[GF: Phase 0 Proposal] Perpetual Protocol

Project Name: Perpetual Protocol
Author Name: Nick
Defillama TVL (at snapshot): $31,274,396
Transactons/day (at snapshot): 21,301
Tier: 1
Optimism native: Yes
Revisions to metrics used: N/A
Number of OP tokens to claim: 9,000,000
L2 Recipient Address: 0xDcf664d0f76E99eaA2DBD569474d0E75dC899FCD
Proposal for token distribution (under 1000 words):

Background

Perpetual Protocol is a leading decentralised perpetual swap protocol that has facilitated over 40 billion in un-incentivised trading volume since inception. We have currently deployed Curie (V2) on Optimism and this proposal explores how we can grow on Optimism as well as support the growth of the chain

Goals

To ensure alignment we’ve defined the goals in mind for both parties with regards to Perp being Optimism-native. Our north star metrics are two fold:

  1. Daily trading volume
  2. Weekly active users

For Optimism we have the following goals in mind:

  1. Bring more developers and builders into the Optimism ecosystem
  2. Increase TVL
  3. Significantly increase number of daily transactions

Token Plan

Distribution

Token holders have recently passed the new tokenomics proposal which outlines two programs that can support these goals:

  1. Liquidity Acquisition: are incentives for lenders to lend any type of collateral to the Market Making Entity
  2. Liquidity Mining: are incentives for market makers to ensure deep liquidity and the best experience for traders
  3. Builder Acquisition: we will extend our current grants program and further incentivise builders to build on top of Perp and utilise Perp as a base layer

Our plan is to have these tokens allocated towards three type programs. One key thing to note is that given our history of experimentation, we may scale incentives up or down depending on the outcomes of each program. Our goal is to ensure that we don’t overspend and that we maximize the impact of these tokens.

Liquidity Acquisition

In our liquidity acquisition program, the market making entity will borrow from lenders in a model similar to Curve. This will bring in more users looking for yield. Additionally, the market making entity is tasked at deploying this capital into market making on Perp. As more liquidity moves into the system we expect trading volumes to increase as well as the number of new users.

With the liquidity borrowed, the market making entity is tasked with deploying it in 3 ways:

  1. Market making on Perp V2: the team will deploy its own strategies to ensure deep liquidity and the best trading experience for all users
  2. Lending to other market makers: long-term sustainability requires multiple market makers and in this case we would look at lending at attractive rates to help bootstrap their journey into market making on Perp V2 as well as on Optimism
  3. Bootstrapping partners: one core tenant is our focus on composability, and, as such, we’d love to be able to support projects in bootstrapping their TVL. An example of this is partners like Brahma where their first product (principle protected vault) was built on top of Perp. In this example we’d be able to deploy liquidity and help bootstrap their TVL to provide comfort for others to start participating.

The final point to add here is that because of our focus on composability we aim to integrate with best in class products on Optimism. In cases where they are not deployed on Optimism already we have been working with the Optimism foundation team to ensure they deploy and bring their users and TVL across

Liquidity Mining

To help drive liquidity we aim to deploy OP incentives via a vePERP model based on the collateral that market makers want to use. We have initial partnerships with Frax and Terra to incentivise the usage of FRAX and UST on OP. We plan on replicating this to build and incentivise a robust ecosystem of different collateral types on OP. We propose allocating 8M tokens here

Builder Acquisition

We currently have a grants program (latest write up here: https://blog.perp.fi/perpetual-protocol-grants-committee-year-end-report-58299271f733) and have deployed > $500K over it’s lifetime. We plan on continuing to support and bring partners over to Optimism and building on top of Perp through a combination of:

  1. Grants: giving out grants for projects to integrate, build tooling or other engineering focused tasks on top of Perp. We propose to allocate 500K OP tokens for this
  2. Bootstrapping: as per liquidity acquisition, we can support partners with initial bootstrapping of TVL to help maximise their success in the Optimism ecosystem. We propose to allocate 500K OP tokens for this

