[DRAFT] [GF: Phase 1 Proposal] Abracadabra Money - Cycle #8

ARCHIVED & OLD Missions Governance Fund: Phase 1
,
1

Project name: Abracadabra Money (abracadabra.money)

Author name and contact info: @0xEdwardo, Romy

I understand that I will be required to provide additional KYC information to the Optimism Foundation to receive this grant: Yes

L2 recipient address: Abracadabra OP Multi-sig (0x4217AA01360846A849d2A89809d450D10248B513)

Grant category: Phase 1

Is this proposal applicable to a specific committee? DeFi Committee A

Project description:

Abracadabra is one of the leading decentralized lending platforms in DeFi. We provide loans in our collateral-backed stablecoin, Magic Internet Money (MIM), against a wide variety of collateral (e.g., LP tokens, ERC-20 tokens, Yearn vault tokens, etc.) to unlock maximum capital efficiency. We can help Optimism kickstart an active and robust DeFi ecosystem by introducing MIM to the chain and providing our battle-tested lending services.

Project links:

Please link to any previous projects the team has meaningfully contributed to:

Popsicle Finance

Relevant usage metrics:

  • $400M TVL
  • 10K+ outstanding CDP positions
  • $210M of circulating $MIM, our decentralized stablecoin
  • One of the highest yielding pools on Curve ($170M TVL) @ boosted yield of 10.5%
  • Analytics page

Screen Shot 2022-09-06 at 10.05.45 AM
Screen Shot 2022-09-06 at 10.05.45 AM794×98 5.34 KB

Competitors, peers, or similar projects:

We are the leading lending protocol for DeFi strategies and have been the inspiration for several protocols. Some projects that are similar to us:

Is/will this project be open sourced? Yes. Much of our Solidity code has already been audited, open sourced, and battle-tested. Code base can be found here: Abracadabra · GitHub

Date of deployment/expected deployment on Optimism: We’re already deployed the requisite contracts on Optimism. We have created 2 cauldrons so far. Now, we’re focused on seeding initial liquidity for $MIM…

Velodrome OP/USDC Cauldron: 0x68f498C230015254AFF0E1EB6F85Da558dFf2362
Stargate USDC Cauldron: 0x0981a77C825CBF9fced939e05f12387Ef1955b90

$MIM: 0xb153fb3d196a8eb25522705560ac152eeec57901
$SPELL: 0xE3AB61371ECc88534C522922a026f2296116C109

Velodrome pool:

  • Currently bribing 5M $SPELL per week
  • 6th largest pool on Velodrome with $4.7M TVL (at 9.65% APY)

Screen Shot 2022-10-19 at 11.55.22 AM
Screen Shot 2022-10-19 at 11.55.22 AM959×60 16 KB

Ecosystem Value Proposition:

We can help Optimism kickstart an active and robust DeFi ecosystem by introducing $MIM to the chain and providing our battle-tested lending services to grow overall TVL. Given that we already have tremendous traction on other EVM chains, we think we’ll have an outsized impact in bringing users to Optimism. For many of our followers / existing use base, this will be the first time they have interacted with Optimism.

We can also help increase capital efficiency for various protocols (and for Optimism itself) by letting folks borrow against their LP tokens. We have already launched an OP/USDC LP cauldron, which means that LPers will not only be able to boost the liquidity of the OP token, but also mint stablecoins against their positions instead of selling / unstaking. This will ultimately create more long-term holders of OP and long-term providers of liquidity.

Has your project previously applied for an OP grant? No.

Number of OP tokens requested: 800K $OP ($560K)

We are basing this number on the following previous successful asks from other DeFi protocols incentivizing activity on their platforms (e.g., borrowing / lending / liquidity).

  • QiDao received 750K OP on $50M TVL (across all chains)
  • Tarot received 540K OP on $17M TVL (across all chains)
  • Yearn received 1,000K OP on $500M TVL (across all chains)
  • Abracadabra asking 800K OP on $400M TVL (across all chains)

Did the project apply for or receive OP tokens through the Foundation Partner Fund?: No.

How much will your project match in co-incentives?: We are currently matching the grant 102%. We are prepared to deploy up to 12M (~$11K) $SPELL tokens to hit our stated goal of 15% APY. Over the course of a year, this will equate to $570K+ of SPELL incentives (vs. the $560K of $OP grant).

