Gains Network had bubbles and loopholes in the early days, but iterated continuously on products and actively communicated with the community, and finally eliminated bubbles and loopholes in the process of moving towards the growth flywheel.
Written by: Beichen
Derivatives DEX, Arbitrum Ecology, Binance Innovation Zone... It seems that apart from the concept of Hong Kong, Gains Network has gathered all the labels that have generated FOMO emotions in the past one or two months.
There are not many discussions on Gains in the Chinese community. Although there are relatively complete introduction articles on product functions and economic models, there seems to be no clear point of view to explain it, so that some people say that Gains Network is an imitation of GMX .
I prefer to understand what Gains is and where it is going from the past background of Gains. Then we have to pull the timeline back to two years ago.
Start with an emergency shell
On New Year's Day 2021, Seb, the founder of DeFi Derivatives exchange gains.farm, transferred 5,000 GFARM tokens to the white hat hacker @SquirrelDeFi, because the other party reminded gains.farm's contract that there was a loophole, and all LP funds (about 2 million US dollars) All could be stolen.
Seb promised to reward 5,000 GFARM tokens if the other party showed the vulnerable code, and finally he found out that it was true, and the hacker attack had already begun.
He quickly sold 25% of the GFARM tokens controlled by the development fund (later used as capital to start gains.farm V2), then told the community members to sell their LP assets, and finally closed the gains.farm transaction on the same day Function.
On the second day, it is reasonable to say that the incident started to ferment (the community started to make trouble), but Seb announced that he will launch a new smart contract (that is, gains.farm V2), the model and tokens still use V1, but added monitoring transactions and The ability to pause at any time. Even if this matter is overturned?
Yes! gains.farm V2 officially launched on day 15.
This time, the GFARM token (GFARM2) was re-issued, and the total amount was reduced by about 100 times (which also means that the value increased by 100 times). Users can get GFARM2 rewards by providing Liquidity on Uniswap. An NFT equivalent of a transferable membership card has also been reissued.
The V2 model is the same as before. Traders need to use GFARM tokens as a margin for leveraged transactions, and losses exceeding 90% will be liquidated. In addition, traders who hold the corresponding NFT can use leverage of more than 10 times (up to 150 times), and act as a liquidator (can earn 10% of the liquidation position).
Today's Gains Network is continuously iterated on the basis of gains.farm V2.
The model and operation of V2
There are not many iterations of gains.farm V2, and some minor repairs have been made based on the last time it was hacked. For example, each block can process up to 10 transactions, the team can suspend the opening of new transactions, and the profit is limited to 400%, etc., all of which are for the sake of preventing attacks.
The core mechanism of V2 is to use GFARM as a margin. In essence, this exchange is just a scenario for using/consuming GFARM.
However, small currencies are used as margins, which will inevitably lead to liquidation due to price fluctuations, so the team has set up an additional mechanism to avoid it-although the margin deposited is GFARM, the position is denominated in ETH ...
Let's skip the convoluted logic and look directly at the final result - when the price of GFARM rises (relative to ETH), the GFARM in the position will be reduced proportionally, and vice versa.
Less than a week after the launch of V2, their NFT (the world's first DeFi NFT with real use cases) was taken off the shelves by OpenSea, so they decided to build their own NFT exchange and adopt the auction mode-every bid will be charged Put ETH into the pool, and when someone bids a higher price, it will be returned to him (but a 5% fee will be charged), and finally when the NFT is sold, the highest bidder will charge 25% of the fee-flow to Uniswap GFARM staking pool.
Therefore, the business of gains.farm at this time is centered on leveraged trading, and there is also NFT exchange + GFARM2 pledge business. But it should be noted that all businesses are born around GFARM tokens, rather than GFARM tokens serving businesses.
After V2 went live, a trading contest was launched, but the effect was mediocre. There were more than 160 transactions within 3 days of going online, and the market value was only 600,000 US dollars. So the Gains team quickly started the iterative road at least once every two weeks.
Iterations after V2
Although V2 solves the loopholes of V1, its starting point (that is, all businesses revolve around GFARM tokens) has two unavoidable problems.
First of all, why bother, why not directly use ETH or Stablecoin to denominate? The second is that the price of GFARM is easily manipulated (especially on Uniswap).
The Gains team first tackled the problem of price manipulation, employing new oracles and imposing very large spreads and limits on trades. Later, the GFARM token was removed as a margin, and the margin was directly converted into DAI anchored to the US dollar in one step.
