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

I did a few times, yes, including in public in the discord channel, where I believe you were active. And where I didn’t have complete information, I noted.

sorry, don’t follow

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Nice, and thanks for your response! :saluting_face:

Looking forward to the response from the team.

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Dear delegates, badgeholders, and citizens,

First of all, we appreciate the concerns raised regarding the allocation of the grant, and we understand the importance of transparency in such matters. After all that is what decentralization indirectly stands for so we welcome the questions and are open to discuss all POV’s on the matter.

So here is Kromatika’s response to the raised points.

1 - Protocol-deposited liquidity - 90K OP

It’s essential to clarify that the decision to allocate 90k liquidity was made in accordance with the established rules. We acknowledge that predicting the evolution of KROM-OP price ratio can be challenging, and our intention was to safeguard against potential downturns. We took measures to set up a pool and prevent arbitrage to the best of our ability. If it would have been done 1-1, it means at that time that KROM price would have been way higher.

This was a question raise by @jackanorak on discord:

We allocated 90k OP based on the proposal submitted 18 months ago when 90k OP were equivalent to 300k KROM. However, at the time of creating the KROM/OP pool, the price of Krom was 1 OP = 51.08 Krom.

If you attempted to create a pool with 300k Krom and 90k OP, the starting price set in the pool creation transaction would be 1 OP = 3.33 KROM, which is 16 times higher than the actual Krom price. This would lead to an immediate dump and depletion of OP from the pool.
It had to be split into 2 add liquidity (not limit order) transactions to avoid that.

First one: Create the pool with starting price 1 OP = 51.08 Krom, and add liquidity (5873 OP = 300k Krom) OP Mainnet Transaction Hash (Txhash) Details | Optimism
Second one: Add the remaining 84126 OP, so that we are in line with the proposal (300k Krom / 90k OP)
OP Mainnet Transaction Hash (Txhash) Details | Optimism

Hope this is clear now.

2 - Gasless swaps

We understand the concerns regarding the execution of Gasless swaps and the apparent delay in its implementation. The delay is not due to oversight but rather a commitment to thoroughness. There’s also the need for a comprehensive audit before deployment, and we are currently in the final stages, with the audit report at 99% completion. We extend an invitation for you to review the pre-signed audit report for transparency.

While the HOP mechanism for gas fee reimbursement serves as a fallback option, we are actively addressing concerns related to user experience and adhering to the no-sale policy. Our design, currently in beta, aims to provide genuinely free and gasless swaps without compromising on these principles. It’s important to note that, given our current priorities, the delivery of this segment (free & gasless) is not our sole focus.

From the start, our focus has been:

  • 1 : create gasless (done)
  • 2 : audit gasless (WIP)
  • 3 : deploy gasless + offer free gasless swap

Last but not least, at the time, gasless was also delayed due to optimism bedrock changes, which introduced gas estimation errors - which made popular libraries such as web3.js and ethers.js to make incorrect assumptions for gas on optimism. As a result, all txns submitted by the relayers were failing. The contracts are already deployed, but not in use. The team decided to pursue the topic once the smart contract security audit is done.

We remain dedicated to its successful implementation in due course.

3 - Liquidity mining campaign on 0xPlasma and Gamma

As for your inquiry into the liquidity farming program and the potential concerns related to team-owned wallets participating in the program, we reply the following -

The primary goal of this initiative is to enhance liquidity, providing users with an attractive yield and subsequently improving trading conditions and cost-effectiveness for traders.

It’s important to note that liquidity has been contributed by a diverse range of participants, including community members and contributors from the DAO. All contributors are community members first. They have transitioned into contributors, some choosing to remain while others have left. When contributors, including ex-contributors, participate in the liquidity farming campaign, it is natural that their involvement can be linked to wallets associated with their contributions.
To amplify: these are not treasury funds but individual user wallets who are KROM holders.

Also, as for the percentages mentioned, the level of incentive captured depends on what is in the pool. If you bring 5k USD and there is 50k in the pool, you will get 10% of the rewards which seems huge. However, if that same campaign had 500k in the pool, you only get 1%.
You can’t define upfront what would be the share of the incentives you will get – that applies for all staking / liquidity farming campaigns. It all depends on a holder’s behavior and participation.

Lastly, implementing a campaign that explicitly excludes anyone who has ever contributed to Kromatika seems impractical and counterintuitive to the inclusive nature of community participation. There is currently no specific clause preventing contributors, past or present, from participating in the liquidity mining campaign as individuals.

4 - Limit order bonuses

Here is a chart showing limit order usage.

(red = optimism, blue = arbitrum, green = mainnet)

Here is another response we got in the optimism discord :

We acknowledge the observation regarding the spike in limit orders coinciding with the incentive program for (early) adopters of FELO. It’s important to clarify that community rewards are designed to attract and onboard users to the system, serving as a means to encourage initial engagement with the dapp rather than a speculative airdrop.

The reward program was announced well in advance, aligning with the grant timeline. We made concerted efforts to publicize this program through multiple announcements and marketing channels (X, Medium, Discord,…) to ensure widespread awareness. While assessing the organic take-up of the program, it’s essential to consider that community rewards aim to create an initial surge in usage.

An analogy can be drawn to couponing, where the distribution of coupons is meant to attract customers to a store. Once the coupon is used and the individual has experienced the offering, it’s their decision to revisit or not. In a similar vein, a spike in usage during the incentive period is a logical outcome, and the subsequent decline aligns with the natural progression of user behavior.

Also, there are still limit orders being created on Optimism. It has only slowed down. As you see, arbitrum and mainnet orders are also rising but slowly. An interesting metric we tracked sometime back is that more than 50% of first time FELO users become returning users. This shows a market fit for sure! (FELO = fees earning limit orders)

It is our flagship product and we are proud of it. Being the first DEX to implement limit orders on Optimism, and perhaps one of the very few (or perhaps the only one?) that has automated the powerful UniV3 tech for limit orders.

Users have the following benefits:

  • zero price slippage
  • zero swap fees
  • zero bot attacks/mev front running
  • earn LP fees (user earns an average 1-9% in fees on top of their fulfilled limit orders)

The only fee is a service fee in KROM (dependent on network gas price) that is used to pay out the Keeper contracts we have deployed for limit orders.

To promote usage of this innovate product on Optimism and clearly understanding the market fit, is why we incentivized it.

We remain committed to refining our strategies and welcome constructive feedback to enhance the effectiveness of our community engagement initiatives.

5 - Marketing

Our approach to marketing expenditure is deliberate, given the nature of the industry and the importance of prudent financial management. In navigating the complexities of the industry, in other words, there are more so called “marketing cowboys” in web3, then any other industry, we prioritize efficiency in our use of OP tokens, a practice aimed at responsible resource management. We believe this is a rather positive mindset to have. We are quite aware of the no-sale policy and being a boot strapped project, we are diligent with marketing funds.

We have utilized 4k partially and another 1.5k in the works. We will also have material posted by crypto research platform Revelo Intel once we decide what package suits the project the best in terms of reach and budget.

We remain committed to providing clarity on our marketing strategy and expenditures.

6 - Affiliate referrals

While it’s true that there has been a delay in its implementation, it’s important to communicate that the initiation process has indeed commenced.

Our team has been diligently focusing on addressing the aforementioned aspects and challenges, which have taken precedence in our development timeline. Despite the delay, we want to assure the community that the referral program is actively in development, and we are committed to bringing it to fruition.

We understand the significance of the referral program in fostering community growth and engagement, and we appreciate your patience as we work towards delivering a robust and effective system which in turn will contribute to Optimism ecosystem growth and usage.

7 - Usage of the grant

Thank you for providing a comprehensive overview, and we appreciate the opportunity to address these concerns.

In terms of fund utilization, it’s important to clarify that a total of 174k OP has been utilized. To break it down:

  • 90k was allocated for liquidity, and it has been utilized as intended.
  • 60k for the gasless refund mechanism remains unutilized.
  • 30k for the liquidity campaign, of which 20k has been used.
  • 60k for the limit order campaign has been utilized as intended.
  • 30k for affiliate referrals is yet to be initiated.
  • 30k for marketing has seen a partial utilization of 4k+1.5k

We acknowledge the concerns raised regarding the enduring impact of certain programs, particularly the limit order campaign and the observed distribution of rewards. It’s essential to emphasize that these initiatives are part of a broader strategy, and their full impact may require time to manifest.

In light of these concerns, we want to reiterate our commitment to transparency, responsiveness, and ongoing improvement. We recognize the importance of addressing these questions comprehensively, and we are open to further dialogue to ensure clarity and alignment with the expectations of our community.

As we move forward, we remain dedicated to refining our strategies, learning from our experiences, and optimizing our initiatives to create lasting value for our community and stakeholders. We appreciate your engagement and constructive feedback, which are invaluable in shaping the future direction of our project.

Welcoming all badge holders to digest all the info in response to the questions raised.

