30 Days of Research: Day 1
Protocol: @GammaSwapLabs | $GS
MC/FDV: $5.9M/$32M
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Initially inspired by @phtevenstrong's "30 Days of Transparency" and @tengyanAI's tweet, I'm starting my own "30 Days of Research," where I'll post 30 tokens' research over 30 days.
"Why did you decide to start it?"
We're at a point in the cycle where research is crucial. If the market takes off and we see the much-anticipated alt season, my readers will already know what to buy.
Being prepared will prevent you from chasing pump to pump without a solid strategy.
So, during the DeFi summer of 2020, @0x_danr, the inventor of @GammaSwapLabs, realized that providing liquidity in AMM DEXs (e.g., @Uniswap) was not always profitable.
"Are you referring to impermanent loss?"
Yes.
IL occurs when the price of one token in the pool changes significantly compared to the other.
This leads to a decrease in value for the LP because the pool's automatic rebalancing adjusts their token holdings to maintain a fixed ratio.
As a result, you end up with fewer of the appreciating tokens than if you had held the tokens outside the pool. :(
@GammaSwapLabs addresses this by introducing perpetual options, which act as a way to hedge against IL or to speculate on an asset's volatility.
Unlike traditional options that expire, @GammaSwapLabs's perpetual options have no fixed maturity.
"So, as long as I can cover the associated fees, I can keep a positionm indefinitely?"
Yes, and when you open a perpetual option position, you are essentially borrowing liquidity from an AMM like @Uniswap.
"Hmm?"
This borrowed liquidity is what gives you leveraged exposure to the underlying asset. The leverage is not fixed and changes as the price of the asset moves.
"What do you mean, changes as the price of the asset moves?"
Your position's "delta" (the rate of change in the option's value relative to the underlying asset's price) is dynamic.
As the asset price moves further from your entry point, the leverage of your position also increases.
This mechanism is designed to transform the IL that an LP would experience into an "impermanent gain."
"Wait, is it that the exact opposite of impermanent loss?"
You got it.
For those wondering, @GammaSwapLabs has never been exploited.
There are audits from @zellic_io, @HalbornSecurity, and @PashovAuditGrp, along with a bug bounty on @immunefi.
"Alright, what about $GS?"
38% of MC is staked, where stakers earn 30% of @GammaSwapLabs's earned fees, distributed in $ETH, $esGS incentives, and MP points.
Current APR is 4.39% (with no boost).
Also, @GammaSwapLabs offers "Farms," a.k.a. liquidity pools where most of the rewards are earned in $esGS (they vest linearly over 30 days).
For example, in the WETH/USDT pool, 16.37% of the 27.95% APY is earned in $esGS.
It gives me early @pendle_fi vibes.
"Hold on, aren't they entirely different?"
Indeed they are, yet I'm betting on a similar path where consistency and strong execution eventually lead to a breakout moment.
I believe @GammaSwapLabs' adoption moment is yet to come, and people have yet to realize the value it delivers.
It's hard for me to believe that $GS is still at a $5.9M market cap.
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