We have been conducting liquidity / bribe tests on Velodrome. With just 5M $SPELL bribes per week, we have $4.5M+ TVL are the 6th largest pool.

Screen Shot 2022-10-19 at 11.42.02 AM

As we ramp up to 12M $SPELL per week, we should expect the TVL to increase to ~$12M. If we add $OP incentives on top of that, we should expect to hit $18-$20M of TVL. This will allow us to support 1-2 medium sized cauldrons, or, alternatively, 5-10 small sized cauldrons (which, frankly may be more appropriate given current TVL and access to DeFi protocols).

As mentioned earlier, we have a long-term outlook and after $OP rewards run out, we will continue funding incentives from our treasury. We currently have 2+ years worth of incentives allocated for liquidity emissions.

Proposal for token distribution:

Liquidity Mining (50% of grant): 50% of the $OP tokens will go towards liquidity mining (which acts as our major form of marketing). While these are being deployed via liquidity incentives. Liquidity sits at the heart of our leverage protocol and without it, we will be unable to operate on a new chain.

Development (40% of grant): 40% of the $OP tokens will be allocated to developing our NFT borrowing platform called Potion. We are excited about introducing NFT lending to Optimism and think this could be a breakthrough development for protocols / users that possess Velodrome veNFTs.

Community Participation (10% of grant): 10% of the $OP tokens will be allocated to encouraging members of the Abracadabra community to identify and work with protocols to develop new strategies and cauldrons. We want to use this portion of the grant to encourage and fuel the process of decentralization.

3 Likes
2

Personally, I’ve lost all confidence in the Spell/MIM protocol, they’ve had some botches.
And they’re not even on Optimism, I think they should at least look at getting some metrics.

image
image1168×385 60.6 KB

3 Likes
3

We hope we can restore your confidence in our protocol! Adding a new chain has many moving parts and we want to be sure that we can be successful before we embark down a path. The $OP grant will go a long ways towards making sure that we can properly bring liquidity to the chain.

I hear you on the not having metrics yet (though it seems like many of the other proposals are in the same state). I’m not sure if this is possible, but we would be more than happy to structure the grant to take a smaller portion (say, 25%) now and the remainder of the grant after finishing the migration.

4

Its good to see that you are matching incentives with your project token.

Any time line on when you are moving to OP chain ?

5

Our dev team believes they can deploy the contracts, set up a handful of cauldrons, set up pools on Velodrome / Curve, and migrate liquidity with 2-3 weeks of concentrated effort. We would be looking to be live sometime in the September time frame.

1 Like
6

Why a partnership with Velodrone instead of a true and tested partnership with Curve?

1 Like
7

Apologies for the slow response! We have considered a partnership with Curve, however we feel like there are two important reasons to consider Velodrome. 1) Optimism is a partner of Velodrome and a recipient of the Velodrome airdrop. This means that they should be collecting fees (indirectly) through swap activity (someone please correct me if I’m wrong). 2) Curve seems to have less activity on Optimism than Velodrome does at the moment. 3) Velodrome is willing to support the Abracadabra team through a potential partnership which could mean boosted votes.

9

I like any project already launched on Optimism and would love to see a detailed distribution plan of OP tokens now, at the proposal submission stage.
So you don’t distribute 50% in the first month and 50% in the other 11 months.

1 Like
10

Our dev team is going to move forward and launch contracts on Optimism. We think the liquidity won’t be there without the right incentives, but I think it’s worth investing time now so we can hit the ground running if/when this proposal passes (plus it shows the community we’re serious).

I’m going to take a second pass at perhaps putting a cap on the OP token distribution, so we can stretch out time. I don’t necessarily believe we should stretch it to 12 months (especially if APY is too low), but I agree that we shouldn’t exhaust rewards in 1 month either.

11

A quick update. Our developers are almost ready to deploy our first set of contracts onto Optimism. We will be going live with two cauldrons in the next two weeks, one for Velodrome’s OP/USDC Volatile pool and another for Stargate USDC. Will revert back to this thread with contract addresses shortly.

We have also deployed a Gnosis Safe

2 Likes
12

Following-up here. Our first two cauldrons on Optimism have been deployed! The team is currently working on hooking these up to the front-end.

