[GF: Phase 2 Growth Proposal] ShapeShift DAO

ARCHIVED & OLD Missions Grants Council Cycle 10-11
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Project name: ShapeShift DAO

Author name(s) and contact info:
@twells (Discord: T Wells#9070)
@willy (Discord: willyfox#1178)

L2 recipient address: 0x6268d07327f4fb7380732dc6d63d95F88c0E083b

Which Voting Cycle are you applying for?: Cycle 11

I confirm that I have read the landing pages for the Builders 9 and Growth Experiments 11 Sub-Committees and that I have determined my proposal is best suited to be reviewed by the Growth Experiments Sub-Committee: Yes

I understand that Growth Experiments grants are subject to a “no sale rule,” as explained in this post 5, and I have read the terms of the rule: Yes

Project Details

What are you building?
Vision: We envision a borderless financial system built on open, decentralized protocols.

Mission: We shall be the pathway into this borderless financial system; an open-source, multi-chain, self-custody crypto platform enabling billions to achieve financial sovereignty.

The roadmap for ShapeShift DAO’s product is ultimately driven by the community of FOX Token holders; an in-progress version is live at app.shapeshift.com . This multi-wallet, multi-chain app is architected for complete decentralization, and is powered by an open-source stack including HDWallet, Unchained, Chain Adapters, Swapper , and Web repositories, will enable completely decentralized access to DeFi protocols across any chain. Additionally, the upcoming Arkeo project will provide backend node infrastructure for ShapeShift, as well as any interface that wants to be truly decentralized (more info ).

Through integrations with DEX and DEX aggregator protocols such as 0x, CowSwap, THORChain, and Osmosis, ShapeShift enables users to seamlessly move crypto assets across chains with no KYC, custody, or added fees. We believe a decentralized interface and blockchain data infrastructure are imperative to bringing DeFi to the masses, and the ShapeShift community is actively coordinating to build this.

Finally, we would like to emphasize a strong sense of alignment with Optimism on the principles of decentralization, self-custody, and trustless finance. As one of the first centralized crypto companies to DAO-it starting in 2021, ShapeShift spent the better part of a year decentralizing our operations and open-sourcing our codebase. We draw on a wealth of industry experience from inside and outside the Ethereum ecosystem and aim to help expand the reach and appeal of the Optimism ecosystem.

Here’s a peek at ShapeShift’s beautiful, cross-chain UI for Portfolio View, Fiat Ramps, Assets, DeFi Yield, and Trading:

ShapeShiftFlow

Why do you believe what you are building is going to succeed?:
We believe a comprehensive, multichain interface is one of the killer apps for crypto. Users need a way to track their portfolio, trade and earn, without giving up their private keys to a centralized exchange. ShapeShift is perfectly positioned to provide this experience and is actively building to make it a reality.

How many users does your project have currently? Please include how you arrived at this estimate:
~20,000 MAUs; the DAO uses Pendo used for app data tracking.

How will receiving a grant enable you to further the mission of maximizing the number of users interacting with Optimism? Please include a step-by-step flow of how you imagine this grant can lead to a greater number of user interactions with Optimism:
Our proposal will maximize the number of users interacting with Optimism by focusing incentives on three central features: fiat ramps, swaps, and bridges. This approach will enable us to target a wide range of crypto users, all of whom require these features to interact with the network via our interface. We believe L2s such as Optimism provide the best balance between security and transaction costs, creating a sticky user experience.

Tell us about the users you plan to target with this grant. Include any defining characteristics that will help you identify and target them:
We plan to target new and intermediate DeFi users with this grant. We define new users as both crypto-curious (no-coiners) and those with basic knowledge of web3. They are most interested in using their fiat to buy crypto and swap between assets. Intermediate users can be defined as those with at least six months of experience in DeFi, who are interested in yield and asset bridging. Our three-feature incentive focus provides a way for these target user demographics to discover, use, and remain on Optimism.

How would these users interact with Optimism? For how long?:
This grant would incentivize new and intermediate users to do the following on Optimism

  • Onramp fresh capital
  • Swap between assets
  • Bridge assets from other chains

The grant distribution will be structured in such a way as to attract these users to Optimism, discover the ecosystem, and remain on the network as it provides a balance of security and transaction costs.