Kromatika is an open source “fair launched” project with no VC backing. We are committed to providing the best DeFi tools for traders and growth of Optimism ecosystem.

I have a long, point-by-point response to this, which I’ll eventually finish, but honestly I think my findings below say much more with fewer words.

Let’s discuss the limit order program, which is the largest distribution of OP to date from this program not going directly into liquidity. It is also intended to reflect organic use generated by the program.

Of the top 20 wallets receiving the most distributions (~25% of the total 60k OP distributed), I can find only one not connected to Kromatika insiders or to several other wallets also farming the distribution.

  • There are direct connections to team wallets in 8 of the top 20 recipient wallets.
  • There is one large sibyl network I can trace to 9 of the top 20 wallets.
  • There is a smaller sibyl network I can trace to 2 of the top 20 wallets.
  • The remaining one has no apparent connections to other participating wallets or to team.

As before, I am not alleging wrongdoing here, merely posting observations and leaving it to Kromatika to explain in particular the connections to team wallets shown below.

Regardless of whether the team did indeed sibyl its own grant program, which is an open question, these findings do lend strong support to the notion that there was little organic use generated by the 60k OP distributed here — which, in combination with the questionable decision to deploy considerable liquidity several months after the original intention, calls into question the overall impact Kromatika has been able to generate for the Optimism community, even with 300k OP allocated.

There were more wallets apparently sibyling this program than there have been individual limit trade orders placed in the several months since the end of this program.

Meanwhile, there is a large buy-heavy liquidity position courtesy of OP Governance, whose purpose remains uncertain except for, in Kromatika’s own words now, protecting price. I appreciate their candor.

I reiterate my call for Kromatika to return the excess OP for this liquidity; they acknowledge there is no real reason to deploy it other than to protect price or adhere to the letter of the grant. Returning this OP would show real goodwill as they prepare to ask badgeholders for RPGF on impact they claim to have had.

Details below:

The top recipients of the first phase of the limit order program are as follows:

n to coins share cumshare
1 0x4db0315d9376d4868629336fa2db3a98213c2542 1000 2% 2%
2 0x98adca7e539269e6e4477fa64043e6658bccba30 1000 2% 4%
3 0x99cdd2e23f6e4bc8e53a433bf68443821d6baadd 1000 2% 5%
4 0x9b3493adb33004fd7a63fb1fe332d9cd8143995d 1000 2% 7%
5 0xdc07213d6bad59c08300d991855addee1e54b6ce 1000 2% 9%
6 0x87d59ab177cbec244bf4fb97dfbd4e254164d048 808 1% 11%
7 0x1c640c0f3db08f86f6eca59c97856341c5c7d146 800 1% 12%
8 0x867848ea050da0eb03bc7eb2b8b94c49df6c1d19 800 1% 14%
9 0xf603c510ffdb10d6bc2ee392c3dcffd470e62da3 800 1% 15%
10 0x56e340e19147fca01d2a1bcfc688bc18c1d4b27f 720 1% 16%
11 0x83425f6705c25e45aae36bc8065bc585e8435963 720 1% 18%
12 0xc2acf84b5c7c7c427d82cbf0ee37cf3bb47e56b9 720 1% 19%
13 0xcf67413f10cfc270b7c4e5ae8d71edf4f823c14c 668 1% 20%
14 0x21db2039dec926841fe9542a37cce5d8d174049f 620 1% 21%
15 0xd9f547ef4ca694502373e150beae37834b2d62e4 616 1% 22%
16 0x013ee45428849aa40c029462f61879771077cce5 606 1% 24%
17 0x0518246f6e7a9d0676b3bffce3630d43fe34069a 600 1% 25%
18 0x06f816a5dfe08af64056857dbea28910af5cd1d2 600 1% 26%
19 0x207d3116b1989144cf4a2639123ef8584d5d1fc0 600 1% 27%
20 0x3ebca8a86a532d970f4e69a30ba8fc5bca7a345c 600 1% 28%

