GEAR Liquidity Explainer: Cider Up!
If you’ve been paying attention to Gearbox governance lately, you may have seen ideas flying around about how to best bootstrap liquidity for GEAR and enable transferability. If you haven’t been paying attention, then you’re in the right place! The time has come…
UPDATE on $GEAR & $ETH pricing:
Recently, [GIP-31] passed, which approved the Cider’ed Liquidity launch plan, and [GIP-35] finalized the parameters, with [GIP-36] adding GEAR/ETH LPs LM rewards. In short, Cider’ed Liquidity is a one-sided GEAR/ETH Curve V2 LP auction where both GEAR holders & ETH holders can participate separately!
- Part 1: Timeline & Mechanics
- Part 2: “What should I do?” tips
- Part 3: “How to participate” guide
- Part 4: CMC & distribution transparency
The goal is to match current sellers with new buyers, and do this in an auction style before trading even begins — potentially smoothing the market conditions. Anyway, if you want to buy or sell some $GEAR, this is your first chance. The aim of this article is to provide a timeline of what to expect, a dash of context, and some profitable trading strategies at the end.
In-depth details can be found here:
Part 1: Timeline & Mechanics
Below is the currently anticipated timeline for the Cider’ed Liquidity launch. Given the nature of multisig transactions, give 1–2 days extra potentially, in case there is any slow-signing. But once the Cider’ed Liquidity first stage opens up (the GEAR deposits), all the subsequent stages would happen automatically until the end of FairTrading.
Follow the official Gearbox DAO socials (forum, twitter, and discord) for the most up-to-date timing announcements. GEAR token contract and other vesting related information can be found in the docs.
Audit: Dec 5th-11th
The contracts have been audited by ChainSecurity. The report & findings are posted on the corresponding forum topic. Cider is not a complex contract, it’s pretty easy — so the audit was swift and comfy. If you are reading this but do not see the audit link in the forum topic, give it a few hours — it and the code will be open-source before the start. This article is posted asap without waiting for those things, so that members have time to read.
Multisig Transactions: ~Dec 12th
Once the audit passes, the multisig can take the day of December the 12th to prepare the necessary transactions. This can be +1–2 days in case there is any slow-signing. Keep an eye on socials.
Cider’ed Launch: Dec 13th
The Cider’ed Liquidity bootstrapping event can be initiated on December 13th. At the same time, the 1st stage of depositing GEAR begins:
GEAR Supply Period: Dec 13th-14th
For the first two days (48 hours), anyone that currently owns GEAR can supply to the Cider’ed contract. The minimum is 120m tokens, and the max is 160m as per the proposal: that is 1.2%-1.6% of total supply or, in other terms, 12–18% of the circulating supply. There is no minimum to deposit, you can send either 10,000 or 99,000 or more. Your decision.
But what happens with this GEAR? Glad you asked, because next is…
ETH Supply Period: Dec 15th-16th
For the next two days, anyone can supply ETH to the Cider contract. The minimum is 2,000 ETH and the maximum is 3,000 ETH as per the proposal. There is no minimum to send, you can fill it all up with 1,000 by yourself or send as little as 0.1. Note that if the total minimum has not been met, the financial multisig is authorized to step in and be prepared to deposit 400 ETH from the DAO treasury in the last hour as support for the plan.
Please keep in mind that if you deposit into the contract (GEAR and/or ETH), you can’t take your LP tokens out until the end of the fair trading stage (or refund earlier in case it is not successful) — 6 days.
Cider only needs ~2,000 ETH to be awesome 🏆
Now we have GEAR and ETH which means…
Liquidity Creation Event: Dec 16th
This is where the contract gets to do something!
It will direct all of the GEAR it received and pair it with all the ETH it received. But to do this, it has to verify the minimum GEAR and ETH commitments (noted above) were met. Should either minimum not be met, all funds will be returned and a new path will need to be determined by the DAO. So long as the minimums are met, a Curve V2 liquidity pool will be created and users will be “counted” with proportional LP tokens.
At what price? — at the average supplied amounts. Whatever side you are entering from, you’d be “buying or selling” GEAR in the range of $0.015-$0.030. The final price depends on the total amounts in the contract at the end of the second stage. Since ETH depositing happens after GEAR depositing, ETH depositors will have a closer range. For example:
- 150,000,000 GEAR is deposited in stage 1
- ETH stage begins, but you don’t know what the amount will be (range for ETH is 2,000–3,000 if you remember from the above)
- The range of $GEAR would then be $0.016-$ 0.024 (if ETH costs $1,200)
At this stage, you can’t claim your LP tokens yet. You “own” them, but just can’t claim them so you can’t withdraw them or unwrap, until this ends:
FairTrading Period — Dec 17th-22nd
As soon as the liquidity pool is filled up, GEAR will be tradeable, but only through the 0xcider contract. It will still be untransferable for a few days. Also note that LPers cannot adjust their LP position at this time — they do not get their LP tokens until the end of FairTrading.
