A Flock of Toucans
2022 has been a year of milestones for Shell Protocol. In February, we released the Ocean white paper and open-sourced its GitHub repository. In April we released Government Toucans, which has become the most popular NFT collection on Arbitrum. With the toucans, over 45,000 new wallets joined the Shell ecosystem. These users were welcomed with aloha into the community and immediately became a part of its fabric.
Since the days after the mint, the floor price of the collection has 4x’d. By our estimates, 3.5% of all Arbitrum wallets were created to mint toucans. April 1st, the toucan launch date, saw the largest twenty-four hour increase in Arbitrum users since the L2’s initial launch.
The power of the toucans is now real, and it’s by your hand that it became so. What started out as a tongue-in-cheek homage to our community has taken on a life of its own. As you may know, we have already begun to use Government Toucans for proto-governance of Shell. Toucan votes have determined who Shell follows on Twitter (shout out Big Player DAO) and have determined the events and rewards of our Mindmeld Live community calls.
Governance has been so active that Shell now has one of the largest communities on the web3 voting platform Snapshot. We have over 7,300 active members, and their ranks are growing by the day. That figure alone makes our Snapshot community larger than projects like 1inch, Compound, ApeCoin and CowSwap, to name just a few.
However strong the toucan surge might have been, it pales in comparison to the activity the Shell community will see with the launch of Shell v2. Believe us — if you’re here now you’re early. Behind the scenes, our core team engineers have been working extremely hard to ship v2. Our second audit with Trail of Bits concluded May 9th. Contract security is a top priority for the Shell team, and a philosophy of measuring twice before cutting once has guided our development efforts. Those efforts are now beginning to pay off, and we will continue to endeavor to make Shell v2 as safe as possible for all users.
Next on the horizon is a public testnet of Shell v2. We will begin sharing it in the next few days, starting with our private Discord channels such as the #primordials and #toucan-lounge. After publicly releasing the testnet, our number one focus will be preparing for a guarded launch in June. For now, we’re excited to share some details on multi-token swaps, the ability to exchange more than two token types in a single transaction through the Shell v2 app.
The upcoming guarded launch features an interface that will feel familiar to DeFi users, but it takes advantage of some powerful new under-the-hood capabilities. Using the Ocean, our team has built an intuitive and convenient experience for swapping three or more tokens in a single transaction.
With Shell v2, it is now possible to add additional token types to either side of the equation. Two or more token types can be swapped for a third, and one token type can be split out into two or more output types. Above, we see a swap of DAI and USDT in exchange for an aggregate amount of USDC. (The values are based on internal test systems, and do not represent real-world exchange values.)
The flexibility to execute many-to-one swaps is just the tip of the iceberg of what Shell v2 will be capable of. This guarded launch interface is just a first taste of the creative applications yet to come. At the smart contract layer, Shell will be able to not only compose an arbitrary number of swaps into a single transaction, but also compose swaps with NFTs, lending pools and many other financial primitives. This is the dawn of an exciting new era. At its full power, Shell v2 will unleash a level of flexibility and programmability hitherto unseen in DeFi.
The potential applications and use cases for Shell v2 are far larger than the sum of what’s presently available in web3. Of course, polishing the UX and adding features that take advantage of this freedom will take time. After all, Shell v2 is built from entirely new smart contracts. Nothing in v2 was forked or copied from existing projects. As much time as we’ve put into security, there are no guarantees. Until the contracts have been proven in the wild, we must be cautious.
As such, we view the guarded launch as a sort of Shell v2 beta. New pools and financial primitives will start out in closed beta, with a cap on their allowed TVL. This will allow us to test the new system without putting an excessive amount of user funds at risk. Over time, as we gain confidence, the TVL cap will rise until the pool eventually enters an unlimited-TVL open beta.
Shell v2’s core power is its ability to create any market, composing together any set of financial primitives in a growing network. By the end of the guarded launch, we will have built, tested and perfected a landscape of interconnected primitives and assets, turning fertile ground into a mature ecosystem.
The Ocean allows for so much more than just hyper-efficient trading pools and we want you to explore every corner of it with us. More details on the guarded launch will come in the weeks ahead. For now, here’s some foreshadowing:
First, we have developed a metric to quantify contributions LPs make to Shell v2 guarded launch. We think it’s time for the community to be able to track who has contributed to the protocol, and how much. More to come on this soon.
Second, we will need a way to allocate the TVL cap. In other words, if a pool can only accept small amounts of deposits, how do we decide who gets to deposit? First-come-first-served (i.e. whoever deposits first) is not a fair way to do it. Solving this problem will be an important part of the guarded launch.
Third, the toucans and their power can do more than just help guide the community. There is plenty of room to develop and grow in the space between NFTs and DeFi, and we’re spending considerable time exploring the possibilities. For example, what if we built an AMM for floor NFTs? Toucans will be at the bleeding edge of these experiments.
The time for waiting is nearly done. It’s been a trip, and we’ve only just reached the water — so come aboard, and get ready to set sail.
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