Vault upgrade: Most liquidity-efficient scaling of position sizes in the industry.
Latest innovations on the DAI-only liquidity layer (vault) of gTrade, our decentralized leveraged trading platform.
When new users discover gTrade, they often wonder how we can already offer $4,000 collateral sizes at 150x leverage (= $600,000 position size) on 37 cryptocurrencies with only $2.7m liquidity. It is already an impressive achievement, but it’s getting even a lot better.
We can achieve this because of two unique attributes of our architecture:
- Only collaterals go through the liquidity, not the full position size.
- All trading pairs share the same liquidity pool.
Currently, our max collateral size on gTrade depends purely on the GNS/DAI LPs TVL. To be precise, the max position size cannot be more than 0.3% of the GNS/DAI LPs. Otherwise, trades could be frontran profitably on Quickswap, as every trade opened instantly buys GNS and burns it with the whole collateral, which would create a poor trading experience.
Overview of improvements:
- Staking in the DAI vault will be open to everyone.
→ no impermanent loss, earn DAI on DAI from trading fees.
- Max collateral sizes will depend on the DAI vault.
→ Max collateral size will scale between 5x and 10x better for the same amount of fees distributed.
- Collaterals will go through the DAI vault instead of the GNS/DAI liquidity.
→ Every trade will have exactly 0% price impact, slippage is completely removed from the platform.
→ 0.3% swap fee on collateral removed when opening a trade (eg. 33% less opening trading fees when using 5x leverage).
- More robust architecture, less useless volatility on the GNS token.
1. New product, earn DAI on DAI.
By staking your DAI in our vault, you act as a buffer between leveraged trading profits and losses on gTrade and the GNS/DAI pool.
This is of high value for the protocol, therefore you will earn as an incentive a share of the trading fees in DAI.
10% of the current fees going to the GNS/DAI LPs pool will go to the new vault, which will turn out to be a long-term benefit for LPs as bigger position sizes means more volume, which means more LP rewards!
We aim to attract a lot of capital with this new product, as earning DAI on DAI directly (no liquidity pool etc.) is very rare.
Make sure to follow the launch of this new DAI vault as the earlier you stake, the better the APR will be!
2. Better max collateral size scaling.
Since APR can be lower on DAI staking than on GNS/DAI staking, we will attract more liquidity with the same absolute amount of fees distributed.
We will still need significant liquidity in the GNS/DAI LPs (ideally vault TVL = liquidity TVL) for practical reasons, even if we spread buying and selling over time. However, this does remove the 0.3% max collateral size problem.
The formula will be: max collateral size = 2% of current vault balance (eg. $20k max collateral sizes with $1m in the vault).
3. No more price impact from opening/closing trades, and less trading fees.
Before, when you opened a trade, it would perform a swap from DAI to GNS with your whole collateral.
This means you suffered from slippage of the swap and also from the 0.3% swap fee, taken from the DAI position size of your trade.
After the update, both will be removed.
1. Collaterals are sent to the DAI vault directly when opening a trade.
They are used to refill the vault, or if it makes the vault current balance above its initial balance, the excess of DAI is used to buy and burn $GNS.
2. The goal is to keep the vault at its max balance by either refilling (mint & sell) or depleting (buy & burn) it.
Let’s say there is $2m DAI staked in the vault. Then, a few trades are closed and take $100k from the vault. Newly opened trades collaterals will refill the vault, and if they are not sufficient, the vault will mint and sell GNS in small amounts over time until it reaches back to its initial $2m balance.
Now let’s say a lot of new trades are opened and they have all been liquidated. The vault balance is now at $2.3m. It will use the excess of DAI to buy and burn $GNS over time until it reaches back its initial $2m balance.
Note: We have an additional threshold parameter. If set at 10% for example, the vault will start buying and burning $GNS once balance reaches > $2.2m from an initial $2m balance. It can be used to always keep some room to prevent refilling the vault only for a few wins, and also to keep the vault slightly overcollateralized.
ETA: ≈ 2 weeks.
CertiK is currently auditing the new contracts. A test transition will also be done on the testnet before deploying on the mainnet.
Thank you for reading!
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