Duration

Depending on the price of OP, we expect these incentives to last anywhere from 4 months to a year

Co-Incentives

We aim to match all of the incentives on a 1:1 basis. As this is expected to be a large amount of the tokens that have been unlocked by governance, this aligns interests of both parties to grow Optimism

33 Likes

Good idea but i think its not sustainable, this will definitely bring new users and LPer but what’s after that. Once the liquidiy is gone, what will happen? If that the only reward then they will move on. You can see that from any project, flock of user using new project because of juicy rewards and once the reward is gone, so are the users. And on top of that, this only help big player.

Will some $op will be distributed to future users?

3 Likes

I am curious how you will divide the tokens among your three goals and how you can constrain the mercenaries. Perhaps you can use a vesting schedule? Kwenta’s draft proposal is interesting because it targets users of competing chains (GMX & dydx). This could help draw liquidity into Optimism

2 Likes

think you have only one goal, which is to encourage more users to use perp. Your current scheme can’t play its due role. If I were you, I would choose:

  1. If the transaction amount of the top 50000 new users exceeds $1000, each account will receive an additional 20 $OP, totaling 1 million;

  2. Open the liquidity mining of trading volume and take out 6 million OP to reward trading volume;

  3. Open the market making reward, take out 2 million OP and use the incentive to make the market;

This is done for the following reasons:

  1. No matter how new users drain, there will be precipitated users. Don’t worry about this;

  2. A large number of transaction volume incentives can catalyze many users to keep using the products of perp for a long time. Even the brush volume does not need to be worried, because with more operations, users will form a habit of products of perp and become dependent on perp;

  3. A large amount of trading volume will generate a large amount of agreement income, which can enable the holders of perp to obtain more benefits and dividends,

  4. The increase in trading volume will lead to a significant increase in the income of market makers. At this time, additional $OP reward will be given, and market makers will flock.

2 Likes

Hello, I also understand kwenta’s proposal. I have different opinions:
At present, the industry is in the early stage. The market is large enough and the cake is large enough. Kwenta should not only focus on the small sector of dydx, which will limit the source of funds and users ~
The perp incentive should be: all users and capital,can be dydx or GMX, uni, AAVE, coinbase, FTX, binance, or even a large influx of traditional funds and Investment institutions
The key point is to add new users and new transaction volume.

Perpetual Protocol is a good object ,i used it and feel smooth . so i support this proposal.wish better

When is the snapshot time?

good, wait and see.
irisliang#0864

I am sad to hear about the Luna Partnership, I didn’t realize. You should look at their activities a little more in depth, I have devoted significant time to this along with participating in their governance forums. Terra is bad for it’s users, and bad for crypto. I could go into details for hours on their money making at the expense of their users. You can go look at @FatmanTerra on twitter also to get an idea. Perp, please consider terminating this partnership. As I boycott all Terra products I also do not associate with their affiliates or exchanges who allow their trade.

Defi is for the people not rigged governance votes, hurting people, and bringing governments down on crypto hard. Please consider my words, if you would like to have a conversation feel free to reach out. I can provide proof of many multiple illicit activities they have engaged in.

I realize this posting was likely before their more recent events, which hopefully may have shed at least some light onto their other activities. I am hoping you took this time to reevaluate.

It’s difficult to fully assess without knowing how the tokens will be distributed among the users described. But if the protocol is optimism native and doing that many transactions a day, then who is anyone to second guess?

i used this DApp a lot. support it.

love the app things are more faster

It is preety good for all community

I think this is a great project!

Its a great proposal but i think having incentives running for a year is just a long period of time. Maximum 6 months is good enough.

Would have liked to see a little more detail (splits / KPIs etc) and sense there is a lack of drive to expand the OP user base in the proposal (feels very B2B, with no B2C consideration) but support the general approach and hope to see some more innovative projects spring up, built on Perp

Good offer, I look forward to the experience.