[READY] [GF: Phase 1 Proposal] Across Protocol (updated template)

Note: This proposal was ready to be voted on prior to the proposal template update. I will link to that post here, because the comments provided valuable feedback that has been taken into account in this proposal. [Original post] [GF: Phase 1] Across Protocol

Proposal Overview

Project Name:
Across Protocol

Author name and info (please provide a reliable point of contact for the project):
Britt - Across community lead from Risk Labs (the foundation that originally built and continues to support Across)

Author contact info:
Britt#2977 on discord, britt@umaproject.org

I understand that I will be required to provide additional KYC information to the Optimism Foundation to receive this grant:
Yes

L2 recipient address:
0x787B66d5281D45126bf0e0f3C9aC682D1E119d6C
Signers are senior Risk Labs Management.

Number of OP tokens requested:
750,000

Grant category:
Governance fund Phase 1

Is this proposal applicable to a specific committee?
Yes. This proposal falls under the Tooling/Infrastructure committee. At the time of writing, the formation of this committee is being voted on here:
https://snapshot.org/#/opcollective.eth/proposal/0x5d3f7aca80dac05c70eae279551d3c8baed64fdfbc52c7cd1e7dfeeba6baf207
And the relevant information about this committee can be found here:

Project Overview

Project description (please explain how your project works):

Across is the fastest, cheapest and most secure bridge between L1 and L2s. Across protocol is a novel bridging method that combines an optimistic oracle, bonded relayers and single-sided liquidity pools to provide decentralized instant transactions from rollup chains to and from Ethereum mainnet.

Across Protocol supports bridging to and from Optimism from Ethereum mainnet and L2s. UMA launched Across Protocol in early November 2021. Across is a bridging solution which uses UMA’s Optimistic Oracle.

Project links:

Additional team member info (please link):

Hart Lambur, Kevin Chan, David Korpi, Nick Pai, and many more. Their email format matches mine [hart | kevin | korpi | nick @ umaproject.org]

Please link to any previous projects the team has meaningfully contributed to:

Risk Labs is the foundation and core team behind UMA and Across. The mission of Risk Labs and our project teams is to make global markets universally fair, accessible, secure and decentralized. UMA is an optimistic oracle (OO) that can record any knowable truth onto a blockchain. The OO empowers and secures a diverse ecosystem of web3 applications including the Across bridge. https://umaproject.org/

Relevant usage metrics (TVL, transactions, volume, unique addresses, etc. Optimism metrics preferred; please link to public sources such as Dune Analytics, etc.):

  • Total Bridge Volume: $664,763,116
  • TVL: $62,864,876 in total
  • Total Unique Bridge Users: 105,409
  • Total Transfers: 215,631

Community-built dashboard can be found here - Across Protocol Stats

Competitors, peers, or similar projects (please link):

We consider Hop (https://hop.exchange/), Stargate (https://stargate.finance/), and Synapse (Synapse) to be our closest competitors for the chains we operate on.

Is/will this project be open sourced?
Yes. Github link above.

Optimism native?:
No

Date of deployment/expected deployment on Optimism:
Across has supported Optimism since it launched in November of 2021

Has your project previously applied for an OP grant?
No

Did the project apply for or receive OP tokens through the Foundation Partner Fund?:
No

If OP tokens were requested from the Foundation Partner Fund, what was the amount?:
N/A

Value Add

Ecosystem Value Proposition:

From a bridging perspective, there are two main barriers to entry for onboarding users into this ecosystem.

  1. Optimistic rollup canonical bridges have a 7 day withdrawal period. This can leave users feeling “stuck” on L2 if they don’t trust or aren’t aware of bridge protocols that can help them move between chains in a much shorter period of time.
  2. A thriving L2 ecosystem is only possible if we also have a competitive and robust network of bridges to support connection between chains. Bridges are particularly vulnerable to exploits, so many newcomers to the ecosystem might be unsure about trying a bridging protocol.

Our proposal aims to solve the above problems by providing an on/off ramp to the ecosystem that will be nearly instantaneous in both directions, and nearly free of cost for users traveling TO Optimism. Our fully audited bridging solution is built on top of UMA’s Optimistic Oracle, which has been battle tested for nearly 2 years and secures hundreds of millions of dollars.

Users will only receive the tokens if they bridge assets to Optimism or run a relayer on Optimism. Both of these require people to move their funds to Optimism, and our hope is that they will find all the great dapps on Optimism and want to stay!

How much will your project match in co-incentives? (not required but recommended, when applicable):

Across will match up to 320% in co-incentives using the ACX token. Details on this can be found below in the Distribution section.

Proposal for token distribution:

We have two planned mechanisms for the distribution of $OP tokens. We will use 75% of the tokens to subsidize bridge fees for users that would like to transfer assets to Optimism. Currently, we support USDC, ETH, DAI, WBTC, USDT, BAL, and UMA. The remaining 25% of the tokens will be used to reward anyone who runs a relayer on Optimism.