Velodrome OP/USDC:
Cauldron: 0x68f498C230015254AFF0E1EB6F85Da558dFf2362
Strategy: 0xA3372CD2178c52fdCB1f6e4c4E93014B4dB3B20d
Oracle: 0xc845C5bAf57f61eB925D400AeBff0501C0e9d2Ba

Stargate USDC:
Cauldron: 0x0981a77C825CBF9fced939e05f12387Ef1955b90
Strategy: 0x6E93686D34a9EBf7c589998a576AB603719500ef
Oracle: 0x8CEe5B335f450933b4720B5b84e6125d4225FB62

13

Very very excited to see Abra coming over Optimism.

They’ve demonstrated their resilience and shown they are a critical DeFi lego.

Also seems like they are fully deploying to Optimism and offering matching incentives which demonstrates their commitment to the ecosystem.

1 Like
14

Thanks so much for the vote of confidence, Alex! Post our discussion with the Velo team, we’re adding some details related to the LP depth models you’ve helped us with (see below).

UPDATE (8/19/2022)
We just got out of a productive meeting with the Velodrome team who graciously helped us model out liquidity depth and APY of a pool given the above incentives… Update posted below (and edited original post to reflect).

Let’s conservatively assume we’ll have ~$10K in weekly bribes (between $OP and $SPELL), we will receive a ~50% bonus APY. This means that we would see a $15K weekly bribe amount. Over 52 weeks, that’s roughly $780K in rewards. If we target a 15% APY, we would expect $5.2M of liquidity depth.

On top of this, however, the Velodrome team has suggested that there is currently a multiplier effect of roughly 3-4x on emission bribes. So we could actually be looking at a figure in the range of $15-20M.

Separately, we have been working on some magic partnerships… We’ve got some tricks up our sleeves that could help us boost APYs and liquidity even further (still in the works, so stay tuned). We think a 15% APY with a $15-20M TVL stable pool seems very feasible.

1 Like
15

Curve has begun making moves on Optimism and looking to expand its presence moving forward.

We have two new gauges voted in since the proposal was written (3pool and FRAXBP), TVL has doubled, weekly volume has 4x’d. Curve and Abra have a deeply intertwined history working together, and especially now that Abra has voted to lock CRV and vote in Curve governance, it would be in your interest to work with Curve on Optimism. No disrespect to other DEX’s, which you should certainly experiment with, but Curve has an established history and proven itself to be a sustainable and secure platform. The prudent strategy is to allocate according to risk, which should consider longevity, team, and brand.

I suggest Abra propose a Curve gauge on Optimism and make use of its locked CRV to help direct liquidity toward your own pool. Hopefully the above proposal passes, which means the gauged MIM pool will receive additional OP incentives.

I found this lukewarm take on working with Curve disappointing, because of our history as partners, and especially since Abra is the one that stands to benefit the most. But I understand the post was written a month ago and things change fast. Now you are aware Curve is expanding on Optimism and we want to continue the relationship with Abra that we have had so far on mainnet.

16

We’ll obviously be continuing partnership with the Curve team (see our mainnet treasury for confirmation). That said, we’ve been working with the Velodrome team for a while now on fostering deep MIM liquidity and do have plans already in the works for getting from 0 to 1. Our priority is MIM liquidity and we’re open to working with any DEX that can help us achieve our goals!

1 Like
17

I mentioned on the discord and writing it here as well. you might need to use the new template as i have many question and most of them will covered in new template.

18

Updated to the template! Thanks for the suggestion, @OPUser

1 Like
19

Doing some follow up here.

when are you planning to go live on Optimism ?

20

We are currently targeting a September 26th launch of a new native $MIM token on Optimism. Once that happens, we’ll be ready to seed initial liquidity. Cauldron contracts are already deployed and we’re simply waiting to test them post-MIM launch.

The new $MIM token is going to make it safer & easier to bring our users from other chains over to Optimism, so it should be well worth the wait.

1 Like
21

Hey, I’ll leave you some questions

Could you give a detailed explanation of this?

Do you have any projection regarding the implementation of future vaults?

Would you say if this is an association with a bridge or do you mean something else?

[/quote]
your proposal indicates:

but this comment confuses me
Voy a dar un segundo paso para quizás poner un límite en la distribución de tokens OP, para que podamos estirar el tiempo. No creo necesariamente que debamos extenderlo a 12 meses (especialmente si el APY es demasiado bajo), pero estoy de acuerdo en que también deberíamos agotar las recompensas en 1 mes.
Could you explain exactly how you plan to do the distribution?