[DRAFT] [GF: Phase 1 Proposal] Sonne Finance

đź“ś Grant Proposals Governance Fund: Phase 1
16

Hello Marc, thanks for the good wishes and suggestions!

We’ll open the github repo by the time this proposal is up for voting. The draft will be edited by the time!

They will be aligned with the current weight of the pools for SONNE distribution speeds. The future holds if there will be new collaterals/assets in the protocol, but the $OPs will be rewarded based on their weights for speeds at the time.

For example right now, stablecoins have each 3/16 weight and wETH and OP have 2/16 weight respectfully. ( If 3 $SONNE is going to sUSD reward pool, 2 $SONNE is going to wETH reward pool, so if 3 $OP is going to sUSD supply incentive pool, 2 $OP will go to wETH supply incentive pool).

SONNE/USDC pool on Velodrome will be incentivized with 10%. Updating the draft.

Updating the other team members as well.

Our long-term goal is to align not just accepting tokens like ETH/OP but liquid financial NFTs to be accepted in our lending protocol. For example, when veVELO is liquid enough (probably not happening in short term), we will consider listing it as a collateralizable asset. This will also enable us to accept real world assets (like real estate) in the very long term. We are already brainstorming and in touch with Turkish real estate exchange but this will take a very long time as well. We think and believe that in order for blockchains and DeFi to achieve its full potential, it needs to start gaining traction in areas where it hasn’t already touched. We are here not just to provide on-chain solutions, but experiment on off-chain ramp.

But for now, we are sticking to the safest approach possible.

For Sonne to achieve $1B to $2B level, Optimism ecosystem needs to gain traction as well. Vampiring AAVE will not be enough for us. We believe that incentives are running the market for now, and Optimism grants are doing a great work onboarding new builders, but the ecosystem in general lacks incentives for onboarding new users. With the unique staking model of ours, we are able to offer good incentives while holding the price of the token (it’s traded more than the LGE price), and 20% yield on stablecoins like USDC is just hard to deny. We already partnered up with Reaper Farm, and will be partnering up with Beefy which enables huge crowd action towards Optimism ecosystem, and Sonne.

Thanks for the suggestions again, editing the draft, and will appreciate the future feedbacks as well! If there are still questions on your mind, or if our answers didn’t satisfy, we’ll try to answer them again!

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17

Thank you for your proposal and congrats on your early traction. We see good alignment with Optimism due to being a native Op project & working with Velodrome. The value-add of Sonne & the proposal to Optimism is not yet clear to us though.

Value-add

As mentioned, Sonne seems to optimize tokenomics but on the product side you seem to not add value or fill an unexplored niche in the current lending ecosystem on Optimism considering that

  • Aave, Hundred Finance, Iron Bank, Granary etc. offer already the same or more lending markets with deep enough liquidity for anyone to borrow
  • Stablecoins such as Angle & yield farming/leverage platforms such as Homora & especially Tarot also offer lending for important tokens and in the case of Tarot for more “exotic” tokens/pairs.

Incentives

In our opinion, for liquidity incentives, Optimism should ask for co-incentives. As an Optimism project, and based on your existing distribution schedule, you are dedicating a large amount of your supply. However, the marketcap is $500K which means it may not last long & we cannot really count on these co-incentives.

The stated KPIs are ambitious, we see utilization is high, and you’re on a good way to reach your first goal. However, we should ask whether this recursive farming is a good KPI to optimize for and IF we should further incentivize TVL growth with Op tokens?

Roadmap of Sonne (might help us understand future value-add)

At this point, it looks hard to support this proposal in its current shape. Maybe some more insights on your near-term roadmap could help us better understand the value-add to Optimism. We see value in an Optimism-native lending product but further advances to the product etc. would likely be a key factor.

3 Likes
18

Really like & support this Defi Project From Beginning. Sonne Finance it is really a great project on optimism :red_circle:, it has gain community trust by its work…Love it….It will be the greatest defi project in future :slightly_smiling_face:

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Good to see another Optimism Native project.

Do you believe this is the only reason people will move to optimism ?

I would recommend you publish what you have as of now and keep on updating in parallel.

apart form what @ScaleWeb3 has mentioned do you have any stats on user on-boarding such as new addresses, retention ratio. Dune dashboard you shared only contains information related to Sonne token

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20

good to see this proposal.

