Co-authors
Peter Yoon (@whitebitcoin8)
Andrew Kang (@adr_sk_)
This article is Episode 6 of Why Gno?, a series featuring a deep dive into Gno.land, the most performant smart contract platform powered by Gnolang, and Gnoswap, an innovative concentrated liquidity DEX aspiring to become the liquidity hub of Gno.land.
[Why Gno?]
Episode 1: Tracing the History of Crypto
Episode 2: Hello World, Meet Gno.land
Episode 3: A Deep Dive into Gno
Episode 4: Lessons from the History of Exchanges — Part 1
Episode 5: Lessons from the History of Exchanges — Part 2
Intro
The best smart contract protocol needs the most powerful DeFi platform. Today, we’re excited to introduce Gnoswap — the first Concentrated Liquidity Market Maker (CLMM) DEX aspiring to become the liquidity hub of Gnoland.
At Gnoswap, we envision Gnoland to become one of the most highly valued smart contract platforms in the world, driven by its sustainable and developer-centric design philosophy built into its PoC consensus, GnoVM, Gnolang, Tendermint2, and deflationary tokenomics. Our rationale behind this thesis was thoroughly covered in Episodes 3 & 4 of this series.
Akin to how the intrinsic value of $BTC and $ETH steered the growing need for a trading platform and the consequent surge of crypto exchanges, we believe that the inherent value of Gnoland will be a catalyst for the demand for a dedicated exchange to facilitate the trading of $GNOT.
Enter Gnoswap, a reliable liquidity infrastructure for Gnoland. As a native decentralized exchange (DEX) on Gnoland, Gnoswap is poised to play a pivotal role in fostering the growth of its ecosystem by providing a means of stimulating the active exchange of assets in Gnoland.
What is Gnoswap
Gnoswap is the first DEX on Gnoland that aims to provide the most simple, secure, and liquid DeFi platform where anyone can permissionlessly swap & earn assets.
Gnoswap adopts the CLMM, which is a mechanism for enabling liquidity providers to specify a price range in which their liquidity becomes active, designed to offer one of the most competitive prices in the market.
For traders, Gnoswap is an exchange platform that offers the best trading experience with a trader-centric interface. Gnoswap provides valuable insights into the market to give traders a massive advantage. From the simplest information such as the price trends of a token to the most complex ones such as the liquidity plot of a pool, Gnoswap will provide everything, poised to become the only platform you’ll need when trading on Gnoland. Furthermore, Gnoswap offers vast opportunities to become the earliest adopter of promising projects built on Gnoland.
For liquidity providers (LPs), Gnoswap is a DeFi platform that maximizes the capital efficiency of their assets. The CLMM ensures that the liquidity is fully utilized to amplify the trading fees for LPs. In addition, the staking program of Gnoswap offers a chance for LPs to not only maximize their asset’s capital efficiency but also own and govern the platform.
For dapp builders, Gnoswap is a liquidity infrastructure that is permissionless and decentralized by nature. Any dapp is free to create a liquidity pool with its token on Gnoswap to enable trading. To bootstrap liquidity, dapps may add external rewards to liquidity staking pools to attract more LPs to join the pool. Nascent dapps are also given a chance to build an initial user base by utilizing the interactive airdrop platform of Gnoswap that supports on-chain quests and quizzes that encourage active engagement.
Why Gnoswap?
Deep Liquidity
The CLMM offers an unmatched capital efficiency — up to a maximum of 20,000x compared to traditional AMMs such as the Constant Product Market Maker (CPMM). Deeper liquidity results in better pricing, which drives higher trading volume and fee rewards, which leads back to deeper liquidity — creating a self-sustaining virtuous loop. To mitigate the conflict between the CLMM and staking arising from the frequent readjustment of price ranges for concentrated positions, Gnoswap introduces the Warm-up Period. This mechanism deviates from long unbonding periods, but instead applies penalties or boosts based on the total staking duration for each position.
Synergy With Gnoland
Gnowap inherits high performance and fast finality from Gnoland, built on top of it as a set of realms, which is a term for smart contracts on Gnoland. These give Gnoswap a huge advantage as an exchange, allowing it to handle a vast number of swaps per second with instant confirmation guarantees. In addition, the deflationary nature of $GNOT also synergizes excellently with Gnoswap by unburdening its holders from the dilution that PoS tokens experience, encouraging active DeFi engagement.
Simple, Scalable, and Customizable
Gnoswap abstracts away the complexity involved in the CLMM to create the most intuitive trading environment while providing a comprehensive pool of data for traders. At Gnoswap, we believe that good UX doesn’t have to be a tradeoff for decentralization. The Gnoswap interface has been designed to simplify your DeFi experience to help you focus on what matters the most: trading and earning.
