How Shell Protocol Uses Sablier Stream NFTs for Its Token Distribution

Shell Protocol aims to unify DeFi with a single swap interface for NFTs and one-to-many swaps across every major protocol. The new Shell v3 will combine the best features of DEX aggregator 1inch and data aggregator DeFi Llama, becoming a place where people come to trade and explore the DeFi ecosystem. Their protocol is like a DeFi super app on Arbitrum, allowing users to trade tokens and NFTs, stake, optimize holdings, track market data, and more.

Shell minimizes the first mover advantage for new projects, ensuring that up-and-coming teams can immediately tap into  a well-connected network. Meanwhile, end users gain access to the latest tools without navigating a tangled web of browser tabs.

With the launch of SHELL, the governance token of the Shell DAO, it was time for the team to figure out how to distribute the token to investors, community, and themselves, in a fair and transparent way, all while ensuring the smoothest launch possible.

The Challenge

Rapid increases in the supply of a new token can negatively impact a developing ecosystem, a common issue with traditional token vesting methods.

In these traditional vesting plans, the circulating supply of tokens abruptly increases by a substantial amount monthly or quarterly, often a large portion of the total supply. This abrupt increase can lead to volatility in the token's price.

Typically, traditional vesting involves creating and deploying a custom smart contract. This process requires extra development work, security measures, and a dedicated interface for recipients to claim their tokens, resulting in a cumbersome user experience. Additionally, the contract deployment incurs fees.

Furthermore, this vesting contract often necessitates a labor-intensive process every few months, where signers must coordinate and manually authorize the token releases. This method is not only tedious but also relies on the company's commitment to execute the releases as planned.

No one prefers to spend extensive time setting up a complex vesting program for a new token, nor does anyone want the hassle of manually claiming their vested tokens from a custom contract on a platform like Etherscan.

The Solution

Shell chose Sablier for four key reasons:

• Comprehensive User Experience: Sablier provides a platform enabling both senders and recipients to oversee and control their vesting plans, known as "streams".
• Full Automation: The setup of vesting plans is a one-time process, eliminating the need for treasury administrators to perform monthly transactions.
• Cost Efficiency: Utilizing Sablier streams is up to 90% more economical compared to traditional vesting contracts, thanks to pre-deployed Sablier contracts.
• NFT Integration: Each Sablier stream is encapsulated in an NFT, belonging to the recipient. These NFTs, designed as hourglass SVGs generated on-chain, can be used in third-party protocols and transferred across wallets.

Shell's integration of these stream NFTs into their app is a step function change. With the introduction of Shell v3, they are launching a unique NFT AMM featuring financial NFTs for the first time: Sablier stream NFTs. Users will be able  to trade stream NFTs via a new Sablier NFT AMM, offering extensive control over their $SHELL tokens.

“Sablier had the flexibility and reliability Shell Protocol needed. Not only that, Sablier token streams are a powerful new primitive that will unlock many new use cases in the future.” – Kenny White, founder & chief economist at Cowri Labs, creators of Shell Protocol

What Shell achieves with this integration is the creation of a comprehensive financial ecosystem centered around their token, which isvestedfrom the outset through Sablier. This would be unfeasible with other token distribution protocols or traditional vesting contracts due to the absence of NFT representation and the limited flexibility and integration capabilities that Sablier's protocol provides.

The Benefits/Results

Shell decided to put everyone on the same vesting schedule. Investors, the core team and community members are treated equally, all subject to a two-year linear vesting program. The NFT representation of Sablier streams allows for a seamless integration inside their app, and the ecosystem Shell is building around the streams will lead to a great user experience for recipients.