In order:
Wallet 1: Sibyl 1 related; deposits to binance and aggregates from others
2 connected to kromfund.eth multisig through 0x631a78f9d903496Ce777Ba43bf7cb711730d54EA, a wallet that bridges to arbitrum to deploy primary liquidity.
3 initially funded by 0x4d9c9, which has heavy interaction with heavy multisig user 0x24 and likely kromatika insider
4 paid biweekly [by 0xC5bmultisig directly] (Ethereum Transaction Hash (Txhash) Details | Etherscan)
5 deposits to sibyl 1
6 funded by 0xC5b multisig through 0x24eB627ee33429d8213b60701deB2950145E0F83, major kromfund.eth multisig user
7 Multiple transactions with wallet 2 and wallet 9
8 funded by wallet 2 and interactions with wallet 7
9 multiple interactions with wallet 8 and others, curiously deposits into fixedfloat at end of incentive program
10 deposits to two sibyl 1 binance addresses and connnected directly with sibyl 1
11 Connected to wallet 9 and wallet 2
12 deposits to sibyl 1 wallet
13 deposits to sibyl1 wallet
14 Apparently organic use
15 New sibyl network; connected to another wallet doing limit orders
16 related to wllet 15 though 0x792, a likely sibyl receiver also connected to wallet 15 that receives several OP airdrops
17 deposits to sibyl1 wallet
18 deposits to sibyl1 wallet
19 deposits to sibyl1 wallet
20 deposits to sibyl1 wallet

There is, again, much overlap between these wallets, suggesting sibyl activity.

Describing the large sibyl network

Three primary binance deposit addresses are associated with this sibyl network, of which several wallets appear to be part.

  • 0x16a49800b59c70d00cbc8bbbda72a73708ee697d
  • 0xb094aF3EE3b65B40Fc9a63bE9c6a82f48E3aF1Ec
  • 0xb093ae1b6ec734644ed52141a9a8eb104b0b9b01

The first deposit wallet is the most immediately revealing; part of the limit order distribution came out of a second wallet, which gave a flat ~25 OP distribution by wallet to a total of 224 participating wallets. Of those 224 wallets, [78 (or 35%) deposited the value from this OP (some having swapped to ETH to 0x16a.](a list of these wallets is in this link). This provides strong support for the possibility of sibyl activity.

This potential sibyl network has onchain connections with team-linked wallets

kromfund.eth has several interactions with early KROM holder 0xF41581B6cEc6FB011C063F4cE6497571bb0781e3 going back to early 2022. One of these transactions is a mainnet multisend that appears to have gone to team members (other wallets on the top recipients list are on there)

This wallet goes on to fund 0x16a, one of the binance deposit wallets.

To the Kromatika team: do you know who this person is? They appear to have farmed roughly 1/3 of your limit order program.

I also invite corrections here; when it comes to the actual mechanics of the program I might be misunderstanding what is being distributed for which actions. All I see are the flows of OP from certain wallets.

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Idle Phase 0 grants: update

In a post from this time last year, I looked at projects that hadn’t done anything with their grants, issued the previous August. I thought it’d be a good moment to revisit these.

At a glance

Among these projects that hadn’t touched their grant by November 2022…

  • 3.2mm OP initially allocated for the start of August 2022
  • 2.2mm OP still hasn’t been used
  • Two projects still have done nothing with their OP
  • One project deposited a majority of its grant to Binance
  • Most projects haven’t given updates of their own

It is probably worth asking 1) what we can do to coordinate with these projects—and possibly 2) ask for some OP back in some cases.

Although this is Phase 0 (and in several respects not bound to standards for newer grants), these are still OP resources—an enormous amount!—and it’s worth following up on them.

Aave

300k OP

Plan

Builders rewards - 200,000 OP (2/3rd of total)

Aave Grants DAO will allocate 200k OP to involve the community by distributing grants to build on top of Aave V3 Optimism and grow the OP ecosystem.

Events (focused on Optimism ecosystem) - 100,000 OP (1/3rd of total)

Aave Grants DAO represents the Aave protocol in many DeFi events, which could be sponsored and receive hackathon prizes.

  • Aave Grants sponsored events
    • Tokens will be used to either sponsor DeFi events and highlight Optimism or help fund Optimism focused events.
  • Hackathon prizes
    • Tokens will be distributed to builders as prizes for building on Optimism for the next hackathons.

Distribution

8/3/22 - Foundation sends to receiver multisig 0xcd150d9cfdb39d287d69b9b1bb7111e58414aca8

6/8/23 - Multisig sends to another multisig, 0xe50c8c619d05ff98b22adf991f17602c774f785c

9/7/23 0xe50 sends to multisig 0x24db24abc762a6ef8a5c5b770ca62684e13b1b9c

9/10 0x24 multisends to 0x04fa (1153 OP) and 0xb00 (1153 OP), appear to be personal wallets, unclear what for

11/7 0x24 sends ~8k OP to Polynomial multisig 0x596 – presumably a builder reward

Wallet still has 290k of the 300k OP allocated

Observation

AAVE appears to be distributing its grant in accordance with expectation, albeit extremely slowly. It is probably worth checking in with them to see what their plans are from here.