For the next 6 days, there will be a fee to sell GEAR into the liquidity pool. This fee will start at 25% and ramp down to 0% over the 6-day period linearly. There will be no fee for buying.
These extra trading fees accumulate in the 0xcider contract for the financial multisig to later supply them into a separate LM contract or just hand out in the merkle distributor way (like the current LM program for passive pools is done). It’s to be divided linearly over 4 months:
Essentially, early sellers fuel future LP rewards. 50% of those FairTrading fees go to 0xcider LPs only, and 50% goes to future 4months+ LM. Plus, future LPs get GIP-36!
Live Trading: Dec 23rd
GEAR can be fully tradeable with liquidity on December 23rd. But — why would anyone LPing during FairTrading stick around? The classic answer, of course, is liquidity mining! Standard liquidity mining has been proposed in [GIP 35], beginning with the start of the FairTrading period (~Dec 17th).
There’s another twist: the fees from the FairTrading period will also be utilized for additional liquidity mining, over the course of 4 months.
To Liquidity and Beyond
Once the event is over, the DAO evaluates the liquidity mining program to determine if tweaks are necessary. The DAO may also wish to pursue a crv/cvx gauge, and migrating (or creating) protocol-owned liquidity to an additional liquidity pool Balancer. That’s all TBD later on…
It’s expected that some or most of the liquidity supplied by 0xcider will leave. That’s totally normal to expect since it’s individual members deciding to either stay as LPs or not. Some might stay, some might leave. The DAO can supply its own chunk in January once volatility supposedly subdues.
But… Why?
There is no doubt that Cider’ed is a new system, so it’s natural to wonder why Gearbox DAO voted to use this system over countless others that have been used in DeFi. The goal is to create liquidity for the GEAR token in the most efficient way possible, and the benefits of the Cider’ed approach revolve around limiting dilution, allowing price discovery, and repackaging the launch in a way that benefits LPers.
The documentation on the Cider’ed approach offers more context, but ultimately Cider’ed takes aim at buyers and sellers of new tokens that will typically pay extremely high gas fees to be the first to buy or sell.
With Cider’ed, the fee is spread out over time, thus allowing the fee to be repurposed as liquidity mining rewards. The price range still allows for a level of price discovery without the DAO needing to sell a significant chunk of its own tokens and diluting the supply even further.
Part 3: “How to participate” guide
Interface is there!
Please be careful with fake links or promises in DMs. The contract is open-source and verified on Etherscan, nobody else will be able to help you with depositing. You can even interact with the contract directly if you don’t trust 0xcider interface, and use that as information only.
Stages start one after another. The information gets pulled from the contract, and you can’t interact with the new stage before the previous one ends. There are timers to help you figure it out, or read Part 1 above again. GLHF!
Source code, audit, and contract
- Code: https://github.com/Cidermancer/gear-auction
- Audit: https://github.com/Cidermancer/gear-auction/tree/main/audit
- Contract on mainnet: 0xcB91F4521Fc43d4B51586E69F7145606b926b8D4
“I am a smart cookie, let me do Etherscan magic”
If you have just graduated from the Izirium university or have been rugged in DeFi summer, you know that all these things should work just via Etherscan w/o trusting any interface. And you’d be right, is all on-chain!
If you are depositing ETH…
Then you just send it to the contract address. That’s it. Just don’t forget to manually adjust for a higher gas limit. Put 250,000 to be sure. That is gas limit, not gwei or priority fee. You don’t need to fix those.
Or you can call the “4. commitETH” function on Etherscan 0xcb91f4521fc43d4b51586e69f7145606b926b8d4#writeContract after connecting your wallet. A regular number, no fancy extra zeroe’es. That will calculate the gas for you. In any case, unused gas is not paid for.
If you are depositing GEAR…
- Go to the GEAR contract at 0xBa3335588D9403515223F109EdC4eB7269a9Ab5D#writeContract
- Go to “Write Contract” and connect your wallet
- Go to “2. Approve” and input 0xcB91F4521Fc43d4B51586E69F7145606b926b8D4 [Cider contract address] into the spender field, & your amount into “rawAmount”
- Press “Write” and confirm transaction
- Then go to that Cider contract at https://etherscan.io/address/0xcb91f4521fc43d4b51586e69f7145606b926b8d4#writeContract and connect your wallet
- Press “5. commitGEAR” and enter your amount into amount. Note that amount has to be entered with 18 zeros added due to how ERC20 decimals work. So to commit 100,000 GEAR, you have to enter 100000000000000000000000 into the field.
