[DRAFT][GF: Phase 1 Proposal] Thales

Project name: Thales

Author name and contact info (please provide a reliable point of contact for the project): padzank, can be contacted through Telegram (@padzank) or Discord (@padzank#2734)

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

I understand that I will be expected to following the public grant reporting requirements outlined here: Yes

L2 recipient address: 0x489863b61C625a15C74FB4C21486baCb4A3937AB

Which Voting Cycle are you applying for?: Cycle 10

Which sub-committee should review your proposal? (Builders Grants, Growth Experiment Grants): Growth Experiment Grants

Project description (please explain how your project works): Thales is a protocol that allows for creation and participation in novel on-chain automated parimutuel markets around the available on-chain data feeds in the likes of Crypto Prices, Commodities, Sports Outcomes etc. To support on-demand liquidity for this type of markets, Thales developed a novel custom AMM specialized in this type of binary outcome markets that successfully mitigates the downfalls of other CFMM liquidity solutions.

Launched in early 2021 as a spinoff of Synthetix Binary Options suite, Thales has since grown to support multiple successful derivative products on top of its core architecture which is pioneering as the only viable liquidity solution for these types of markets. Major catalyst for Thales’ exponential growth was deployment on the Optimism Network from mainnet. This allowed Thales to flourish in a cheap and fast environment, deploy more complex products and solutions all while keeping the security and openness of the Ethereum network.

As one of the first projects to deploy on Optimism, Thales was also among the projects awarded the Phase 0 Optimism Grant worth 900,000 OP tokens. This specific grant was in major use in incentivizing Thales Markets product usage and bootstrapping THALES/ETH pair on-chain liquidity. The goal was to bring new users to Thales suite of products and subsequently the Optimism network itself, and also to increase THALES token liquidity on DEX-es and subsequently increase the overall Optimism network TVL as well.

This program was proven to be highly successful for both parties and it brought in an average ~6x increase in stable Average Daily Volume, ~5x increase in Average Daily Users (~114 average daily users past 30 days), $3M of stable sticky on-chain TVL for THALES token pairs across DEX-es and expansion of product suite to Ranged Markets, Thales Vaults, Referral Program, Overtime Sports AMM and Commodities Support.

As Thales Protocol Phase 0 allocation has finally run its course after ~8 months, efficiency of the incentives to attract sticky users during a long timeframe make a strong case for success of Optimism’s grants experimentation. With additional OP+THALES incentives on driving Trading Volume, users are subsequently experiencing added benefits on their winning positions and “consolation prizes” on their losing positions, creating a welcoming trading atmosphere. Volume and usage based rewards act as rebates to users against all conservative pricings, negating its effects from the User Experience while the Protocol itself seamlessly works towards optimizing liquidity usage, algorithmic pricings and new features. With further revamping the program into major key growth points, Thales Protocol hopes to continue the increase in growth metrics with the same success rate and thus turn heads of even more new users to the protocol and to the Optimism network itself.

Website: https://thalesmarket.io/

Twitter: https://twitter.com/thalesmarket

Discord/Discourse/Community: Thales

Other relevant links (including any demos): https://docs.thalesmarket.io/

Additional team member info (please link): Tech lead - Danijel Thales#0627 / @DanThales
Marketing Lead - dmonkey Thales#8677 / @spartanmonkey

Please link to any previous projects the team has meaningfully contributed to: https://overtimemarkets.xyz

Relevant usage metrics (TVL, transactions, volume, unique addresses, etc. Optimism metrics preferred; please link to public sources such as Dune Analytics, etc.): ~$20M of Buy Volume across products** ( stable ~6x increase in Average Daily Volume prior to program)
~224 Unique Addresses per day
27,775 Executed User Positions**
+500% Increase in total THALES/ETH on-chain liquidity
>1,000 user txns per day

Competitors, peers, or similar projects (please link): None that we are aware of.

Is/will this project be open sourced?: Yes

Optimism native?: No

Date of deployment/expected deployment on Optimism: 12/22/2021

What is the problem statement this proposal hopes to solve for the Optimism ecosystem?: To acquire a wider demographic of regular users and increase adoption of the network, the Ecosystem needs to also adopt and nourish easy-to-understand and simple derivative products which Thales represents. Simplicity of Thales positions and easy to grasp profit/loss estimations can contribute significantly to inviting non-advanced users to the Optimism network as well.

How does your proposal offer a value proposition solving the above problem?: With offering incentives/rewards for usage and thus creating a welcoming trading environment for all Thales product users, discovery of Thales product suite will greatly benefit and more eyes will be drawn to the Optimism network itself. With the adoption of Thales products comes the increased adoption of the Optimism network itself.

Why will this solution be a source of growth for the Optimism ecosystem?: Tokenized Usage Incentives and Liquidity Bootstrapping proved to be sustainable and viable, as proven by Thales expenditure of Phase 0 grant received well over 8 months ago. By adopting a streamlined targeted emission schedule perfected over the previous 8 month period, this potential grant will be maximally and efficiently utilized into increasing active daily users of Optimism and increasing the overall on-chain liquidity via THALES token pairs.

