Gnosis currently has a Total Value Locked of $107 million across its DEX landscape. The top three DEXes are Balancer with a TVL of $91 million, Curve with $8 million, and Gyroscope Protocol with $5.4 million.
Figure 1: Breakdown of Gnosis Chain Total Value Locked
As illustrated in Figure 1, Balancer has extremely high DEX dominance on Gnosis. Balancer offers both stable and weighted pools - employing the veBAL gauge model to direct incentives to user-voted pools. This strategy leads to a weekly expenditure of $27,710 distributed among LPs as BAL rewards.
Figure 2: Balancer incentive spend on Gnosis
While these incentives represent a large amount of LP earnings, LPs also earn from swap fees and yield reward. When weighted by TVL, 16% of rewards come from swap fees, 39% from BAL incentives, and 43% from Native Yield APR (e.g wstETH). This results in a projected $474,000 in swap fees collected by LPs. While earnings are skewed to incentive rewards, swap fees and yield do provide sustainable revenue.
Figure 3 highlights the earning breakdown of LPs, and indicates the importance of incentives to attract liquidity. Overall, only 10% of Balancers liquidity is in non BAL incentivised pools.
Figure 3: Balancer Pair Reward breakdowns
Both Curve and Gyroscope both focus on providing liquidity for stable pairs such as EURe / EURC.e or weETH / wstETH, rather than competing for volatile pool TVL. Furthermore, while Gryroscope is a CLMM, it is built on Balancer; and veBAL holders determine the pool incentives and swap fees.
Figure 4: Aggregated Liquidity
Therefore, based on the aggregated liquidity in Figure 4, it is evident that Gnosis chain lacks a CLMM in its current DEX ecosystem. Only 9% of DEX TVL is concentrated, and only in a stable ETH pool. This lack of concentrated liquidity provides a huge opportunity for Uniswap V3 to gain a sizeable marketshare on Gnosis - and we are highly supportive of a deployment. Since Uniswap doesn’t need to compete directly with the current competitors, we advocate for an incentive package of $250,000. This should be enough to attract long term liquidity while still being mindful of expenditure.