One month after the launch of V2, the community reported that the fees of Ethereum were too high (not only the gas fee, but also the handling fee, because the price of ChainLink alone cost $3), and finally the cost of each transaction exceeded $24, which is not suitable for Derivatives transactions, the result of the team's communication with the community is to switch to layer2, and finally choose Polygon.
The test network was launched in less than a month, and soon in April, Polygon was officially launched, and the fee for each transaction was reduced to $0.001... Gains ushered in a big explosion-there were already 24 hours after the launch 317 transactions, the transaction volume reached 8.6 million US dollars.
Moreover, the Gains team is constantly adjusting its positioning - cryptocurrency is just the beginning, and it will expand to stocks, foreign exchange and commodities in the future.
Since then, gains.farm has continuously launched new currencies, adjusted front-end design, and joint marketing with waist KOLs. By September, it had iterated to V5, and V5 was launched in less than 48 hours, with a daily trading volume of more than 20 million US dollars.
As the Gains team said, "It's like watching a plant grow every day. You don't notice the day-to-day changes, but one day you will find out how much it has grown."
RebrandingGains Network
The Gains team realized that the name gains.farm can easily be mistaken for a farm that releases tokens, rather than a Derivatives exchange, so in October 2021, it was renamed Gains Network in one step.
However, their starting point has not changed - all businesses are born around GFARM tokens, but now they are starting to lay out the product matrix.
gTrade is the first Gains Network product, essentially the previous gains.farm V2. However, the GFARM token was split 1000 times and renamed as GNS (Gains Token).
The model has also been adjusted to use DAI as the margin—if the user earns, he will withdraw directly from the vault as before, but the money lost by the user will be used to repurchase GNS and be destroyed when the vault is over-collateralized (more than 110%) it.
The Gains team is also deeply aware that marketing, especially community marketing, is a top priority, even while the project is still in development. "We are prioritizing the development itself, but this is an ongoing work, so there is no ETA."
So the team brought in a marketing team, all of whom were early users of Gains, had a deep understanding of the project, and believed in its potential.
Later we saw the marketing team have a visible push for Gains popularity - launched a more intensive and systematic marketing, including but not limited to hosting Twitter Spaces with various partners, actively interacting within the community to curate the community content, contact KOL to promote the referral program, etc. Three months later (January 2022), Polygon awarded Gains Network $250,000 of Matic for two trading competitions.
Gains Network also began to consider expanding to other chains (Solana was the first choice at the time).
V6 to now
Gains Network experienced explosive growth a few weeks after its launch, but decided to continue iterating, that is, V6, followed by countless large or small iterations, small iterations such as optimizing various experiences (such as adding stop loss, web chat function, etc.) ), large iterations such as no longer using GNS as collateral after the LUNA thunderstorm, but changing to DAI.
However, the form of today's Gains Network has finally been determined at this stage. So let's skip countless adjustments and directly introduce the current model of Gains Network.
All trades (from cryptocurrencies to foreign exchange with up to 1000x leverage) use DAI as collateral and are settled in DAI with 0 slippage on every trade.
The counterparty of the transaction is the DAI treasury (the trader's mortgaged DAI is still in the contract), and if the trader makes a profit, he will withdraw the DAI from it, and if he loses, he will deduct the corresponding collateral and put it in the treasury.
So here comes the question, isn’t the starting point of Gains Network that all businesses revolve around the platform currency? It seems that GNS is not needed, but the Gains team found a consumption scenario for it-40% of the market price list and 15% of the limit order fee is allocated to the GNS unilateral pledge pool, which is almost 32.5% of Gains revenue.
Another scenario is also critical, that is, the DAI treasury repurchases GNS and destroys it. The premise is that in the long run, the trader must lose more than the profit (long-term betting will lose), then the part of the loss will enter the DAI treasury, and then repurchase GNS and destroy it.
Summarize
Now we can look back again. Gains Network had bubbles and loopholes in the early days, but iterated on products and actively communicated with the community, and finally eliminated bubbles and loopholes in the process of moving towards a growth flywheel (rather than a reverse death spiral).
Strictly speaking, Gains Network is not the most professional Derivatives exchange, but it doesn't matter. Iteration and community are the source of vitality of crypto products (for the same reason, please refer to GMX and TreasureDAO).
