Deployment Phases

Phase 1: Lending Protocol Deployment

1. Enable Flash Loans for Market Makers: Once the mainnet is live, the first protocol to be deployed will be the lending protocol. Pre-launch liquidity raised will be bridged onto Glue mainnet and deposited into this protocol. Market makers can then access flash loans, which are critical for effective arbitrage. This functionality ensures that the prices on Glue accurately track those on CEXs and other chains, contributing to a healthy and efficient market. The availability of flash loans allows market makers to exploit price discrepancies swiftly, maintaining price parity across different platforms.

2. Support Stablecoin Minting: A key objective is to have substantial bridged assets to facilitate the minting of the stablecoin against these deposits. Achieving a significant market capitalization for the stablecoin USDg early on is crucial for the ecosystem's stability and adoption. This stablecoin will serve as the backbone for many financial operations within Glue, providing a reliable and widely accepted medium of exchange. The minting process will be streamlined, allowing users to easily create and redeem stablecoins, ensuring liquidity and trust in USDg.

3. Facilitate Borrowing for Leverage: Additionally, the lending protocol will enable users to borrow assets for leverage and yield enhancement. This capability attracts users looking to maximise their returns through strategic borrowing and lending activities. By offering competitive borrowing rates and secure lending mechanisms, Glue ensures that both borrowers and lenders find value in participating in the protocol. The lending protocol will be designed with robust security measures to safeguard user assets, prioritising trust, and reliability.

Phase 2: Stablecoin Protocol Deployment

1. Unified Ecosystem Stablecoin: Following the lending protocol, the stablecoin protocol will be deployed. A single, ecosystem-wide stablecoin, USDg, simplifies user experience by eliminating the need to choose between multiple stablecoins like DAI, USDC, USDT or less liquid alternatives. USDg has no centralised issuer and will be fully collateralized with a mix of crypto assets and tokenized real-world assets (RWA). Users will interact with a decentralised protocol to mint and redeem USDg, ensuring trust and transparency. By leveraging decentralised collateral, Glue enhances the stability and reliability of USDg, making it a cornerstone of the ecosystem.

2. USDg: Initially, using a third-party stablecoin was considered but it was concluded that none offered the right balance of decentralisation, user yield, and adoption. An ecosystem native stablecoin is crucial for retaining users by providing a stable, reliable asset that can be used across the Glue ecosystem. Given that USDg will be fully collateralized and that Glue tokens will not be allowed as collateral initially, the protocol avoids risks similar to those seen with Terra.

Phase 3: Decentralised Exchange Deployment

1. Incentives for USDg Paired Tokens: The final phase involves deploying the DEX. Incentives will be exclusively for USDg paired tokens (except for USDg pairings with other stablecoins), promoting the stablecoin's adoption and integration within the ecosystem. This strategy ensures that USDg becomes a central element of trading activities, increasing liquidity and trust. By incentivizing liquidity providers to focus on USDg pairs, Glue enhances the depth and stability of the market, making it more attractive for traders and market participants.

2. Concentrated Liquidity Functions: The DEX will use concentrated liquidity functions to minimise slippage and maximise yield for liquidity providers. Although this approach is more complex, it abstracts away the intricacies from retail users, allowing market makers to manage it effectively. Retail users often lack the understanding required to provide liquidity efficiently, even in simpler forms. Concentrated liquidity ensures that capital is used optimally, providing better price stability and reduced slippage for traders. Market makers will play a crucial role in maintaining liquidity, ensuring that the DEX operates smoothly and efficiently.

3. Limit Order Functionality: The DEX will integrate with the routing protocol to offer limit order functionality, minimising slippage. Partial orders can be filled, with market makers arbitraging the remaining volume back to the real price. This feature enhances the trading experience by ensuring more optimal execution prices for users. By supporting limit orders, Glue provides traders with greater control over their transactions, reducing the risk of unfavorable price movements. The routing protocol will dynamically route orders to the most efficient execution paths, ensuring optimal outcomes for all trades.

Integration and Interdependence

The integration of these protocols is designed to create a synergistic and robust ecosystem. The stablecoin will utilise deposits from the lending platform as its collateral, maximising liquidity and ensuring the stability of USDg. This interconnected approach enhances the functionality and reliability of both the lending protocol and the stablecoin, creating a seamless financial environment for users. The integration ensures that liquidity is always available to support the stablecoin, reducing the risk of instability and enhancing user confidence.

All incentivized trading pairs on the DEX will be USDg paired tokens, promoting the stablecoin's utility and adoption. This strategy integrates USDg deeply into the trading activities within the Glue ecosystem, ensuring that it becomes the preferred medium of exchange. By focusing on USDg pairs, Glue ensures that the stablecoin is widely used and accepted, driving liquidity and volume in the DEX.