Deep dive into Gains Network (Part 1)
Primer: This is a deep look into Gains Network, based mainly on the work done by Trayzy on Reddit. The content is updated and summarized into 2 parts. This part 1 is about the history of Gains Network, the features of gTrade and what the custom Chainlink DON is all about.
Introduction
This is a deep dive into Gains Network
Based mainly on the work done by Trayzy on Reddit
Divided into 2 parts
First part: Introduction, History, gTrade unique features, custom Chainlink DON
Second part: Tokenomics, LP mechanism, deflationary mechanism, regulations
What is Gains Network?
Building a decentralized finance ecosystem on Polygon Network
Combined (GFARM + GNS) market cap of $111 million (as of 4th Feb 2022)
Has 2 goals:
Provide the best and fairest leveraged trading experience on a fully decentralized protocol, known as gTrade
Provide value to GNS token holders by awarding liquidity providers almost all of their trading fees + a deflationary mechanism
gTrade is Gains Network’s first product, with many more to come
History of Gains Network
Gains Network, formerly Gains Farm, was established in Jan 2021 but rebranded in Nov 2021
GFARM2 token underwent a 1:1000 split where 1 GFARM2 token on Ethereum could be bridged to 1000 GNS tokens in the Polygon network
Features of gTrade
High leverage
42 crypto pairs and growing, with up to 150x leverage
10 forex pairs, with up to 1000x leverage
Zero funding fees
Leverage without having to borrow any funds
Fully synthetic so positions can be held open for years without borrowing costs
Privacy
Full custody of your funds with no KYC required
Trading is done using DAI directly from Metamask wallet on Polygon network
A broad range of assets to trade
Any asset with real-time pricing data can be added with any pair
Examples:
Commodities (gold, silver, crude, nat gas),
Stocks and shares
Stock indices (Nasdaq, SP500, FTSE, DJIA, DAX)
Cross pairs BTC/EUR or TSLA/BTC
Superior capital efficiency compared to perps exchanges
Liquidity is required only from GNS/DAI pair, so adding more trading pairs and alternative assets does not require additional liquidity
A safer platform for Traders
No liquidation unless >90% loss (other platforms liquidate at 50% losses)
No more scam-wicks
Perps platforms generate their own price which makes it easy for price manipulation
Large market trades on the underlying asset can influence the price and liquidate leveraged positions even though the price does not reflect the true market value across other exchanges
Low fees
Lower trading fees compared to other competing decentralized platforms
0.06% per trade and 0.08% per limit order
No deposit/withdrawal fees, unlike CEX
Unique & Custom Synthetic Architecture
Uses a synthetic architecture with a custom ChainLink Decentralised Oracle Network (DON) that aggregates pricing data from 8 exchanges
ChainLink confirmed that Gains Network is the first to run an advanced architecture with a real use case
Gains Network created a custom on-demand decentralised oracle network (DON) as they needed the price feed to be real-time (to the second) yet also gas efficient
gTrade protocol does not generate its own price for the trading pairs, unlike other platforms
How does the Custom Chainlink DOM work?
Whenever an order needs to be executed on the platform, the trading contract requests the current spot price of the asset from the aggregator contract
The aggregator contract requests the current price from 8 Chainlink’s on-demand nodes
Each of the Chainlink nodes takes the median price from 7 exchange APIs and send the result to the aggregator contract
The aggregator contract then compares the corresponding Chainlink price feed to filter for outliers
If there is a difference of > 1.5%, it rejects the node answer and waits for the next answer
Once a min of 3 answers is reached, the aggregator takes the median again and sends the final result to the trading contract to execute the order
For a more detailed explanation of how this works, look at this medium article here.
Why is this important?
Real-time pricing
Nearly instantaneous opening and closing of trades compared to platforms that use a typical Chainlink price feed
This need for real-time pricing becomes even more crucial with high leverage because a 20x leveraged long with a 1% drop in price is a 20% change in your profits, which might result in a loss
Tamper proof
Makes it very costly to manipulate the price
There are 8 on-demand Chainlink nodes, making it impossible for a single person to manipulate the price
Each on-demand Chainlink node answer is compared to the corresponding Chainlink price feed to filter outlier
Resilient
A lot of redundancy is built-in
There are 7 APIs in total but only a min of 3 is required to work
Chainlink nodes have redundant setups and do not depend on a single Polygon node for WebSocket connection
All information presented above is for educational purposes only and should not be taken as investment advice. Summaries are prepared by The Reading Ape. While reasonable efforts are made to provide accurate content, any errors in interpreting and summarizing the source material are ours alone. We disclaim any liability associated with the use of our content.