AMA on GIP2.4: Recap
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May 17th, 2022

In this write-up, you will find key highlights from the AMA interview conducted on May 12, 2022.

Intro

The latest recently published proposal (GIP2.4) attracted a lot of attention from the community. We also consider this proposal to be very important because it is necessary for us to prioritize several sections of the roadmap. We think that in the current market climate and in light of the recent research that we've been busy with, some of the sections have to be swapped, and some things have to be put forward.

We'll cover different subjects. One of them is why we need to focus on Ethereum and our own Layer 2 solution and why we think that the products that we promised to release should be released on L2. We’ll talk about how we're going to start onboarding new community members on Ethereum and how we’ll use staking and bonding to do so. We’ll also describe why bonding can’t start right now due to the current price of GTON, why exactly we need a target price of $5 that we put in the proposal, from which bonding should be activated. We will also talk about Pathway and different kinds of solutions for liquidity configuration, and why we think there is a need to move to Uni v3 kind of pools. The last thing that's also important is whitelisting for bonding and different details that pertain to that particular aspect of the project. 

About the up-to-date achievements 

In the roadmap, it was declared that we have to implement the core protocols in Q1 and move into Q2 focused on a growth strategy. In Q1, we delivered staking and bonding which are already audited.

The most difficult deliverable was Pathway, and we made four different models of it. We tested them in production: we did a bunch of interventions on Uni V3 and different types of PMM, but it took much more time than we expected because it's an unprecedentedly innovative protocol. Finally, we came up with a solution where we can combine everything together. 

Now, we need to discuss the importance of moving to Ethereum. We think that the focus on Ethereum will be beneficial in the long term. Of course, there are many alternatives. For instance, we started the development on Fantom: that was a good start as now we have a lot of Fantom users in the community,  connections with the foundation, market makers and other Fantom projects. 

However, we also acknowledge that if we have ambitious aims and want to become one of the top projects by market cap there is no other way than building our own network. 

So now, our main goal is to develop our own chain that will become the foundation for all the necessary infrastructure to build the entire ecosystem with multiple types of products for any type of users. Our own chain will attribute a business model for the token itself. If you have your own network, everything that users and projects built upon it do can generate fees. 

We also plan to add an innovation component into the ecosystem which is a stablecoin as a native token, and we feel that our network design looks very attractive for the current community members and potential strategic partners and investors. **
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About the ecosystem

We are building the system with three components.

First component is the core infrastructure and protocols– DON, Pathway, staking, bonding.

The second component is the DAO. Everything we do revolves around the DAO. 

And finally, for the DAO, the token holders, we have a token with a limited supply. Thus, GTON is the third key component.

We have a lot of stuff built around the token – one is staking. Being a token holder, you automatically become a part of the DAO and receive direct access to all the projects in the ecosystem. You also get benefits from the potential growth: you leverage the network revenue flow, new products, airdrops of ecosystem projects etc. You essentially receive a “ticket” into something big, to leverage all the value that is being created on top of the network.

But we need to begin with some minimum utility, and staking represents the very basic type of it. It’s proven that this utility is important and in demand. We received some questions from the community whether the staking will be continued on Fantom or switched to Ethereum completely. It can be discussed further and implemented by the community request, but our target is to ultimately implement staking on our L2 blockchain.

For those who want some special advantages from joining the ecosystem, who are not speculators and don’t aim to get fast gains and leave i.e. long-term holders, we have another option which is bonding.

We’re often asked, what are distinctive features from Olympus that has first introduced this model? GTON Bonding gives juicy advantages. If we’re talking about quarterly bonds it's a 15% discount, which, in case of combining during the year and using all four available purchases, gives you up to 60% APY. The access to this extra advantage needs to be gated. In Olympus it’s not gated in any way.

Another distinctive feature is a reserved passive yield which protects the ecosystem from the short-term holders looking for the quick insane profits and lets us attract more moderate and long-term investors.

There are a lot of questions about why we are offering bonding only for whitelisted users. Again, this is a huge advantage for people to join the protocol early as long-term holders, that’s why we bring in the whitelists. But at the same time we see them not only as a restriction mechanism, but as an opportunity to establish awareness among the partner communities, as an opportunity to make mutually beneficial marketing campaigns. **
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Bootstrapping the community growth

We’re always thinking about the community bootstrapping process.Though the bonding campaign, we’ll be able to establish strong partnerships with the projects we already have some connections with. You probably know that we were the organizers of EthDubai last month and it helped us to establish connections with projects from the EVM ecosystem. Bonding will be sort of a tool to leverage those connections through providing corresponding communities an option to become GTON holders with a discount.**
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About the price levels

In addition, we can’t start bonding before we reach a certain price level in order to protect the early investors.

Therefore, we need to set up some kind of a floor price to start bonding. Let’s outline again why we need bonding in general: it will help to attract new long-term holders, allowing them to become token holders with a discount as well as fill the treasury by enabling the buybacks of the governance token at a lower price.  

But the DAO needs to somehow reach and sustain that minimum price level.

Once we reach it, the price level will be helped by Pathway which is the novel approach for the token pricing by the DAO using the Treasury funds for market making.

We have already explained the Pathway concept, and it’s more about philosophy at the moment rather than a very specific approach but we’re continuously experimenting with that so we can say that these concepts are already in product testing.