Bridge Users

For any user going to Optimism, Across will provide $ACX incentives alongside the $OP. The amount of this $ACX co-incentive can be as high as 320% of the $OP incentive dependent on whether or not the bridgooor uses an Across referral link to do their transaction. An example of how it could be that high is if a user self refers in Across, they will receive 80% of their bridge fee in $ACX and only 25% in $OP (for a total of 105% rebate). 80%/25% is a 320% co-incentive. their bridge fee 105% (so they will earn 5% to bridge to Optimism). The composure of this rebate depends on whether or not the user is already earning $ACX rewards on their transaction. If there is no $ACX reward, the bridge fee will be rebated back 80% $OP and 25% $ACX. If there is an $ACX reward, the $OP amount will be (105%-$ACX%). All of this will be computed on the bridge fee component of a transfer and capped at 12 basis points (which covers the entire fee during periods of low to moderate bridge utilization.)

Note: Across differentiates between the bridge fee and the gas fee. This distribution is only applied to bridge fees, so network conditions that cause an increase in gas fees should not make an impact in this program. For more information on our bridge fees, you can see this section of our docs site.

Relayers

We will direct 25% of this grant towards rewarding relayers that facilitate transfers to Optimism. This will be dispersed as 0.01% (1bp) on the amount transferred in each relay. For context, this is equal to a 33% bonus for relayers operating on Optimism. This incentive will last until the 25% is exhausted.

Note: This was an addition to the original proposal, which only rewarded bridge users. It was decided that this would serve to enhance the overall bridge experience for Optimism users, making it a worthwhile investment. Having a robust relayer network strengthens the security mechanism of the bridge, and reduces transaction times during high traffic events.

Distribution

Across will provide $ACX incentives alongside the $OP. The amount of this $ACX co-incentive can be as high as 320% of the $OP incentive dependent on whether or not the bridgooor uses an Across referral link to do their transaction. An example of how it could be that high is if a user self refers in Across, they will receive 80% of their bridge fee in $ACX and only 25% in $OP (for a total of 105% rebate). 80%/25% is a 320% co-incentive.

The rate of distribution will depend on many factors. The main ones include amount of bridging we see to Optimism, whether or not it’s through a referral link, and the Optimism token price. It is expected that we will spend these tokens at a slower rate than other bridges since other bridges are able to incentivize Optimism liquidity pools, whereas our bridge model does not require a liquidity pool on each destination chain. (Note: we believe this is a good thing, as incentivizing LPs can cause mercenary capital to farm rewards). Given all of these factors, we estimate 12-18months for distribution. We believe this is an appropriate amount of time to distribute the tokens, primarily because we hope to establish long-term association for users bridging to Optimism. These tokens will help to make it nearly costless and effortless to move assets to Optimism when it makes sense for users to do so. If the grant distribution time is too short, it could unintentionally generate activities that attempt to farm the reward.

We also recognize that there will be external factors that may lead to farming as well. In such an event, we would expect to adjust the OP rewards distribution in a way that reduces this farming potential. Our goal is not to allow users to farm and sell $OP to bank a profit and not use the optimism ecosystem. We will keep the optimism delegates aware of any such actions, should they ever be necessary. We would like to be the bridge of choice for any user that ever needs to move tokens to Optimism as more and more assets migrate to Optimism.

Depending on the optimism token price and whether or not people use ACX referral links, this program should fund between $500 million and $1 billion of volume to Optimism.

Please provide any additional information that will facilitate accountability:(smart contracts addresses relevant to the proposal, relevant organizational wallet addresses, etc.)

You can find links to all of our smart contracts in our docs site (linked above). The wallet listed above as the receiving wallet will hold these tokens until a distribution contract has been deployed. Upon doing so, this information will be supplied to OP governance for additional accountability.

2 Likes

Here is a brief checklist of feedback we’ve included up to this point:

  • Lower the ask from 1,000,000 $OP to $750,000 $OP.
  • Clarify how we’ll prevent users from cycling funds to farm this reward.
  • Who is Britt?
  • Clarify the types of fees in Across and which one this applies to.
  • Rewarding relayers is another way to add value to this distribution plan.
2 Likes

Hi @britt reviewing the proposal, is good seeing an amount reduction. I respect the proposal approach, but I particulary was analysing these subsidies from bridges fees (earning 5%), I was doing some number, and considering some circumstances I see some risks of cycling funds, especially with high amounts and using third parties such as CEXs or bridges with positive slippage, even more so in this context of low gas fee in L1, I mean, is not impossible. I know this is a topic that was discussed in your previous thread, I would suggest reducing from 105% to 101% or less to completely eliminate that risk. Let me know what you think.

2 Likes

Hi @DeFi_LATAM_Joxes, thanks for your response.

We don’t view this as a significant risk, and here’s why:
5% of a bridge fee is 0.6bps. If a user did $1mm to Optimism, they would “profit” $60 (this does not account for gas costs as well as slippage in token prices). So if they did 1mm$ / day every day for a year they’d make 2.2% APY at best. This would likely be lower after costs and friction. So this is not a very good return on investment/time/effort. Also, the positive slippage issue you mentioned is mostly for the L1 to L2 route (that we are incentivizing), so the user would have to pick one or the other, not combine. As far as we are aware, there are no known incentives from L2 > L1 that would allow users to profit in both directions.

