Why Gondola? A case study.
So many are asking questions like: “What does Gondola Finance do exactly?” “Why is it good for Zero and the Avalanche (AVAX) defi ecosystem?” And “Is it yet another Avalanche AMM?”
We would like to answer these questions through an illustrative case study.
- You are a heavy BSC DeFi user. But one day, you occasionally entered Olive Cash in AVAX Chain (https://avax.olive.cash/farms) and found that the stablecoin pools there is providing excellent yield (APY: 328%)
2. All of your assets are in BSC. You’ve decided that it’s optimal to sell your BNB into USDT and DAI to participate in the USDT-DAI farm in Olive Cash on the AVAX protocol.
3. You know that ZeroExchange (https://0.exchange) is providing a bridge between BSC and AVAX. Nice! So you go there and sell BNB in ZeroExchange for zDAI and zUSDT.
4. Now let’s transfer our zDAI and zUSDT from BSC to AVAX.
5. Now let’s switch to the AVAX chain. Our zDAI and zUSDT is here! (kudos to the Zero Exchange bridge! Works like magic!)
6. You now go to Olive Cash and try to deposit your zDAI and zUSDT. But wait, our smooth ride has hit a snag — Olive Cash supports DAI and USDT but not zDAI and zUSDT!!! Ugh!! The reason is that multiple bridges exist on Avalanche. The tweet here from Kevin Sekniqi explained this issue. And, different bridges exist & are needed due to differing functionality, security assumptions, etc.
Hence a real need to provide swap services to allow easy asset conversion between different bridge tokens. This is why Gondola was created.
7. Gondola Finance exists to allow you swap your zDAI and zUSDT to DAI and DAI in our app.
Swapping zDAI and zUSDT to DAI and USDT on Gondola is extremely cheap due to the Stableswap algorithm. In this case, we even get a small bonus (~2 USD) due to the pool imbalance!
8. Thank you Gondola Finance –done! All our zDAI and zUSDT is swapped for DAI and USDT at a cheap and reasonable exchange. And now we can go to Olive Cash to farm in the DAI-USDT pool there!!!
I hope this case study helps you understand what Gondola Finance does and why it serves important function for both Zero Exchange and Avalanche. In the future, we plan to expand to other chains such as BSC to support the z-tokens there, and add other bridge assets to Avalanche such as Anyswap.