Onboarding Package for Gnosis Chain

[karpatkey]

Outline

• Overview
• Motivation
• About Gnosis Chain
• Benefits to Uniswap
• Cost and Timeline
• Stakeholders

Overview

Gnosis Chain is a community-owned, EVM-compatible network operated by a diverse set of 200k+ validators around the world. In the last two quarters (Q4 2023 and Q1 2024), Gnosis Chain experienced significant growth reaching over $300 Million in TVL. The DeFi sector added numerous established blue chip projects and now powers a vibrant ecosystem including Spark, Aave, Balancer, Curve, CoW Swap, 1inch and Connext among others.

Since Gnosis Chain’s focus on revolutionising the payments infrastructure to make decentralized financial tools accessible and usable for all, we feel it fitting for Uniswap to tap into the ecosystem.

This proposal requests a retroactive Onboarding Package for Gnosis Chain.

Motivation

While already deployed on Gnosis Chain, Uniswap is not currently capitalizing on it. This proposal aims to change that.

One of the key areas of focus suggested by the Uniswap Deployments Accountability Committee to expand the Uniswap ecosystem is “Uniswap Revitalization and Growth”. In their recent work, a large emphasis is on revisiting some of the old deployments and proactively capturing first-mover advantage on promising new chains.

As Gnosis Chain experienced significant growth across Q4 2023 and Q1 2024, we believe the chain aligns perfectly with the scope of the Uniswap Revitalization and Growth initiative. Uniswap’s deployment on Gnosis Chain was completed in early 2022, hence Gnosis Chain was never a beneficiary of the “Onboarding Package” that is now included as a standard element of deployment proposals.

We believe there are synergies between Uniswap and Gnosis Chain as well as a strong potential for Gnosis Chain to generate high volumes and mobilize an influx of new users to Uniswap because of its focus on payments and financial tools.

As a comparison, Balancer processed over $590 Million in volumes YTD (end of May) on Gnosis Chain, making it the second-largest alternative EVM market for the DeFi protocol (similarly to Uniswap, Arbitrum is the first). Gnosis Chain has a larger positive impact on Balancer’s volumes than other more prominent networks like Polygon ($284M YTD) or Base ($80.8M YTD).

We believe that additional visibility and an incentive program would enable both Uniswap and Gnosis Chain to tap into their synergies resulting in positive growth on both ends.

About Gnosis Chain

Gnosis Chain is a community-owned, EVM-compatible network operated by a diverse set of 200k+ validators around the world. It features fast transaction times (5 seconds) and low transaction fees (500 tx for $0.01) with the unique advantage of having a stable token as a base asset for transactions and gas fees.

One of the first Ethereum sidechains, Gnosis Chain’s core values are resilience and credible neutrality. By allowing contributors to easily run a node, Gnosis Chain created a community-owned, anti-fragile network secured by a geographically diverse validator set. Its strong culture of at-home stakers (not reliant on cloud providers or data centres) and its community governance ensure Gnosis Chain remains credibly neutral at a lower price point than Mainnet.

Gnosis Chain underpins the Gnosis collective of aligned projects revolutionising the payments infrastructure to make decentralised financial tools accessible and usable for all. The collective features established blue chip projects like Safe as well as prominent ones like Gnosis Pay and Monerium.

In the last two quarters (Q4 2023 and Q1 2024), Gnosis Chain experienced significant growth reaching over $300 Million in TVL. The DeFi sector added numerous established blue chip projects and now powers a vibrant ecosystem including Spark, Aave, Balancer, Curve, CoW Swap, 1inch and Connext among others.

Benefits to Uniswap

The Multichain Uniswap approach has proven successful with approx. 35% of trading volumes in the last 6 months come from non-Ethereum-Mainnet deployments.

Since Gnosis Chain’s focus on revolutionising the payments infrastructure to make decentralized financial tools accessible and usable for all, we feel it fitting for Uniswap to tap into the ecosystem. The potential for Uniswap to capture the inflow of new and existing users leveraging Gnosis Chain as a payments infrastructure is a promising opportunity for the project to reach a new audience.

Gnosis Chain underpins the Gnosis collective of aligned projects, building synergic services to Uniswap. Among those, Safe and Gnosis Pay. Safe Smart Accounts count 9.1 Million accounts deployed with $100B+ in total assets stored and VIP individuals (e.g. Vitalik) using them. Gnosis Pay is the world’s first on-chain spending account with a Visa Debit Card linked to a self-custodial blockchain wallet, connected with 80 Million merchants worldwide. Roll-out in Europe and the United Kingdom has already started, with upcoming new Countries including Brazil and Argentina. That is a combined population of approx. 1.45 Billion people.

Additionally, Gnosis Chain powers a growing DeFi sector with numerous blue chip projects added since Q4 2023. These include Aave, whose market on Gnosis Chain has grown rapidly since its launch 7 months ago and is now larger than the lending protocol’s markets on Base and Scroll (as of May 2024). sDAI (MakerDAO’s interest-earning DAI) accumulated over $68 Million TVL since October 2023. Focusing on the on-chain trading vertical, Balancer processed over $590 Million in volumes YTD (end of May) on Gnosis Chain, making it the second-largest alternative EVM market for the DeFi protocol (similarly to Uniswap, Arbitrum is the first). This means, Gnosis Chain has a larger positive impact on Balancer’s volumes than other more prominent networks like Polygon ($284M YTD) or Base ($80.8M YTD).

Based on the above and observing Uniswap’s performance across blockchains, we anticipate the protocol will replicate its success in capturing market share on Gnosis Chain.

Bridges

Gnosis Chain is committed to providing easy and secure access to Ethereum L1 and other Layer 1 and Layer 2 ecosystems. For this reason, multiple bridging options are available to connect with Gnosis Chain.