If we do find people gaming it, there are some options to mitigate:
1.) We could reduce $ACX rewards and/or $OP rewards for identified farmers.
2.) We could consider only allowing a wallet’s first 10 transfers to be eligible, making farming more difficult.
3.) We could consider requiring the funds to remain on Optimism for a period of time before rewards are received.

It is in our best interest to reduce farming activities here as well, so this is something that will be monitored closely.

1 Like

I am an Optimism delegate [Delegate Commitments - #42 by solarcurve ] with sufficient voting power and I believe this proposal is ready to move to a vote.

Across recently added support for bridging BAL and I’ve been quite pleased with the results plus all interactions with the team have been great. Optimism should benefit from these incentives as it will bring more users and funds to the network. If Across can support more tokens with a presence on Optimism and Ethereum like BAL it will encourage more trading activity as it allows arbitragers to close the gap on price discrepancies. For example, I could see supporting rETH and wstETH as being a big value add for the Optimism ecosystem.

I’m an Optimism delegate with >0.5% of the current votable token supply and I believe this proposal is ready to move to a Snapshot vote (not an endorsement of the proposal itself but that I think it is ready for voting). I had already reviewed a draft proposal where I gave initial feedback that suggested lowering the number of OP tokens requested which was updated.

“Across is the fastest, cheapest and most secure bridge between L1 and L2s” - Who in their right mind thinks that putting a controversial (at best) marketing sentence like this in a proposal? There’s certainly no consensus that Across is the ‘most secure’ bridge between L1 and L2s. Bad look imo.

2 Likes

1. Presentation

We are an officially recognized Tooling Governance Committee, responsible for assessing proposals related to tooling and infrastructure (wallets, bridges etc.).

To begin with, for this proposal we identified a possible conflict of interest between our team member (@cryptotesters involved in Hop protocol) and thus that individual was excluded from assessing this proposal.

2. About the project

Bridges are vital for the Optimism network to flourish. They enable capital flow between various chains.

Across is an optimistic bridge allowing users to move funds between two EVM compatible chains. Relayers are actors that provide liquidity on destination chains. Across is optimistic in the sense that after a successful relay of funds, relayers (not users) are reimbursed for their service by the optimistic oracle.

At its current stage, Across uses UMA’s Optimistic Oracle as a security source for dispute resolution. Conceptually, Across should work properly if UMA is.

Notes:

  • Supports the following chains, Ethereum, Arbitrum, Boba, Polygon and Optimism launched in December 2021.
  • Across is the only bridge that uses UMA’s Optimism Oracles.
  • They have plans to launch $ACX token in October 2022. Full details of the token launch.
  • To date it hasn’t suffered any security incidents.

External links:

Similar OP Governance proposals:

3. About the following

Across submitted original proposal in July. Original proposal requested more tokens (1M OP vs current 750k OP) and had a similar co-incentives plan.

4. About the proposal valuation

  • Added value (good to bad): good. As we noted previously, bridges are crucial for adoption. It’s important for Optimism to use as many different (reasonable) bridge designs as possible. Across is one of few bridges employing optimistic tech. It has a good track record and active community.
  • Impact or expected usage (high to low): medium. Optimism ecosystem has grown these months, there are a large number and variety of bridges supporting the network, But it is always welcomed to have new bridges/liquidity networks being frictionless to enter and exit. Due to the presence of different bridges competing for activity, we believe that the impact will be medium since it does not present a very emerging need beyond the possibility of supporting new tokens and incentivising users to give Optimism a try.
  • Current Status [Development stage/Open Source?] (early to ready): ready. Across Protocol is in production since November last year. At the moment anyone can be a relayer to full-fill orders (https://docs.across.to/v2/developers/running-a-relayer) but governance has not been implemented yet nor full-immutability.
  • Expenditure plan and distribution (appropriate to inappropriate): appropriate. 75% of requested OP tokens will be used to subsidise users bridging, 25% for relayers providing liquidity. ACX will be used as a co-incentive. We are slightly worried about rebates that can total to more of 105% bridge fees, but we believe that in reality, it won’t be a problem because this is rebating only bridge fees (not OP gas fee) + it can be tweaked if farming potential is real.
  • Amount requested (high to low): medium.

5. KPIs and impact tracking

Optimism Governance should be aware how each OP token is really spent. We suggest tracking following KPIs:

  • number of bridged users
  • volume bridged
  • number of bridged users that made at least 3 other transactions on optimism (other than bridging away)
  • OP vs ACX spent

We suggest that Across team creates a Dune dashboard (or something similar) with these metrics.

6. FINAL RECOMMENDATION: Yes.

3 Likes

I have voted against this proposal and the recommendation.
Distribution will last 12-18 months. I consider this too long as this is a perpetual fund and you could ask for far less for a 6 month program and return after milestones are met.

I refer to…

2 Likes