Say goodbye to sniping? How does Gavel solve the dilemma of token distribution and liquidity guidance?

Written by KarenZ, Foresight News

In the Crypto world, token distribution and liquidity guidance have always been the key links that determine the success or failure of a project, often accompanied by multiple shackles such as lack of transparency, market manipulation, sniping, and "sandwich" attacks. Currently, most token issuances on Solana use the joint curve model. Although this mechanism can achieve initial price discovery, it has spawned the phenomenon of "token sniping" - robots buy tokens at low prices before real users at lightning speed, and then resell them to retail investors at high prices.

Gavel is committed to solving these pain points through on-chain mechanisms, bringing a fairer and more efficient token issuance experience to the Web3 ecosystem. This article will introduce the background and mechanism of Gavel in detail.

What is Gavel?

Gavel is a platform focused on on-chain token distribution and liquidity bootstrapping, developed by Ellipsis Labs and launched on Solana on May 20. Gavel aims to help project owners issue tokens in a lower-cost and more transparent manner, while protecting users from malicious behavior in the market (such as squeeze attacks and sniping). Gavel also helps bootstrap initial liquidity for tokens and ensures fairness and security of transactions through its unique anti-squeeze AMM mechanism.Safetysex.

Ellipsis Labs is also the core developer of Solana's ecosystem limit order book DEX Phoenix, with a total financing amount of US$47.3 million.

Among them, in August 2023, Ellipsis Labs completed a $3.3 million seed round of financing, led by Electric Capital, with participation from Robot Ventures and Anagram, and angel investors including Solana co-founder Anatoly Yakovenko (Toly), Polygon Labs CEO Marc Boiron, and Monad Labs CEO Keone Hon. This financing aims to accelerate the development of innovative DeFi protocols such as Phoenix.

In April and October 2024, Ellipsis Labs completed two rounds of financing. In April, it completed a $20 million Series A financing, led by Paradigm. At the end of October, Ellipsis Labs completed a $21 million financing, led by Haun Ventures, and the original investors Electric Capital, Toly, and Paradigm continued to participate. This financing is committed to accelerating the creation of verifiable finance.Blockchain Development of Atlas.

Gavel AMM is the product of Ellipsis Labs’ early research work. At that time, Ellipsis Labs co-founder Jarry Xiao and @0xShitTrader, as well as Paradigm partner frankie and general partner Dan Robinson, co-authored the “A Sandwich-Resistant AMM” proposed an anti-“sandwich” AMM (sr-AMM) application layer mitigation measure, which extends the constant product AMM by enforcing an invariant: no exchange transaction will be traded at a price better than the price at the beginning of the slot window, thereby protecting traders from front-running attacks. This is also what Vitalik Buterin proposed in 2018.Anti-front-running ideaextension of.

How does the Gavel mechanism work?

Gavel's core mechanics are divided into the following phases:

Initial Token Distribution：Project owners can flexibly choose issuance methods such as Dutch auction, fixed price first-come-first-served, and licensing mechanisms. During the open token distribution period, users deposit SOL and receive token allocations at the end of the token allocation period. Regardless of the model adopted, Gavel ensures that the closing price of the public sale is exactly the same as the subsequent AMM opening price, eliminating arbitrage and sniping space from the source. Taking the test token IBRL as an example, its total supply of 70% is allocated through a 24-hour public sale, and users can deposit SOL to obtain tokens in proportion.

Anti-Sandwich AMM：When the initial distribution period ends, part of the token supply (not sure whether it is all the remaining tokens or part of the tokens) and part of the raised SOL will be deposited into Gavel's anti-sandwich AMM, where the amount of SOL is selected to ensure that the opening price of the AMM is consistent with the liquidation price of the public sale. Anti-sandwich AMM is more suitable for guiding liquidity and promoting early price discovery, while protecting traders from front-running attacks.

Temporary liquidity management and liquidity withdrawal：AMM is used to guide initial liquidity, not permanent support. When the token trading volume is sufficient, liquidity can be gradually withdrawn to avoid permanent lock-up losses. LPs in Gavel will extract a portion of liquidity according to a fixed schedule, convert it into tokens, and then destroy the tokens (the schedule is configurable). This design not only meets the initial liquidity needs, but also avoids the asset retention problem caused by long-term lock-up, and can also maintain the stability of token value through a continuous deflation mechanism.

Currently, it takes permission to launch a project on Gavel. Gavel allows project owners to adjust distribution parameters according to demand, such as token allocation ratio, distribution mechanism, etc., but participation on the platform does not require permission and is completely managed by on-chain smart contracts.

Practical Example: Gavel Test Token IBRL

In order to demonstrate the effectiveness of its mechanism, Gavel launched a test token IBRL. It should be noted that Gavel stated that IBRL is only used to demonstrate the operation of the Gavel protocol and has no actual or future utility. Its distribution and fee mechanism is as follows:

• Total supply: 1 billion.

• The funds raised by 100% and the token supply of 100% are allocated to the Gavel mechanism.

• Among them, public sale: 700 million tokens are allocated through 24-hour public sale, and users receive tokens according to the deposit ratio.

• 3/7 of the raised SOL is paired with the remaining 300 million IBRL and injected into the AMM to ensure that the initial price is consistent with the liquidation price of the public sale.

• The remaining 4/7 of SOL is used to purchase IBRL and destroy it according to an exponential decay schedule, purchasing the remaining SOL 0.01% tokens every 1000 Solana slots (about 6.5 minutes). This process is managed autonomously by the on-chain smart contract.

• Liquidity on the AMM also decreases on an exponential decay schedule. Starting 7 days after the public sale, 0.01% of liquidity will be withdrawn every 2,000 slots (about 13 minutes), up to a maximum of 20,000 withdrawals. The withdrawn SOL will be immediately used to directly purchase IBRL, and IBRL will be destroyed. This process is managed autonomously by the on-chain smart contract.

• The team will not retain any IBRL tokens and collected SOL.

• In terms of fees, there is no fee for the initial token distribution. Gavel charges a fee of 30 basis points (0.3%) for AMM exchange transactions.

On the evening of May 21, Gavel ended the IBRL token sale, with 2,480 participants contributing a total of 30,747 SOL. The market value of IBRL once reached 66 million US dollars in the early morning of May 22, and the current market value of IBRL has fallen back to around 30 million US dollars.

summary

Through innovative mechanism design, Gavel helps project parties raise funds at low cost, strives to achieve fair distribution, eliminates sniping opportunities, and creates a fair, efficient and user-friendly token distribution and liquidity guidance ecosystem through liquidity management and token destruction mechanisms.

For project owners, Gavel can maximize fund-raising efficiency and avoid value interception by middlemen; for ordinary users, they can obtain fair participation channels and avoid price exploitation by robots; in addition, all operations are fully on-chain and auditable, which effectively promotes the industry's transparency process.

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