Has your project previously applied for an OP grant?: Thales received Phase 0 grant of 900,000 OP approximately 8-9 months ago.

Number of OP tokens requested: 250,000 OP

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

If OP tokens were requested from the Foundation Partner Fund, what was the amount?: N/A

How much will your project match in co-incentives? (not required but recommended, when applicable): Project with match co-incentives with THALES tokens to a certain degree that will be determined by the governance structure.

How will the OP tokens be distributed? (please include % allocated to different initiatives such as user rewards/marketing/liquidity mining. Please also include a justification as to why each of these initiatives align with the problem statement this proposal is solving.): Usage Incentives 100,000 OP - Direct pro rata emissions for Volume Drivers across Thales products on a round based system and targeted campaigns.

Gamified Staking 60,000 OP - Additional Usage-based bonus rewards for Thales stakers that are also actively driving volume across products. Aligning THALES token with the usage of the products creates a positive feedback loop with leveraged effect of adoption.

THALES token on-chain liquidity bootstrap incentives 60,000 OP - Conservative direct emissions as LP rewards for THALEs token liquidity providers until the protocol incrementally builds a strong POL position in the background.

Sub-grants/Builders/Marketing 30,000 OP - Incentivize additional third party builders to consider expanding on top of the Thales protocol

Over what period of time will the tokens be distributed for each initiative? Shorter timelines are preferable to longer timelines. Shorter timelines (on the order of weeks) allow teams to quickly demonstrate achievement of milestones, better facilitating additional grants via subsequent proposals: Usage Incentives - 3 - 4 months of active biweekly distributions

Gamified Staking - Estimated 3 - 4 months of weekly distributions

THALES pairs LP rewards - 3 months of LP reward emissions

Sub-grants - No time estimation as it’s solely dependent on the amount of third party builder interests.

Please clearly define the milestones you expect to achieve in order to receive milestone based installments. Please consider how each milestone relates to incentivizing sustainable usage and liquidity on Optimism. Progress towards each milestone must be trackable: Usage Incentives - Reach $30M of Total Volume across all products by end of distribution.

Gamified Staking - Reach 3,000 total stakers and 20% of active stakers.

THALES pairs LP rewards - Keep a stable >$2M on-chain liquidity for the duration of emissions.

Why will incentivized users and liquidity on Optimism remain after incentives dry up?: After a successful emission program from Phase 0 grant, unique daily users, volume and THALES token on-chain liquidity remained high even with incentives diminishing compared to emissions 8 months ago. This is caused by organic growth initially bootstrapped by the presence of OP+THALES subsidies.We intend to continue this trend.

Please provide any additional information that will facilitate accountability (smart contracts addresses relevant to the proposal, relevant organizational wallet addresses, etc.): contracts.thalesmarket.io

Confirm you have read and agree to the Eligibility Restrictions (here): I have read the Eligibility Restrictions and agree to abide by their conditions


Additions to the Thales grant proposal based on Reviewer Feedback

Usage Incentives 100,000 OP - Largest portion of Usage Incentives bucket is to be distributed pro rata on a bi-weekly frequency equally to ITM and OTM buy volume, to organically incentivize balancing the Thales AMM risk. Planned distribution is 5,000 OP to ITM Buy Volume drivers and 5,000 OP to OTM Buy Volume drivers pro rata every two-week round for 6 rounds (3 months duration, 60,000 OP in total). The remaining 40,000 OP is to be reserved for Usage Incentives for unspecified targeted ad-hoc campaigns, competitions and events that will attract new users in trying out the Thales protocol products and drive volume.

Gamified Staking 60,000 OP - Gamified Staking distribution is a unique Thales feature where THALES token stakers can earn bonus THALES+OP rewards on top of their base staking rewards if they are using Thales protocol products from the same wallet. This incentivizes leveraged alignment with the protocol, incentivizes more staking TVL and creates active power users of Thales protocol and the Optimism network. Amount of Gamified Staking rewards is a direct function of claimable THALES base staking rewards and the amount of volume driven by the same wallet for the eligible week. All THALES stakers share total base rewards of 60,000 THALES per week, but via gamified staking they can earn a max additional of 35% bonus on top of base rewards if they drive sufficient volume compared to their stake amount. To date, OP tokens are complementing these 35% bonus rewards in 64.2% ratio (for every 1 THALES bonus claimed from driving volume as staker, you get 0.642 OP). With this ratio, max possible amount of OP rewards (if every staker earns max bonus rewards) is 13,500 OP per week, but since the launch of Gamified Staking method, we never saw it go across 5,000 bonus OP earned weekly by stakers. If the same average is followed, these emissions should last in between 3 to 4 months until depletion. Difficult to know exactly since the amount is depending on behaviour of THALES stakers and how active they are to earn these bonus rewards.

