We can often get ahead of ourselves in crypto. It’s one thing for us apes (addicts) to spend every waking minute exploring the far corners of DeFi, use unfriendly protocols, pay ridiculous fees, and wait forever for a transaction to process, but that simply won’t cut it in the real world.
Smart contracts come with the promise of a permissionless world, where users from anywhere at any time can interact with an open financial system. While that all sounds great in theory, in practice the user experience still has a very long way to go before your neighbour, parents and all your friends can use it.
And if we non-technical plebs have to suffer through this UX when looking to earn yields or flip a monkey JPEG for ridiculous sums of money, imagine what the developers of those contracts have to deal with.
In this article, we’ll look into each of Gelato’s innovative solutions that address these key issues, and how they’re leading the way to create an efficient, interconnected, and decentralized future.
What is Gelato?
Gelato is web3’s decentralized backend, enabling developers to create advanced smart contracts that are automated, gas-efficient, and capable of operating off-chain.
That’s all great but what does it mean?
In essence, Gelato’s technology is crucial to the daily operations in web3. The industry would not be operating in its current form without the Gelato integrations that you unknowingly use nearly every single day.
Top web3 projects depend on Gelato to facilitate the execution of millions of transactions throughout DeFi, NFT, and gaming ecosystems. So if you’ve ever used AAVE, Sushiswap, Abracadabra, MakerDAO, and Beefy Finance (to name but a few), you’ve unknowingly interacted with Gelato’s tech!
This is just 1 page of protocols that currently use Gelato which can be found here: https://gelato-network.notion.site/Gelato-Ecosystem-6706d2a6134d485995484f6ce77dfddb
Gelato supports most EVM-compatible blockchains, including Ethereum, Arbitrum, Optimism, Polygon, BNB Chain and more. Their main services, Automate, Relay, and web3 Functions automate smart contract executions, give users access to fast and reliable gasless transactions, and connect web3 to the outside world (more on that later).
Since its inception in late 2021, Gelato has seen a surge in adoption by leading web3 projects, resulting in the project cornering a 78% market share in decentralized smart contract automation. Gelato’s mission is to accelerate the adoption of web3 by building the infrastructure that enables developers to create augmented smart contracts that are automated, gasless, and off-chain without sacrificing the core tenets of the industry.
With use cases spanning across areas such as: yield farming, oracles, gaming, NFTs, derivatives, bridges (basically anything you can think of), Gelato has established itself as a vital piece of infrastructure that serves as a leading catalyst to onboard millions of users to crypto and web3.
Tools and Services
Gelato offers a suite of tools that allow any developer to get up and running with low effort. Their comprehensive documentation, tutorials, and how-to guides let beginner and advanced builders alike hit the ground running to get the most out of Gelato’s features and learn more about web3 in general. Below we will take a look at their core offerings and some newer products.
There are three key issues are holding this space back and driving developers mad:
- The inability to self-execute smart contracts
- Expensive gas fees
- Bringing useful real-world data on-chain is a pain
Let’s take a look at each of these a little more in detail –
Automate: Self-executable Smart Contracts.
Despite being a cornerstone to most blockchains by providing trustless and programmable transactions; smart contracts are in fact… pretty dumb. But that doesn’t quite have the same ring to it, does it? Smart contracts still require a third party to execute and forget about trying to create a multi-step complex process that is automated. In its current form, the solution to this is to use bots.
Another issue is that building and maintaining bots requires a lot of effort and capital. Developers shouldn’t be hamstrung having to deal with this and users shouldn’t have to deal with a terrible user experience. After all, we can forget about the claims of real-world adoption, if the tooling to create next-gen apps simply isn’t available or is too cost-inefficient to do so.
However, Gelato’s Automate tackles this challenge by enabling developers to create automated workflows for their smart contracts through affordable solutions. Bots are commonplace in crypto and provide an accessible user experience if used properly.
We are currently rolling out the new blocmates.com site and even an idiot like me knows how to create an automated process through tools like Zapier. For smart contract developers, something akin to Zapier needs to be available. This is a tangible way for you to imagine Gelato’s Automate.
Gelato’s Automate service provides an effortless solution for users to configure and oversee their smart contract automation through an intuitive, accessible app.
Automation tasks can be submitted through three different channels based on preference: a dedicated UI, SDK, and/or smart contract.
