A DeFi ecosystem built on the Ethereum blockchain is aiming to maximize yields from top platforms.
Growth DeFi says its ecosystem leverages the power of an unlimited amount of protocols — with Aave and Compound being two of the most prominent ones they are working on. Sushi and Pickle are among the others they plan to embark on soon.
The project describes itself as a one-stop-shop for an array of differing protocols and strategies, with no limits as to what it can build on.
At the heart of this ecosystem are gTokens, an interest-bearing cryptocurrency backed by an underlying asset that is designed to be held for long periods of time. As well as owning a reserve of an underlying asset, they benefit from deposit and withdrawal fees.
A Growth DeFi spokesperson explained: “gTokens are the heart and soul of Growth, they optimize and enhance the strategies used by the underlying protocols. Same as cTokens are to Compound and aTokens are to Aave, gTokens have been developed from scratch by Growth Foundation and are designed to be used by long-term oriented investors.”
The value proposition of this asset is derived from how it combines the potential profits of an underlying protocol with arbitrage profits from minting and burning fees, as well as profit-sharing ownership in locked liquidity pools.
With gTokens there are no performance or management fees, only the mint and redeem fee. Every time gTokens are redeemed or minted, a 1% fee is paid — and half of this sum is burned to create scarcity. The remaining 0.5% is committed to locked liquidity pools paired with GRO tokens, generating new arbitrage opportunities.
The GRO cryptocurrency serves as a deflationary utility token that enables owners to participate in Growth DeFi’s governance — contributing towards the development of the ecosystem and making decisions about future milestones.
In time, it is hoped that gTokens will eliminate the high reliance on yield farming tokens through the use of locked liquidity pools. The fact that these LPs are permanent helps to remove the risk of impermanent loss, which illustrates the difference between holding tokens in an automated market maker and in a wallet.
A range of gTokens have been created — including gDAI, gUSDC, gUSDT, gWBTC and gETH — helping to deliver liquidity to the ecosystem from a multitude of blockchains.
Those behind Growth DeFi say this is a verifiably open source, on-chain project that anyone can audit. The ecosystem has also completed a full audit by ConsenSys Diligence.
To achieve maximum levels of security, a bug bounty program is also in place, with up to $100,000 in rewards offered depending on the severity of the vulnerability uncovered, and how likely it was to be exploited.
The importance of staking
A tokenized version of GRO has also been created known as stkGRO, encouraging people to hold onto their cryptocurrency for long-term periods.
Unlike other protocols, stkGRO is not locked up for a specific time period, meaning that owners can continue to benefit from liquidity if they really need it. Instead, a flat fee of 10% is charged whenever someone unstakes. Half of this fee is burnt, causing GRO’s circulating supply to diminish, while the other half is used to enhance reserve ratios.
This also plays a crucial role from a governance perspective, as only those who have stkGRO can participate in the decision-making process. In a recent blog post on Medium, Growth DeFi explained that this is designed to filter out those who may have participated in votes with a short-term mindset.
Growth DeFi is hoping to achieve sustainability in the industry following on from a blockbuster year for decentralized finance — and remove some uncertainty from the market.
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