Project Name: Tarot
Author Name: @TigrisOfGaul
Number of OP tokens requested: 600,000
L2 Recipient Address:
Relevant Usage Metrics: Currently on Optimism: ~$5.4M TVL, achieved with no token incentives
Tarot is a decentralized lending protocol where users can participate as lenders or borrowers in isolated lending pools. Lenders can supply tokens to earn single-sided passive yield without impermanent loss, while borrowers can leverage their LP tokens as collateral to borrow tokens supplied by lenders.
On Optimism, Tarot has several OP-based lending pools, with Supply APRs of up to ~36% for single-sided OP lending with no impermanent loss, and leveraged LP APRs (5x) for OP-based pairs exceeding 400-600%. These pools offer long-term OP holders a source of sustainable yields without selling, ultimately driven by the trading fees and DEX rewards earned by LPs. Supply APRs for ETH and stablecoin lending on Tarot regularly exceed ~10%.
Tarot is proud to be part of the OP ecosystem. Beyond the many technical merits of the OP ecosystem for an advanced DeFi protocol like Tarot, we believe the core tenets of Tarot DAO are fully aligned with the Optimistic Vision.
Proposal for token distribution:
OP token incentives will primarily be used to drive liquidity to TAROT-based pairs on two leading OP protocols: Velodrome and Beethoven X.
This includes, for example, a USDC/TAROT pool on Velodrome (currently in discussion to co-incentivize with Velodrome) and a TAROT/ETH pool on Beethoven X (currently in discussion to co-incentivize with Beethoven X).
How will the OP tokens be distributed?
Liquidity providers (90%): 540,000 OP is allocated to liquidity bribes and other liquidity incentivization mechanisms on Velodrome and Beethoven X to incentivize TAROT-based liquidity (e.g., USDC/TAROT, TAROT/ETH, OP/TAROT).
Core team + initial OP-TAROT liquidity (10%): 60,000 OP is allocated to the Tarot core team in support of Tarot’s growth and operations on Optimism. The OP will be paired with team-held TAROT and provided as initial liquidity on Optimism for a period of at least 12 months.
How will this distribution incentivize usage and liquidity on Optimism?
Liquidity incentivization for the TAROT-based pairs will encourage Tarot stakeholders to provide deep liquidity in the OP ecosystem. This distribution helps Tarot to continue to offer competitive yields, generated by supply and demand for loans in isolated lending pools, to users on Optimism, and will facilitate the creation of one or more additional lending pools (e.g. for USDC/TAROT) with attractive leveraged APRs.
Why will the incentivized users and liquidity remain after incentives dry up?
On Fantom, Tarot lending pools have continued to see strong demand and competitive yields, in the form of single-sided lending, auto-compounding LP, and borrowing and leveraged yield farming, even following the sunsetting of the Tarot Farming Rewards program. Tarot will continue to attract users and liquidity to the OP ecosystem from other chains, even after the conclusion of OP token incentives.
Over what period of time will the tokens be distributed?
This is flexible, but OP token incentives for liquidity providers and operations are expected to be distributed over 12-16 months, and 3-6 months, respectively.
Has your project previously received an OP token grant? If yes, what’s the status
of these tokens?
How much will your project match in co-incentives?
OP token incentives for liquidity bribes on both Velodrome and Beethoven X will be matched (following the adoption of a Tarot DAO governance proposal) with TAROT and/or other token incentives.
Update: Following the adoption of TIP-018: Tarot Co-Incentivization on Optimism, 3,000,000 TAROT has been allocated over a 12 month period towards Optimism incentives.
Additionally, the TAROT-based pools may be co-incentivized by Velodrome and Beethoven X.