[READY] [GF: Phase 1] Overnight.fi

Please don’t))) As mentioned previously, we had worked with Balancer (with Andrea, Greg, Rab, Alan and others) on making boosted pools 4626 compatible. Hence, Balancer are still considering a grant to compensate us for that work, we proposed to spend it all on OP incentives on Beets/Balancer.

Also, the way USD+ works, is that collateral backing USD+, is deployed across lending and stable-to-stable LP. Since Beets implemented daily reward claiming, we cant wait to deploy a chunk of that liquidity into Balancer’s stable/boosted pools. we also look to start a boosted pool on balancer as well.

All that being said is that USD+ launching on OP would benefit the entire ecosystem and would generate 2nd and 3rd order effects that would benefit Balancer, Uni v3, Velodrome, AAVe, curve and generally everyone. So please vote))

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Whilst there’s some issues with proposal (not deployed to OP, no co-incentives) I do still think that it’s a very interesting experiment for a stablecoin. Will be voting for.

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Hello @lafe

Thank you for your proposal.

One important (for me) question:
Is all your code opensource? Smart contracts? UI and frontend?

I see a couple of issues.

  1. Where is the yield coming from? I went to your website and tried to understand how the system works.

What do you mean by assets immediately convertible to USDC? Which assets are that?

Drilling further it seems that these assets are other yield bearing tokens? Like say cUSDC and aUSDC in Compound and Aave respectively?

Can you explain the “Profit paid out daily in USD+ via rebase” a bit more? So you wrap various yield bearing tokens in a new token. You call it USD+ … and then how do you generate more yield for your users on top of the standard yield that they would get from the normal yield bearing tokens? “Via rebase” does not really explain it.

EDIT: Okay for this question got some answers in Twitter: https://twitter.com/LefterisJP/status/1545884720914890753

  1. Why not wait with the proposal until you are live on Optimism?
  2. Why not wait when you can offer co-incentives? You mention you will have a governance token soon.

yes, everything is opensource: overnight.fi · GitHub

the yield comes from lending strategies (like aUSDC indeed), but most importantly from high quality stable-to-stable pools, like USDC/USDT/DAI. Stable-to-stable pools tend to generate higher yield than things like AAVE, but also involve certain costs that require careful portfolio management. Yield generated by the collateral is paid out via rebase, meaning that when the value of the collateral exceeds 100% of USD+ in circulation, the USD+ is rebased for the collaterization to reach 100%. Below is the picture of USD+ portfolio on Polygon - we run online mark-to-market valuation of the portfolio and contrast it to the amount of USD+.

  1. it is very quick for us to deploy on Optimism (1 week or so), but we won’t be able to launch successfully unless there is an incentive program we are certain about. We missed on veNFT distribution by Velo, otherwise we would be live by now. maybe, the way to go is approving the funding subject to our deployment? i.e. funds are disbursed only after the product is live on OP?

  2. we planned on issuing the governance token but won’t do that soon because of the market conditions. this has been delayed until the end of the bear market essentially.

when talking about incentives it is important to understand our model: we do give incentives to USD+ holders, simply in the form of the yield they receive via rebase. the way to think about it could be that rebase is actually an incentive in USD+ stablecoins. Users absolutely prefer stablecoin incentives to those in governance tokens.

this is also important to understand why other stablecoins provide incentives, in particular, lending protocols like LUSD or Qi DAO. Their model is to generate revenue from lending and issuing the stablecoin is like issuing the ‘variable coupon bond’, i.e. the funding mechanism. They take revenue from lending and pay out çoupon’ in the form of token incentives (or at least thats how it is supposed to work sustainably). Because of the differences in the models, we believe, a different standard in terms of incentive matching is appropriate

an important point: we would love to offer co-incentives, however, our governance token does not exist yet. hence, we attract users by offering yield in LPs

Thank you for mentioning this, I understood this when I read the proposal for first time and realized that co-incentive section is not clear and that is why i was asking lafe for more information. As I understood, your project offer yield on LPs(on stable-coin pair) with rebase mechanism and OP will be an added reward.

and I am fine with no co-incentives as its not mandatory and highly project dependent criteria , but giving 250K OP just as a LP reward is not a good idea as I believe it will only bring sort term liquidity.

One suggestion, from the comment it seems you will be live on OP chain in few days/weeks, once live, submit the proposal again with metric on op chain as it might support your proposal.

Regarding short-term liquidity:

Velo (just like Dystopia and Solidly) is a ve(3,3) governance model, meaning that in a very simplified way pool’s yield is determined by its trading volume:

  • trading volume generates fees
  • fees become bribes
  • bribes are awarded to voters
  • voters are incentivized to provide liquidity where they vote

what we did on Dystopia was focusing on generating trading volumes and thats how we managed to attract voters. the way to do it is not going after stable-to-USD+ pools, that trade very little, but focus on OP/USD+ and ETH/USD+ that, in my estimation, would trade 10-15x the stable-to-stable pools trade.

