The beginning of Graviton: DeFi liquidity incentivization with a seamless, low-fee inter-chain UX
Graviton is designed for DeFi liquidity incentivization with a seamless, low-fee inter-chain UX.
For the last three years, I have been all-in on Web3, drawn to this field by the opportunities that decentralization technologies and smart contracts afford to us. It so happens that in the DeFi space of today, most opportunity lies with Ethereum. It provides a vast range of DeFi solutions and has ample liquidity, albeit hindered by exorbitant gas fees and frequent network congestion. However, in recent months many alternative blockchain networks and ecosystems have shown remarkable progress and growth, offering comparable or even superior services but significantly more affordable in terms of transaction costs.
The time has come when one needs to spend tens or hundreds of dollars for most on-chain interactions on Ethereum. I still remember my astonishment when paying around $500 in fees to deposit stablecoins on curve.fi.
During the past year, my team has been focused on in-depth R&D in the field of inter-chain communication. We have developed Gravity, a leading-edge technology that establishes a solid foundation for multi-purpose inter-chain applications and gateways, such as SuSy. One of the potential applications of such technologies can make it easy for the regular users of Ethereum to seamlessly interact with DeFi services in other chains, while remaining within the comfort of their existing accounts and tools they’re accustomed to. Using our open-source developments, you can gain unhindered access to inter-chain DeFi, or just test and see whether a certain blockchain ecosystem is in line with your individual use case without having to buy native tokens on CEXes or install new wallets.
What matters is that each Ethereum user already owns and knows how to operate a private key or a seed phrase in the Ethereum network. These credentials are sufficient for interacting with any blockchain in a trustless manner, given that the same key can be used to sign transactions on other networks as well.
In order to implement such inter-chain mechanics in practice, we need at most three interacting components:
1. A mirror account in a destination chain that will carry out (“mirror”) transactions signed by an Ethereum account owner
2. A set of wrapped tokens in a destination chain
3. Transaction fee controller: a module that charges $ETH and converts it to native tokens of other platforms to be used for transaction fees of a mirror account
Using this system, an Ethereum account owner can easily access DeFi services in any blockchain networks (BSC, Tron, Avalanche, Waves, Fantom, Heco) by signing transactions with Metamask, Ledger, Trezor or other wallets.
One of our key open-source solutions, which lies under the hood of Graviton and enables a sufficient level of decentralization, is Gravity — a system of oracles specialized in cross-chain communication.
The Gravity network is blockchain- and token-agnostic, and it leverages a decentralized p2p reputation mechanism based on the so-called EigenTrust algorithm. As a foundational cross-chain communication element, cross-chain swapping of assets via gateways is implemented on top of Gravity as the so-called SuSy (SuperSymmetry) protocol.
In addition to repurposing the existing SuSy gateways between Waves, BSC and Heco, we aim to extend SuSy with other cross-chain gateway solutions that meet our technical requirements, such as multichain.xyz, a bridge enabling bi-directional token transfers, derived from AnySwap. The synergistic collaboration with multichain.xyz represents our strive towards a more decentralized approach in supporting swaps between EVM-based chains. The integration of non-EVM chains, such as Polkadot and Solana, remains in the pipeline of Gravity.
Token-agnosticism is an important attribute of Gravity because it allows for blockchain neutrality and ease of integration, but it is inadequate for dealing with economic incentivization of participants, notably motivating them to lock tokens on gateways and maintain liquidity in decentralized AMM pools. For that purpose, we postulate that a reward token is needed. One of the ways to provide rewards is to accrue commissions from transactions and additional financial flows (for example, DeFi staking of tokens locked on the gateway), which can subsequently be redistributed among all the supporters of the system. In addition, in order to manage potential updates to the protocol according to the will of the system participants, a token-driven governance mechanism is required. The initial concept of such a protocol-token system that combines the functionality of reward, governance and utility — called Graviton — was first described and published in this research paper.
To bootstrap Graviton and support its self-financed and decentralized development, my team proposes a novel process of issuing a governance token we call Treasury Farming (TF).