And if this sounds too complex, maybe just use this…
Part 2: “What Should I Do?”
These are just ideas, we are all born to be rekt.
Maybe you have some GEAR, or some ETH, or both and are wondering what to do. Ultimately, the strategy is up to you and what your goals are, but here are a few points you may want to consider:
- Participation is optional. There is no obligation to supply GEAR or ETH if you don’t want to. You can buy or sell after 0xcider stages end.
- Similar to point 1, the fee you pay during the FairTrading period is up to you. If you want to sell GEAR, you can sell for a 25% fee in the first block, or you can wait for the fee to drop before selling. You can also sell after December 23 when there is no extra fee.
- If you ONLY supply GEAR, then you are effectively selling half of your GEAR to ETH & then committing to provide liquidity for 6 days. After FairTrading, you can decide to stay as LP and earn more, or withdraw your LP and convert the remaining 50% GEAR to whatever asset you choose if there is liquidity (like, sell remaining to ETH). Basically, Cider’ed Liquidity gives you a chance to sell 50% of your stack. Next to that, you bet on volatility, and can earn more if you join. If you deposit GEAR, it doesn’t mean you are a seller per se though: you can actually make more $GEAR by betting on volatility, and then buying back that 50%.
- If you ONLY supply ETH, then you are effectively buying GEAR with half of the ETH you deposited in 0xcider, and committing to provide liquidity for 6 days. After FairTrading, you can decide to stay as LP and earn more, or withdraw your LP and convert the remaining 50% ETH to GEAR. Basically, Cider’ed Liquidity gives you a chance to buy for 50% of your stack. You bet on volatility, and earn more $GEAR if you join.
- You can supply GEAR AND ETH! This is an option for anyone who wishes to provide liquidity (and earn liquidity mining rewards and trading fees) but not sell their GEAR.T his option is effectively betting on trading volume to collect as much extra GEAR as possible.
- You can send in any amount of GEAR or ETH, in any number of transactions, during their respective supply periods. For example you may initially supply some amount of GEAR, then the next day decide to supply more. During the ETH period, you may initially send a small amount of ETH, then the next day you wish to supply more.
So, again…
What options do $gear holders / buyers have?
You have $ETH and you want some $GEAR?
Participate in 0xcider, and you will get 50% of your stack in $GEAR. After the 0xcider and FairTrading stages end, you can unwrap your LP and buy the remaining $gear. Or you can stay as LP and get a piece of two LMs.
You have some $GEAR and want to get more?
Participate in 0xcider with your $GEAR, and earn LM rewards from both programs. Once 0xcider ends, you can unwrap your LP position and use the ETH you got to buy back whatever amount of $GEAR you deposited in 0xcider (due to volatility, even though you earn LM, it can be more or less).
What options do $gear sellers have?
You have some $GEAR and you want to sell all or a part of it?
- Participate in 0xcider and sell 50% of your stack to ETH. After 0xcider ends, you can decide to stay as LP and earn more, or withdraw your LP and convert the remaining 50% GEAR to whatever asset you choose if there is liquidity (like, sell the remaining amount to ETH).
- Sell during either FairTrading phase or after — while FairTrading has fees, it also allows you to trade with the pool earlier than others. So if you think that there will be a sell-off, you can sell even if there is a fee.
PS: If you deposit GEAR, it doesn’t mean you are a seller per se: you can actually make more $GEAR by betting on volatility, and then buying back that 50%.
At what price am I entering / exiting $GEAR?
Everybody gets the same price, meaning all the liquidity will be supplied by the 0xcider contract at the price the auction ends at. To be precise:
- For GEAR depositors, it’s “better” if 120M GEAR is deposited rather than 160M — and 3,000 ETH next to it. That gives the highest entry price.
- For ETH depositors, it’s “better” that 160M GEAR is deposited rather than 120M — and 2,000 next to it. That gives the lowest entry price.
That’s auction for you!
Why join Cider’ed Liquidity and/or stick around as an LP?
By participating in the 0xcider supply phase, you get a chance from the very 1st block to receive a few different rewards. Those rewards will be claimable few days after 0xcider ends and multisig seeds the reward contract:
- A share of FairTrading generated extra fees linearly distributed over 4 months, which you get from the very 1st block as 0xcider participant;
- AND a share of the LM program linearly distributed over 4 months;
- AND you are first in line to buy or sell GEAR tokens (before FairTrading begins) with a specified price range, almost guaranteed exit / entry.
