Overview
The proposal seeks to introduce a GRAI/USDC liquidity pool with a 0.01% fee tier on zkEVM and zkSync. This initiative aims to enhance the liquidity and accessibility of GRAI, the native debt token of the Gravita Protocol, facilitating more efficient and cost-effective transactions within the ecosystem.
Background
Gravita Protocol is a friendly fork of Liquity. It is an interest-free, non-custodial borrowing platform that advances censorship-resistant stablecoins and the decentralization of Ethereum. GRAI is its native debt token, designed to support high-quality LSTs as collateral while excluding censorable assets. The protocol leverages a stability pool for liquidations and redemptions to maintain peg stability.
The intention behind this proposal is to improve GRAI’s liquidity on Layer 2 solutions (zkEVM and zkSync), promoting broader adoption and utility across Ethereum’s scaling solutions. This is in line with Gravita’s mission to facilitate seamless and affordable borrowing and lending services, enhancing the protocol’s utility and value within the ecosystem.
Details
- Audits: Audits - Gravita Protocol Docs
- Token Utility: GRAI serves as a debt token within Gravita Protocol, enabling interest-free borrowing against collateral.
- Volatility: GRAI’s price stability is strategically managed through a combination of hard and soft peg mechanisms, designed to dampen volatility and maintain its peg close to 1 USD. Despite these mechanisms, it’s important to recognize that GRAI’s price can fluctuate within certain ranges in decentralized markets due to its design and the recovery mode feature of Gravita Protocol.
Hard Peg Mechanisms: These provide a foundational price floor and ceiling for GRAI through direct arbitrage opportunities. Users can redeem GRAI for collateral within Gravita’s Vessels or mint GRAI at a 90% Loan-to-Value (LTV) ratio against WETH. This design ensures a more stable price range for GRAI, preventing it from regularly exceeding its peg, which could deter its implementation in other protocols over time.
Soft Peg Mechanisms: In addition to the hard peg, GRAI benefits from less direct mechanisms that contribute to its price stability. As GRAI’s market price moves below or above its 1 USD peg, opportunities emerge for both borrowers and depositors to engage in profitable activities, further stabilizing its price. One notable soft peg mechanism is the concept of parity as a Schelling point; the protocol’s design inherently encourages users to treat 1 GRAI as equivalent to 1 USD, promoting an equilibrium state where the token’s value aligns with this parity, although it is not guaranteed. This approach to managing GRAI’s volatility makes it a volatility-dampened token, though users are advised to be cautious and fully informed when interacting with the Gravita Protocol, acknowledging the potential for price movements beyond the expected ranges.
- Oracles: An Oracle integration is being build with DIA
- Control: Gravita’s governance token is not live yet. Gravita uses proxy smart contracts with a 2 days timelock protected by a 5/7 multisig.
- Merit: Enabling the GRAI/USDC pool on zkEVM and zkSync would benefit the broader ecosystem by increasing trading volume, attracting new users, and promoting fee generation through more efficient and scalable transactions.
Links
- Token address: zkSync: 0x5FC44E95eaa48F9eB84Be17bd3aC66B6A82Af709
zkEVM: 0xCA68ad4EE5c96871EC6C6dac2F714a8437A3Fe66 - Website: https://www.gravitaprotocol.com/
- Socials: Twitter, Discord
- Documentation: Overview - Gravita Protocol Docs
- Github: Gravita-Protocol · GitHub
- Any other relevant links: Dune Dashboard (Murathan, Gravita), DefiLlama - Gravita Protocol