Repost the original title “Goodbye Sniping? How does Gavel crack the dilemma of token distribution and liquidity guidance?

In the Crypto world, token distribution and liquidity guidance have always been crucial factors determining the success or failure of projects, often accompanied by multiple constraints such as lack of transparency, market manipulation, sniping, and ‘sandwich’ attacks. Currently, most token issuances on Solana adopt the AMM (Automated Market Maker) model. While this mechanism can achieve preliminary price discovery, it has spawned the phenomenon of ‘token sniping’—where robots rapidly buy tokens at a low price ahead of real users, then resell them at a higher price to retail investors.

Gavel is committed to solving these pain points through on-chain mechanisms, bringing a fairer and more efficient token issuance experience to the Web3 ecosystem. This article will provide a detailed introduction to the background and mechanism of Gavel.

What is Gavel?

Gavel is a platform focused on on-chain token distribution and liquidity provision, developed by Ellipsis Labs, launched on Solana on May 20th. Gavel aims to help projects issue tokens at lower costs and in a more transparent manner, while protecting users from malicious activities in the market, such as sandwich attacks and sniper attacks. Gavel also helps guide initial liquidity for tokens and ensures the fairness and security of transactions through its unique anti-sandwich AMM mechanism.

Ellipsis Labs is also the core developer of Solana’s ecosystem limit order book DEX Phoenix, with a total funding amount of 47.3 million US dollars.

In August 2023, Ellipsis Labs completed a $3.3 million seed round of financing, with Electric Capital leading the investment, Robot Ventures and Anagram participating, and angel investors including Anatoly Yakovenko (Toly), co-founder of Solana, Marc Boiron, CEO of Polygon Labs, and Keone Hon, CEO of Monad Labs. The financing is aimed at accelerating the development of innovative DeFi protocols such as Phoenix.

In April and October 2024, Ellipsis Labs completed two rounds of financing. In April, it completed a $20 million Series A financing round led by Paradigm. At the end of October, Ellipsis Labs completed a $21 million financing round led by Haun Ventures, with existing investors Electric Capital, Toly, and Paradigm continuing to participate. This financing is dedicated to accelerating the development of the blockchain Atlas for verifiable finance.

Gavel AMM is the productization of early research work by Ellipsis Labs. At that time, co-founder Jarry Xiao of Ellipsis Labs and@0xShitTraderParadigm partner Frankie and general partner Dan Robinson co-authored “coinA Sandwich-Resistant AMM》，proposed anti-‘sandwich’ AMM (sr-AMM) application layer mitigation measures, extending constant product AMM by enforcing an invariant: no exchange transaction will be executed at a price better than the one at the start of the slot window, thus protecting traders from front-running attacks. This is also what Vitalik Buterin proposed in 2018Anti-Plundering Trading IdeaExtension.

How does the Gavel mechanism work?

The core mechanism of Gavel is divided into the following stages:

Initial Token Distribution: The project party can flexibly choose the Dutch auction, fixed price first-come-first-served, permission mechanism, and other issuance methods. During the open token distribution period, users deposit SOL and receive token distribution at the end of the distribution period. Regardless of the mode used, Gavel ensures that the closing price of public sales is completely consistent with the subsequent AMM opening price, eliminating arbitrage and sniper space from the source. Taking the test token IBRL as an example, 70% of its total supply is distributed through 24-hour public sales, and users can obtain tokens in proportion to the amount of SOL deposited.

Anti-‘Sandwich’ AMM: When the initial allocation period ends, part of the token supply (it is uncertain whether it is the remaining all tokens or part of the tokens) and part of the raised SOL will be deposited into Gavel’s anti-sandwich AMM. The choice of the amount of SOL will ensure that the opening price of the AMM is consistent with the clearing price of the public sale. The anti-sandwich AMM is more suitable for guiding liquidity and promoting early price discovery, while protecting traders from front-running attacks.

Temporary Liquidity Management and Liquidity Withdrawal: AMM is used to guide initial liquidity, not to provide permanent support. When the token trading volume is sufficient, liquidity can be gradually withdrawn to avoid permanent lock-up losses. LPs in Gavel will withdraw a portion of the liquidity on a fixed schedule, convert it into tokens, and then burn the tokens (this schedule is configurable). This design meets the initial liquidity needs, avoids the problem of asset immobilization caused by long-term lock-up, and maintains token value stability through continuous deflation mechanism.

Currently, launching a project on Gavel requires permission. Gavel allows project parties to adjust distribution parameters according to their needs, such as token allocation ratio, distribution mechanism, etc., but participation on the platform does not require permission and is fully managed by on-chain smart contracts.

Practical case: Gavel test Token IBRL

To demonstrate the effectiveness of its mechanism, Gavel has launched a test token IBRL. It is important to note that Gavel states that IBRL is only used to demonstrate the operation of the Gavel protocol and has no practical or future utility. The distribution and fee mechanism are as follows:

• Total supply: 10 billion coins.
• 100% of the raised funds and 100% of the token supply are allocated to the Gavel mechanism.
• Among them, public sale: 7 billion coins are distributed through a 24-hour public sale, and users receive tokens according to the deposit ratio.
• 3/7 of the raised SOL is paired with the remaining 300 million IBRL coins and injected into the AMM to ensure that the initial price is consistent with the public sale clearing price.
• The remaining 4/7 of SOL is purchased and destroyed according to the exponential decay schedule to buy IBRL, with 0.01% of the tokens remaining SOL purchased for every 1000 Solana slots (approximately 6.5 minutes). This process is autonomously managed by on-chain smart contracts.
• The liquidity on AMM also decreases according to an exponential decay schedule. Starting from 7 days after the public sale, 0.01% of the liquidity is withdrawn every 2000 slots (approximately 13 minutes), up to a maximum of 20,000 withdrawals. The withdrawn SOL will be immediately used to directly purchase IBRL, which will then be destroyed. This process is autonomously managed by the on-chain smart contract.
• The team will not retain any IBRL tokens and collected SOL.
• In terms of fees, there are no fees for the initial token distribution. Gavel charges a fee of 30 basis points (0.3%) for AMM exchange transactions.

On the evening of May 21, Gavel ended the IBRL token sale, with 2480 participants contributing a total of 30,747 SOL. The market value of IBRL reached 66 million USD in the early morning of May 22, but currently, it has dropped to around 30 million USD.

Summary

Through innovative mechanism design, Gavel helps project parties raise funds at a low cost, and strives to achieve fair distribution, eliminate sniper opportunities, and create a fair, efficient, and user-friendly token distribution and liquidity guidance ecosystem through liquidity management and token burning mechanisms.

For the project party, Gavel can maximize the efficiency of fundraising, avoid intermediaries from intercepting value; for ordinary users, they can obtain a fair participation channel, free from price exploitation by robots; in addition, all operations are fully on-chain and auditable, which effectively promotes the process of industry transparency.

Statement:

1. This article is reproduced from [Foresight News]，The original title ‘Saying goodbye to sniping? How does Gavel break the dilemma of token distribution and liquidity guidance?’ belongs to the original author [ KarenZ，Foresight News], if you have any objections to the reprint, please contactGate Learn Team, the team will handle it as soon as possible according to the relevant process.
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