Provide us with links to any of the following for the project:

Do you have any metrics on the project currently?:

  • ~$4m trading volume across CowSwap, 0x, and THORChain
  • $250k monthly onramp volume
  • ~$200k vault deposits since THORChain Savers launch in Jan, ‘23
  • Optimism integration completed early Feb, ‘23 (send, receive, trade)

Who are your competitors, and are they on Optimism?:
Zerion (Yes)
Zapper (Yes)

Please link to code audits (if any): N/A

Team

Who are your founders?:
ShapeShift was originally founded by Erik Voorhees in 2014, but transitioned from a centralized company to DAO in 2021. We adopted a governance and operational framework illustrated below:

WS_Chart_3
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Detailed description of the FOX Governance Process

What makes your team well-suited to carry out the project described in this proposal?
As mentioned above, ShapeShift DAO is composed of builders who have been in the industry for multiple cycles. Our app has already integrated Optimism Network and is therefore positioned to implement the distribution plan immediately.

Is this your first Web3 project?: No.

If not, what else have you built?:
KeepKey
CoinCap
Portis
Giveth

Grant Request

What is the size of the grant request?: 200k OP

How do you justify the size of the grant?:
Our grant request is intended to maximize the longevity of our distribution experiment according to the phases and corresponding milestones below. Should the Growth Committee feel a different grant size is appropriate, we can adjust milestones accordingly.

Roadmap and Distribution Plan

Describe in discrete steps how you will successfully implement your grant plan:
The incentive program we propose is made possible by our partnership with DappBack; a Web3 rewards platform. In collaboration with their team, we will design and deploy user quests around on-ramping, swapping, and bridging, with OP token rewards available upon completion. Below is a draft UI:

DappBack-WireframeUI (3)
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In order to protect these quests from sybil attack, we will require users to have adopted Gitcoin Passport with a score of 21.76 or higher. ShapeShift has experience distributing millions of dollars worth of crypto rewards as user incentives and defending against the resulting attacks. We have a high level of confidence in Gitcoin Passport, and believe its implementation in this experiment could help solidify its place as an industry standard for sybil resistance. Any user with who has adopted Passport, and completed all three feature quests is a unique, valuable target user successfully onboarded to Optimism.

How will the OP tokens be distributed?

On-chain Task Rewards (82.5%, 165k OP)
Rewards will be provided for all three features (fiat ramps, swapping, and bridging) via quests on Dappback.

Liquidity Mining (10%, 20k OP)
In an effort to firmly establish the ShapeShift DAO on Optimism, we intend to create a FOX/wstETH pool on Velodrome and offer access to farming rewards directly within the ShapeShift app, similar to our existing program on Mainnet. This opportunity will be easily accessible to our existing liquidity providers, many of whom may choose to migrate to Optimism.

LPFlow

Marketing/Co-marketing (7.5%, 15k OP)
We will pursue and measure a variety of marketing initiatives ranging from targeted airdrops to in-person learning experiences at conferences such as F3ST. Should this proposal pass, we would love to explore creative co-marking ideas focused on growing the Optimism network.

Over what period of time will the tokens be distributed for each initiative?: 6 months.

Please provide benchmark milestones for this project. These milestones should guide the Optimism community on the progress of your project throughout your work on the project. Do not use distribution of the grant itself as a milestone:
Since April 2022, Optimism network has maintained a monthly average of ~394,000 transacting addresses making ~23 transactions apiece. Although we’re missing the exact historical figure, it’s safe to say over 10m OP has been awarded since the grants program began, which indicates ~25 OP spent to acquire a monthly transacting address. Through the proposed experiment, ShapeShift aims to onboard 10k+ monthly transacting addresses to the Optimism network at a substantially reduced cost of 16.5 OP/TA. Monthly target milestones can be seen in the table below.

Optimism 1

Should this proposal pass our team will commit to bimonthly reporting on the milestones above, as well as fiat on ramping data.

Please define critical milestones for this project. Critical milestones are meant to show good-faith efforts to accomplish the project. Non-completion of these milestones could lead to revocation of remaining grant rewards. Do not use distribution of the grant itself as a milestone:
As fiat ramps and swapping are already live, the remaining critical milestones are bridging and LP features; we are on track to launch both of these next month.

