Shell is Dead, Long Live Shell!

A letter from Kenny on the future of Shell.

I keep hearing that Shell is dead, or soon will be. In a way, they are right. The Shell you know, Old Shell, will soon be a thing of the past. In its place, New Shell will arise.

Old Shell was born in the warm, halcyon days of DeFi summer.

New Shell is a child of the cold, lean days of DeFi winter.

Old Shell was tentative and experimental.

New Shell is confident and polished.

We know of Old Shell as Shell v2, and New Shell as Shell v3. What is Shell v3? Before we discuss that, let's examine what has led to the demise of Shell v2.

Shell v2 is a promising technology with a lot of potential. By reimagining smart contract architecture, Shell v2 transformed siloed, fragmented DeFi protocols into modular, composable DeFi primitives.

However, in a system obeying the logic of capital, a promising technology is insufficient. We must also create a compelling product, something that creates value for people, that they love and will keep using.

Shell v2 is not that.

What are its limitations? Shell v2 cannot integrate with existing protocols. In order to be useful, Old Shell must attract its own liquidity, build its own primitives, and generally compete against all of DeFi. That leads to a chicken vs. egg problem. In order to be useful, Shell must attract users to grow its ecosystem. But how can it attract users if it isn’t useful?

This is the trap we are stuck in right now. How can we compete?

As they say, if you can’t beat them, join them.

Unlike Shell v2, Shell v3 can integrate with existing primitives. Shell v3 will enable adapter primitives that wrap siloed DeFi protocols like Uniswap, OpenSea and Aave into modular Shell primitives.

Alice wants to migrate her liquidity from Uniswap to Curve. With Shell v3, that's as simple as swapping from one token to the other.

Anything and everything can and will be connected to Shell Protocol, and receive all the benefits of modularity and composability. Here’s how we are going to build it.

Stage 0: $SHELL TGE in December 2023. Having a liquid token and a decentralized, independent DAO will lay the foundation for taking the Shell ecosystem to the next level.

Stage 1: Modify core protocol (Ocean) to support adapter primitives. This will ship in December, at the same time as TGE.

Stage 2: Integrate Shell smart contracts and dapp with major DeFi protocols. Shell users will have access to all the major aspects of DeFi in one place. Shell will become, in effect, the frontend of DeFi. This will be completed during Q1, ‘24.

Stage 3: Implement Shell intents. Intents are the future of web3, a system where users simply specify what they want to accomplish, not how to accomplish it. Intents will lead to gasless, MEV-resistant transactions. When we combine stages 2 and 3, all of DeFi will become intent-enabled. The Shell intents MVP will be ready to ship in Q2, ‘24.

Stage 4: Integrate cross-chain bridge primitives into the core protocol. Shell users will have access to any protocol on any chain, all through the Shell dapp. Perfecting the UX will take a few iterations, but once complete, users will not need to worry about which chain they are using.

In the short term, between now and TGE, we have quite a lot to look forward to as well. Season Three, after all, begins October 19. For Season Three, pools will have dynamic multipliers, which were already beta-tested on Toucans. Crab holders will be able to vote on setting the Shell Point ‘gauges,’ to borrow language from Curve, in preparation for post-TGE governance.

More Evolving Proteus pools will launch as well. The recent $COLLAB pool launch was a success, opening the door to future Evolving Proteus pool deployments. The ETH+USD pool will be converted from Static Proteus to Evolving Proteus so the liquidity concentration can update over time to better track the market. We expect this to greatly improve swap competitiveness for v2. If we combine Evolving Proteus with an NFT fractionalizer, we can create NFT liquidity bootstrapping pools (LBPs). This use case will be tested by launching a new NFT collection that integrates with existing Bro Kwon’s Booty items (alpha leak!).

There has been considerable community discussion regarding the plan for linear vesting of $SHELL tokens post-TGE. Once Season Three begins and the Season Two participants have had a chance to collect their $CRAB tokens, there will be a vote on what percent, if any, of $SHELL should vest early. More information on this will be provided once Season Two Crabs are available.

A lot has changed for Shell Protocol, but one thing that has remained constant is our vision. Shell aspires to usher in the Internet Monetary System, a form of money that transcends geographic and national boundaries, connecting people across planet Earth.

In ancient days, shells were the first global currency, integrating civilizations as far apart as Asia, Africa and the Middle East. Within the next year, Shell will connect all of DeFi together, and this ecosystem will be accessible to anyone with access to the internet. By bringing protocols and people together, Shell will truly bring about the age of Internet Money.

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