Introduction to Glide Finance
Greetings! If you’re reading this, you may have already heard about our plans to release a decentralized exchange (DEX) protocol on the Elastos Smart Contract Chain (ESC), but we wanted to take some time to further explain our motivation for Glide, outline the token economic design, and present our current progress.
Motivation
Our primary objective is to develop a base of liquidity so that future projects aiming to launch on ESC have a reliable foundation to expand upon. Elastos is a little tardy to the DeFi party, but this space is only going to grow exponentially over time so it is critical that we get our foot in the door and begin to establish Elastos as a desirable option for real-world and cryptocurrency users alike.
At the moment we are a small team of four people, two of which still have full time commitments elsewhere. Two originate from the original Starfish Labs team, one was added from within the community, and the fourth we were able to hire as a solidity developer thanks to support from the Elastos Foundation. We will look to add another developer or two once the basic exchange infrastructure is operational.
The name ‘Glide’ is based on the transition of finance from a legacy system that is inefficient, inaccessible, and often corrupt, to one that is frictionless. Our mascot is the sugar glider, a creature that evolved out of a necessity to avoid predators in all three dimensions and decrease the time and energy required to forage for foods that are irregularly distributed. Our philosophy for finance is much the same: assets should be mobile and be used effectively.
Automated Market Maker (AMM) Design
Glide pulls concepts and implementations from various existing DeFi protocols. The minimum viable product will function similarly to a Sushiswap or Pancakeswap. Our core contracts are based on Uniswap V2 (1:1 pool matching). The most significant difference will be how exchange fees are handled. Like most decentralized exchanges, Glide will charge a 0.3% fee on token swaps. However, 0.25% of this fee will be converted directly into ELA. That means that every trade includes a small purchase of ELA. The ELA accumulated from fees will be redistributed to users of the platform. You can think of this mechanism as the exchange’s primary driver. The more trade volume, the more fee-capture, and the greater the ELA rewards for Glide users.
The other 0.05% of the fee will be awarded to liquidity providers (LP). The decision to keep LP fees low was made due to the fact that ESC will have few token pairs to incentivize comparative to other ecosystems, as well as the conclusion that incentives in DeFi are heavily derived from token rewards anyways.
The GLIDE Token
GLIDE will be the rewards and governance token for the Glide Finance platform. It will be earned by providing liquidity or staking GLIDE.
Given the likely small size of our user-base at launch and largely undiscovered nature of the Elastos smart contract chain, we felt it made the most sense for GLIDE to have a disinflationary model. This is somewhat in contrast to existing DEX projects that have no maximum supply and rely heavily on burning mechanisms to keep inflation in check. Token burning mechanisms will also be a large part of Glide’s model, but the burns will receive a helping hand from the token release schedule.
The GLIDE token will have a maximum supply of 50,000,000, released over a 10-year period (based on an average block time of 5 seconds).
We have chosen to aggressively reward early participants, as these are likely to be long-time Elastos community members who have stuck with the project through the years. If Elastos succeeds, and Glide succeeds with it, we want these individuals to benefit the most.
There will be a lengthy 3-month bonus rewards period. At the end of the 3-months, the GLIDE rewards rate will be reduced by 25%, and then the token will adopt a regular deflation schedule, decreasing 15% every 6 months until a supply cap of 50M is reached.
Since DEX liquidity depth is highly sensitive to the rewards rate, we opted for a system that is predictable and adjusts in smaller increments as to not destabilize the user base. We also opted to introduce some scarcity since Elastos’ footprint in the Ethereum scaling space is likely to be much smaller than other ecosystems. A less-aggressive token issuance won’t be as reliant on a constantly growing user base as some other platforms.
In addition, there will be no pre-mine or pre-sale allocation. All GLIDE will be minted on a per-block basis from the genesis block. The main staking contract will allocate GLIDE tokens according to the following breakdown.
The development and treasury wallets will be announced publicly upon launch. The development fund will be used to support the team, pay for background services, hire developers, and grow the platform through promotion and feature expansion. 12.5% is a touch higher than is typical for a fair-launch project, but we feel it is warranted given the risks and challenges associated with bringing liquidity to an unknown and under-developed chain. We will remain as transparent as possible regarding the use of this fund and retain the option of burning the developer tokens once the project has reached full maturity.
The community treasury will be designated for other rewards mechanisms beyond liquidity and staking. Our intention with this treasury is to promote growth of the Elastos ecosystem by providing incentives for various activities such as DID credentialing, cross-chain liquidity, mainchain voting, partnership airdrops, etc. These features will not be live upon launch, but this will give us time to develop them while the treasury grows. Our intention is for the community treasury to eventually be fully controlled by our DAO, giving Glide users the power to decide how the tokens are spent.
Current Progress
We are committed to providing the community with regular communication about what we’re working on. So, here is a quick rundown of the work completed so far.
The AMM and fee distribution contracts are mostly complete. The only tasks remaining are testing, and ensuring that the transaction fees are properly converted to ELA and able to be earned through our GLIDE staking contract.
The GLIDE token and core staking contracts should be ready for testing by the end of the week. Once we’re confident with this, we will seek to have all of our contracts audited. We’re very conscious of the risks involved with DeFi and do not want to put anyone’s funds at risk. Even if these contracts are similar to secure and well-tested contracts, we still want to complete at least 1 and preferably 2 audits of our entire system prior to launching anything.
Our plan is to submit the contracts for audit by the end of August, and spend September completing development of the front-end and relevant back-end services.
Another priority is simplifying the cross-chain bridging process. We are currently building a bridge tool directly into the Glide application, and will submit a proposal to the Cyber Republic shortly to subsidize bridge fees and fund an ELA faucet, so that first time users of ESC can receive a small amount of gas to transact with. The proposal will also include a request for CRC to seed some liquidity on the DEX.
We are also considering other security mechanisms such as Timelock contracts and multi-signature support for ESC, which does not currently exist. Since we’re launching on a blockchain with few applications and limited existing infrastructure, there are various challenges to overcome and we are in communication with the core teams discussing the services that are currently missing.
Finally, we are preparing contracts to enable partnership token rewards for other tokens anticipated to launch on ESC later this fall.
Outlook
Up to this point, we have spent the bulk of our time studying other implementations around the DeFi space and deciding which elements we wanted to include. We’ve scrapped a few ideas and changed direction several times already in the effort to make sure the platform is beneficial to the ecosystem, but also considers the health of the token and leaves enough flexibility for future upgrades and improvements. We’re brand new to developing a DeFi project, but our hope is to come out the other side of this project as a team capable of building more tools for the ecosystem. The experience will be invaluable, and we look forward to taking this journey alongside the Elastos community. The future remains bright.
To avoid excessive distraction while we build, we have not yet opened up our Telegram group, but you can follow our progress here or on Twitter. Thank you!