But how do we reach the needed price level?

If you look at the majority of DAOs, it is obvious they don’t give enough attention to market making of their governance token. A DAO needs to be constantly looking at the price fluctuations of the token and support price discovery to adjust the price. For DeFi projects that own most of the token liquidity, like GTON Capital, it can be simply managed by operating the treasury funds.

But the price also depends on the community expectations and CT (Crypto Twitter) sentiment. Price discovery by new potential holders is based upon the historical data. If people see that there are simple cycles of pumps and dumps, which is quite natural, especially considering extreme market fluctuations in general, the behavior of the masses has all the chances to be bullish. 

But if the token shows only the downward dynamics, people will highly likely foresee the continuous downtrend and will refrain from purchases. 

Therefore, we have to actively manage the liquidity, narratives and sentiment around the token. **
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About Uni V3

We have already talked about our attempts at a proper implementation of Pathway. We successfully conducted random interventions in Uni V2 and that experience allowed us to identify multiple attack vectors. Then we examined and implemented Pathway in the PMM model and we found some attack vectors there too. So now we intend to try Uni V3 that has already proven its efficiency and a certain level of security.

Uni V3 allows you to provide liquidity at different price ranges. You can set up liquidity at a certain price level and market makers can trade within this interval without slippage.

So our plan now is to configure the liquidity properly within the peg price and target price to minimize the slippage and stimulate the trades in this interval. Add to it the growth campaign involving bonding that will implicitly grow the number of traders,  the price growth to the target level is pretty feasible.

About the $GCD stablecoin

You probably know that the core contributors used to be the developers of USDN before, so we have more than extensive experience here. We understand the stablecoin designs, their pros and cons, and are aware of the possible solutions to the stablecoins trilemma. Of course, we realize that we need to focus on the stability of the peg and utility of the stablecoin within the ecosystem. After a thorough research we found out that probably the Abracadabra stablecoin design is the most suitable.

This design implies that you can use the staked GTON and other yield generating assets as a collateral to mint the GC Money’s $GCD stablecoin. It will then be bridged to the GTON chain as a native token, and any activity on the GTON Chain will generate revenue in the form of fees in this stablecoin.

About the plans

Our short-term plans are to focus on Ethereum as the primary network for GTON liquidity and Pathway implementation, develop our own blockchain based on Optimistic roll-up, develop the $GCD stablecoin. The integration of Optimistic is very easy, the key innovation of the GTON chain will be in the use of the stablecoin as the native token.

Our long-term plan is to build the entire ecosystem on top of the GTON chain including the deployment of the envisioned products, such as Candy, OGSwap and others, on it, and later attract other projects into the ecosystem.

What are the next deliverables?

If the GIP2.4 proposal passes, the next priorities will be the launch of staking and bonding which are already audited and the necessary fixes suggested by the auditors are done.

Another deliverable will be Pathway V1 using Uni v3.

How are we going to implement the L2 solution?

The core contributors did a thorough research of many different architectures. We also did a lot of practical experiments with the fork of the Fantom, which is DAG-based. We tried to deploy Polygon subnets and Avalanche. We worked on Polkadot and its fork chains like  Moonbeam and Moonriver. We have always faced some obstacles and shortcomings of those chains. 

If you choose to become a fork of a certain blockchain, you’re “betting” on the success of that network, and, of course, betting on Ethereum has more chances of success.

We think that building on Ethereum is more ambitious and opens up greater opportunities for growth. 

Ethereum is the biggest ecosystem with the biggest community, capitalization, variety of tools and products open for collaboration. So, after considering pros and cons we came to the decision to develop an Optimism roll-up fork. 

It’s easier than anything else as it has no strict requirements for running a node. It’s also more reliable and secure and protected from many types of attacks like the double-spending attack or the 51% attack.

L2 is the simplest solution to run, support, build upon and focus on building the community and onboarding.

Why not ZK? 

ZK roll-ups are not ready yet. They will not let you use Solidity code for the dApps development and they have different opcodes. We’re big believers in ZK roll-ups but their release is not expected in the mid-term future but rather long-term, and we don’t want to stall our production processes.

Why not L1?

L1 implies very high requirements to the chain security. With L2 roll-ups those security solutions are solved by the chain architecture itself.

Potential double-spend attacks, consensus attacks and types of compromising activities are minimized because it’s anchored to Ethereum and attacking it is hardly feasible.

How do we reach $5?

We need to arrange a proper campaign to let other communities know about the bonding and GTON ecosystem in general. How can the community help with that? 

The bonding activation will kick off the treasury revenue flow and this will open up an opportunity to spend more funds on marketing, hire agencies, attract influencers etc. So the community engagement, their peer-to–peer education and explanations, the noise that it can create on social media will greatly contribute to the growth and create a positive price impact.

Are you planning to bridge all other chains to the GTON chain?

We need to keep the focus on Ethereum for now, so the question about bridging is when and how. We suggest not to not distract the development process with other expansions at the moment.

Why do we implement whitelisting?

First of all, we suggest not to look at whitelisting as a protection from some categories of users. It’s not so. It’s about managing the privileges in the ecosystem.

We want to be careful with the GTON distribution and prevent excessive dilution of the benefits especially assuming that the bonding allocation is limited. We chose a targeted bonding model to be able to grow the community with more qualified and engaged users.

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