[READY] [GF: Phase 1] Hundred Finance

šŸ“œ Grant Proposals Governance Fund: Phase 1
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1

Project Name:

Hundred Finance

Author Name:

Hundred Finance

Number of OP tokens requested:

300,000 OP

L2 Recipient Address:

0x641f26c67A5D0829Ae61019131093B6a7c7d18a3

Relevant Usage Metrics: (TVL, transactions, volume, unique addresses, etc.)

  • TVL Defi Llama
  • Transactions through platform contracts
  • Unique addresses holding hTOKENS, gauge tokens and the HND/veHND tokens
  • Use of borrowed funds - (As a lending protocol, we facilitate liquidity generation from held assets. This means that volume and fees generated on Optimism may be enabled by Hundred Finance, though not necessarily captured within the platformā€™s own metrics)

Optimism alignment (up to 200-word explanation):

Hundred Finance is a multichain lending platform based on Compound Finance and incorporating Curve Financeā€™s vote-escrow tokenomics in the management of the protocol. Having launched on seven chains so far (Arbitrum, Fantom, Harmony, Moonriver, Gnosis, Optimism and Polygon, with IoTeX and Ethereum soft launched) and accumulated ~15m in TVL at present, we are in an excellent position to draw users and liquidity to Optimism. This ability is complemented by our successful implementation of cross-chain mirroring enabled by Layer Zero and Multichainā€™s anyCall, which grants our governance token holders APR bonuses cross-chain, thus removing friction in transitioning to Optimism. We believe our potential is already evident, as our own HND emissions have drawn over $1m USD in TVL to our Optimism deployment launched in March, since then providing liquidity for use on other DeFi applications.

In terms of our use case on Optimism, through incentivizing the supply of stablecoins in particular, Hundred Finance provides low borrowing APYs to those supplying bluechips. This helps grant liquidity used in Optimismā€™s burgeoning DeFi ecosystem. Conversely, our stablecoin market focus makes Hundred Finance an excellent tool in leveraging cryptocurrency on-chain, an objective worth pursuing as we all seek to move away from CeFi infrastructure.

Proposal for token distribution:

Hundred Finance was launched on Optimism on March 9th, 2022, as part of our multi-chain mission to unite the users of EVM-compatible blockchains in the pursuit of an easy to navigate and capital efficient DeFi ecosystem. In order to encourage current and new users of our borrowing and lending services to become active participants on Optimism, we believe a dual rewards program for emissions to those who supply stablecoin liquidity to our money markets will help build a strong and consistent user base that are invested in Optimismā€™s approach to open finance and able to take advantage of market-leading APYs on stablecoin borrowing.

We propose to achieve the above by, during the first year of our launch, including OP token emissions as part of the ongoing rewards received by liquidity providers. Those who stake stablecoins in Hundred Financeā€™s gauges (supplying stablecoins allows borrowing while staking receives emissions only) currently receive HND tokens based on their contribution to the total number (with vote-escrow tokenomics used to manage this distribution on a per-gauge basis). We would distribute OP tokens pro rata with these HND emissions, aligning interests by creating Optimism user incentives that grant real utility (market-leadingly low borrow APYs on stablecoins). Not only would it encourage new and established users of Hundred Finance from its current and future deployments to contribute to the Optimism ecosystem, it would also grant the existing Optimism community a venue to carry out a major DeFi functionality on an established platform while taking a strong position in our mutual protocols through the time-weighted receipt of the means of participating in the two projectsā€™ governance systems.

How will the OP tokens be distributed?

300,000 OP for redistribution to Hundred Financeā€™s OP users in 12 tranches over the course of one year. In order to ensure ongoing contribution to Optimism, TVL-based metrics can be used to ensure incentives remain aligned.

Milestone 1:

Duration (weeks): 4 weeks

Deliverables: Acquisition of $1m USD in TVL

Funds requested: 25,000 OP

Milestone 2:

Duration (weeks): 4 weeks

Deliverables: Acquisition of $2m USD in TVL

Funds requested: 25,000 OP

Milestone 3

Duration (weeks): 4 weeks

Deliverables: Acquisition of $3m USD in TVL

Funds requested: 25,000 OP

Milestone 4 - 12:

Duration (weeks): Nine 4-week periods (40 weeks)

Deliverables: The maintenance of at least $5m USD in TVL

Funds requested: 180,000 OP to be distributed during the remaining nine 4-week periods

How will this distribution incentivize usage and liquidity on Optimism?

As a lending protocol, Hundred Finance attracts users who wish to earn yield on their assets while also having the freedom to generate liquidity from borrowing other cryptocurrencies. By providing combined HND and OP emissions to those who stake stablecoins in the protocolā€™s gauges, we will be able to attract the liquidity to offer market-leading interest rates on stablecoin borrowing. These favorable rates will attract our own and new users from other chains who wish to generate liquid capital from cryptocurrency assets (WBTC, ETH, etc.) without the need to sell, engage in on-chain leverage trading or participate in governance through token acquisition. Our intended future implementation of cross-chain collateralization will also represent a source of liquidity generation, as it will provide an alternative means of acquiring assets on the chain without bridging (which can be done by those pursuing supply-side interest rates at scale).

Why will the incentivized users and liquidity remain after incentives dry up?

