GoGoPool: CoinFund’s Investment Thesis

Thesis

I am thrilled to share that CoinFund has co-led GoGoPool’s $5MM seed funding round! GoGoPool is building the first Avalanche native protocol that is both a decentralized liquid staking network, and a novel coordination mechanism that will allow for the frictionless launch of application specific chains (subnets). Liquid staking is one of the key DeFi lego blocks within crypto today. It solves for the unbonding periods which limit staker liquidity, allowing users to earn staking yields for helping to validate Proof of Stake networks (often approaching 10% APR or more), while maintaining the flexibility to freely trade their AVAX tokens and the composability/connectivity with broader DeFi protocols to amplify yield. As one of the largest PoS blockchains, there is over $5B of AVAX tokens that are currently staked¹. However, less than 2% of staked AVAX has been deposited in the existing nascent liquid staking market². This means that there is $4.9B in the immediate addressable market of currently unserved capital waiting to be unlocked and provided liquidity (and more as the network grows). However, this is just the tip of the iceberg with respect to the market need for which GoGoPool is building. One of the key innovations of Avalanche is its Subnet architecture and the flexibility it affords applications to build use case specific appchains that run on Avalanche’s consensus algorithm. Applications are already beginning to key in on application specific chains within Avalanche as a preferred solution, with DeFi Kingdom and Swimmer Network being two of the first. These two subnets currently process over 1MM transactions per day, and have no impact on main C-chain (Avalanche’s generalized smart contracting layer) transaction fees or speeds. Subnets allow the broader Avalanche network to have infinite horizontal scalability. Subnets also allow applications to eliminate resource contention that often makes transaction speeds and costs unpredictable on generalized smart contracting blockchains, use their own native token as the gas token and fine tune unique application specific token economies, build the base layer flexibly with the requirements of the application in mind, and set specific validator requirements. Subnets are among the most lightweight and accessible options for application builders in crypto. However, while subnets provide many advantages to would be subnet operators, they still face the problem of bootstrapping their validator set and network security. GoGoPool leverages its liquid staking architecture to build a unique coordination mechanism that solves this problem, which in turn has the potential to catalyze exponential growth in Avalanche’s subnet economy.

How Does it Work and What User Need Does GoGoPool Solve?

GoGoPool liquid staking works via the creation of a wrapped proxy asset that represents the token holder’s claim to the underlying staked asset. This wrapped proxy asset can then be freely transferred between addresses, traded on DEXs, and deposited within DeFi protocols. In this respect, GoGoPool liquid staked tokens will function similarly to other existing liquid staking tokens, but with a few key points of differentiation.

For users, when they deposit AVAX, it gets delegated to a GoGoPool validator and in exchange the user receives ggAVAX (liquid staking derivative token). The staking yield accrues to the derivative token via an increasing exchange rate (similar to many “x” tokens in DeFi) vs. a rebasing model (where rewards are sent to the user’s wallet) providing a superior user experience. In addition, GoGoPool users have the opportunity to earn additional yield in the form of GGP tokens received from participating in the ecosystem, which when staked can further boost yields. The GGP token’s role within the network, and the coordination role it plays with validators and subnet operators, also means that the protocol does not take any fees.

For GoGoPool validators, they need only stake a minimum of 1000 AVAX tokens (vs. the typical Avalanche Primary network requirement of 2000 AVAX), and the equivalent value of 100 AVAX tokens in the form of GGP tokens (as slashing collateral for any validator downtime).The GoGoPool network then matches validators with 1000 AVAX from liquid stakers to meet the P Chain validator requirement of 2000 AVAX. Validators dynamically set fee levels and staking duration (anywhere from 2 weeks to over 1 year; yields are higher with increased bonding duration). Validators earn rewards in both AVAX and GGP, and can restake GGP rewards to boost their AVAX yields through delegation.

For subnet operators, they have a network of validators at the ready to provide network security (i.e., the existing GoGoPool AVAX liquid staking validators). Currently, for new subnets looking to bootstrap their validator set for launch, finding outside validators (i.e., those already validating the Avalanche P-chain), becomes a maze of Discord direct messages and intense and protracted business development work. GoGoPool solves this problem by building a dedicated validator community for subnet operators. Since validator nodes can validate both the P-Chain and additional subnets at the same time, GoGoPool connects existing validators from its liquid staking network with subnets needing validators. This has the added benefit for validators and liquid stakers of the additional staking yields earned from providing security to the subnet. Subnet operators need a community and rich plugin ecosystem to create and grow their subnets. GGP becomes a centrifuge for subnets and validator node operators, making it much easier for subnet operators to pick up validator nodes as they start the decentralization process.

The Team

The GoGoPool team, led by co-founders Steven Gates and JohnnyGault, are exceptional. They are laser focused, ship non-stop, have incredible attention to detail, and have already contributed to meaningful advancements in the Avalanche ecosystem (most notably, the first MPC cross-chain TSS wallet). They are truly mission driven in their vision to build both the best liquid staking solution for Avalanche token holders and validators, and a highly coordinated and incentivized plug and play validator community for subnet operators that makes it as simple as possible for subnet builders to bootstrap network security. All of this has the potential to drive rapid growth in capital available within DeFi and spark an explosion of new application specific chains. CoinFund is incredibly excited to be working side by side with this exceptional team as they deliver this critical blockchain infrastructure to the Avalanche ecosystem!

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