Introducing Arrakis — Web3’s Liquidity Layer
On planet Arrakis, 𝘸̶𝘢̶𝘵̶𝘦̶𝘳̶ liquidity is the most sacred resource.
Arrakis has one mission: to become web3’s liquidity layer, enabling LPs and tokenized projects to optimize their DEX liquidity on and across multiple blockchains in a seamless and automated manner. The platform is a reaction to the problems that many projects in web3 are facing today:
- Traditional Uniswap v2 AMMs provide a one-size-fits-all liquidity solution. While being simple, they lack efficiency and are costly to subsidize liquidity programs
- Next generation AMMs like Uniswap v3 provide liquidity efficiency improvements, however at the cost of added complexity and risk to LPs
- The multichain landscape made liquidity increasingly fragmented & the operational overhead of managing liquidity exponentially higher
- Projects are forced to spend an unnecessary amount of time & resources on complex topics such as active liquidity management, cross-chain liquidity provision, and modeling expenditures on market making programs
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. It currently has $447 million (~$607 million at its peak) in TVL in its LP vaults — which comprises roughly 10% 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… up until now.
Since the launch of its v1, top DeFi projects have adopted Arrakis vaults, including MakerDAO, Aave, Olympus Pro, Frax, Synthetix, Fei, Index Coop, and many more. For many of these protocols, Arrakis Vaults are one of the largest collateral / liquidity positions. For example, in MakerDAO’s upcoming governance proposal, Arrakis vaults would receive a debt ceiling of 1.75bn, which could potentially lead to more than 10% of all DAI in existence being backed by Arrakis in the near future.
A New Primitive for Active Cross-Chain Liquidity Management
Arrakis at its core is a protocol that specializes in concentrated & active liquidity management. It solves the aforementioned problems by creating a curated marketplace of novel tokenized LP strategies that facilitate deep liquidity and optimize LP earnings.
The Arrakis DAO overseeing this protocol is the coordination point for projects looking to aggregate & bootstrap liquidity effectively and the most attractive destination for market making strategists to design automated liquidity provision strategies.
By abstracting liquidity management and directing it towards advanced market making strategies, Arrakis becomes a highly useful primitive. With Arrakis vaults, passively holding an ERC20 LP token automatically exposes an LP to the underlying automated strategy. This encourages grassroots innovations in liquidity aggregation, such as those we have seen on Uniswap v2 style AMMs (Liquidity Mining, Protocol Owned Liquidity, LP tokens as collateral), in more efficient but also more complex markets such as Uniswap v3.
Beyond this, Arrakis opens the door for a new area of decentralized market making with potential for tokenized products like:
- Auto-Hedged delta neutral LP positions
- Sophisticated multi-positions on concentrated AMMs
- Cross-AMM positions
- LP positions coupled with lending/borrowing or options markets
- Cross-chain strategies
The overall purpose of the protocol is to aggregate, grow and sustain the best-in-class strategies for effective DEX liquidity provision, openly accessible to all and seamlessly composable with the rest of DeFi. In doing so, Arrakis fosters deeper and more robust liquidity for myriad projects and use cases across the web3 landscape.
In order to achieve these goals in a truly permissionless and decentralized manner, Arrakis now unveils the $SPICE token, whose purpose is to add transparent governance and new incentive mechanisms to the Arrakis protocol.
Those Who Control the $SPICE Control the Universe
The Arrakis DAO coordinates the management of its tokenized strategies with its curated list of automated strategies from which the protocol will take a 25% commission on fees earned from all liquidity under management, as protocol revenue. In turn, projects get optimized liquidity without the management overhead, and crucially, access to liquidity gauge emissions of $SPICE.
These $SPICE emissions provide additional incentives for LPs and attract “sticky” liquidity to vaults, while doubling as a bootstrapping mechanism for distributing governance power over the Arrakis protocol by vote locking $SPICE for non-transferable $xSPICE. The tokenomics of $SPICE and $xSPICE are inspired by Curve’s explosively popular ve design, with a number of important differences (outlined in detail in a forthcoming post) optimized in order to fit and grow Arrakis’ future product fleet.
At the genesis of Arrakis and the $SPICE economy, there will be an initial distribution of $SPICE, including an airdrop spanning a few key demographics. Details about the $SPICE distribution and eligibility will be released soon.
Join the community of Fremen and become a part of Arrakis:
— Website: https://www.arrakis.finance
— Telegram: https://t.me/arrakisfinance
— Twitter: https://twitter.com/arrakisfinance
— Discord: https://discord.gg/arrakisfinance
