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Alpha Opportunity: Understanding GoGoPool Investment Blueprint

Alpha Opportunity: Understanding GoGoPool Investment Blueprint

GoGoPool is a permissionless staking protocol on Avalanche combining liquid staking, decentralisation hardware, and subnet compatibility. Its mission is simple: accelerate the Avalanche subnet economy by giving DeFi users the most secure and easiest access to liquid staking while enhancing the security and decentralisation of subnets.

Ultimately, Gogopool believes in the future of Avalanche and aims to redefine how users build, manage, and interact with subnets on this blockchain. In their words: “We make subnets easy.”

The Market Opportunity for Gogopool

Liquid staking: A DeFi Cornerstone

In conventional crypto staking products, deposits are locked on a platform and cannot be used for other purposes. However, the apparition of liquid staking changed this status quo in DeFi. 

For the first time, liquid staking allowed users to deposit their assets and receive instant liquidity in the form of a synthetic token representing a claim on their staked asset. These assets could then be traded for other assets or used in other DeFi protocols to earn additional yields. In that sense, liquid staking solved liquidity challenges associated with traditional staking protocol.

Liquid staking: A DeFi Cornerstone

Liquid staking has been really popular on the Ethereum blockchain. In the last year, Total Value Locked (TVL) across decentralised protocols built on top of liquid staking (LSDFi) grew at a rate of over 5,800% and reached a TVL of around $920 million.

Top 10 LSDfi protocol TVL

As of September 2023, more than 25M ETH is staked, representing ~21% of the circulating supply, while about 45% of that staked ETH supply is deposited into liquid staking protocols.

ETH liquid staking ratio
Source: Defillama

On the other hand, if we look at the Avalanche blockchain, we note that around 58% of the token supply is being stacked, which is more than double that of Ethereum. However, liquid staking is still new and has not gained significant market share yet. Currently, only around 3.6% of the total stacked supply is held in liquid staking protocols.

Avalanche liquid staking ratio
Source: Defillama

GoGoPool Market Potential is significant

The total addressable market for GoGoPool is significant, with over $4.5 billion in AVAX tokens staked and less than 3.6% of these in the nascent liquid staking market. Assuming that liquid staking on Avalanche will follow the Ethereum adoption path, this presents a market opportunity of approximately $2.025 billion in unserved capital, implying a  growth of 1,125% (11.25x) yet to be exploited.

Liquid staking
Source: Defillama

GoGoPool is well positioned to leverage Avalanche's subnet architecture and benefits from the expected growth in liquid staking on this vibrant and dynamic blockchain.

A Unique Value Proposition

GoGoPool aims to make deploying subnets easy, seamless and efficient by reducing subnets development costs, enhancing security and decentralisation and helping reward the community better.

Reducing the cost barrier for subnets development

Launching a new validator node through GoGoPool, called a Minipool, requires developers to supply their hardware and stake only 1000 AVAX, plus 100 AVAX worth of GGP tokens. This is significantly lower than the standard requirement of 2000 AVAX.

Enhancing security and decentralisation

Minipools are non-custodial. This implies that each node operator retains full ownership of their validator and may use it to validate Subnets. This feature is crucial to ensure the protocol is as decentralised and trustless as possible.

Better reward the community

When using GoGoPool to liquid-stake AVAX, users receive the ggAVAX token representing their staked AVAX plus any rewards accrued in real time. Users are then able to sell, hold or spend ggAVAX. Simply put, ggAVAX can be used in the same way as AVAX in different DeFi protocols. 

Token and Utility

GGAVAX

ggAVAX is GoGoPool’s synthetic derivative of AVAX. It represents the staker’s deposit plus the rewards it gains over time.

This token is liquid and can be used for diverse reasons:

  • Accrue staking rewards
  • Sell and trade it
  • Earn additional yield by lending it or providing liquidity (e.g. on a ggAVAX / AVAX pair)

If there is floating AVAX in the deposit pool, users will be able to exchange ggAVAX back for AVAX (which burns the ggAVAX and draws AVAX from the deposit pool). Alternatively, they will have the option to exchange it for any token they would like on different exchanges that list the token.

GGP

GGP is an ERC20 token with a maximum supply of 22.5 million.

It serves as the protocol token for GoGoPool, where node Operators have to stake a minimum amount of GGP tokens to secure their assigned staking funds as insurance for good behaviour. GGP token holders will have the ability to participate in the GoGoPool Protocol DAO, which allows members to propose and vote on a range of governance issues.

GGP Tokenomics

The vesting schedule is as follows:

Vesting schedule

Team and Investors

Under the guidance of co-founders Steven Gates and JohnnyGault, GoGoPool has managed to raise money from notable investors such as Framework Ventures, Coinfund, Avalaunch, and Republic Capital.

GoGoPool team
GoGoPool partners

Key takeaways

  • Liquid staking is still nascent on Avalanche. It still has a lot of room for growth. The market opportunity for Gogopool is substantial, with over $2 billion in unserved capital.
  • Gogopool is backed by a strong team of experienced entrepreneurs as well as notable investors. This increases confidence in the proper and successful expansion plan of this project.
  • Gogopool is uniquely positioned to empower the growing subnets ecosystem of Avalanche. It aims to reduce the development costs for subnets, enhance security and decentralisation, and allow users to liquid-stake their tokens safely and easily.

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