Critical Milestone Timeframe for Completion
Fiat ramps to Optimism Complete
Swapping on Optimism Complete
Bridging to Optimism Mid April
FOX/wstETH Farming Late April

If the OP tokens are for direct distribution to users, why will incentivized users and liquidity on Optimism remain after incentives dry up?:
OP token incentives will help bring users into the Optimism ecosystem and discover their favorite apps. Once onboarded, these users will want to stay for cheap, fast, and secure transactions. The ShapeShift app will always function as a means to expose new users to Optimism and the variety of dapps it has to offer.

Please provide any additional information that will facilitate accountability:

Optimism Relationship

Does your project solve a problem for the Optimism ecosystem? If so how?:
Optimism’s goal of empowering the next billion users to experience web3 through the security of L2s requires constant experimentation around incentive distribution. Nearly three years have passed since DeFi summer, and although liquidity mining is still commonplace, alternative methods of attracting and retaining capital and community are now possible. Furthermore, when considering the next billion users, there are a few fundamental features likely to be the most critical to their journey in DeFi:

  • Fiat On-ramps
  • Swapping
  • Cross-chain bridging

However, there are two main problems associated with current efforts to incentivize these actions:

  1. Fragmentation - these features are often spread across multiple dapps.
  2. Sybil Resistance - offering significant incentives for features such as swapping/bridging can lead to abuse and sell pressure.

Why will this solution be a source of growth for the Optimism ecosystem?:
ShapeShift proposes to solve both of the problems above through a new incentive experiment that:

  1. Unifies all three features in the ShapeShift interface for the Optimism Network.
  2. Implements a sybil resistance layer that balances UX friction with incentives offered.

Is your project Optimism Native?: No

Confirmations

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

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I think the idea that it focuses on Optimism Ecosystem Growth isn’t highlighted at all in this proposal. It addresses generic problems, not saying it solves them, but is trying to address those problems. I don’t know how this will bring long-term growth on Optimism.

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Thanks for the feedback @0xairboomm :wave:

You’re right, we are addressing a generic problem. That’s because fixing feature fragmentation and reducing UX friction can unlock new growth, particularly for the user demos we have targeted in our proposal.

In the spirit of the committee’s name, ShapeShift DAO has proposed a well-scoped scoped experiment around critical user features, that includes a novel implementation of Gitcoin Passport (proof of uniqueness), tokenized CAC tracking at distribution levels 30% lower than historical averages for the network.

Our previous proposal included a second phase based around ecosystem integrations and replication of the incentive experiment for added stickiness over the mid-long term. This section was removed for the sake of simplifying our approach, but we could roll it back in without issue!

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Hello and thank you for your proposal! Throughout the application process, this forum thread will be one of the official means of communication. Please be sure to monitor it for updates over the course of the review period.

At this stage, applications are mainly being reviewed for completeness, and nothing at this stage should be construed as support or opposition by any members of the Grants Council.

This is vague, can you please elaborate more on you use of the marketing allocation?

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Glad you asked Katie!

One of the most exciting recent integrations we’ve made is with Wherever, built on Push Protocol, which enables us to offer direct-to-wallet notifications via our dapp! All opt-in wallets are highly qualified leads, and we have over 2k unique addresses enrolled since launch at the end of February. We’d love to experiment with this tool for OP distribution in a way that synergizes with the network’s communication needs. For example, we could send notifications to all opt-in addresses with the latest news and CTAs from Optimism, and incentivize enrollment via DappBack in the same fashion as the three main features in our proposal. If this is of interest to the committee, we can add specific milestones to track distribution of OP info and tokens to these engaged DeFi users (ex: 3 OP per wallet with 10k target would equal the total marketing allocation).

Update (Mar 17): We just hit 2500 subs on our EPNS (Push Prot) channel which puts us third overall after ENS and Coindesk.

Update (April 3): Just crossed 3300 wallet subs :rocket:

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Hello, please provide specific dates for the milestones above. Additional information regarding milestones can be found here. Thank you!

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Sure thing-

  • Bridging to Optimism: April 20
  • FOX/wstETH Farming: April 27

Source of truth for both will be our GitHub.

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Hello and congratulations on being a finalist for Round 11! Please verify that the milestones and grant size above are accurate. Thank you!