Chainlink

1mm OP

Plan

  • The OP tokens will be rewarded to NOPs and other ecosystem participants over time in order to support and encourage building on Optimism. Given Chainlink’s integral role as the industry-leading oracle solution, the dynamics and appropriate incentives to supercharge user growth on Optimism are different from the ones of projects building exclusively on-chain (dApps). With this proposal, we aim to broadly align the interests of the Chainlink ecosystem with the Optimism ecosystem and, in turn, attract more developers/users to Optimism.

Distribution & Observation

8/3/22 Foundation wallet sends to chainlink multisig

…and that’s it. Nothing’s been done in almost 18 months.

0x

Plan

300k OP

  • To accelerate distribution, 0x Grants will award grants <$10k, similar to our current grant initiative supporting Polygon 2. If larger grants are requested, an onchain, community vote will be held. Over the past year, the 0x community has awarded more than $1.2M in builder-focused grants 3, with ~$300k awarded directly by 0x Grants. For this initiative, we intend to allocate at least 50% of the total distribution to NFT/gaming projects building on Optimism (grant application 10).
  • In addition to grants for teams developing applications, we can also foresee some of the allocation being used to fund the R&D of tools that expand governance capabilities and reach, with the goal of reducing gas costs incurred with onchain proposal voting and enabling other use cases that may benefit from multichain presence and coordination.

Distribution

7/8/22 Foundation sends to 0x multisig

8/12/22 0x Multisig sends to multisig 0x1d

2/8/23 0x1d sends 451 OP to another multisig, 0x536. I’m not sure but I think this might be related to this grant https://x.com/0xCommunityDAO/status/1623382357888626689?s=20 , as 0xsha2, who is on this multisig, retweeted it.

5/1/23 0x1d sends 233k ZRX and 27k OP to another multisig, 0xe1c. This doesn’t appear to have any information associated with it. The OP eventually ends up in an EOA, which sells for USDT. This EOA is a signer on a multisig that gets the ZRX, so this appears to have the structure of another grant.

268k OP left.

Discussion

Again, this appears to be consistent with expectation, but the distribution of this is remarkably slow. Would definitely want to hear more about their plans there - and what the deal was with that 5/1 transfer.

Synapse

Plan

1mm OP

150k OP to developers

450k OP for liq mining on major coins and stables on Synapse

  • We currently incentivize each pool with close to 12k SYN (around $36k) per week, or roughly 624,000 SYN (around $2m) per year and have close to $30m of TVL across both pools. Given our stablecoin pool was launched more recently, it only represents 20% of our Optimism TVL.

400k OP for liq mining on SYN,

  • In an effort to make it more affordable for users to acquire and trade SYN, we propose creating a new SYN/Stablecoin pool on Curve’s Optimism instance. As the Synapse network continues to decentralize, it will be imperative for there to be affordable venues to acquire SYN and participate in the cross-chain message validation process.

Distribution

3/26/23 - sends 850k to 0x450, which next day sends to 0xad6, a Cumberland DRW marketmaking address, which promptly deposits these in Binance.

This one’s more concerning - the 850k was intended to remain within Optimism DeFi. Sending to Cumberland, a large CEX market maker, makes this outcome unlikely.

150k OP remains.

Observation

I suggest we contact Synapse to determine what has happened with this OP.

Connext

300k OP

  • LM rewards for stable swap LPs (AMM) on Optimism: 250,000 OP
  • Sponsor Vaults: these subsidize gas fees for transfers to Optimism, making them cheap for users and protocols. 50,000 OP

Distribution

Still hasn’t claimed its OP

Gelato

300k OP

250k OP - subsidies

  • We will be subsidising usage of Gelato’s infrastructure network by having the network charge 0% fees on transactions that are automated by Gelato.

50k OP - builder bounties

Distribution

Gelato gave an update here, easily verified onchain.

5/12 - 50k OP to https://debank.com/profile/0x6a0a93cd6d6fb7a36bf6234ef4650bf9474e7682, which sells for ETH and sends 10e to each of four different wallets. Although it’s in a more roundabout fashion, it appears to be a similar structure to the previously disclosed bounties.

202k OP remaining.

Observations

Gelato’s been relatively great in providing updates; would love to see how it plans to carry out the remainder of its bounties.

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We have a delegation in Connext and we launched an RFC for the funds to be used, as it benefits both protocols:

There is a liquidity task force being formed that wants to take the initiative and make use of the funds:

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