What is Gelato Network?
Many DeFi protocols rely on a network of bots. For example, lending protocols like Aave and Compound rely on bots to liquidate borrowing positions whose collateral goes below the liquidation threshold. But it takes a lot of time for developers to monitor and maintain these bots. If the bots of a protocol are only run by the developers of the protocol, then the protocol is becoming too centralized, ending up a central point of failure.
To solve this decentralization problem, DeFi protocols provide incentives so that many other actors run bots and perform liquidations to maintain the system. But each DeFi protocol runs its own separate bot system, which leads to inefficiencies and higher costs. Gelato Network was created to solve this problem!
Gelato is an automation network for smart contracts that allows you to automatically execute transactions under certain conditions. It can be used to DeFi protocols but also by traders for their own trading strategies.
The protocol provides a plug-and-play automation network that anyone can use to run bots and automatically execute transactions. You heard it well, Gelato doesn't require KYC and it's open-source. Whether you are a DeFi developer or a DeFi wizard, you can gain access to the same Gelato architecture which is responsible for ensuring that tasks are executed correctly and efficiently.
The decision to run open-source is by all means a feature. As more protocols start using Gelato, the costs can be reduced and the market becomes more efficient. Gelato Network also has its own token called GEL. Token holders can collectively participate in the Gelato DAO governance and influence the direction of the protocol.
The control of the bots will thus be distributed to the Dapps and developers that are using Gelato the most by overseeing the protocol and influencing the decisions within the infrastructure of the network. The infrastructure is designed to extract as much value out of the system to ensure that they continue to operate in the best interests of the end-user.
Launched in 2020, Gelato Network was never hacked. There was, however, an incident with their token sale. Someone managed to hack the token sale and buy about a third of the circulating supply. Although the sale had KYC, it didn't stop the attacker from getting ahold of many different identities, and use them for his nefarious purposes. The attacker managed to sell a portion of the GEL tokens at a huge profit. To this day, there are no details as to how many tokens does the attacker hold.
On a brighter note, the protocol itself has never been hacked. The Gelato team collaborated with a group of whitehat hackers to retrieve $27M at risk on their side protocol, Sorbet Finance. No user funds have been at risk.
On Gelato, the biggest risk is if you don't know how to program your bot. As it goes in coding, mistakes happen because the programmer coded something wrong – the machine just executed it. Which is why Gelato is better suited for developers with knowledge about Solidity. For the sake of our less technical readers, we will explain how Gelato works in simple terms before going into details.
How does Gelato Network work?
In essence, the Gelato Network continuously checks if the conditions you have set have been met and then proceeds to take the action you have instructed the it to do. In the world of smart contracts, taking an action means sending a transaction.
Gelato consists of a network of relay servers that are incentivized to execute certain tasks for the users of your Dapp. These relay servers are also called network Executors. An Executor is paid by the provider in ETH in exchange for running their automation infrastructure.
There are two kind of providers: external providers and self-providers. External providers pay the executors on behalf of the Dapp user. This improves the user experience massively as it doesn't ask of the user to deposit ETH on Gelato. Self-providers are the users themselves – they pay the executors directly and have to deposit ETH on Gelato before they can use it.
Let's resume the workflow: when you set up an automation it's going to emit an event in the smart contract. The executors will pick up on the event and start to monitor the trigger of the automation. It could be a price target or any other condition you set. Every time the event is triggered i.e. a price action, the executor will send a transaction to the target smart contract. The three main triggers can be: at a time interval, at every block, or through a smart contract.
With thousands of queries, there is a possibility that executors start to compete with each other over which action gets executed first. This is how front-running happens. To avoid executors competing each other in expensive gas wars, Gelato Network employs a coordination mechanism that comes at a fraction of the cost to miners and avoids racing conditions and winner-takes-all games.
Gelato currently works with a set of whitelisted partners who provide Executor services. A core aim for Gelato is to further decentralize and enable anyone with the right resources to become an Executor. Executors will be required to stake a GEL tokens to become an Executor - creating accountability and incentivizing them to act in the best interests of the user and protocol.
How to make money on Gelato Network?
If you've made it this far, you want your own bot really bad. Your curiosity will be satisfied all the way as we explain how to create your own Gelato bot 🤖
For the less technical folks, we have you covered as well. Gelato created simpler instances of their bots that are as easy to use as doing a swap on Aave. At the end of the day, creating a bot takes some effort, but hey, you do it only once, that's the idea of automation!
What you can do with your own Gelato bot is limited by the imagination. For example, you can create a bot that automatically does DCA for you, run your own liquidation bot on DeFi lending protocols. You can create a bot that automatically pays the salaries for your own DAO, and the examples keep coming.
Gelato Network Automate
As a developer, you can take full advantage of Gelato to create your own bot. There's only so much a single person can do manually in DeFi, and the benefit of automation can maximize your profits in a way which wasn't possible before. You can even create your own bot to front-run others on trading opportunities. All power lies in the way you program the bot.
First off, what tasks can be automated? Gelato bots work best with functions which are usually called by the development team or external keepers, not "user facing" functions called by users directly. Luckily, the majority of these functions are being used.
The basic steps to create your Gelato bot are as follows:
1. Find out the smart contract address and the function you would want to automate
2. Tell Gelato exactly when do you want your function to be called
3. Define your payment method for the executor
4. Submit your task
Even if you are a power DeFi user, creating your bot from scratch can be difficult at first. This is why Gelato has created an interactive example where they guide you step by step to the creation of your own bot. Go check out their tutorial!
Some of the most popular tasks such as yield vault harvesting or rewards payout have been coded into a template that you can use for your own needs. To make the best our of Gelato, better start learning Solidity!
Price Prediction for Gelato Network — Can it hit $1000?
Buying and hodling GEL — the native token of Gelato — is one way of potentially making money on Gelato.
By looking at its current price, it’s natural to think about the chance of GEL hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the GEL token by analyzing its tokenomics. GEL’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} GEL tokens being in circulation today, that means a price of {PRICE} per GEL.
How did we come to that calculation? It’s quite easy, the price of a GEL token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each GEL coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of GEL at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for GEL to hit that price.
At a price of $1000 per token, that means the current market cap of GEL would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. GEL’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} GEL which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of GEL? Taking into account the current price of a GEL token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. GEL coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a GEL token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the GEL protocol fully diluted market cap.
These are all crucial details to know when calculating if GEL can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of GEL depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some GEL to your portfolio, the most trusted places to get some are Binance and Coinbase.