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The milestones are correct; we are flexible on the grant size and look forward to some specific feedback on how we might work with the committee to find a request that works! Thanks Katie

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thank you @katie and OP collective! we’re so excited to help onboard the next wave of users to Optimism and are already making progress on these milestones. upward and onward :rocket:

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Update - we’ve completed the Bridging milestone ahead of schedule! :partying_face:

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Critical Milestone update!

ShapeShift DAO has completed the first three grant milestones (Fiat ramps, Swaps, and Bridging) and is preparing a soft-launch this week for the rewards campaign. OP earmarked for this initiative totals 165k OP, or 82.5% of the total grant awarded.

Our PR for adding the $FOX token to the Optimism Bridge was merged last week, and we are coordinating with our friends at Lido to launch FOX/wstETH liquidity on Velodrome in early June. This fourth and final milestone totals 20k OP, or 10% of the total grant awarded. A final update will be added when liquidity incentives are live.

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Update: All critical milestones are complete! :partying_face:

Our fourth and final milestone was recently satisfied with the launch of FOX/wstETH liquidity on Velodrome. Incentives for this pool are earmarked in the proposal, and we require coordination assistance from the Council to roll them out as soon as possible.

Regarding the OP Rewards program containing our three core milestones, Season 1 has concluded successfully! ShapeShift DAO will post a summary report here in the coming weeks. tldr; we surpassed 60% of the target number of unique transacting addresses while only consuming ~30% of the total incentives awarded for this growth experiment. Season 2 has already started, and we look forward to continued growth of the OP Rewards program on our app!

cc: @willy

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Growth Grant Report

gm OP frens :sunny:

As a follow-up to our previous post, ShapeShift DAO would like to report the final figures related to our growth experiment with Gitcoin Passport + Thrivecoin.

tldr; the incentive program outperformed expectations both in terms of Unique Transacting Addresses (UTAs) onboarded and anticipated acquisition costs.

KPI Target Outcome
UTAs 10,000 27,385
OP/UTA Acquired 16.5 4.98

User Actions & Incentives

Although success metrics related to UTAs and Volume were not included in the original proposal, we’re happy to report the following data for all three features incentivized by the program:

Action Incentive UTAs Volume
Trading 3 OP 22,261 $1,568,996
Bridging 6 OP 23.530 $2,320,928
Fiat Ramping 9 OP 1,598 < $250,000

The figure below shows the distribution of user actions during the incentive program.

A few learnings for future incentive programs:

  • Bridging was the most popular task, likely due the action’s co-location with swapping in the ShapeShift UI, and relatively high reward rate. In the future, we would offer equal incentives for Swapping and Bridging.
  • Despite having the largest OP reward, few users chose to onramp fiat via providers such as OnRamper, Banxa, and Mt. Pelerin. There are many potential reasons for this user behavior, including high UX friction and jurisdictional challenges (KYC, etc.). We we therefore recommend against fiat ramps incentive programs the future.
  • Thoughtful iteration and calibration of user rewards is required to avoid diminishing the quality of a project community with non-sticky users (i.e. airdrop hunters). Special attention should be paid to the user journey before reward distribution to determine the likelihood of change in behavioral patterns.
  • Anti-sybil mechanism is key, details below.

Data provided by distribution service partner ThriveCoin.

Sybil Protection

For the purpose of this growth experiment, a Unique Transacting Address (UTA) was defined as a wallet with a minimum Gitcoin Passport Score. We partnered closely with the Passport team to calibrate the required score for the OP Program, and experimented with different levels of difficulty.

Our experience implementing OP rewards led to the following calibration considerations for Gitcoin Passport scores when the available incentive range is ~4-20 OP:

  • 22+ significant reduction in sybils at the cost of high friction, KYC-like UX
  • 19-20 golden zone with post-campaign, pre-claim analysis
  • 17-19 potential for substantial sybil abuse

In addition, we conducted a post-campaign analysis to remove suspected sybil attackers. Key learnings from this program have been published in partnership with Gitcoin Passport.

Conclusion

Our experiment demonstrates the feasibility of DAO-managed onchain user rewards for Optimism using crypto-native tools and partnerships. ShapeShift DAO remains open to further partnership with the OP Collective around growth incentive programs, should the community desire further experimentation and data!

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