Gelato Network introduces Uniswap v3 management token “G-UNI”

While Uniswap’s highly acclaimed v3 has soared to the top of the TVL charts of late, the need for active management has kept some retailers out of their pools – an issue a new product on the Gelato Network aims to address.

The Gelato Network, which was teased for the first time in a community call last week, today published the details of its Uniswap v3 management system “G-UNI”. G-UNI aims to constantly maintain a liquidity margin of 5-10% within the current price of an asset pair, with an oracle network reviewing the prices and rebalancing the liquidity pool position areas every half hour. G-UNI also automatically reinvests trading fees to compound returns.

“Passive G-UNIs work by simply providing very broad liquidity, similar to Uniswap v2 that never needs to be changed,” said an announcement blog post. “This means that it can be completely free of anyone’s control as it does not require any changes in its price range.”

While Uniswap v3 allows liquidity providers to earn more fees by concentrating their funds at certain prices, it puts them at risk of temporary loss if the trading pair’s prices go beyond the range set by the provider.

The blog post points out that G-UNI’s automatic rebalancing brings the benefits of concentrated liquidity, but with the ability to passively manage the position in a way that is closer to Uniswap v2.

“The benefit of this is that users can sit back and relax as all of the difficulties associated with monitoring LP positions are eliminated.”

Compostability and Incentives

While the new tool will be a boon for passive liquidity providers, the real benefits of G-UNI for other DeFi protocols could be.

A self-proclaimed “legendary member” of Gelato, Hilmar, noted that projects can now incentivize concentrated liquidity in “Pool 2” liquidity pools. Pool 2 is slang for a native governance asset paired with a popular base asset such as ETH or MATIC.

Often, projects must provide the participants in Pool 2s with sufficient incentives to mine liquidity, as liquidity providers run the risk of the price of the native governance token collapsing. Concentrated liquidity premiums can help stabilize the prices of domestic assets in a more regular area.

In addition, G-UNI is an ERC-20 token as opposed to an NFT, which opens it up to a wider number of possible uses in DeFi. Many lending platforms accept liquidity pool tokens as collateral, but are not yet largely prepared for positions that are presented as NFTs. G-UNI will allow you to take up v3 liquidity positions faster. Yield vaults such as Yearn.Finance, which has been planning to take stock market positions for some time, should also find the integration of ERC-20 easier.

G-UNI has been used from the start as part of the introduction of the governance token by Instadapp. The team provides 1,000,000 INST tokens for INST / ETH liquidity mining, with 3/4 of the rewards targeting a higher INST price liquidity range.

According to the Instadapp dashboard, the incentive pools are currently live and offer 2,200% and 1,800% APY, respectively.