G-UNI, an automated liquidity provision ERC-20 for Uniswap v3, powered by Gelato
Automated Market Maker (AMM) protocols such as Uniswap have earned their place as the central primitive of DeFi. In a sense, Uniswap is the “townsquare of tokens”, and provides an easy-go-to arena for users who are looking to exchange them in a completely trustless and decentralized manner.
Through the simple formula of x * y = k, Uniswap v2 allowed anyone to become a market maker and benefit from fees generated from trades and potential yields spouting from yield farming schemes in distant pastures in the DeFi universe. Users provided liquidity across a single curve from 0 to infinity. The benefits of this lies in its simplicity and fungibility, users can just set and forget and receive LP tokens in ERC-20 form making them composable with the money legos of DeFi, for example leading to them being used as collateral in lending protocols such as Aave (
) or .
The benefits of Uniswap v1 and v2 can be summarized by:
Yet, having a pair of tokens populate infinitely along a curve means only a small minority of them are actually being utilized to provide liquidity around the current price at any given moment, with the vast majority sitting idle for most of the time. In order to solve this dilemma and to get the most out of every token that is being provisioned for liquidity, Uniswap took it upon themselves to step up their AMM game by optimizing capital efficiency. The result of this premise was Uniswap v3 which takes liquidity provisioning to a whole new level.
How Uniswap v3 works is that rather than putting all tokens on the same curve, users decide the price range they want to provide liquidity for and deposit them in positions filled with “ticks”. An example of this is for an ETH-DAI pair, you may decide to provide liquidity only between $2,500-$3,000 DAI worth of ETH. The result is much higher fee generation in that range since the liquidity provision is much more concentrated. Yet the trade-offs for this efficiency is more risk for impermanent loss. The price of ETH is likely to escape your LP range, leaving you rekted without any of the benefits of fee accumulation. In addition, because of the way v3 is structured, LP tokens are now NFTs making them much less composable with other DeFi protocols.
Because of the complexity of v3, it leaves many everyday DeFi participants at a disadvantage. Many won’t have the time to keep track of their position or will be unwilling to pay the transaction costs to rebalance their position. So how do we make v3 accessible to all?
Enter G-UNI, an automated liquidity provision ERC-20 for Uniswap v3, powered by Gelato. G-UNI combines the capital efficiency of Uniswap v3 with the simple user experience of Uniswap v2 by enabling users to simply deposit their funds in a G-UNI ERC-20 that manages their liquidity on Uniswap v3 automatically on their behalf.