For individuals and teams looking to automate a smart contract, they’ll need to follow these four steps:
- Identify the smart contract address and function to automate, ensuring that it is compatible with Gelato’s capabilities
- Define the condition for when the function should be executed
- Choose the preferred payment method
- Submit the task using one of the available methods
Additionally, Automate offers an alert service that allows you to receive notifications about your task executions, issues, or low balances.
With Gelato Automate, users can speed up transactions and experiences by more efficiently working with smart contracts. Some use cases for Automate include yield vault harvesting and rewards payouts.
For example, this allows users to claim yield rewards and redeposit them back into a pool without manual effort. If anyone has used Beefy Finance, their auto-compound function works like this. In the early days of BSC yields were eaten into as the Beefy contracts would have to do each step manually and as you can imagine, this was pretty expensive. With Gelato implementation, everyone wins!
Relay: High Gas Fees Solution
Another pain point in crypto is the burden of gas fees. There were points during 2021 when I paid several hundred dollars for a transaction on ETH to buy a JPEG or make a swap (I did mention I am an idiot) or even claim from a vault. It even got to the point where I would wait a whole month to claim weekly rewards because the gas fee would take up most of the yield!
So, what is the solution? Gelato has introduced Relay to enable gasless transactions… Gotta get me some of those.
By leveraging a Relay system, Gelato allows developers and users to execute transactions without having to pay gas fees directly. Relay submits all your transactions for you and then allows you to submit and validate the transaction when you are ready even without a gas token balance!
Note: The transaction still needs to be paid i.e. the transaction in a non-gas token can/will be used or a project can sponsor this transaction to subsidise the cost!
The incredible imagery across the Gelato site explains this beautifully:
More info: https://www.gelato.network/relay
In web3 transactions, users sign and send transactions using their private keys and pay gas fees for each in the network’s native token i.e. ETH on Ethereum. This can be a challenge when onboarding new users, as they need to purchase native tokens from a CEX for a given chain, pay the fees to bridge and then perform whatever transaction they set out to do. In turn, relayers solve this issue by sending transactions on behalf of users.
A relayer is a third-party service that helps users send transactions without needing to have a balance of the native token. This makes it easier for new users to interact with dApps, abstracting the gas payment away. They only need to sign a message, which is passed on to the relayer to send the transaction. Gelato Relay takes a user’s message off-chain and executes it on-chain. A developer can even cover the costs of the transaction as a subsidy if they choose to do so.
For more details on implementing Relay into your apps or if you are just generally curious, check out Gelato’s documentation for all of the details.
Web3 Functions: How to Connect the Off-Chain World to the On-chain World.
Finally, a major limitation of the current state of web3 is its isolation from external data and systems. By design, blockchains are secure and decentralized, but this also makes it challenging for them to communicate with and utilize information from the outside world.
Web3 Functions is an ambitious new product from Gelato that allows developers to run decentralized cloud functions, similar to those on AWS and Google Cloud. They allow developers to perform transactions on the blockchain, based on information that’s stored off the blockchain (from APIs or subgraphs). Users create these functions using Typescript and then store them on a decentralized storage system called IPFS. These functions are then executed by the Gelato Network.
What kind of real-world data does an application need?
Well, the most basic example of this would be price feeds. If we use a perps DEX for example which allows people to leverage trade assets on-chain. They need to rely on off-chain pricing from centralized exchanges to figure out things like funding rates, liquidation prices and current spot prices of assets in relation to the DEX.
Usually a collection (aggregated) price of centralized exchanges, for say ETH, will be fed back to the DEX and then used to calculate the above. The DEX needs to ensure that the prices fed to the exchange are not spoofed which could result in mass liquidations or even CEX: DEX price manipulation by bad actors.
An even more tangible solution for the normies is a music streaming service (bear with me)…
Imagine one day Spotify introduces a fee-sharing model with its publishers in crypto. I mean in an idyllic world they could subsidize the $0.003/play they currently give their creators with a Spotify token, but that is another story.
Data from the streams/plays could be then fed to Gelato, which could then trigger a periodic payment based on how much a song was played. It could even do it per stream and not have to be monthly like the current situation is.
Note: This is simply an example of bridging off-chain data to make on-chain decisions. Do not quote me saying Spotify is teaming up with Gelato (or do I don’t care)
Web3 Functions are currently available today in private beta on most major EVM networks. The application process is available here.
This is a big one that soon, everyone will be talking about. The Ethereum developer community has been extremely excited about Account Abstraction (AA) and EIP-4337 for the past year or so and it will soon be a reality.
