OP grants through Season 2: where has the OP gone?

[jackanorak]

Celer - Cycle 1

[GF: Phase 0 Proposal] Celer Network

Project Name: Celer Network Author Name: Mo Defillama TVL (at snapshot): $30.6M Transactons/day (at snapshot): 99 Tier: 2 Optimism native: No Revisions to metrics used: N/A Number of OP tokens to claim: 1,000,000 L2 Recipient Address: 0xF5e9D550C3c50364D630eDB4753bE404Cd109121 Proposal for token distribution (under 1000 words): Background Celer is a blockchain interoperability protocol enabling a one-click user experience accessing tokens, DeFi, GameFi, NFTs, governance, and more acro…

Grant - 1mm OP

650k OP - liquidity mining

@modong

cBridge on Optimism operates in a liquidity pool based model. Tokens bridged via Optimism’s gateway (the official bridge) is always treated as the canonical bridged token on Optimism. When a user bridges a token, say USDC, from chain X to Optimism, the user adds USDC liquidity in the Chain X side of the pool and removes liquidity from the Optimism side. The depth of the liquidity pool on the Optimism side determines bridge pricing and size of liquidity bridgeable via cBridge. Therefore, it is beneficial for the Optimism community to incentivize a deep liquidity pool on Optimism’s side with $OP token especially in the early stage of ecosystem growth.

Other context: Celer had already been running incentives with its native token, so the largest wallets had already been farming. What was strange was that the largest wallets were repeatedly depositing and withdrawing their liquidity, which might indicate the intention was to game some sort of reward.

Celer rewarding USDC, USDT, and ETH

150K OP: gas rebates for bridging

cBridge can facilitate that structure by covering a portion of the gas fee that the user needs to pay. For example, if a user bridges 10 USDC from Avalanche, instead of getting $9.5 with the $0.5 covering the gas costs on Optimism, she would now get $9.8 with $0.3 covered by cBridge through $OP token distribution to Celer’s validator networks.

200K OP: builder grant

@modong

• cBridge widget integration. cBridge functionality can be integrated with any dApp through a web widget. We will allocate a certain amount of $OP based on the total bridging volume of all the integrated dApps. Among the integrated dApps,the $OP tokens will be distributed proportionally to bridged volume from their integrated widget.
• Cross-chain dApps built with Celer that makes onboarding and using Optimism easier. Celer IM allows users from other chains to experience apps on Optimism with ease. This allows app builders to build applications native to Optimism and do not need to migrate their apps with multiple copies to other chains to accept users there. Instead, they can acquire users by providing a capability to allow users on other chains to directly interact with Optimism based dApps with one-click UX.

Duration
6–12 months expected

Announcement and intention

Fee rebate to start 11/15
https://blog.celer.network/2022/11/14/optimism-fee-rebate-event/

The fee rebate proportion is 80%, however the total rebate amount per user is capped to the “Per-User Rebate Maximum” (5,000 OP) mentioned above.

Distribution

Liquidity Mining - 650k allocated

8/4 - Foundation sends 1mm OP to 0xf5e9d550c3c50364d630edb4753be404cd109121, which immediately sends to EOA 0xf5e9d550c3c50364d630edb4753be404cd109121 then sends → to EOA 0x20f3880a281092dbc6699e5d5a0ff5feb3d3db1a.

8/11- 0x20f sends 10k OP to farming reward contract 0x06292de88adb3b1557b034ebb1c367e65ab93e4c

9/21- 0x20f sends 100k OP to farming reward contract 0x062

Liquidity mining here is likely linear so the rewards will follow a preset schedule. Of note is that the 0x062 contract has a function drainToken which lets the dev wallet retrieve the OP. OP is manually transferred in to the contract in batches.

Of the 650k allocated for distribution, only ~50k has been claimed. However, the rate of rewards distribution is unclear; we’d have to check with the Celer team to see how they’ve programmed it.

Address	OP	Share	Cumulative Share
0x2ddbd93427608f5ff3a7f83f46f293aa410ddea9	8624	15%	15%
0x089a2c44131b1eb30cc4fc226560163fcef2c288	6101	11%	26%
0x21d9c1d2cdcb44b04e6ded64dd89bcf5fcb09ce5	4395	8%	34%
0x4fc126b084fd491cf417c306717019e9c0d6d087	2754	5%	38%
0xa2ada734d1d76e3d689fdb0c676ceb95bfd6cacf	2705	5%	43%
0x10bf1dcb5ab7860bab1c3320163c6dddf8dcc0e4	2240	4%	47%
0xf0eabe8052643d080df6cffcc637b2b3bc0e6ad2	1954	3%	51%
0xf0bbfb6b0d222e0d065538546d20302298752446	1854	3%	54%
0xdb38e01ba0d515ef152c79155f19e338cd823a56	1776	3%	57%
0x8604c23ac29342c1bed458cee6be460054cda8c9	1617	3%	60%
0x9a25d79ab755718e0b12bd3c927a010a543c2b31	1511	3%	62%

The first and third wallets are related, so the top three entities are getting 38% of all rewards claimed to date. However, of the top four wallets, only #2, 0x089, is still farming.¹ This could mean that much of the distribution has yet to be claimed by large providers still farming.

We thus won’t know the largest beneficiaries without directly investigating the pool itself.

Fee Rebate - 150k allocated

Just started.
11/15 0x20f sends 10k OP to ‘IncentiveEventsReward’ contract 0xf6C5d7DA1654d9BbDe0D25A5fd6776B37a2aD881

drainToken also exists in this contract.

Will revisit in a month or so to get a sense of spend rate.

Unused

880k OP remains in EOA

Brief performance analysis

TVL

Overall, across chains, Celer’s TVL has decreased ~30% since 8/4²

On Optimism, Celer’s TVL has roughly tracked that decrease, but some recent deposits have brought it almost back up to the start of the period.³ From my view, taking out the recent deposit, this suggests that the grant hasn’t had a meaningful impact on liquidity.

Activity

More transaction volume (particularly inbound) is an intended second-order effect of the grant. The data suggest that the grant hasn’t noticeably facilitated bridge activity.

On Optimism, Celer has decreased 1 percentage point in transaction share since August. from ~3.4% to 2.3%⁴

Across crypto, Celer’s 1m volume is roughly 20% the amount of the leader, Multichain. On Optimism, it is only 4% of the leader, the Optimism Gateway, and 5% of the #2 bridge, Multichain.⁵ Again, there doesn’t appear to have been a meaningful increase in share, which is what one would expect to occur as a result of this grant.

Observation and recommendations

1. Get the 880k EOA-custodied OP to a multisig asap
2. Distribution to date seems properly managed and not obviously to related parties, though any related parties are likely to still have their liquidity in and thus likely not to have claimed rewards yet. A more thorough analysis would identify the largest liquidity providers to this bridge.
3. This grant doesn’t appear to have been deployed to any real effect. It could be worth revisiting the length of time used on this grant or the timing (maybe the moment isn’t right). Or, if the Grants Council has the authority, they could even revisit the scope of the grant in collaboration with Celer.
4. It might be interesting to evaluate the grant distribution on bridges relative to activity.

References

1. Own analysis from Etherscan
2. Analytics page for Celer cBridge
3. https://dune.com/optimismfnd/Optimism-Bridge-Activity
4. https://defillama.com/protocol/cbridge
5. https://defillama.com/bridges/Optimism