DeFi Dive 004: Glitch Finance — a scalable layer 1 blockchain to facilitate DeFi money markets

One of the great bottlenecks for Ethereum to reach it’s full potential is scalability. It is clear as day that in its current state it is not able to be the platform facilitating DeFi access to the entire world. The average transaction fee on Ethereum has a cost of above 10–20$ per transaction during 2021 and for most of 2020, which prices out the majority of the global population. Luckily, solutions are being developed to tackle this problem and increase the accessibility to DeFi for the entire world. One of these solutions is called Glitch Protocol, a blockchain developed with a core function of facilitating DeFi money markets.

There are several projects that are working on a scaling solution for Ethereum, however there are various aspects that sets Glitch apart. One of these key elements is that Glitch’s sole purpose is to facilitate decentralised finance; it has been built from the ground up to solve scalability trilemma of DeFi. This means that there are no extra unproductive features on the blockchain that could cause congestion. In addition to that, it is also blockchain agnostic, meaning that it is interoperable with multiple different blockchains. The blockchain agnosticism is another key element, because it enables Glitch to be able to position itself as the hub for DeFi money markets.

These are some of the main components within the Glitch Protocol’s value proposition:

1. High transaction speed

The Glitch blockchain will be able to achieve a minimum speed of 3000 TPS (Transactions per second.) To compare, Ethereum in it’s current state only is able to handle 20TPS.

2. Revenue sharing structure

Glitch encompasses a revenue sharing structure that incentivises developers to build on Glitch, as well as the community through earning passive income by staking GLCH. Users can then use their GLCH dividends on dApps built on the Glitch blockchain, which creates a positive feedback loop.

3. Low transaction fees.

Through the groundbreaking revenue sharing structure, Glitch is able to offer low transaction fees on it’s network.

In recent months, centralised chains such as Binance Smart Chain have been a dominant force in capturing users in those developing countries, especially in Asia, due to the low transaction fees it’s able to offer in comparison to Ethereum. However, there lies a lot of structural problem and concerns with centralised chains like BSC, especially if they grow to be the most adopted chains in the long-run. One of the main reasons why the emergence of crypto and DeFi can have such a profound impact on our financial system lies in it’s decentralisation and how it’s able to give people full control over their finances without the risk of a centralised authority intervening. This trustlessness and control is nullified when using centralised chains, as the potential for centralised intervention exists in these cases.

All in all, the popular blockchains that have been built so far have faced this scalability trilemma that forces projects to choose between what are the most important to them of these three elements:

1. Decentralisation

2. Security

3. Scalability

Glitch has been built solely with the purpose of solving this trilemma, which it does through a few key features. One of those is the revenue sharing structure of Glitch, which I mentioned earlier. 20% of all network fees and dApp revenue are automatically deposited into a vault stored on the blockchain. The revenue sharing model enables proportional transaction fees being charged to each user, which makes the blockchain more scalable and less prone to exorbitant gas fees that we witness on Ethereum during network congestion. Through this model, the network becomes increasingly more scalable as more users make use of it. The shared revenue stored in the vault is distributed to GLCH stakers, after which those stakers are encouraged and incentivised to use their GLCH dividends earned through staking on any of the dApps built on the Glitch blockchain. This creates a positive feedback loop wherein the community and developers are able to support each other.

Portability Ethereum <-> Glitch

On the Glitch blockchain, the ERC-20 token, which we are familiar with as the token standard for Ethereum, will be replaced by the GRC-20 standard. Users register their ETH address with Glitch, then the ERC-20 balance is mirrored in GRC-20 balance once the system creates an initial blockchain snapshot. A developer could simply deploy their smart contract token onto the Glitch blockchain, which would match the token’s supply and distribution, after which users can migrate their tokens from Ethereum onto Glitch.

Token wrapping is also something that is being worked on and will be released later on, which will allow users to integrate other blockchains besides Ethereum onto Glitch.

Delegated Proof of Stake (DPOS)

Glitch utilises a modified Delegated Proof of Stake consensus mechanism, which is widely recognised as the consensus mechanisms for blockchains that can scale and thus support mainstream usage. The consensus mechanism has been adjusted to eliminate the possibility of pooling of control over the Glitch blockchain. It utilises a carousel system, giving stakeholders an equal chance to produce a block, ensuring a network hijack is not possible and thus guarantees fair governance.

The Team

Glitch launched in January without revealing most of the team, only the CTO & Project lead were revealed initially. In the past months they started to roll out additional core team members as well start introducing other members of the team through introductory medium articles.

A passion and dedication for decentralisation can be described as the core ethos of the Glitch team, compiled of individuals that truly understand the importance of it and are dedicated to making the financial system work for all, not just the wealthy & powerful. They understand the potential it has to combat corruption, inflation, as well as give equal access to financial tools to the global population, no matter what their political, social or economic status is. On their medium page, you can find several articles written by the Glitch team that discuss their views on the importance of DeFi from a global perspective.

The core team exists of Sean Ryan, the project lead, has been involved with crypto and DeFi since 2017 and is a serial entrepreneur and has led creation, development and acquisition of multiple SaaS products. Tawana Muchatuta, the COO/CTO, is a chartered engineer with experience in capital projects and operations management at Schweppes Holdings Africa and British Sugar. Rohan Barde as head of Research & Development, who’s had experience in the blockchain space since 2016 as the former R&D manager at Blockchain Zoo. Jason Mcgregor as the CFO, a Certified Financial Planner with 20 years of experience in the financial services industry. Glitch has also recently onboarded Jeff Kirdeikis, founder & CEO of TrustSwap as a strategic marketing advisor.