A Quick TLDR:
AA in our opinion will be one of the pivotal steps towards increasing the chances of major adoption in the crypto space. Users can sign in with traditional methods such as Google sign-in, enable social recovery to regain access to “lost” keys, submit bulk transactions, have gasless fees, allow others to manage funds under specific instructions and much more. This is one of the major advances in normalizing crypto wallets for the everyday person.
The Gelato and Gnosis partnership is poised to be one of the main players in this next step in crypto adoption. They are already building the infrastructure on the eagerly anticipated Coinbase L2: Base.
A Gasless Wallet is a tool that lets users deploy their own smart contract wallet with the same address across EVM-compatible networks, allowing for predictable contract address pre-deployment.
Architecture, Tokenomics, and Governance
At its core, Gelato is designed with the value systems of crypto in mind. Efforts for decentralization, without compromising scalability, are delicately aligned so that its tools make for a critical foundation of web3 infrastructure. Putting it more bluntly, this space would be screwed without Gelato.
A key feature of Gelato is its decentralized architecture, which is built upon a network of node operators responsible for running its services. The elimination of centralized points of failure is a crucial aspect to its architecture, offering advantages in terms of security, trust, and overall system robustness.
This distributed approach ensures that multiple nodes execute the backend logic on behalf of projects and protocols. One of the primary benefits of having multiple node operators is to create redundancy within the system. This ensures that if one node goes down or encounters a problem, other nodes can seamlessly take over its tasks. A distributed node network mitigates risks, ensuring a higher level of uptime even in the face of unexpected disruptions or outages.
Likewise, Gelato’s architecture removes any centralized points of failure. The distributed approach guarantees that no single entity can shut down a project, with the network better equipped to withstand attacks, manipulations, or shutdowns. Users can be confident that Gelato’s services are not controlled by a single entity and that transactions remain secure and unbiased.
Be on the lookout for an update to Gelato’s architecture as the team expands its capabilities to ensure its services are put to good use!
Tokenomics of the GEL Token
Gelato had a GEL token sale in September 2021 on Ethereum Mainnet. The total initial supply of GEL is 420,690,000 (lmao), with a Public Sale Token Allocation of 16,827,600 (4% of the total initial supply).
The method of sale was first come, first serve, and the accepted payment was ETH. Gelato self-hosted the sale, with an initial circulating market cap of $2,900,000 and FDV of $125,000,000. Some Seed round investors included Gnosis, Galaxy Digital, and IOSG, among others.
50% of the tokens are allocated for community development, which will be periodically used to incentivize new participants to join and help grow the ecosystem. The funds from the public sale were used to finance ongoing expenses for human resources, legal, business, marketing, and software and infrastructure development to develop Gelato as a platform that rewards its contributors in the short and long term. Gelato has since raised an $11m Series A from some industry titans including Dragonfly Capital, ParaFi, Nascent and Stani from AAVE.
Gelato was meant to be owned and driven by its community from the start. To accomplish this, the Gelato DAO was created, powered by GEL. This token is the central focal point for all stakeholders and serves as an alignment among the protocol’s participants. Token holders can voice their support for or opposition to proposals within the Gelato DAO.
The governance proposal process for Gelato Network starts by creating a thread on the Gelato Forum where users can discuss and provide feedback on the proposed upgrade. The thread should follow the Proposal Template found in the Governance category, and a poll should accompany it to measure community sentiment. The poll remains active for approximately five days, and the proposal must reach a relative majority of votes on the Forum Poll to officially pass the Initial Phase and proceed to off-chain Governance Voting on Snapshot.
During the second phase, a proposal is created on Snapshot for off-chain governance voting. To vote, users can find the poll in the list of active proposals within Snapshot and vote. The voting period is usually at least three days with a weight based on the amount of GEL tokens held in a given wallet.
To date, there have been several passed and vetoed proposals, with topics such as investor vestings, new integrations, and community grants.
In a nutshell, Gelato is a foundational set of services that will help onboard the next billion users to web3. With their Automate and Relay services to do all the heavy lifting and make things reliable, scalable, and decentralized. It’s no surprise they’ve got a ton of popular protocols using their services.
The Account Abstraction narrative is already heating up and when people get to use it, this will inevitably be a game changer. We here at blocmates are keeping a very close eye on how this area of the space develops as it is something extremely aligned with our own mission to try and make this space accessible to as many people as physically possible.
Now, enough of this Gelato talk, I need some of the real stuff!