Revert Compoundor
https://gov.optimism.io/t/review-gf-phase-1-revert-finance-compoundor/3242
Recommendation
We support this proposal as a measured bet on a specific type of active user migrating to Optimism from Mainnet as a result of granted OP. We would appreciate more presentation of data supporting the likelihood of this bet panning out.
Background
Revert Finance offers a suite of tools and analytics geared around LPing. One of its tools, Compoundor, is a dApp that, for a fee, lets users autocompound LP positions on Uniswap v3.
Although we can’t say for sure that the protocol has demonstrated clear PMF (it hasn’t had the explosive growth experienced by, e.g., Beefy), they’ve made a clear bet in migrating to L2: they believe there is a large class of Uniswap v3 LPs whose position sizes are too small to compound profitably on high-gas mainnet but who could be drawn to use Compoundor on a low-gas L2 platform. Under this belief, migrating to Optimism would dramatically increase the addressable market of not just Compoundor users but Uniswap v3 LPs.
When asking Revert how this would work, @mariorz had this to say:
The real point of what we are proposing is that we can convince our users (the people who use us for analytics not the existing compoundor tvl) into optimism, by targeting the LPs who would do well in compoundor and showing them the additional returns of the OP distribution
Ask
240k OP over 3 mo, or 15k OP per week, for the sole purpose of incentivizing v3 LP. Expect this to draw $20mm in capital to Uniswap v3
This is a generous run rate on Uni v3 rewards, and we’re not enthusiastic about devoting the entirety of such a large grant to LP rewards.
However, this is a unique case in that we think this grant is intended specifically for the migration of users looking to do something on Optimism they couldn’t do on Mainnet. Although there isn’t a massive amount of Compoundor capital on Mainnet, many do use Revert’s analytics, and it seems reasonable to imagine they are of this ‘on the fence’ type, though we’d like to see some confirmation of this.
To be entirely comfortable with this grant, we’d want to know:
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Number of wallets and amt of capital Revert believes to fit the correct profile of likely, interested migrators
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Share of these wallets Revert already has access to through its analytics — that is, where/who is the latent capital that benefits from this migration?
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How Revert gets to the likely $20mm migrated capital of this profile (i.e., not whale capital) given 1 and 2
In this way, we could work backward to arrive at an appropriate way to determine the success of such an initiative — and to determine a more appropriate grant amount.
We do appreciate the short timeframe of this grant, which we believe will help us quickly determine the success of such a migration. We think that KPIs tracking the migration of the ‘sticky’ marginal capital would cover this better than the simple TVL measure proposed.
What this does for Optimism
Although we think it’s too early crypto-wide to expect a massive influx of retail or power-retail LPs, it does seem in Optimism’s interest to facilitate this type of service sooner rather than later. We especially appreciate how Revert identified a specific audience to target with this initiative, something we’d like to see in more proposals.
We think that Revert would be well situated to continue offering public goods with us, and helping them early may encourage them to work with Uniswap and large LPs for the purpose of specifically benefiting this ecosystem. We’ve found the team to be thoughtful and responsive.