I wont dive in-depth into the background of each individual within the team, but from a tech perspective the technology lead Sang Duong Van, has an extensive 14 year track-record within software development, with 4 years experience in blockchain technology as the Senior Blockchain Developer at Morpheus Labs. Tạ Bá Trung (Brian) is another key individual from a tech perspective as the lead blockchain developer. Brian has considerable experience as a developer, working for a wide variety of projects including OpenWay, FTP Software, Veloxchain, Unibot, Astranetwork, and Hxr.

It goes without saying that the technology aspect of any legitimate blockchain project is very important, however, branding, community-building, communications, are all also very important within a project for it to become successful. A vast abundance of projects within the blockchain space have great tech, but due to a lack of expertise on how to communicate their technology to the outside world the public never picks up on the potential of that technology. So, in order for a project to truly grow, marketing and community-building are key. This is why Aram Hami was hired as marketing manager. He is the main man behind all the recent marketing initiatives as well as the community-building efforts. Aram has background in social media management and marketing and has built huge communities consisting of over 250,000 individuals within the gaming industry in the past. As many Glitchers would likely confirm, Aram has really been instrumental in the past months in shaping the Glitch community and helping improve the communications of the project.

Tokenomics

Ticker: GLCH

Network: Glitch Blockchain

Total supply: 88,888,888 GLCH

Circulating supply (as of June 27th): 71,558,187 GLCH

Token Type: Utility token

The tokenomics of Glitch are yet another aspect that is very attractive about the project. With over 3/4ths of the circulating supply distributed, all the private and public sale rounds distributed, and currently sitting at a marketcap of around 35 million $, Glitch has potential for massive growth in this bullmarket cycle. When comparing Glitch to other smart contract platforms/ blockchains and their price performance in combination with the technical advantages of Glitch, the potential for a huge financial upside becomes abundantly clear.

Comparison chart GLCH vs ETH / DOT / AVAX

To illustrate the potential of Glitch in terms of valuation, in order to capture half of Avalanche’s marketcap, Glitch would have to grow approximately 6000% in market capitalisation. Given the ambitions and roadmap ahead, this is definitely something that lays within the realm of possibility. It all depends if the team is able meet their roadmap and goals.

Roadmap

Glitch’s roadmap for the upcoming months is huge, and if the team is able to meet the deadlines, it should provide for giant price catalysts during the summer. The next upcoming major milestone is the testnet release, which is scheduled for June 30 (3 days after publishing of this article.) Mainnet is scheduled for July (exact date TBA.) There will also be an updated roadmap released in coordination with testnet release, which will give a more updated picture of the things we can expect within the coming months from Glitch.

Partnerships & Integrations

The list of partnerships & integrations is an impressive one, already securing 2 partnerships/integrations with projects within the top 30 of cryptocurrency projects (Polygon & Chainlink). Whereas many projects choose to partner-up without actual substance backing the partnership (likely for marketing purposes), Sean Ryan has communicated that Glitch is actively searching for purposeful partnerships that are mutually beneficial, and each partnership announcement is accompanied with a medium article of exactly what the partnership entails and why it is beneficial for both projects.

dApps & GEX

One of the flagship dApps that will be launched shortly after mainnet release is the Glitch decentralised exchange; GEX. The GEX is built in collaboration with Orion and enables permissionless peer-to-peer transactions, using the same AMM concept as well-known protocols like Uniswap and Bancor, but with additional key features. The GEX is entirely a not for profit dApp and 100% of the fees earned go into the profit sharing vault, which strengthens the ecosystem as a whole considerably. More revenue being generated on the Glitch blockchain, means more dividends being earned, creating more funds to be avalaible to be used for additional dApps, which will likely incentivise developers further to build on Glitch. The GEX also allows for whale-sized orders without slippage, which could likely drive large players to Glitch when the GEX is better to use for the size of their trades compared to the other AMM alternatives.

In addition to the GEX, several other dApps have already been hinted and announced to being developed. These include an NFT marketplace, a stablecoin, a lending platform, and likely we can expect a lot more various dApps being formally announced in the comings months.

Glitch xBRIDGE

The Glitch xBRIDGE is another key component of the ecosystem, it allows to move tokens across chain in an convenient and easy manner. The xBRIDGE makes it free to move back and forth for short time periods, and it keeps track of the tokens to match the balances as a secondary check against smart contracts. Version 1 of the bridge can be found here.

Glitch Grants

One of the issues of blockchain projects face is how to incentivise developers building on their chain. Because, without developers building on a blockchain, there are no dApps to be utilised, which are needed to be able to attract users. Aside from the revenue sharing and the positive feedback loop it creates, Glitch also launched Glitch Grants, consisting of a total sum of 2,000,000$ to help boost ecosystem development. We’ve seen in the past that grants like these can really help kick-start a blockchain, with polygon as one of the most obvious recent examples. In order for a blockchain not to turn into a ‘ghost chain’, mechanisms are required to be in place that truly encourage and incentivise developers to build innovative dApps on their blockchain.

Links & Resources

Cryptocurrency & DeFi enthusiast. Looking to raise awareness about the potential of Decentralised Finance and help newcomers gain a better understanding of it.