Furthermore, Gnoswap supports multiple fee tiers with configurable price ranges. This allows scalable liquidity pools, ready to accommodate any token pairs regardless of their price tendencies, whether stable or volatile. LPs are also free to experiment with any strategy on account of its high customizability.
The $GNS Token
$GNS is the native utility token of Gnoswap, designed to align the interests of all participants of the platform to its growth and success. The primary purpose of $GNS is to incentivize active liquidity provision while capturing the value generated consequently. In the long term, $GNOS will play a vital role in achieving the complete decentralization of Gnoswap as a gateway to its governance for self-sustainability and ownership distribution.
Utility
- Staking Incentives: To ensure deep liquidity, $GNS emissions are directed to liquidity staking pools as incentives for LPs. These rewards exist to offset the impermanent loss that LPs experience while inviting them to own and govern the platform they are contributing to.
- The Primary Quote Currency: Liquidity staking pools containing $GNS will be prioritized when directing $GNS emissions as staking rewards. This will pair a majority of tokens with $GNS, positioning it as the primary quote currency of Gnoswap. As a result, $GNS will facilitate trades between tokens without direct pools.
- Governance Gateway: Positions from the $GNS-$GNOT liquidity pool can be staked to earn xGNS, which represents the voting powers of the Gnoswap Governance.
- Airdrop Eligibility Criteria: Owners of $GNS will be eligible for airdrops of vetted projects that launch on the Airdrop Platform of Gnoswap. $GNS is poised to become the key to gaining exposure to new, promising projects building on Gnoland.
- Pool Creation Fee Payment: More dapps and tokens will emerge on Gnoland as its ecosystem expands. This will naturally lead to more pool deployments on Gnoswap, provoking the demand for $GNS as its pool creation fee.
$xGNS
$xGNS is the governance token of Gnoswap that allows its owners to vote on proposals that introduce changes or improvements to the platform. The only way to acquire $xGNS is by staking positions from the $GNS-$GNOT liquidity pool.
Drawing inspiration from the $veBAL design by Balancer, $xGNS guarantees sufficient $GNS liquidity at all times, while entrusting the LPs of the core liquidity pool of Gnoswap with governance authority. Unlike traditional single-sided staking mechanisms, $xGNS allows $GNS owners to engage in governance without foregoing capital efficiency.
Tokenomics
The distribution will start at the genesis supply of 100M $GNS. The genesis supply consists of the Airdrop and the Ecosystem Growth Reserve:
Afterward, 900M $GNS will be distributed following an emission schedule with a yearly halving until the total supply of 1B $GNS is reached. 10 years from the genesis, the majority of the total supply will be released, dynamically changing the distribution that will look like the following:
Detailed information about the supply and the release schedule can be found in the tokenomics section of the Gnoswap Docs.
The Gnoswap Team
Gnoswap is built by Onbloc, a blockchain infrastructure company dedicated to Gnoland, behind Adena Wallet, Gnoscan Explorer, and the Gnoland Developer Portal. Onbloc was one of the first awardees of Gnoland Grants, a formal program for funding teams and individuals who have been reviewed by the core team to have made valuable contributions to the Gnoland ecosystem.
Aligned with a vision of onboarding the masses to the blockchain ecosystem, members from Onbloc bring professional experiences from many sectors including web3 projects, crypto exchanges, consulting firms, startup incubators, infosec institutes, and much more.
Road Ahead
Our nearest goal is to coordinate the official release of the Gnoswap Web App to the mainnet launch of Gnoland. We’re looking to bring a seamless trading experience for Gnomes starting from Day 1.
Following the launch, new features will be continuously shipped in accordance with the development of the Gnoland stack. The following are key milestones:
- Support for cross-chain-transferred tokens via IBC or bridges.
- Various APIs for seamless integration with other dapps and platforms.
- A customizable framework for building advanced financial primitives such as leveraged trading and perpetual futures.
Conclusion
As one of the earliest and the most active contributors to Gnoland, Gnoswap will work closely with the Gnoland Foundation in developing the core Gno Stack while, at the same time, supporting the onboarding of new projects with liquidity bootstrapping and user base acquisition.
In the foreseeable future, Gnoland will evolve into one of the most vibrant ecosystems with a vast pool of developers building innovative dapps atop. In this perspective, the demand to access the GnoVM will naturally drive the intrinsic value of $GNOT, and consequently its trading volume. As the native liquidity infrastructure of Gnoland, Gnoswap will scale alongside its ecosystem, distributing the captured value to the $GNOS owners to create a self-sustainable exchange platform that will provide the most simple and reliable trading experience for everyone.
