Arrakis Finance

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

Basics

• Based in: Switzerland (16-3-2022)
• Started in / Announced on:
• Testnet release:
• Mainnet release:
• Built by Gelato, FKA G-Uni

History

• From their docs (8-2022):

"In the current DEX environment there is a trade off in terms of ease-of-use and the efficiency. AMMs with a constant function market maker curve, meaning any AMM that only has 1 price curve such as UniswapV2 and their forks make the largest trade off in this section. These AMMs provide liquidity from a price of 0 to ∞ meaning that they are extremely capital inefficient since the price of an asset is neither close to 0, nor close to ∞. Due to this capital inefficiency it affects all the other components. It results in low liquidity depth, because the funds for liquidity are distributed equally throughout the whole price range, this of course makes there be a high amount of slippage. A high amount of slippage means that there is a lot of volatility, as well as means there is low amount of volume as people don't like trading something with high slippage.

Due to these factors we truly believe that a protocol like Arrakis is required that helps projects, make concentrated liquidity DEXs such as Uniswap V3 easier to use, furthermore making liquidity no longer be a topic that projects need to care about themselves. As a project matures, the liquidity profile should mature as well. Via automated liquidity optimisation we can make sure that a project gets what it needs in terms of liquidity at the moment in time.

Arrakis, previously known as G-UNI, set out to solve these issues in February 2021. Since that time, the protocol has demonstrated exceptional growth on every conceivable metric. As of this writing (21st May 2022), Arrakis has $745 million in TVL in its LP vaults — which comprises roughly 19% of Uniswap v3’s entire liquidity. This makes Arrakis the largest LP on Uniswap v3 by far, all without having any native liquidity mining incentives."

Audits & Exploits

• Bug bounty program can be found [insert here].
• Audits of V1 can be found here (8-2022)

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."

Token

Launch

• Got first discussed on 13-3-2022.

Token Allocation

• When Gelato spun out Arrakis, GEL holders got the short end of the deal, from a DeFi Prime thread (15-3-2022):

"And what $GEL token holders get is a meager 15% of a new tokens supply vested for 4(!) years when you lock $GEL in an airdrop contract for a year!"

• From the gov forum itself (15-3-2022):

"22% to “Team and Investors”??

Who are the investors other than GEL holders who basically funded the development of G-UNI??"

Utility

• From the gov forum announcement (13-3-2022):

"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)."

Technology

• Whitepaper or docs can be found [insert here].
• Code can be viewed [insert here].
• Built on: Uniswap V3, deployed on Ethereum, Optimism and Polygon (10-2022).

How it works

• From their docs (8-2022):

"Vaults are smart contracts which allow for projects or users to deposit funds, and vault managers to activate strategies on these vaults. This makes UniswapV3 as easy to use for projects and users as UniswapV2, no longer having to think about "where should I set my LP range?".

Vaults interact with 2 users:

1. Projects/Users-  that provide the liquidity
2. Managers- Anyone can be a manager

When a project or user deposits funds into the Vault they receive LP tokens back which represent their share of the overall Vault LP position.

The manager account within the vault is completely permissionless, anyone and everyone can be a manager, however the vault deployer has to specify who the manager should be. For any project that wants deep liquidity and does not want to manage the vaults themselves the full autonomous Bene Gesserit Strategy exists, which is the first strategy and strategy team that Arrakis has whitelisted."

Roadmap

• Can be found [Insert link here].

Usage

• From The Defiant (14-10-2022):

"A user removed around $300M from Arrakis Finance’s DAI/USDC vault. The withdrawal reduced the pool’s TVL by more than 40% from $800M."

This started discussions around how Arrakis' TVL is misrepresenting things, due to their x50 leverage.

• From their docs (8-2022):

"As of this writing (21st May 2022), Arrakis has $745 million in TVL in its LP vaults — which comprises roughly 19% of Uniswap v3’s entire liquidity. This makes Arrakis the largest LP on Uniswap v3 by far, all without having any native liquidity mining incentives."

Pros and Cons

Cons

• When Gelato spun out Arrakis, GEL holders got the short end of the deal, from a DeFi Prime thread (15-3-2022):

"And what $GEL token holders get is a meager 15% of a new tokens supply vested for 4(!) years when you lock $GEL in an airdrop contract for a year!"

Two days later following up with:

"Aha ha you probably should not delete discussion from Discord if you want to pretend that you are a community-driven project"

Team, Funding and Partners

Team

• Full team can be found [here].
• Gelato spun out Arrakis and their devs that worked on it.

(:

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