WEN TOKEN? Pre-proposal context.
The goal of this article is to give content into the upcoming GIP proposal with the vote details described below. The target for the execution and final transferability is within the first half of December, ideally prior to Dec 10. Please read, comment in Discord gear-economics, and help refine the plan.
UPDATE: the plan has been changed following the DAO vote, in favour of another model, you can find all the details in here:
Intro
Gearbox V2 has officially launched! It has demonstrated strong signs of a product market fit on the Credit Accounts side, and generated plenty of attention from users. Gearbox V2 is the result of months of work from a large group of DAO contributors, including multiple passed audits. We’ve only scratched the surface of what sort of creative strategies are possible with V2, so naturally we know what you want to ask ne-
‘WEN TOKEN’
No wait don’t you want to know about new pools and strateg-
‘WEN TOKEN’
But don’t you want to explore fee structures and scali-
‘WEN.’
How about-
‘TOKEN.’
Ok fine, we can talk about the token. If you do also want updates and more info on V2, stats, and so on — check out the latest DAO update:
The Token Launch Plan [soft consensus]
The proposal to unlock GEAR token will go live within a few days of this article being posted. Let’s give it a few days for the last remarks and suggestions, to make sure we got all possible solutions covered.
Context
“Wen token” is a very valid question, given the precedence of DeFi protocols commonly having liquid tokens. Gearbox is a DAO, and at any time someone with enough delegation power could launch a proposal to enable transferability. However, many would have been against this with no plan.
There are many reasons that the Gearbox DAO and its members may wish to enable token transferability, and many reasons for the token to remain locked indefinitely. On top of that, there are many (many) ways to enable transferability — from simply flipping the switch and seeing what happens, to carefully curated liquidity.
The process for token launch, should the proposal pass in its current form, is outlined below. Full context for the proposal, as well as supporting and counterarguments from the community, can be found on the forum:
Procedure
Should the proposal pass, the token launch will be broken into two stages:
Stage 1 — Gnosis Auction
[Target End of November]
- 150,000,000 GEAR will be available for sale via a gnosis batch auction.
- The starting price will be $0.015, and the auction will last 3 days. The full set of parameters are listed in the table below.
- Anyone can participate! There will be no whitelist.
(But Ser What is a Gnosis Auction?)
A gnosis auction is intended to sell tokens at a fair price. Throughout the auction, users may deposit capital and set a max bid price — ie the maximum price at which they are willing to be GEAR at. At the end of the auction the order book is analyzed to determine where the supply and demand curve intersect — this will be the final GEAR price.
Anyone who set their max price above the final price will receive GEAR at the final price (ie, lower than their max bidding price). Anyone who set their max price below the final price will not receive GEAR. By utilizing gnosis auction, with participants aware that additional tokens will unlock after the auction, supply and demand are balanced and the initial token price is more likely to represent the markets valuation of GEAR.
Stage 2 — Liquidity
[Target early December — subject to change if additional proposals are needed pending the outcome of the Gnosis Auction]
- A nominal amount of GEAR and WETH (<0.01) will be used to seed a new 50/50 pool on Balancer as a test deposit.
- GEAR token transferability will be enabled.
- Shortly after, the full amount of funds raised in the Gnosis Auction will be converted to ETH and paired with an equivalent (in value, priced per the Gnosis Auction) amount of GEAR and deposited to a NEW 50/50 liquidity pool on Balancer.
- Note that due to how Balancer functions (specifically, internal balances), users could in theory purchase GEAR from the pool (but not withdraw) even if transferability were disabled. It is recommended that the multisig do a test deposit prior to enabling transferability, but not required. Because this pool could be purchased from in theory, it will likely be necessary to seed a separate pool for the real liquidity.
- Up to 500k of funds from Part 2 of the community raise may be used for liquidity if the sale comes up short. This will be up for voting too, a multichoice snapshot or a separate one instead.
- NOW TOKEN
- Gearbox DAO will then apply for a BAL gauge. Aura contributors have soft-agreed to direct some core contributor voting power ❤️
This is one of the reasons for choosing Balancer over other avenues: better biz dev and community support. And not only that, but the fact that Balancer & Aura might seem to be in the next line of integrations (TBD) making it more logical to have GEAR liquidity there for possible Gearbox-native integrations later if those are to be suggested and voted on later. Anybody will be free to set up their own pools on Uniswap V2 or V3, or instead Curve V2… those can also be discussed by the DAO in later stages, but for now the proposal is simplified.
Unwritten rule: Gearbox DAO governance remains very active and community-centric (see the end of this article for some info & stats) and OG members have reduced voting weights!
That makes the process more open and fair. Always has been! However, some members have PTSD from other DAOs with centralized governance. To address that, even if that’s not by default the case in Gearbox DAO — early OG members will abstain from voting directly. Delegates can though, but delegates are public members who can be argued with, so there is no forced agenda here. Lobby, convince the other party — it’s an actual forum!
Future GEAR Utility
So you bought a GEAR token — now what?
GEAR token has had governance utility from the very first day: deciding the parameters and assets for V1 back in December 2021. And has continued over the course of 2022 with strong community & voter presence. Governance is really active, let’s keep this going!
But, rightfully so, many are interested in adding utility and accrual to GEAR. A totally valid, wanted, and important part!
So far, therehaven’t been any tokenomics forced into GEAR (like revenue sharing, veTokenomics, or other models) — because the PMF wasn’t clear. As it becomes a bit more evident, we can decide on concrete models and implement them. It’s not a tomorrow decision as it requires much more data, but it definitely will be super important in the near future.
What is important is that from the start Gearbox Protocol has been having fees. They were never large though and not intended to be large for now, for two reasons:
- It doesn’t seem to make sense to rake fees while the protocol is still early on, and its entire TAM / reach is not fully clear. On the path to growth, startups don’t try to “milk users” from the get-go, it’s not a viable expansion strategy. With that being said, revenue must be done and will be done, but after solid growth has been there. Doing it too early is not a good idea. First grow, and grow big — then revenue.
- The fees can actually come from various aspects once growth is there, which can be: Credit Account performance fees, Credit Account opening-closing fees, DAO2DAO revenue sharing like Yearn does, and so on. It’s all on the table! So Gearbox is not restricted to current protocol fee sources, it can be quite dynamic.
- The way revenue or yield is shared, can be different too. It can be veTokenomics, it can be a GMX model, it can be an early LOOKS model, it could be MKR burning… all of these are viable paths, and it’s up to the DAO to figure out this direction.
Again, these opinions are of course subjective, but seem to be shared by many DAO members. These points can always be re-discussed and changed with the voting. Revenue, token accrual, real value sources, protocol fees — should and must be there. The concrete direction is TBD, but everyone is aligned so far to have this live.
Some discussions have also suggested enabling the staking of GEAR as cross-collateral on the protocol. This would require deep liquidity and an oracle for GEAR (token transferability gets us a step closer). DAO members may wish to flesh this idea out further. An interesting idea too!
Any community members that wish to discuss ideas for future GEAR utility are encouraged to post to the forums or join the discussions in the #gear-economics channel of the Discord server.
In Conclusion
Wen Token? (maybe) December (if the vote passes), with Dec 1st-10th-ish as the target. Stay in the loop and be ready to vote if you currently own GEAR!
That’s it on this month’s DAO update. If you would like to earn passively, remember to LP into our Lending Pools to earn GEAR. If you want to take leverage as Ninja just ping us on Discord or post on the forum.
Otherwise you can always get involved with the DAO — 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:
