[Gains Network][FINAL][STIP - Round 1]

The genuine value comes from attracting traders and their capital away from the orderbooks of cexes and their hot wallets and onto Arbitrum.
But unlike most other perp dexes, Gains´ mission is alto so attract Tradfi traders and investors and attract new capital from the traditional markets on-chain and onto Arbitrum. It can accomplish this mission like no other thanks to its wide offering of 28 (and growing) non-crypto pairs in the forex and commodity markets.
Gains is simply in the best position in the market to do so thanks to their non-fragmented liquidity which gives it the ability to size up their offerings and give traders unparalleled on-chain available open interest.
Across its 28 forex and commodity pairs, gains allows for a cumulative (yet not simultaneous) open interest of 588.4 Million dollars
Gains Network has built a robust infrastructure that has been well tested and is ready for mass adoption which will attract mass capital to Arbitrum.
All that is needed is a spark.

6 Likes

The GAINS protocol, like several other DeFi projects, showcases the potential pitfalls inherent within the rapidly-evolving decentralized finance space. The most glaring issue is the protocol’s model, which inherently trades against its own users. For the protocol to thrive, its traders must face losses. This is a disconcerting proposition because the foundational promise of DeFi is to democratize finance and to serve the interests of its users. But GAINS, as it stands, is counterintuitive to this very principle.

While innovation and experimentation are crucial in any nascent sector, protocols should be designed to ensure user trust. GAINS undermines this trust. In a market environment where traders primarily go long, especially during a bull run, there’s a looming threat of a bank run. Such a scenario not only endangers the assets of individual users but also casts shadows on the broader DeFi industry’s credibility.

DeFi’s value proposition centers around transparency, autonomy, and trustless operations. Yet, if protocols such as GAINS prioritize their survival over the financial well-being of their users, they drift away from these core tenets. GAINS might be an emblematic representation of what’s currently wrong with parts of DeFi: unsustainable models masked by the allure of innovation. As the DeFi space matures, there’s an urgent need to weed out such models, ensuring that user interests are always at the forefront. This will be paramount for the sustained growth and credibility of decentralized finance.

2 Likes

The innovation here is open, transparent rules. What you have said can be summed up as “perps aren’t fair” and to that end you would be correct as most traders are their own worst enemy on all perps. Perps wouldn’t exist if humans were perfect traders, especially at scale with leverage.

That said we offer those open, transparent rules. Anyone who trades on gains can see our protocol health, the over collateral level, and can read the rules that govern the dex. All this is laid out in an open and transparent way.

We do not have co mingling of funds (ftx) scam wicks (numerous cex) and we do not freeze assets (again, because we hold no assets past those places on a trade).

I fail to see your argument as valid as we are the solution to the problems of the cex based perp model. We are more fair, more transparent, and all the rules are available to see and evaluate for the customer.

These rules extend to the investors who stake their gns or DAI with the protocol. Open and transparent. If they feel the vault health is looking poor they are free to leave the protocol as they see fit.

6 Likes

Transparency is Not Enough on its Own: While the open and transparent rules are commendable and critical for building trust, it’s essential to recognize that transparency alone isn’t sufficient. The underlying system’s mechanics and its implications for the average user are equally important. Even if the rules are transparent, if they inherently disadvantage the user or promote risky behavior, then they might still be problematic.
Comparison to Centralized Exchanges: While I agree that many centralized exchanges have their set of issues, it’s essential to ensure that GAINS and other DeFi platforms are not just better in comparison but also fundamentally sound in their own right. The objective should not only be to surpass the flaws of the cex model but to establish a robust, user-centric system in the decentralized space.
Autonomy and User Choice: I appreciate that users have the freedom to observe the health of the protocol and act accordingly. However, the average user may not always have the expertise to evaluate the risks fully. Thus, while providing all the information is necessary, it’s also essential to ensure that the system is designed to minimize potential harm to these users in the first place.

With not an iota of doubt in my mind, Gains Network deserves this grant and probably much more! Why? Let’s answer those who are too lazy to pull out some stats and look at Gains contribution in Arbitrum ecosystem!

  1. 30d Activity: First of all hands down, Gains Network with its >$50M average daily volume on Arbitrum is the highest for any application on Arbitrum barring just GMX. GMX and Gains are closely fighting for the top spot for becoming the largest perps DEX on Arbitrum.