This approach starts with collecting funding (most likely in stablecoins) into a treasury contract. In proportion to the contributed amount of tokens, each of the participants can indefinitely farm the governance token and contribute more to the treasury, thereby increasing their reward yield. However, when new backers contribute into the treasury, the prior backers’ share of rewards gets diluted. It is important to note that only the future yield of farming rewards decreases for the previous contributors, which means that everyone joins the treasury on equal terms. Furthermore, the management and budgeting of the collected funds is a sole responsibility of decentralized governance, represented by the token holders of the farmed token. Depending on the roles of the system participants, as well as the activities that are chosen to be rewarded within the system, the farming constants and formulas can be modified and optimized through voting. For example, increased farming ratios can be set up for those who provide liquidity for wrapped tokens in AMM pools, since as a crucial contribution to the growth of the system, it merits an increased reward.
The proposed fair-launch scheme ensures that backers can vote for a refund from the treasury if their assessment of the current performance, growth, and future prospects of the project is negative. Moreover, the emission curve is initially determined by the project’s founders, but it can be altered if governance so decides. This methodology of bootstrapping a new project constrains the influence of the founders from the get-go and leaves decision-making and project financing to the token holders.
To launch Graviton, we propose starting out with the following features of the Treasury system:
- A gradually plateauing farming curve with a maximum possible asymptotic supply of 21 million tokens.
- A consul role. Consuls are delegates trusted by token holders that are able to transfer their governance power. Only consuls are allowed to initiate new proposals, and their main task is to vote with the majority of the delegated stake. At the same time, large token holders can be nominated for the role of consuls themselves.
- Implementation of a monthly compensation plan for core contributors.
- Using farming rewards to incentivize actions that are useful within the system: wrapping tokens, voting, providing infrastructure etc.
The launch strategy consists of the following steps:
First and foremost, farming will start for the early initiators of the Graviton system. This period will last for about two weeks, and during that time each backer will receive a farming reward proportional to their contributed share in the treasury. When the early-bird seed period ends, the early-bird role will still continue to exist, meaning that the shares of early-bird backers are never going to be diluted due to the new backers entering during the next phases. Immediately after the start of farming, the token will become liquid, without any lock-up periods or vesting.
At that stage, it will be necessary to bootstrap a governance system and organize voting to determine which AMM pools/token pairs are in priority for liquidity provision rewards. After a series of proposals and implementations, $GTON token public farming will be launched. At this stage, the token will already have a price, some liquidity, and an incentive to be accumulated by new external participants. At this stage, the reward program will be launched for maintaining liquidity of wrapped tokens and the growth of the system’s TVL. In subsequent milestones, which will be determined solely by the participants’ governance decisions, new strategies for farming and distributing rewards between $GTON stakers can be implemented.
The launch scheme assumes the presence of several roles in the first stages of the launch of $GTON, which are indicated in the table below:
The ratios of distribution of farming rewards are flexible and can be altered through governance, as well as the impermanent roles of participants. The project leader is an elected representative and can be replaced by a general governance decision, and their farming allocation can also be changed. A new role can be added by voting. An important difference between early backers and standard backers is that treasury funding & farming is possible indefinitely, and the share of distributed tokens will be diluted for everyone except for the early bird investors. The share of early backers will remain constant as the opportunity to become an early backer is limited to the first weeks after launch. Governance delegation, liquidity provision for $GTON, as well as the farming of LP tokens/wrapped tokens are the responsibility of the so-called user role. A user can join and exit the system at any time, using any amount of accounts.
The $GTON token will have no fundamental value outside of the Graviton system and no special applications. The range of its use cases is solely determined by the decisions of its holders, who are initially represented by treasury backers, and by other roles and actors in the long-term. The main functions of $GTON are the right to allocate funds of the treasury to attain a specific goal, as well as determine token rewards for actions beneficial to the system. Several use cases that the contributing team offers for consideration after the launch of the system are:
- use the token as a payment for withdrawal of tokens from destination chains to original chains and distributing this token back to the stakers (which is essentially a negative incentive to demotivate the reduction of the system’s TVL),
- use the token to relay the share of rewards received from yield farming of tokens locked on bridges.
As stated previously, one of the key factors influencing the prosperity of DeFi inter-chain is the liquidity of wrapped tokens. The problem of bridges is efficiently solved by the Gravity network and SuSy protocol. The Graviton system, if implemented on top of Gravity, would allow for the expansion of the concept of wrapped tokens, ultimately being another important step in achieving full inter-chain composability.
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Graviton: https://graviton.one
Graviton community chat: https://t.me/graviton_community
Mirror Accounts Article: https://medium.com/gravity-protocol/using-an-ethereum-wallet-to-sign-transactions-on-waves-23509adf152
Metamask-Waves Demo: https://sandbox.graviton.one