All this to say that with the initial push from this grant, we would be able to bootstrap initial liquidity in OP/USD+ and ETH/USD+ pools and then high trading volumes would generate bribes and attract voters and help us maintain a sustainable position.

we would honestly appreciate some indication of whether this grant passes before deployment)) maintaining multi-chain infrastructure creates certain complexity that grows exponentially with every chain added; i’m quite certain that without the grant we would not get to a critical mass

I cant comment on the final decision but I will be voting against it. Once its live on OP chain and we have some on-chain data supporting the uses of your project, I would be happy to reconsider your proposal.

yeah, i understand. this is chicken and egg)) please consider that USD+ has proven itself on Dystopia (Velo’s equivalent). The product is useful and loved by its users. There is ample onchain evidence of that on Polygon. we are still a small startup that has to count money, in particular, in today’s environment. My understanding of this grant program is that it is designed to help create the ecosystem and incentivize startups like ours, who find it hard to launch on OP, despite clear user rationale, for purely financial reasons.

The primary purpose of Gov Fund Phase 1 is to directly promote growth on Optimism. There are other programs like the Seed Fund more in line with incentivizing startups. Delegates of course use their judgment and consider a variety of factors. I’ll also be voting No, on balance. I’m not a fan of liquidity mining programs, but do appreciate that it’ll promote growth on Optimism in certain cases. However, as others have noted, I’d like to see your protocol deployed on Optimism and see what sort of activity it gains first. Your success on Polygon is promising, but we need more information about your commitment to Optimism.

i understand, no problem. we would like to deploy and as i had said, funds disbursement can be made subject to the deployment. however, it is impossible to compete without the liquidity mining support - it has been given to all other stablecoins present, also Velodrome had airdropped the veNFTs, which is another form of subsidy. People buy yield and for us it would be impossible to match the yield of those players that are already being subsidized by OP/Velo without this grant. this is a bit of weird situation, as we have an innovative and competitive product, but the grants/subsidies, despite being meant to stimulate growth, have created a major barrier to [our] entry

Farming incentives did very little for FTM and ilk in the long run. Seems to attract mostly mercenary capital that move on once they’ve drained everything.

Asking the OP community to fund every new entrant up to the level of existing players is a very slippery slope. I acknowledge the uneven playing field, but I’d rather move the other incentives down than bring everyone else up

Going to be a no so far from me.

However, if you can tweak your incentives to put OP in users hands another way, I’m interested. Example:

“Click here to try Overnight.fi on Optimism and receive 100 OP!”

Open that up, once, to all your existing Polygon users. It encourages exploration of the L2 without dumping them right back onto the market.

Locking the OP, or scaling up OP rewards by electing to lock instead of dump, etc. Those are also interesting pivots. As another member said, it would also show you’re here (here specifically) to play. It puts your protocol in good light for further rounds of funding too

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

It is a project that is not yet implemented in OP. I think we should first see how it works and some metrics in the chain to validate if its value proposition is approved by users.

Vote: No

It would be better if you had a live product + co-incentives. Using USD+ isn’t a co-incentive as its daily yield is part of the aspect but it is an interesting experiment.

I voted NO :x: for this proposal.

Project value: Not sure, never used before

Amount: Not sure, project not live

OP distribution: Bad, incentives are short term boost with no long term value

Thank you for sharing your proposal. I would like to see the product deployed on Optimism first so I think it makes more sense to wait until this is deployed in July/Aug. I don’t feel liquidity mining incentives are necessary from the start as it’s difficult to see what the organic demand/usage is so I will be voting no in this cycle.

The team is crazy talented and dedicated to the community and best interests of it. :revolving_hearts:

I will be voting NO at this point in time.

Reasons:

  • Not deployed in Optimism yet.
  • No coincentives
  • Due to the 2 bullets above I can’t judge if the requested amount makes sense or not.

Another comment on the protocol:

  • Not sure how safe their approach is, even though it’s an interesting spin on liquidity aggregation using a stablecoin to represent yields and LP.

We voted no on this proposal because it is not yet deployed on Optimism.

[Final]

Voting: No

Firstly, not deployed on Optimism yet. Second, we want to evaluate what kind of strategies would be implemented and thus have a better criterion as to what amount the governance can reasonably accept. Our DeFi community showed no interest in these types of products and worried about its security.

  • Contribution: Standard
  • OP distribution: Neutral
  • Co-incentives: No
  • Impact in LATAM: Neutral

Suggestions: Deploy to check if this protocol can be of interest to the Optimism community and then evaluate an appropriate amount of OP tokens.

1 Like

Snapshot vote - not passed