Project Name: Interest Protocol
Author Name: GFX Labs
Number of OP tokens requested: 240,000
L2 Recipient Address: 0xa6e8772af29b29B9202a073f8E36f447689BEef6
Relevant Usage Metrics: On Ethereum, Interest Protocol ranks 118th in TVL after less than 1 month, and $3.9m in overcollateralized loans at time of writing.
Optimism alignment (up to 200 word explanation): Interest Protocol plans to support the OP token as collateral on Optimism. Interest Protocol is designed to allow tokens held as collateral to still be able to participate in governance via delegation controlled by the user. This feature will allow OP users to simultaneously utilize their tokens as intended for governance and use them to participate in the Optimism economy. No other lending protocol offers this feature to our knowledge. Note that collateral is not lent out on Interest Protocol, which prevents OP placed as collateral from being used to short the token in times of market volatility.
Proposal for token distribution (under 1000 words):
How will the OP tokens be distributed?
Tokens will be distributed to incentivize borrowing usage of Interest Protocol. Note that Interest Protocol supports vote delegation by users’ collateral tokens, so users do not need to choose between governance participation and accessing value from their holdings, should they choose to place the tokens as collateral at Interest Protocol.
How will this distribution incentivize usage and liquidity on Optimism?
Interest Protocol will support OP as a collateral type. Interest Protocol notably allows users to delegate votes from their collateral tokens even while in the vault. This added utility combined with the fact that Interest Protocol does not lend out collateral provides a use for OP other than selling into the market.
Why will the incentivized users and liquidity remain after incentives dry up?
Users will hopefully retain their OP to borrow against, delegate their votes, or both. Note that Interest Protocol will support OP as a collateral, and will also allow users to continue delegating their OP while serving as collateral. The screenshot below shows what this looks like on Ethereum Interest Protocol with other governance tokens.
Over what period of time will the tokens be distributed?
The specific schedule is ultimately up to Interest Protocol governance, but 20,000 OP per week for 12 weeks to celebrate the launch on Optimism is the intention at this time.
Has your project received an Optimism grant before?
How much will your project match in co-incentives?
IPT, the governance token of Interest Protocol (not yet in circulation as of writing), will be used to incentivize borrowers. IPT will at least match with OP incentives on a 25 cent price basis for IPT.