Farewell to sniping? How Gavel solves token distribution and liquidity bootstrapping challenges
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Farewell to sniping? How Gavel solves token distribution and liquidity bootstrapping challenges
Gavel platform's test token IBRL public sale raised over 30,000 SOL, with market cap peaking at $66 million.
Navigating Web3 tides with focused insightsBy KarenZ, Foresight News
In the Crypto world, token distribution and liquidity bootstrapping have always been critical factors determining a project's success or failure, often accompanied by multiple constraints such as lack of transparency, market manipulation, sniping, and "sandwich" attacks. Currently, most token launches on Solana adopt a bonding curve model. While this mechanism enables initial price discovery, it has led to the phenomenon of "token sniping"—bots use lightning speed to buy tokens at low prices before real users, then resell them at higher prices to retail investors.
Gavel aims to solve these pain points through on-chain mechanisms, bringing a fairer and more efficient token issuance experience to the Web3 ecosystem. This article will detail Gavel's background and mechanisms.
What is Gavel?
Gavel is a platform focused on on-chain token distribution and liquidity bootstrapping, developed by Ellipsis Labs and launched on Solana on May 20. Gavel helps projects issue tokens at lower cost and with greater transparency, while protecting users from malicious behaviors in the market (such as sandwich attacks and sniping). Gavel also helps bootstrap initial liquidity for tokens and, through its unique sandwich-resistant AMM mechanism, ensures fairness and security in trading.
Ellipsis Labs is also the core developer of Phoenix, a limit order book DEX in the Solana ecosystem, having raised a total of $47.3 million in funding.
In August 2023, Ellipsis Labs completed a $3.3 million seed round led by Electric Capital, with participation from Robot Ventures and Anagram. Angel investors included Solana co-founder Anatoly Yakovenko (Toly), Polygon Labs CEO Marc Boiron, and Monad Labs CEO Keone Hon. The funding aimed to accelerate the development of innovative DeFi protocols like Phoenix.
In April and October 2024, Ellipsis Labs completed two additional funding rounds: a $20 million Series A round in April led by Paradigm; and a $21 million round at the end of October led by Haun Ventures, with existing investors Electric Capital, Toly, and Paradigm continuing their participation. The funding is dedicated to accelerating the development of Atlas, a verifiable finance blockchain.
The Gavel AMM is a productization of early research work by Ellipsis Labs. At that time, Jarry Xiao, co-founder of Ellipsis Labs, along with @0xShitTrader, Paradigm partner frankie, and general partner Dan Robinson, co-authored "A Sandwich-Resistant AMM", proposing an application-layer mitigation for sandwich-resistant AMMs (sr-AMM). By enforcing an invariant that extends constant-product AMMs—ensuring no swap executes at a better price than the one available at the start of a slot window—it protects traders from front-running attacks. This concept builds upon an anti-front-running idea proposed by Vitalik Buterin in 2018, Improving Front-Running Resistance of x*y=k Market Makers.
How Does Gavel Work?
Gavel's core mechanism consists of the following stages:
Initial Token Distribution: Projects can flexibly choose auction models such as Dutch auctions, fixed-price first-come-first-served, or permissioned mechanisms. During the open distribution period, users deposit SOL and receive token allocations at the end of the distribution phase. Regardless of the chosen model, Gavel ensures that the closing price of the public sale exactly matches the subsequent AMM opening price, eliminating arbitrage and sniping opportunities at the source. For example, with the test token IBRL, 70% of the total supply was allocated through a 24-hour public sale, where users received tokens proportional to their SOL deposits.
Sandwich-Resistant AMM: When the initial distribution period ends, a portion of the token supply (whether all remaining or only part) and some of the raised SOL are deposited into Gavel’s sandwich-resistant AMM. The amount of SOL is carefully selected so that the AMM’s opening price matches the clearing price of the public sale. This sandwich-resistant AMM is well-suited for bootstrapping liquidity and facilitating early price discovery, while protecting traders from front-running attacks.
Temporary Liquidity Management and Liquidity Withdrawal: The AMM is used to guide initial liquidity, not to permanently support the market. When trading volume becomes sufficient, liquidity can be gradually withdrawn to avoid permanent capital lockup and associated opportunity costs. LPs within Gavel follow a fixed schedule to extract a portion of liquidity, convert it into tokens, and then burn those tokens (the schedule is configurable). This design satisfies initial liquidity needs, avoids long-term asset stagnation from locked capital, and maintains token value stability through a continuous deflationary mechanism.
Currently, launching a project on Gavel requires permission. While Gavel allows project teams to adjust distribution parameters such as token allocation ratios and distribution mechanisms, participation on the platform itself is permissionless and fully managed by on-chain smart contracts.
Case Study: Gavel Test Token IBRL
To demonstrate the effectiveness of its mechanism, Gavel launched the test token IBRL. It should be noted that Gavel states IBRL serves solely to illustrate how the Gavel protocol operates and carries no actual or future utility. Its distribution and fee structure are as follows:
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Total supply: 1 billion tokens.
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100% of funds raised and 100% of the token supply are allocated to the Gavel mechanism.
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Public sale: 700 million tokens distributed via a 24-hour public sale, with users receiving tokens proportionally based on their deposits.
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3/7 of the raised SOL is paired with the remaining 300 million IBRL and injected into the AMM, ensuring the initial price matches the public sale clearing price.
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The remaining 4/7 of the SOL purchases IBRL on an exponentially decaying schedule and burns them: every 1,000 Solana slots (approximately 6.5 minutes), 0.01% of the remaining SOL buys tokens. This process is autonomously managed by on-chain smart contracts.
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Liquidity on the AMM also decreases according to an exponentially decaying schedule. Starting 7 days after the public sale, 0.01% of liquidity is extracted every 2,000 slots (approximately 13 minutes), up to a maximum of 20,000 times. The extracted SOL is immediately used to directly purchase IBRL, which are then burned. This process is autonomously managed by on-chain smart contracts.
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The team retains none of the IBRL tokens or collected SOL.
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Fees: No fees are charged during the initial token distribution. Gavel charges 30 basis points (0.3%) on AMM swap transactions.
On the evening of May 21, Gavel concluded the IBRL token sale, with 2,480 participants contributing a total of 30,747 SOL. IBRL's market cap briefly reached $66 million in the early hours of May 22 and has since declined to around $30 million.
Summary
Through innovative mechanism design, Gavel helps projects raise funds at low cost, strives for fair distribution, eliminates sniping opportunities, and builds a fair, efficient, and user-friendly ecosystem for token distribution and liquidity bootstrapping via liquidity management and token burning mechanisms.
For project teams, Gavel maximizes fundraising efficiency and prevents value capture by intermediaries; for ordinary users, it provides equitable access and protection from price exploitation by bots; additionally, all operations are fully on-chain and auditable, significantly advancing industry transparency.
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