G-UNI Multiply is a feature that allows you to earn Uniswap V3 trading fees with your Dai. G-UNIV3DAIUSDC is a collateral type that represents a fungible version of a Uniswap V3 DAI/USDC position trading in a very tight range. Using this as collateral to generate DAI users can multiply their position allowing them to collect the fees earned from being a liquidity provider in Uniswap V3 with high capital efficiency.
How does it work?
The G-UNI DAI/USDC LP pair is a collateral in the Maker Protocol that’s a ECR20 tokenization of a Uniswap V3 position. Arrakis Finance (formerly Gelato.network) has created a wrapped version of Uniswap V3 positions, where they make sure to reinvest the earned fees. GUNIV3DAIUSDC is the name of the Vault of a Uniswap V3 position that provides liquidity for DAI and USDC at fixed spread.
GUNIV3DAIUSDC-A represents a Uniswap V3 position with a spread of 0.9994 - 1.0014 at a 0.05% fee. This pair information can be found here:
GUNIV3DAIUSDC2-A represents a Uniswap V3 position with a spread of 0.9998 - 1.0002 at a 0.01% fee. This pair information can be found here:
Oasis.app Multiply takes this collateral and uses it to generate Dai up to the maximum collateralization ratio possible to collect the most fees from trading activity. Each G-UNI Vault has a different collateralization ratio and stability fee. However these values are low allowing users to deposit Dai in their prefered G-UNI Vault and with just one transaction they get up to 50x multiple to collect up to 50x trading fees depending on the Vault chosen.
For example for a user starting with 50,000 Dai, the following will happen under the hood:
- Around 2.5 million Dai will be borrowed from the maker Flash Mint module
- A portion of this loan will be traded for USDC using Maker PSM
- Both Dai and USDC will be deposited into Arrakis Uniswap v3 DAIUSDC
- The LP tokens obtained will be locked as collateral in a Vault, and will be used to generate enough Dai to repay the flash loan amount.
Afterwards in case users decide to close their Vault they will get the option to do the inverse process and payback all debt selling collateral to get back the Dai amount deposited and the collected fees minus the stability fees paid.
Differences with standard Vaults
Unlike standard borrow Vaults G-UNI doesn’t offer the option to generate Dai or withdraw collateral since it’s meant as a position to maximize fees collected from Uniswap V3. As such the only available options for G-UNI Vault are to deposit Dai and multiply to the maximum possible amount and to close such a position back to Dai.
Like all financial activities this position carries certain risks. Contracts for both the G-UNI collateral and multiply have been audited and reviewed by the teams working at Oasis and the Maker protocol.
Collected fees from the Uniswap V3 position depend entirely on the volume that passes through that pool and as such is a variable return that’s reliant on market conditions and the ratio between liquidity and volume of the pool. Profit and loss will be shown in the Vault screen but users will need to monitor their position to be sure that the rate of return exceeds the stability fee paid. Oasis.app Multiply charges a 0.04% fee on all swaps for stablecoin Vaults and G-UNI Multiply requires 2 swaps, one for setting up the Vault position and one for closing, the closing fee is waived at the moment. Gas costs for the Ethereum network apply as usual and need to be taken into account too.
Liquidations for this Vault have been disabled by the Maker protocol for now so Vaults won’t be liquidated in case they become undercollateralized. That liquidations are disable at the moment should not be taken as a guarantee since the Maker protocol could decide to enable liquidations, users should still monitor their positions to ensure the growth of the collateral exceeds the growth of the debt thanks to Uniswap V3 fee collection.