THALES token on-chain liquidity bootstrap incentives 60,000 OP - Conservative direct emissions as LP rewards for THALES token liquidity providers until the protocol incrementally builds a strong POL position in the background. The plan is to emit 3,000 OP tokens per week to complement THALES token rewards as rewards for Arrakis THALES/WETH liquidity providers. This would ensure sufficient incentive for 20 week duration during which time the protocol will direct it’s efforts to build protocol owned liquidity and move away from depending on incentives.

Sub-grants/Builders/Marketing 30,000 OP - Incentivize additional third party builders to consider expanding on top of the Thales protocol in the form of deploying alternate front ends, automated trading strategies that use Thales products in the background, small ad-hoc grants for successful community marketing initiatives (translations, community groups maintenance etc).

Milestones to be achieved in middle point of planned distributions:

  • ThalesAMM to drive $1.3M in pure Buy Volume in 1.5 months since start of Usage Incentives distribution. In case of this Proposal Approval, 50,000 OP upfront and 50,000 OP if this milestone is reached in 1.5 months. Data tracking: Thales Key Metrics (OE)

  • THALES unique stakers number to reach 2,500 out of which >30% to be active in 2 months from start. (observed by the amount of OP tokens earned as bonus every two week period, Gamified Staking distribution to be greater than 8,000 OP every two week distribution). In case of this Proposal Approval, 30,000 OP upfront and 30,000 OP if this milestone is reached in 2 months. Data tracking: Thales: Permissionless Parimutuel markets.

  • THALES pairs LP rewards - Keep a stable >$2M of total on-chain liquidity for first 2 months since start of program. In case of this Proposal Approval, 30,000 OP upfront and 30,000 OP if this milestone is validated in 2 months.


@padzank as part of the Final Review, reviewers will look at your milestones. Your preliminary reviewer noted that you updated milestones previously. So that you are aware of how the Council thinks about milestones, please consult this post: Milestone Assessment.

This post is to make sure you have the benefit of having the information in the post. If you choose to update your milestones, please note that the Council will begin reviewing milestones on Monday (2.27).


Final update regarding Milestone Distribution specifically for Usage Incentives bucket:

  • Usage Incentives (100,000 OP total) - To be split equally in 3 Fees Accrued + Average Daily Unique Users milestone based releases. Reasoning behind changing the Milestone evaluation of usage in Fees Accrued rather than pure Volume Driven is because the high risk/high reward nature of trading on Thales makes the volume metric non-comparable to other protocol Volume Numbers that have much lower risk/volume ratio. Since Thales has much higher risk/volume ratio, traders on Thales are also willing to pay a higher fee per $ of volume compared to other protocols, hence why Fee Accrual is much more comparable metric and much more showing of Thales’ increasing success.

  • First release (34,000 OP) to be released upfront on the day of Proposal Approval.

  • Second release (33,000 OP) to be released after 1 Month of Incentive Program if the ThalesAMM maintained an average of 150 daily unique users during the first month and accrued at least 20,000$ in Fees in same timeframe.

  • Third release (33,000 OP) to be released after 2 Month of Incentive Program if the ThalesAMM maintained an average of 170 daily unique users during the second month and accrued at least 24,000$ in Fees in same timeframe.

The updated Usage Incentives milestone based releases should showcase our strong faith in more incremental increase in organic growth of the ThalesAMM usage for the total duration of Usage Incentives program.

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Milestone completion report:

Thales Phase 1 Grant Milestones spreadsheet

Critical Milestone #1: Reach 2,500 unique THALES stakers until 30th of May.
Results: https://dune.com/queries/2630074/4366770
Commentary: With the usage of OP and THALES tokens as bonus rewards on Gamified Staking and our new release of AMM LP-ing gated by THALES token stakers, we have been able to reach and maintain a metric of above 2,500 unique THALES stakers for previous couple months.

Critical Milestone #2: Drive $1.3M in pure Buy Volume until 30th of May.
Results: https://dune.com/queries/409027/780685
Commentary: With the usage of OP rewards and THALES token rewards as Trading Incentives for all traders on thalesmarket.io dapp, he have reached well beyond $1.3M in Buy Volume from March until end of May. During this time, we deployed a brand new trading frontend with increased UX and opened the AMM to external liquidity providers (THALES token stakers on Optimism).

Regural Milestone #1: Average >150 daily users and accrue >20,000$ in Fees during first month of emissions
Results: https://dune.com/queries/2631865/4371889
Commentary: Thales Protocol on Optimism had a daily average user count of 274 during the month of April. When it comes to Fees accrual, Thales Protocol did not accrue more than 20,000$ fees during the first month of emissions. The Thales Protocol started pivoting towards improved UX via better pricing and focusing on good AMM performance due to opening up the AMM LP pools to the public. This had an effect of slower fee accrual to the SafeBox contract than what was projected during the non-critical milestone drafting.

Regural Milestone #2: Average >170 daily users and accrue >24,000$ in Fees during second month of emission
Results: https://dune.com/queries/2632585/4371893
Commentary: Thales Protocol on Optimism had a daily average user count of 140 during the month of May.

Regural Milestone #3: Average >$2M of total on-chain liquidity

Commentary: During the months of April and May, the THALES token had well beyond of >$2M of total on-chain liquidity at any point in time.

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