As a lending platform, Hundred Finance provides a service that underpins decentralized finance. As such, as long as the dApp offers security combined with competitive interest rates generated by lend/borrow dynamics and a thriving DeFi ecosystem developing on Optimism, we will be able to provide this fundamental service to those who wish to earn on held assets or obtain liquidity through borrowing. What is more, as our multi-chain expansion includes innovating in the mechanisms that allow the collateralization of assets across chains (supplying collateral on chain A facilitating borrowing on chain B), we will have a major advantage in broadening the number of users who consider interacting with Optimism. This reduction in friction in moving to and from Optimism will not be incentive-led, but rather convenience-led. Lastly, Hundred Finance has a conservative emissions schedule for its own token with a four-year distribution phase, which grants greater stickiness in retaining users once theyā€™re on the platform. As is demonstrated by our other deployments, even after the conclusion of dual rewards programs conducted with collaborators, liquidity and protocol usage remains.

Over what period of time will the tokens be distributed?

48 weeks, with 25,000 OP tokens emitted per tranche during 12 successive 4-week periods.

How much will your project match in co-incentives?

HND tokens are emitted on each of our chains with the objective of providing market-leading stablecoin APRs. Currently we consider that to be around 8 - 20% APR. This yield is displayed as a range as our vote-escrow tokenomics allow users to boost their APR by up to 2.5x by locking HND for our mveHND governance token. During the initial 4-weekly periods we would boost this further through granting stablecoin gauges on Optimism the extra HND required to reach 12-30% APRs, which, in combination with OP incentives, would make Hundred Finance one, if not the most, rewarding destinations for stablecoins available.

12 Likes
2

I think this is a more than reasonable request from Hundred Finance. They have proven to be a strong community-oriented protocol. The team is also dedicated to the project hence I 100% this proposal.

3

Glad to see a proposal from Hundred, team and market fit is top tier therefore i think the distribution would go to great use.

4

The OP emission schedule seems cumbersome, is it not easier to simply setup a mutli-sig wallet, and add an OP community rep to release the funds that way?

5

Hi @TerraBellus , thank you submitting your proposal.

You TVL on OP chain is $410K and token request is around $150K which seems reasonable, this might give your platform a jump start with liquidity.

Help me understand this, you will only distribute second weeks 25K OP token when first week TVL is achieved, right ? What are you planning to do with the OP token when the said TVL is not achieved during that time frame?

4 Likes
6

This plan incentivizes usage and liquidity. It also holds itself accountable through milestones. @TerraBellus - If you donā€™t hit your TVL targets, will you return the tokens? I would support this regardless of your answer simply because noone else is making promises like this, so i wouldnā€™t want to hold you to a standard above others. However, if your answer is yes, than the structure of this proposal is easily the most aligned with the best interests of Optimism. (in this small token holdersā€™ opinion).

7

Thank you for bringing this up (you too, @Justin).

If the TVL target for the first four-week period is not met within that period then we would not begin distributing the next tranche of 25k OP. If we got over $1m USD TVL during that period (at any point according to DefiLlama), then the next tranche would be released. This approach would be maintained during each subsequent four-week period.

The way we look at it, unless the OP emission is contributing to key performance indicators then we donā€™t see that maintaining the distribution would have merit. In which case, weā€™d reach out to the Optimism team to discuss returning the OP.

4 Likes
8

@TerraBellus Thatā€™s great! Solid proposal, looking forward to voting for this!

9

The way we look at it, unless the OP emission is contributing to key performance indicators then we donā€™t see that maintaining the distribution would have merit. In which case, weā€™d reach out to the Optimism team to discuss returning the OP.

Just from this alone I can see a lot of integrity in your team and am inclined favorably towards your proposal.

The ask sounds reasonable for your TVL and it seems it will all be used as emissions to incentivize LPs in in 12 tranches over a whole year, right?

2 Likes
10

Thank you for the explanation. You will have support, will write a proper response to all my approval/rejection by Monday.

1 Like
11

Yes, this is approximately correct, though 48 weeks total (12 x 4 weeks) rather than the 52 weeks that make up a year. Iā€™ve updated the ā€œOver what time periodā€¦ā€ answer to reflect this and avoid potential confusion.

1 Like
12

this is not live for voting in this phase, right ?

13

We moved it to [READY] on the 24th so weā€™re hoping for it to be voted on in the next cycle.

1 Like
14

Voting in favor. Reasonable ask and hundred finance is a relatively proven protocol - this should help them establish solid usage on Optimism. Good chance users stick around as HND emissions will be ongoing.

3 Likes
15

I am going to be voting in favor.

I like the targets the team has set, the ethos of the proposal (setting performance indicators which if not met they will return the OP) and the fact the amount is quite reasonable for the TVL and duration (2 years)

Also the fact it has co-incentives by the team.

16

Voted: Yes
Usually I am not a big fan of just LP rewards but this proposal is also applying different approach just like Kromatika.

  1. Milestone based incentive
  2. Duration of distribution is good with respect to number of token requested
  3. Co-incentive are provided

Suggestion:
For proposal focusing on LP, I would encourage them to match the incentive 1:1

17

I will be voting YES, I like the approach to the milestone incentives and the distribution plan seems okay.

1 Like
18

I like that the incentives are based on KPI results, hope more projects consider it. Checks all the other boxes - reasonable ask, longer term outlook, co-incentives etc. However, Iā€™d argue 12%-30% APRs is more of a sign of lack of adoption - I hope to see higher TVLs and APRs stabilize at a sustainable rate.

19

I am not a delegate, but I am an active member of the DefiLATAM and OptimismESP community.

Overall the proposal is reasonable and the distribution of OP tokens based on TVL and metrics seems very transparent to me. Also the protocol in a period of about 3 months has acquired a TVL of +$380k in Optimism, this gives me the guideline that they are doing a good job and surely with the allocation of OP tokens they will do so as well.

20

Iā€™m voting yes on this proposal. There is already some traction and I really like that there are TVL milestones for the distribution of funds. This is a setup I would like to see more projects include in their proposals.