  2. Innovation: Gains capital efficient design, in-house low latency DON (decentralised oracle network), leverage of upto 100X and availability of pairs like Forex, commodities and alternative crypto assets makes it a significantly rich platform providing it with features that are remarkably ahead of other Perp platforms including GMX, Vertex. It’s important that Arbitrum ecosystem allows competing platforms of all kinds to usher that bring different flavours and creates a level playing field for protocols.

  3. Continous improvements on Arbitrum: As a project with one of the largest thought leader on Arbitrum, Gains Network has been continuously pushing the boundaries of innovation and bringing out the stark capabilities that applications can find on Arbitrum. As an example, Gains Network is the first platform to release “Lookbacks”. Lookbacks allow traders of the application to execute orders (like limit orders, liquidations etc) at the exact price at the time of execution irrespective of the price delay that may happen due to time lag between the time stamp at which trader executes the order and the time stamp when the order is actually executed by the network. This innovation has brought the trader experience on Arbitrum to a new level and has now set a standard for other applications to bring close to real time experience for Web3 applications on Arbitrum. We are already seeing other applications taking inspiration from Gains and making similar designs available to improve experience for their users.

It’s an absolute no-brainer that with these top metrics and with a team that sparks innovation at such a rapid pace, Gains deserves a grant that is reserved for Top 2/3 spots in the ecosystem.

To those who think Gains is not native Arbitrum, need to understand that relationship of Gains with Arbitrum is similar to relationship of Arbitrum with Ethereum. Gains team started developing on Ethereum but realised their full potential only on Arbitrum deploying their mainnet on Arbitrum long before L2s were even here. 85% of their trading volume on Gains occurs on Arbitrum and the team gave it all to stand as a single largest competitor to GMX on Arbitrum purely on the basis of their innovation on capital efficient design and superior trading experience. The team has been consistently innovating pushing the envelope of innovation and becoming the source of inspiration for several applications to migrate on Arbitrum. The team’s painstaking efforts and level of execution is more than enough to prove that their home and place of action is Arbitrum. If the past performance of the protocol and continuous grind of the team in the ecosystem in last 1-1.5 years doesn’t convince the original Arb community of the immense contribution of Gains to Arb ecosystem, then I don’t know what will?

10 Likes

Correct me if I am wrong, but it sounds like you’re moralizing on gTrade existing because in aggregate traders lose, and that this is the basis for it continuing to exist. While at the same time expressing concern for the exact opposite; where traders win and endanger invested assets (the counterparties).

It’s interesting that you specifically are calling out gTrade to suggest it is failing to minimize potential harm to users, when there are several reasons why it actually does exactly that, compared to leverage trading on CEXs.

If your argument is that leverage trading simply should not exist at all because it has the potential to inflict harm, I would question why you’re choosing this moment to target this protocol, and would be curious if you’re also making a public stand against slot machines, lotto tickets and options trading. And other leverage trading protocols.

On a CEX, there’s always a loser for every winner, plus there are fees, and regular manipulation via scam wicks that wipe out both sides of the trades, where the only benefactor is the exchange.

gTrade is providing a service that replicates the leverage trading experience in a manner that, as you’ve agreed above, is commendably open and transparent, while at the same time eliminating scam wicks and the ability for the service provider to manipulate the outcomes to it’s own benefit, and also eliminating the ability for opposing traders to do so.

In every trade, there is always a counterparty, and in gTrade’s case, it’s gDAI that acts as the first temporary counterparty layer, with the GNS token actually being the backstop to the vault as the true counterparty. gTrade does not require net traders’ losses to be sustainable, and can even sustain long-term positive profit and loss (PnL) if that was the outcome. This would simply mean the GNS token would be slightly inflationary, which could be countered by burning some of the fees. The entire trading execution is on-chain, and everything is transparent, so there cannot be any conflicts of interest in practice.

In Vegas, where the average user rarely has any expertise or information whatsoever, people willingly engage for entertainment purposes (hoping to win, understanding they may not), with the net benefactor being the casino. If all the existing casinos were totally opaque and possibly corrupt, where other guest could easily manipulate outcomes, and someone was to build one that was fully transparent with measures to protect against this, someone could certainly picket out front of that newcomer to tell the world they should do even better by not profiting from the provision of such a service, and must educate everyone who walks through the doors, while giving the incumbents a pass.

But wouldn’t that be kinda weird?

Concurrently you’re postulating all of the above is not actually the case at all, and it’s the threat of a run on the counterparty is the real risk.

As pointed out, the gDAI vault is the first layer (actually there is a layer above that, which is the overcollateralized layer owned by the protocol, which must be depleted before any of the gDAI assets are drawn upon).

Should the gDAI layer be drawn upon, GNS is minted and sold OTC to recollateralize the gDAI vault, which greatly reduces the risk of gDAI losing value in a sustained manner (although it should be expected that occasionally it may temporarily). The true counterparty to traders is the GNS token.

There are many features that help reduce the risk of this turning in to a bank run of sorts. There are measures (all fully transparent) to limit existential losses to the vault. Limiting OI, increased fees as OI becomes too skewed, borrowing fees, max win of 900%, epochs to limit the pace of withdrawals from the vault, GNS minting is only sold OTC and at a limited daily rate to prevent a Luna type situation of infinite minting, anyone pulling out from the vault in an undercollateralized state takes their share of the current under collateralization rather than leaving the last man holding the bag, and the incentive to deposit to the vault while it’s undercollateralized knowing the likelihood of the OTC refilling the vault is there.

Perhaps consider the risk involved in buying commercial bonds, junk bonds, bank stocks, savings account etc. And even sovereign bonds in a high inflationary environment may end in real losses. And none of this is transparent.

Then consider the risk in buying stocks of a company who only report periodically, and then consider the GNS token who is the real counterparty, that has fully transparent access to the condition of the entire protocol at any given moment, from outstanding trades, to vault health, to fee generation etc. Is this really a condition to be critical of from an investors point of view?

Positioning your argument to denounce a protocol that pays real yield earned from fees by providing a service that people pay to use, that better serves their clients than similar centralized products is very curious. And pointing from both sides, where on one hand claiming it’s at fault for not being sustainable, and on the other for actually being so is even more curious.

6 Likes

When I brought up the potential pitfalls of traders both losing and winning on the platform, it wasn’t to present an inconsistent critique. Rather, my aim was to highlight a conundrum. On one hand, there’s an ethically questionable model where the exchange, to some degree, benefits from users incurring losses. On the other hand, there’s a palpable risk when traders begin winning en masse, which could lead to a destabilizing bank run. It’s not about moralizing but underscoring an inconvenience for traders. Choosing to engage in an environment that can feel inherently hostile or against their best interests is hardly appealing.

I absolutely acknowledge the strides gTrade has made, especially in comparison to centralized models. Eliminating certain flaws like scam wicks and manipulations is commendable. However, it doesn’t render the protocol flawless. Introducing high fees, caps on PnL, among others, are indicative of a system that might be overcorrecting.

While you’ve positioned gTrade in the context of CEXs, it’s essential to also look within the DeFi ecosystem. There are numerous DEXes with sustainable models where traders can truly profit without the looming shadow of a bank run. These platforms offer lower fees, no caps on potential gains, and an overall more trader-friendly environment. In the competitive world of decentralized finance, protocols that don’t evolve will inevitably be overshadowed by those that better serve user interests.

Your comparison to a casino was particularly intriguing. If gTrade indeed positioned itself as a casino, the discourse would undoubtedly be different. However, by identifying as the number two DEX on Arbitrum, the platform invites comparisons to more traditional trading ecosystems. And while casinos might appeal to a certain demographic, it’s reasonable to believe that a network like Arbitrum seeks to incentivize projects with longevity and tangible value in mind. The mainstream adoption of blockchain and crypto, especially by institutions, will likely gravitate towards projects exuding gravitas and sustainability rather than transient, experimental ventures.

Lastly, while you’ve mentioned features aimed at preventing a bank run, many of these seem more inclined to curtail traders’ potential profits. The very essence of a platform named “GAINS” should be to amplify, not inhibit, users’ earnings. If these protective measures significantly impact the traders’ upside, it somewhat contradicts the protocol’s foundational promise.

While my critique may come across as pointed, it’s essential to emphasize that this is not a personal attack on any individual or project. It’s born out of a genuine belief in the transformative potential of arbitrum’s ecosystem. As the space matures, the arbitrum community must be discerning about which projects it incentivizes, ensuring that only those which align with the platform’s long-term vision and values are bolstered. It’s about maintaining the integrity and reputation of a pioneering platform.

Gains have been early builders in the space. They are consistently amongst the top perp DEXs on Arbitrum, both by volume, and open interest.

We at Stella added support for the GNS/ETH strategy on Uniswap V3 a while ago, and will explore to add support to gDAI pairs in the future.

We see the ecosystem benefiting from Gains getting this grant, and support it!

6 Likes

We are fully supportive of this proposal as written.

Arbitrum Needs this Incentive Program. I want to start by saying that we have significant positions in GMX, GNS, and several smaller-cap tokens in the Arbitrum ecosystem. We are highly aligned with the ecosystem and have been at the forefront of talking about the need for incentives in the space since Synthetix started the legendary OP incentives campaign that shifted momentum from Arbitrum to Optimism. We believe (and the data shows) that Synthetix was able to shift the center of gravity of DeFi with a single well-placed incentives campaign. In a small and slow market like the one we are seeing in 2H’23, thoughtful incentive campaigns can really move the needle.

Perps Protocols Should Get Outsized Incentives. We believe that the bulk of incentives should go to perps protocols that have been able to demonstrate organic demand (i.e. a period of significant volumes without incentives). This includes both GMX and GNS. We focus on perps because that is what drives most activity on L2 DeFi. We have investments in yield protocols, borrow-lend protocols, privacy protocols, DEXs, and TG bots. Of course, we would love for all of our investments to receive large allocations, but we understand that perps volumes are the most important thing for Arbitrum as an ecosystem. Perps volumes lead to yields which lead to leverage, vaults, trading, liquidations, and exotic instruments. All economic activity on DeFi comes from volumes, and perps protocols are the best candidates to do real volumes in the current market.

Remember that perps are still a $150B+ daily volume market but only 2% of perps are traded onchain. The technology is not ready for this market to be fully onchain, but incentive programs like the one we are discussing do allow us to bring a small part of a huge market onchain for a while. That activity benefits the entire DeFi ecosystem and gives builders a much-needed push during a difficult bear market.

Both GMX and GNS Deserve Large Allocations. GMX and GNS are not really competitors. GMX is a platform for people to speculate on BTC and ETH price movements. GMX v2 is opening the platform to a few more assets, but the reality is that BTC and ETH are still >90% of trading on the platform. This is completely fine as BTC and ETH are by far the largest perps market. GNS, on the other hand, allows people to trade BTC and ETH pairs but these pairs account for <25% of trades. The majority of trades on GNS come from foreign exchange (GBP-USD is the biggest pair) and long tail assets (e.g. ARB, TRX, SNX are all significant volume drivers). If this incentive program is going to incentivize perps trading on Arbitrum, then it needs to prioritize both large cap trading (e.g. BTC and ETH on GMX) and long tail assets (e.g. GBP and JPY on Gains). I see some people acting like GMX and GNS are competitors when the data clearly demonstrates this is not the case (link below).

GMX Data — https://dune.com/shogun/gmx-analytics-arbitrum
GNS Data — https://dune.com/gains/gtrade_stats

GNS is Large Enough to Warrant 7M ARB. Gains has been responsible for $30B of volumes in the past 365 days. GMX has been responsible for $72B of volume over the same period. This is a ratio of approximately 2-1 and it aligns well with the requested proposals (14M ARB request from GMX and 7M ARB request from GNS). We believe both proposals are appropriate and are supportive of both.

One clarifying point. There is absolutely no reason to look at TVL for these comparisons. TVL is a cost and only exists for the benefit of trading volume. It is actually better to have less TVL and more volume — i.e. capital efficiency. I am not saying the GNS model is better than the GMX model, as each has its own pros and cons (and we are big fans of both) but the purpose of both models is to support trading volumes and trading pairs. There is no reason to want TVL for the sake of TVL (unless you are an AUM business charging on TVL which is not the case for either of the two protocols).

We believe that Arbitrum has a real opportunity to bring DeFi activity back with this incentive program. Optimism has many things working in its favor right now and will continue to grow over the next six months (and we are happy for them) but it is imperative that Arbitrum is able to bring trading volumes back to the ecosystem over that same period. Arbitrum is shipping this incentive program at an opportune time as volumes are likely to increase from a low point over the next few months. A thoughtful incentive program and a little bit of luck on volatility could ignite Arbitrum’s engine. We can all benefit from another period of volatility, activity, and fees (remember Q1) … especially the builders that are going through a tough fundraising and team-building environment.

Thank you to the Arbitrum ecosystem team for pushing this forward!

12 Likes

Please, could you stop using ChatGPT to have a conversation here ? :slight_smile:

What I get from your points is that you do not approve morally leverage trading on its own, CEX or DEX (GMX, GNS and such). That’s a respectable point of view, though I am not sure it is a way to handle grants submissions here.

I totally approve this grant. The use of the grant sounds very profitable to Arbitrum ecosystem in my eyes, lot of volume and users, traders, to come. Gains.trade is a clear innovative leader in the space and in my opinion, that would be awesome to support their work on our chain. In one year from now, their innovations will be appealing to a crazy number of external traders, and it will be profitable for us as an ecosystem.

6 Likes

I can’t help but feel there might have been an intentional oversight regarding my initial points. For clarity’s sake, let me elucidate further. My concerns are not rooted in a moral disapproval of leverage trading as a whole. Rather, they revolve around ensuring that the platforms on which such trading occurs prioritize user interests and maintain a sustainable model. The heart of DeFi is its promise to democratize finance while placing user welfare at its core.
I believe I’ve articulated my perspective comprehensively. My arguments have yet to be directly counteracted, which leaves them standing for further contemplation. I consider this dialogue to be concluded on my end, and I trust our readers will form their own judgments based on the discourse presented.

i’ve read a majority of the proposal requests on the forum, and i have to say this is probably the most well written and clearly defined of all of them. very clearly describes how the funds will be used in a way that greatly supports arbitrum ecosystem growth. you can tell whoever wrote this took a lot of time and care in doing so. i’m 100% in support of this proposal.

and a small nitpick here, but several people in here have called GMX arbitrum native while claiming GNS is not, which is false. GNS is on polygon, but most of its volume is on arbitrum. GMX is on avalanche, but most of its volume is on arbitrum. there’s no reason to describe one as native and not the other. please, if we really care about the future of arbitrum, let’s try and get past this tribalism as both projects can succeed without harming the other.

9 Likes

I had and still have some of my bags distributed for different Arbitrium DEX projects.

But I have to admit after much research I can’t find better projects than GAINS NETWORK, It is not only how honest the people behind the project are, it is everything the way they execute tasks and deliver them, the level of professionalism, ethics, and honesty, the quality of the product, the amount of new disruptive features that the rest are trying to follow up for years.

Not even say that in less than a year in Arbitrum, it has surpassed older projects in trading volume.

For that, I can’t think of any other project but GNS.
So in my humble opinion, GNS is well deserved for the grant.

(With all due respect to others, comparing GNS with other DEXs is a bad joke at this time)

7 Likes

GNS has pretty much established itself on Arbitrum. They were actually one of the first protocols we sought to integrate when Pendle first launched on Arbitrum. Their growth is quite synergistic to us as we enable users to trade the yield of gDAI. Would be happy to support this proposal move forward in some form.

7 Likes

All perp dexes are based on the same assumption : Synthetix, GMX , GNS etc
If GMX traders start earning lot of money, GLP will start losing. This is same for SNX & GNS.

So not sure why you targeting GNS alone here?

4 Likes

That is a false statement.

  1. GMX v2 has implemented a mechanism where the funding balances almost perfectly the long/short ratio. Same applies to polynomial (which is SNX’s exchange)
  2. The fact that “everybody does it” isn’t an argument nor an excuse
  3. I didn’t come here to promote other projects, but there are CLOBs exchanges on aribtrum that don’t inherit the flaws I’ve presented above

It’s illogical to make a “non-native” complaint about a DEX protocol which launched before Arbitrum was available, and worth noting that some other DEXs with an open grant applications have fragmented their protocols and TVL across other chains after the date of their Arbitrum launches. Gains has not done that.

6 Likes

great step I thinks this proposal will create new mile stone here :rocket: :rocket:

3 Likes

Love this proposal and I’m all for it

  1. Can’t say enough good things about the team. I’ve worked with a few of them for almost 2 years and can say they’re professional, smart, driven, and accomplish their goals.

  2. Whether Gains started on Arbitrum or not is irrelevant in my mind, judge them and this proposal based on the value they’ve brought since operating here

  3. Perps trading is absolutely top 3–5 use cases in crypto, has been for a while, and I think will grow in next cycle. Very wise for Arbitrum to invest heavily into it, imo

Full speed ahead, gentlemen. LFG

7 Likes

Seb, Nathan, Crumb, Atlas, and the maestro Lunaman
Gains Network, under Lunaman’s strategic guidance, epitomizes decentralized financial prowess with gTrade, leveraging quantifiable excellence to navigate the complexities of the Arbitrum ecosystem and propel the future of decentralized finance

4 Likes