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21

I am one of the Synthetix Ambassadors, and a member of the Defi Shadow Committee.

I am an Optimism delegate [Delegate Commitments - #65 by mastermojo ] with sufficient voting power, and I believe this proposal is ready to move to a vote.

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22

Hi, glad to see the Sonne Finance application.

Could you please make available the twitter of the members and links to where they worked before or currently?

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23

Hello @ScaleWeb3 and thanks for your appraisal, thoughts and criticism!

We believe that it would be unfair to seperate tokenomics from the project, as it’s one of the main reasons for this traction of Sonne Finance. Our ability to create demand for SONNE token, and SONNE staking is what enables us to grow while not destroying the token price. (LGE price was $0.04)

Also with the current rate of utilization and total borrows, $250k/yr buying pressure for SONNE is there. (Not considering the VELO reward distribution.)

We agree that we haven’t launched an unexplored niche yet, but even now, SONNE is the best liquidity market for OP token. In just 3 weeks, we filled the gap of utilizing OP better than other examples in your message. And as we stated above, competition is healthier for both users and Optimism ecosystem rather than monopoly.

Hundred Finance, Iron Bank, Granary etc. is here for longer than us, but had hard time to gather liquidity. This is the power of being native. Also, because we are native to Optimism, we can act fast and do updates faster than our competitors. This may not be an example for filling a gap, but for example, we integrated our pool on Velodrome in our website for ease of users on Optimism:
https://sonne.finance/swap

Also, wanted to add that Sonne is the only project among those that considering Optimism’s unstable blocks per year in order to calculate the true APR (both supply/borrow and reward APR) for users.

Tarot and Homora has isolated pools for leverage farming, so it’s less dangerous for them to have “exotic” liquidity markets. Sonne adding those pairs would danger not just Sonne holders but whole liquidity suppliers. We’ll add those tokens when they have good liquidity on Optimism.

Sonne being native and being able to incentivize the activity on Optimism is another value proposition that is supported with the TVL growth on Sonne and Optimism since the day we launched. This short-term success already made an example for other teams to launch on Optimism. We are already in touch with two protocols (to be launched on Optimism as native protocols) to pass the knowledge and experience we had and are having.

For co-incentives part; our liquidity from LGE was locked in Velodrome Finance for 6 months and this locked liquidity makes 71% of SONNE/USDC pool and has $125k USDC in the pool. Even everything goes bad, even without considering protocol revenue buying SONNE back, and even without considering VELO distribution incentives for SONNE stakers, our co-incentives will be equal to 75% of asked OP. Based on current trend, the co-incentives will be 819% of asked OP.

TVL is one of the biggest marketing tool for DeFi ecosystem and growth of Optimism. Just to give an example to this, a user opening the DefiLlama to see what’s happening in Defi in general, he/she will see this:

image
image1346Ă—67 9.86 KB

Being in the first eight or not in TVL is a huge difference there for appearance. And it’s just one example. Also, more TVL equals better liquidity and more usage. Although it’s overrated in general, we believe that TVL growth’s importance should not be underrated either.

Proposal’s first edit was asking 500k OP for 1 year, and we edited that for 6 months and half the OP asked.

Near-term roadmap looks like this:

  • We are in touch with QiDAO, and will discuss about how MAI can be utilized in Sonne Finance.
  • We are in touch with DLC.Link, and will enable native BTC lending/borrowing on Optimism in 4-5 months.
  • We are in touch with Synthetix to discuss how SNX can be utilized in Sonne Finance to help Synthetix’s grow more on Optimism.

We are in touch with two of the biggest banks in Turkey and Turkish Real Estate Exchange for having collateralized NFT-based loans (for real estate) on-chain, but that doesn’t look like to happen in near term. We are well-equipped for integrating financial NFTs (like veVELO) as collateral, but on-hold for a better environment to launch that.

Thanks for the reply and thoughts, and will appreciate future feedbacks as well! If our answers didn’t satisfy, we’ll try to answer them again!

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24

Hello @OPUser !

We don’t believe that is the only reason will move to Optimism, but also believe that that’s one of the main reasons for migration.

Will update the github as soon as possible.

Right now we don’t have the exact data for that, but started working on that. It will be up soon. Will edit this message once it’s up.

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25

Hello @Defi_LATAM_axlvaz . Thanks for the appraisal and sorry that we missed this question.