Part 4: Circulating CMC & token information
GEAR token is an ERC20 utility token, starting off as a governance token for the protocol — and then possibly taking any other new function the DAO could envision for it. The supply of GEAR is capped at 10,000,000,000 (10 billion) which can’t be technically changed. See in source code.
Token contract: 0xba3335588d9403515223f109edc4eb7269a9ab5d
Decimals: 18
Symbol: $GEAR
All this information can be found in the docs, below is just a recap of the most important parts. This distribution was designed and confirmed in August 2021, more than one year ago. The token has been live since December 2021.
How to figure out circulation?
Initially circulating tokens will be owned only by the community members: first testers, first Discord members, first users, retroactive drop, the recent liquidity mining, and some VIBES contest winners. In total:
- 5% Credit Account Mining, see the old contract.
- 1.433% for early testers and Discord members, see the old distributor.
- 0.5% for retroactive V1 liquidity mining, see the contract [the same is being used for new LM as well as the old drop: it’s a unified contract that is updated by the DAO every few weeks with fresh rewards].
- ~0.336% from the new V2 liquidity mining: that is 12 percent of the ~2.8% LM rewards allocated for the first year [approx 43 days of rewards are seeded into the same merkle as the above]. By the end of December, it might be a bit more, but this inflation is quite small.
- ~0.015% from VIBES subDAO that was sent to contest winners, small grants, and other things. See their reports in Notion.
- + some initial LM for the GEAR/ETH LPs, some small multisig compensations, etc. Likely all in the range within 0.1% more. And then + 0.2% or so when the DAO supplies some more LP by itself in January. This part won’t actually be circulating though, but sitting in the LP.
Roughly ~8% of the total supply will be circulating at the start. But since DAO owned >51% from the start, that 8% is actually ~16% of the allocated supply. That’s not tiny!
Because 0xcider will take some days to go from start to finish, by the end of December that total can become ~8% of the supply including some new LM rewards and contributor vestings. Some dashboards count vestings differently (even if it is all on-chain) so just keep this in mind. All the vestings are on-chain from the very first day, you can verify it all.
Transparency Notice: vestings and numbers
Let these numbers not deceive you though. Early contributors start their vestings around the same time. But there is no cliff unlocks in chunks, it’s all linear vestings for 12 or 18 months or more. So, circulating supply can be increasing, but nobody can speak for what these members do with their tokens: buy, hold, sell, LP… it’s up to them.
- Who the early contributors are & what they did to help Gearbox DAO — can be found at the bottom of the main Notion page (links to the governance proposals or the article V1 product are there too).
- All the numbers & their vestings can be verified on-chain — instructions are in the docs. You can check the list of addresses of all early members (includes first round, DAO round, and developers). Some even have ENS attached to them, so you can see what they do & when.
A notice to CMC or on-chan tracking dashboards
If you are trying to make sense on-chain, then the following addresses & contracts ARE NOT circulating (so take 100% minus these portions):
- https://etherscan.io/address/0x7b065fcb0760df0cea8cfd144e08554f3cea73d1, 46.6% owned by the DAO [minus the grants and whatever activities that have taken place throughout 2021, see monthly DAO reports]. Up to DAO what to spend it on, but usually DAOs never deplete their treasuries fully, and it happens very very slowly: a multi-year process.
- https://etherscan.io/address/0xf7512B2B20Cf427ADD8b01D8CDEef97a4B0E2C27#readContract, ~40%. Whatever tokens are inside the contracts related to this vesting manager contract, are not circulating: they are either vested or not claimed. At the time of writing and for the foreseeable months, most of them are vesting and can’t be claimed. Whenever a token leaves one of the contracts attributed to this registry, you can count it cirulating. Their voting power also becomes x1 then.
- Some small distributions for grants, DAO Round part 1 & Part 2, comprise whatever is 40+46,6% minus community stages explained above. DAO rounds were ~3.8% in total, so the ~8% as per above is correct! You can & should check. You can go extra-picky and also exclude VIBES metaDAO multisig from circulation too, is all verifiable.
If you would like to join — just get involved on Discord. Discuss, research, lead and share. Call contributors out on their bullshit and collaborate on making things better. Here is how you can follow developments:
- Website: https://gearbox.fi/
- dApp: https://app.gearbox.fi/
- User Docs: https://docs.gearbox.finance/
- Developer Docs: https://dev.gearbox.fi/
- Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
- Blog: https://medium.com/@gearboxprotocol
- Github: https://github.com/Gearbox-protocol
- Twitter: https://twitter.com/GearboxProtocol
- Snapshot page: https://snapshot.org/#/gearbox.eth
- And, of course, the DAO working docs:
