GM, this is your Daily Bolt briefing
In this edition, we’ve included notes from Gyroscope’s recent twitter space with Swell Network, where the Gyroscope team joins to discuss their protocol, the Elliptic Concentrated Liquidity Pool (E-CLP) mechanism, & more.
We’ve also included notes on GMX V2, and the role Arbitrum has played in the success of the popular perpatuals protocol.
Stay alert, stay informed ⬇
1/ Swell Network Twitter Spaces with Gyroscope
Preview: Kizen hosted Abishek, Lewis, and Steffen to discuss E-CLPs, Gyroscope, DeFi liquidity, stablecoins, and more! Click here to listen to the full episode (37 mins).
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Abishek mentions his involvement in setting up various liquidity pools and collaboration on the swETH-wrapped staked $ETH, E-CLP (Elliptic Concentrated Liquidity Pool).
Lewis talks about the Gyroscope protocol, which primarily focuses on stablecoins. He mentions that he recently completed a PhD focused on decentralized finance and explains that one of the sub-components of Gyroscope is the E-CLPs.
Steffen says he focuses on R&D and helped design most of the mechanisms, including the E-CLP, from a mathematical and technical perspective.
Kizen asks Abishek for his perspective on how the E-CLP fits into Swell's liquidity strategy.
Abishek says that they were initially interested in Gyroscope for its stablecoin but found the E-CLP to be particularly useful. He mentions that they analyzed previous trading data and volatility to optimize the pool. Abishek highlights two main reasons for choosing the E-CLP: it captures rebalancing volume effectively, and both sides of the pool are yield-bearing, which increases the overall APR and reduces the need for additional incentives.
Steffen says that the E-CLP uses a rate provider to account for yield-bearing assets, minimizing the arbitrage opportunities that arise from differing yields. He highlights that this makes the experience of providing liquidity essentially hassle-free, as liquidity providers can simply deposit their assets and let the pool handle the rest.
Steffen explains that the E-CLP was initially designed for stablecoin pairs but is also efficient for token pairs with a natural price relationship, like liquid staking tokens. He mentions that these tokens have a natural anchoring price and can benefit from the same design principles used for stablecoin pools.
Abishek says that there are many parallels between stable pools and LST pools. He says that the relative price difference between $swETH and wrapped staked ETH is likely to remain constant due to standardized yields, making the pool efficient.
Lewis says that decentralized stablecoins could offer a non-custodial, permissionless, and openly auditable form of exchange. He acknowledges the challenges in creating such stablecoins but is hopeful that Gyroscope will contribute to solving them.
2/ Arbitrum Twitter Spaces with GMX
Preview: Ana is joined by coinflipcanada from GMX to discuss Arbitrum and GMX day, and the public testnet launch of Arbitrum Stylus. Click here to listen to the full episode (41 mins).
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Ana says that August 31, 2023, is Arbitrum Day and mentions the significance of the day, including the launch of new features in the Arbitrum ecosystem.
Coinflipcanada shares that Arbitrum Day is also significant for GMX, as GMX also launched on the day of Arbitrum launch in 2021. He expresses excitement about the future, particularly mentioning Stylus, which he believes will revolutionize not just Arbitrum but also Ethereum.
Ana gives a brief introduction about GMX, describing it as an important decentralized exchange in the Arbitrum system where users can swap crypto, go long or short, and stake.
Coinflipcanada says that GMX v2 is the result of more than a year's work and community feedback. He talks about the success of their first product, GLP, which has generated hundreds of billions in volume and $180 million in trading fees.
He says GMX v2 aims to address scalability, better pricing, and less risk for liquidity providers. He mentions a unique partnership with Chainlink to develop a new set of Oracles that will power GMX v2 and potentially other DeFi protocols in Arbitrum.
Coinflipcanada says that GMX v2 offers a wide range of opportunities for liquidity providers. He says providers can choose which markets they want to support, including non-native assets like XRP and DOGE.
He mentions that the system is designed to protect liquidity providers from impermanent loss and that pricing is determined instantly by Oracles, soon to be Chainlink Oracles. He says that the more efficient the markets, the more volume there will be, attracting more capital to Arbitrum.
Coinflipcanada also says that many people are looking to build protocols and products on top of GMX v2, and he is excited for Stylus, which will bring a new range of Dapps and applications.
Coinflipcanada says that GMX v2 offers lower fees for traders, ranging between five and seven basis points, resulting in about a 40% reduction in fees. He says the system also allows traders to benefit from price impact, which is determined by the balance of the pools and the size of the markets.
Coinflipcanada says that GMX v2 creates unique opportunities for traders to pick up funding fees, something not possible in GMX v1. He mentions that traders help create liquid markets by balancing pools and being counterparties to other open positions.
Coinflipcanada says that GMX v2 will offer a wide range of crypto and non-crypto assets for trading as they scale up out of their beta phase. He highlights the robust opportunities for traders on Arbitrum, including the ability to use GMX positions as collateral in lending markets.
Coinflipcanada says that they are just at the beginning of growth in the Arbitrum ecosystem and have barely scratched the surface of opportunities.
He says that Arbitrum is the home of DeFi and that GMX aims to fuel the growth of the entire Ethereum ecosystem. He mentions that they are looking into real-world assets and how to create efficiency in various markets.
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appreciat 😊