Our developers do not want public doxxing, but if you want, we can provide the information in private message.

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26

Not public doxing, but outside of atakan which is a known figure we know very little about the rest of the team.

Which one?

Which ones?

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27

Could you touch on your vision for NFT-based loans? I’d be interested to hear your long term view on using uniswap v3 LP positions and other financial NFTs as collateral.

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So this was a thread i wrote almost 2 years ago: https://twitter.com/DefiIntro/status/1358059563556237313

This happened last week : https://twitter.com/Rusty_Bill/status/1582098885933027328

We believe that one day DeFi will be just Fi. NFTs (or a better tech in the future) will represent most of real world assets, and people will be able to take loans against them.

We are working and will continue to work towards this goal. Right now we are in education phase, as we first need to educate and convince those institutions to make this happen, and it’s a very slow process. But if traditional banks accept real estate as collateral, why shouldn’t we?

If you were asking about financial NFTs, the NFTs need to be liquid in platforms like Quix. Let’s say, volume of veVELO or Uniswap v3 LP positions grow a lot on NFT markets.

The liquidation can be done with auctions or anyone can pay the borrowing amount to take the position. It has been done with normal NFTs (like BAYC etc.), but it was not a great idea to do so with those assets at that time, as it was endangering suppliers.

The UI and UX should improve for the financial position sales. If NFT markets can achieve that, and if people start to trade those positions, and if the volume is good enough for us to integrate, there is no reason why those shouldn’t be collateral. Though, the c-ratios will be very low at first in order to protect our suppliers.

It will be a hard task to decide for c-ratios, interest rates etc. for every position for Uniswap v3, but it’s not undoable. NFTs like veVELO won’t be that hard though, so we’ll probably add those first. (the NFTs that represent staking)

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30

Hello @Netrim !

For Gathon, we can provide the information privately. He is not comfortable sharing it publicly, as it would instantly doxx him.

For Ameterasu, she was working with me in a VR startup for one and a half year. It was an awarded project in Turkey as “Turkey’s best VR/AR product” in 2022, but business-wise it didn’t achieve what we want it to achieve, so we dismissed that project.

I had a vision for a long time for liquidity markets, and she was a very good full-stack developer according to our CTO at the time, so I offered her to study solidity/web3 development (specifically liquidity markets) instead of looking for a new job around 10 months ago. She took the offer, killed it and here we are working together to make Sonne shine. Hunger for success and hype of Ameterasu combined with the experience of Gathon made a great combination of a core dev team.

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31

I am not interested in private doxxing, it would put me in a difficult position all around and I am not a delegate nor a committee member.

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32

Sonne made a good entry to the optimism ecosystem and i especially like the innovative tokenomics and launch mechanism of getting Protocol Owned Liquidity in the fairest way possible through a LGE. Bribing and farming with POL then distributing POL farmed Velo to its stakers to generate a immediate source of revenue and incentive to stake the token, instead of farm and dump.

A new way of launching tokens, only possible on a chain that have a succesful solidly-type dex with good traction.

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33

I feel the responses Sonne made to the questions and comments were reasonable and well stated.

I believe some healthy competition is good regarding similar protocols.

The git repo update does seem a bit important however. From what i’ve gathered from the Sonne docs, the team token allotment has a 2 year linear vest with a 3 month cliff. This seems to show commitment to the project and OP eco. Allowing the community to run diff checks on the source and confirm the vesting contract(s) could be helpful in garnishing support. Hopefully the update indeed does take place soon and might be something that attracts a second delegate to put this to vote.

A further note is that the current market size and TVL seems to be about 50% more than what is stated in the proposal. considering this, and the term asks in other proposals, I feel like 250k tokens over six months is more than reasonable. I could be crazy here, but even twice that amount is something I would not oppose although i’m mostly a nobody in opinion weight. Six months imo is a very long time in the defi chrono bubble.

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34

market cap is over 1 million. does that mean this figure has doubled to 2000% now?

I feel like anyone that would have sold from that first big spike after the LGE, would have sold already. The sonne discord looks active and the recent PA seems to be organic in nature. Can never tell of course but i feel like all things considered with sonne on velo and tarot and the native staking apr on the sonne platform…this trend in price appreciation could continue or at the very least hold current market cap.

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35

Hello Delegates with enough voting power: Is the Sonne Proposal far enough along to move to a vote?

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36

I think it maybe a good iead.