Although the popular v3 version of Uniswap soared to the top of the TVL rankings later that year, the need for active management has deterred some retailers from being part of their team – an issue that has been largely ignored by a number of retailers . New products from the Gelato Network should help.

The Gelato Network was first introduced in a community call last week and today announced details of its Uniswap v3 “G-UNI” management system. G-UNI aims to permanently maintain a liquidity margin of 5-10% within the current price of an asset pair, with the Oracle network checking the price and rebalancing the liquidity pool position every half hour. G-UNI also automatically reinvests transaction fees to receive compound interest.

“Passive G-UNI works by just providing very broad liquidity, similar to Uniswap v2, without ever having to be changed,” said an announcement blog post. “Hence, it can be completely free of anyone’s control as it does not require any change in the price range.”

While Uniswap v3 allows liquidity providers to earn more fees by centralizing their funds at specific prices, it exposes them to the risk of temporary losses if the price of the trading pair exceeds the range specified by the provider.

Update: REKT ️ https://t.co/0MF0gCd9sm

– ameen.eth (@ameensol) May 29, 2021

The blog post points out that G-UNI’s automatic rebalancing offers the advantage of centralized liquidity, but with the option of passive position management, which is more like Uniswap v2.

“The benefits of this are that the user can sit back and relax once all of the difficulties associated with monitoring LP positions are resolved.”

The ability to combine and promote

While the new tool will benefit passive liquidity providers, the real benefit of G-UNI could be for other DeFi protocols.

Hilmar, a self-proclaimed “Legendary Member” of Gelato, noted that projects can now incentivize liquidity that is concentrated in “Group 2” liquidity pools. Group 2 is a slang for a native governance asset combined with a common underlying asset such as ETH or MATIC.

3) Having an ERC20 wrapper around Uni V3 LP slots is extremely powerful as it allows groups like Instadapp to offer incentive programs for liquidity mining on G-UNI.

That means you can now incentivize your community to provide liquidity in specific areas

– Hilmar X (@hilmarxo) June 16, 2021

Projects often have to offer multiple liquidity mining incentives in order to bundle 2 participants, as liquidity providers bear the risk that the price of the native governance token will drop. Centralized liquidity premiums can help stabilize the price of the underlying asset in a more regular range.

In addition, unlike NFT, G-UNI is an ERC-20 token that opens it up for a greater number of possible uses in DeFi. Many lending platforms accept liquidity pool tokens as collateral, but are not yet largely prepared for positions that are presented as NFTs; G-UNI will allow you to initiate v3 liquidity positions faster. Profit vaults such as Yearn.Finance, which have been planning to take stock market positions for a long time, could also integrate ERC-20 more easily.

G-UNI has been used from the start as part of the introduction of governance tokens by Instadapp. The team is issuing 1,000,000 INST tokens to mine INST / ETH liquidity, with 3/4 of the rewards focused on the higher INST price liquidity area.

According to the Instadapp dashboard, incentive groups are currently active and offer 2,200% or 1,800% APY.