudent for investors to pay close attention to the Arrakis ecosystem to identify the “Convex,” i.e. the protocol that offers a liquid derivative of xSPICE."

Roadmap

• Can be found [Insert link here].

Usage

• Has been securing and automatically managing positions worth over $180M (6-5-2021).

Projects that use or built on it

• From Bankless (15-4-2022):

"Arrakis has experienced significant adoption, with more than $465 million in TVL and counting protocols such as Frax, Fei and Aave among their customers."

• From Cointelegraph (8-10-2021):

"The Gelato Network currently supports smart contracts on Ethereum, Polygon and Fantom and will add additional support for Binance Smart Chain, Arbitrum, Optimism and Avalanche. Several projects are already using the system to automate contracts, including MakerDAO, Instadapp, B Protocol and QuickSwap.

In June, Gelato introduced an automated liquidity manager for Uniswap called G-UNI, which combined the capital efficiency of Uniswap v3 with the user experience of v2.

In August, Gelato integrated with DeFi aggregator Zerion to improve liquidity management for its users. This enabled Zerion’s 200,000 or so active monthly users to have their Uniswap v3 positions managed automatically."

Team, Funding, Partners

Team

• Full team can be found [here].
• Hilmar Orth; co-founder
• Comes from Gnosis.

Funding

• Got a grant in 2020 from MetaCartel (4-4-2021).
• From Cointelegraph (8-10-2021):

"Gelato has raised $11 million in a Series A funding round led by Dragonfly Capital and with participation from ParaFi Capital, Nascent, IDEO CoLab Ventures and Aave founder Stani Kulechov. The funds were raised through a closed-door token sale and will go toward onboarding more blockchains to the network and increasing its staff from the current team of 15."