Introduction: The Ocean is Rising
Almost exactly one year ago, the core team relocated from San Francisco to Hawaii. Working out of a simple house by the water, we have been able to tune out all the noise and focus on what’s important — the fundamentals. The bright sun and salty air have a way of getting our minds to think new thoughts, see the world in new ways.
From our vantage point, we couldn’t help but notice that the world is getting hotter and the ocean is rising. Once stalwart seawalls are crumbling. Sandy beaches are swept away at high tide. The ocean is rising and it is too late to stop it. We must find a way to thrive in a new environment.
The purpose of this blog post is to tell you about what we’ve been working on and what we have in store over the next couple of months.
What will Shell v2 entail?
The protocol will have two main modules:
- A trade logic layer that determines swap rates.
- An accounting layer that tracks balances and transfers tokens.
The trade logic layer for Shell v2 will feature a new type of bonding curve with concentrated liquidity and fungible LP tokens. Based on initial tests, it is expected to be more flexible and capital efficient than Uniswap v3 and Stableswap (Curve).
Our high level goal for the trade logic module is not to create the most capital efficient bonding curve, per se. Instead, we want to create a general purpose algorithm that can represent any curve. Consider how a video game engine’s purpose is to help designers render their game. Our algorithm is a bonding curve engine that helps financial engineers implement their trading strategy through a smart contract.
The Shell v2 accounting layer will be an internal ledger tracking the balances for multiple pools. Any type of liquidity pool using any type of bonding curve can plug into this accounting system. It is designed to be highly gas efficient; chaining together multiple swaps will cost very little gas.
We call this accounting module “the Ocean” because it is an aggregation of pools. By analogy, transporting cargo by sea is very efficient. Once a shipping container has been loaded onto a boat, the container can travel to any port in the world quickly with little added cost. Once capital has been loaded into the liquidity Ocean, it can convert to any currency at low cost. The Ocean is also a symbol of the watery world we will one day inhabit and our determination not to run from it, but embrace it.
Combined with our new bonding curve algorithm, we have a protocol where financial engineers can deploy the most capital efficient pools, and where traders can aggregate pools to get the best swap price.
Our first deliverable will be a white paper release of the bonding curve along with a Solidity reference implementation. This will be published in a couple of weeks. After that, an Ocean white paper will follow. Update: Read the Proteus white paper here and the Ocean white paper here.
The next deliverable will be a guarded launch of the full v2 protocol, including the bonding curve engine and the Ocean. Although v2 is designed to accommodate any token pair, we will first focus on stablecoins and expand from there. The timing of the guarded launch will be partially contingent on the completion of at least one audit. In any case, we will start out with a small amount, then ramp as we prove the efficacy and security of the system.
As part of the guarded launch, we will clarify retroactive rewards to users of Shell v1, and give guidance on incentives for participating in the guarded launch. However, we will not have a liquidity mining or governance module in place for the guarded launch. We thank everyone for their patience regarding the launch of the Shell governance token, which will be known by the ticker symbol $SEA. (Update: As a result of the SEA vs. SHELL community event, the official ticker has been changed to $SHELL)
The final step will be to fully launch Shell v2 with no capital restrictions and a fully fledged liquidity mining and governance module. It is at this time that the protocol governance token will be launched. After this, Shell will quickly become a self-governing protocol. The core team will continue to work and build, but the community will begin to take on more responsibility.
Conclusion: The Horizon Beckons
We can’t wait to share more information about what’s in store for Shell v2. There are additional features and capabilities in v2 that we are quite excited about, but we will save those for another blog post. Even we are surprised by what Shell can do.
As the waters encroach on what was once dry land, it is time to board our vessel and head out to sea. Our destination lies over the horizon but we have not yet lost sight of the shore. We thank you all for coming along on this journey.