The Omnibridge is a native token bridge that connects Ethereum and Gnosis Chain (and vice-versa) by minting the canonical representation of bridged assets on Gnosis. The Omnibridge is built on top of the Arbitrary Message Bridge (AMB), a key bridge primitive that is used inside higher-order bridges like the Omnibridge and allows Gnosis contracts to send data and trigger contract functions on Ethereum and vice-versa. Therefore, the Omnibridge relies on the same trust models and group of Trusted Bridge Validators as the AMB. Part of these validators is Succinct Lab’s zkSNARK-enabled Light Client, Telepathy. Telepathy is a key component of the AMB bridge ecosystem as it enhances security and reliability for cross-chain transactions by providing validity proofs via zkSNARKs that ensure trustless verification of transaction events across chains.

The xDAI bridge is a native DAI bridge from Ethereum that is used to mint and burn xDAI, the native asset used for gas and transaction fees on Gnosis.

Gnosis has a long-term roadmap to move towards trustless bridges and is investing resources into trust-minimization of its bridges, to ensure trust and safety of users. Hashi is an EVM Hash Oracle Aggregator designed to enhance cross-chain bridge security by aggregating block headers from various sources. It supports 15+ General Message Passing bridges and ZK light clients, promoting redundancy and reducing reliance on single mechanisms. By requiring validation from multiple independent mechanisms, Hashi ensures greater resilience against security incidents. Gnosis plans to gradually migrate its canonical bridges to Hashi’s distributed trust model with the goal of strengthening security, decentralisation and interoperability.

Additionally, Gnosis Chain is supported within independent bridge solutions that enable the cross-chain connection with other Layer 1 and Layer 2 ecosystems. These include Jumper (provided by Li.Fi), Bungee, Hop, Connext, DLN (debridge), LayerZero, Chainlink CCIP and Wormhole.

Cost and Timeline

This proposal requests a retroactive Onboarding Package for Gnosis Chain as well as costs for Merkl and Oku integrations. To be voted on Snapshot:

• $250k
• $500k
• $750k
• $1m
• Do Not Fund
• Abstain

Please note that each of the options with incentives will include a Oku and Merkl integration package (21.6k and 105k).

Stakeholders

Proposal sponsor - karpatkey. karpatkey is a delegate both in the Uniswap DAO and in the Gnosis DAO.

Deployer - The relevant smart contracts have already been deployed.

Target chain: Gnosis Chain by GnosisDAO.

[Tane]

We agree with this Onboarding Package for Gnosis Chain. We believe that Gnosis Chain will benefit from more participation and contribution from the Uniswap side. We believe that $250k is a reasonable incentive amount because Linea and Scroll, which have larger TVLs than Gnosis Chain, received $250k in incentives from https://gov.uniswap.org/t/uniswap-revitalization-and-growth/22616, and we believe that Gnosis Chain should follow the similar amount to them.

[jayyu23]

This Onboarding package for Gnosis Chain seems to be reasonable and well-thought out, and the incentive package of 250k seems to be the right amount. We believe that this would set a good example of a previously deployed project also receiving the DAO’s incentivization package and having the revitalization plan extending beyond just new deployments.

[SEEDGov]

We believe that this Onboarding Package for Gnosis Chain is appropriate and reasonable, as it is a network in current growth of both TVL and DeFi protocols, so it represents a great opportunity for Uniswap to strengthen its presence there and expand the scope of “Uniswap Revitalization and Growth” in order to capture more market share of activity and volume for the protocol. We believe that 250k is an appropriate amount, given the history of similar programs for other networks.

[blockchainedu]

Read through the proposal.

$250k is a good amount, Gnosis Chains having $375m in TVL makes it a reasonable bet.

Uniswap is already deployed? Don’t see the option to switch to it. Unless it’s just not supported via the uniswap.org front-end?

Top pools on Balancer for consideration, Uniswap’s $250k incentives package could aim for similar APYs to be competitive, or target different pairs to capture the gap in market share.

[karpatkey]

Thank you for your feedback and suggestions.

Uniswap is already deployed on Gnosis Chain, but you are correct, it is currently not supported by the uniswap.org front-end. Unfortunately, this negatively impacts discoverability and accessibility.
As part of this proposal, we aim for Uniswap’s Gnosis Chain deployment to be added to OKU with the goal of improving the user experience.

[karpatkey]

This proposal has now been moved to Snapshot: https://snapshot.org/#/uniswapgovernance.eth/proposal/0xc2eed288ba61241dd86928eff15b7c8c9622168fc4b435657f58dda8ce285d13

[0xkeyrock.eth]

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.

[kaereste]

The below response reflects the views of L2BEAT’s governance team, composed of @kaereste and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

As with similar votes in the past, we are generally supportive of new Uniswap deployments, but against incentivizing deployments outside of the Ethereum ecosystem. Since the Gnosis Chain is a sidechain, we vote against the onboarding package.

[pennblockchain]

We voted for $250k: We believe $250k reflects our confidence in Gnosis’ potential while ensuring that resources are committed prudently. Supporting new deployments is crucial to enable them to foster an ecosystem that can flourish with the necessary liquidity requirements backed by such onboarding packages. This level of support also signals to the community and potential partners that Uniswap is serious about expanding its ecosystem thoughtfully.

[SEEDGov]

Consistent with our vote in the Temp Chack pool, we also voted in favor of this onchain proposal. Here our rationale.

[kaereste]

The following reflects the views of L2BEAT’s governance team, composed of @kaereste and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

We’re voting AGAINST the proposal for the same reasons we voted against during the temp-check.