2024/02/07
Project Name: Gains Network
Token: GNS
Current Market Cap: $160 Million
Estimated Market Cap: $480 Million
Upside Potential: 202%
Penta Dimensional Score: 76
Data as of: February 1, 2024
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Penta Dimensional Score:
Research Summary:
Gains Network stands out with its unique comprehensive architecture design that leads in capital efficiency. Founded on the Ethereum blockchain, Gains Network is a decentralized protocol for leveraged trading of synthetic assets. Its flagship product, gTrade, supports high-leverage perpetual contracts trading for cryptocurrencies, forex, stocks, stock indices, and commodities. The unique integrated architecture of gTrade offers a wide range of trading pairs, low transaction fees, and high leverage options—up to 150x for cryptocurrency trades, a staggering 1000x for forex, and 100x and 35x for stocks and indices, respectively. Gains Network sets the standard for capital efficiency in the sector, with gTrade's 7-day average trading volume/TVL ratio reaching 2.11 as of January 30, 2024, compared to 0.27 and 1.14 for GMX and dydx, respectively.
The introduction of gETH and eUSDC, along with new multi-collateral deposit features in gTrade V7, is poised to break new grounds in trading volume. The liquidity pool will transition from USDC, ETH, or DAI, to include liquidity yield tokens gUSDC and gETH. Gains Network has disclosed that over the past 18 months, gTrade has processed more than 1.38 million transactions, totaling $56 billion in volume, with fee revenue reaching $38 million.
Multiple mechanisms control trading risks, while a proprietary oracle ensures robust development. Gains Network offers three risk control mechanisms in trading: 1) Dynamic Spread/Price Impact to prevent price manipulation and facilitate listing of smaller currencies; 2) Rollover Fee to control traders' leverage and risk; 3) Borrowing Fee to balance long-short ratios and avoid excessive exposure to one-sided risks. Furthermore, Gains Network has developed a hybrid architecture combining Chainlink Price Feeds with its own Chainlink Decentralized Oracle Network (DON), where 8 nodes collect prices from 7 exchanges, effectively filtering anomalies and preventing price manipulation, thereby providing safe, accurate, and real-time aggregated prices for its high-leverage trading products.
Token deflation mechanisms and protocol revenue sharing enhance holder benefits. For GNS holders looking to earn staking rewards, single-sided staking encourages the withdrawal of more GNS tokens from circulation. Earnings are denominated in $DAI, not through inflationary minting of more GNS tokens.
Valuation: Although GNS's TVL is less than 7% of GMX's, its market cap to TVL ratio is already three times that of GMX, indicating the market's recognition of its lending efficiency, growth potential, and safety. In a six-month outlook, we believe that with the inclusion of gETH and eUSDC and new feature expansions, TVL could break through the $100 million mark. Based on the historical average market cap/TVL ratio of 4.84 over the past two years, the six-month estimated market cap is $484 million.
Key Risks: Fund pool management risk, liquidity risk, and risk of being attacked.
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