[READY] [GF: Phase 1 Proposal] Ooki Protocol

Project Name: Ooki Protocol

Author Name: Ang

Number of OP tokens requested: 700k

L2 Recipient Address:

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

Optimism alignment (up to 200 word explanation):

Ooki is extremely aligned with the Optimism and looks forward to cooperating with the core team and community. Ooki Protocol (Ooki.com) is a protocol for margin trading, borrowing, lending and staking deployed on multiple blockchains. Ooki is a fully decentralized, DAO led project, governed by community vote for all major changes to the protocol.

Ooki users can open margin trades with up to 15x leverage using a fully decentralized trading platform. Ooki users can lend out funds and earn interest on their capital, and also borrow funds against collateral. Ooki users can participate in platform governance through the OOKI DAO, and use their OOKI tokens to vote on proposals, submit new proposals, and participate in platform governance.

We are excited to service the entire Optimism Ecosystem with secure and reliable DeFi leveraged margin trading, borrowing, and lending services for long tail tokens deployed on Optimism. Initially, after Ooki is deployed, margin trading/borrowing/lending pairs will include USDT, USDC, DAI, UST, FRAX, ETH, WBTC

Proposal for token distribution (under 1000 words):

In order to provide an optimal DeFi experience, sufficient liquidity is needed for traders to open new margin trading positions. On Ooki, anyone can lend out funds and earn interest. Initially, seed liquidity is necessary to provide liquidity to attract and incentivize new lenders, borrowers and traders to the application.

Once sufficient liquidity is established, users open large margin trading positions, short or long, borrow funds with collateral, as well as lend out funds and earn interest. Ooki has a recently launched an innovative and unique dynamic interest mechanism to ensure borrowers and lenders receive optimal interest rates when opening new positions on Ooki. Ooki’s approach to delivering optimal rates to lenders and borrowers uses a variable interest rate with a dynamically changing interest rate curve. The new dynamic interest rate system is preferable because it will allow liquidity pools to grow larger.

Additionally, Ooki protocol gives developers and pro users the ability to use flash loans. Flash loans are an uncollateralized loan option designed for developers. Flash loans enable users to borrow instantly and easily with zero collateral obligations, provided that the liquidity is returned to the pool within one transaction block. Use-cases include arbitrage, collateral swapping, self-liquidation, and much more.

How will the OP tokens be distributed?

OP tokens will be distributed to users who lend out funds used by traders to open margin trading long/short positions. OP tokens will also be to traders and borrowers to incentivize activity.

How will this distribution incentivize usage and liquidity on Optimism?

To facilitate the successful launch of Ooki on Optimism, Ooki is requesting a grant of 400k OP tokens which will be used to incentivize traders, borrowers, and lenders to open new margin trades, lend out funds, and borrow on Ooki’s Optimism deployment. These funds will be utilized in order to Incentivize borrowing, trading, and lending activity on the OOKI Optimism deployment. Utilizing various incentive mechanisms, including borrowing incentives, and trading incentives.

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

After incentives are removed, users will continue to use the product in order to earn interest, and engage in margin trading long short with up to 15x leverage. The liquidity incentives are used for initial liquidity to bootstrap platform usage.

Please let us know if you have any questions, or if you have feedback. We’d love to hear from you!

Over what period of time will the tokens be distributed?

The planned incentive period will be between 6-12 months.

How much will your project match in co-incentives?

Ooki tokens may be added pending approval of Ooki DAO.

10 Likes

Would you please share TVL, and number of transactions etc

Please see multisig and relevant metrics information below:

Multisig: 0x4e5b10F8221eadCeDEAA84a122620e22775F82Df

The current TVL and associated metrics are available here: Ooki | DeFi Crypto Margin Trading

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Ooki would be a good addition to Optimism. As far as I’m aware, there are currently no spot margin trading platforms on Optimism.

2 Likes

It should be also mentioned that the then co-founder (who now left for Ooki to become pure DAO-based project and is now a contributor, still heavily involved with project though)
was extremely enthusiastic for Optimism. Based on an earlier community call, he, -in my interpretation- even declined zk-rollup to prioritise OP.
I myself have tried to push the DAO-hired team to prioritise Optimism - Ooki union.

Since he had such strong belief that Ooki’s potential for limit orders, permissionless listings (Uniswap of margin trading) is best set with Optimism, I also got convinced that OP is the best synergy for Ooki.

Let us make this happen

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Hey @OokiDAO, thanks for submitting this proposal. I’ve added [DRAFT] to the title above.

To get this ready for a vote, you should:

  • Circulate this proposal in #gov-temp-check on Discord for community feedback.
  • When you feel like this proposal has good buy-in, including from at least one OP delegate, you can update [DRAFT] in the title to [READY] and we’ll include it in the next voting cycle on Snapshot.

The first voting cycle for GovFund Phase 1 proposals will run June 22 – July 6.

More details on the process above can be found in the Operating Manual or on Gov Fund Phase 1: How to create a proposal

i don,t now much about ooki it,s not much use in netherlands

Hi Dregan. there are quite a few dutch people who know about the Ooki project. if you want to know more about the project i can explain it in dutch to you in telegram. username: @CryptoSteve1101

at last: well writed proposal, i support it! Ooki and Optimism can benefit both:

  • Optimism have a unique trading platform on their chain. it could attract usage on their platform
  • it helps Ooki to expand to a new chain, getting more awarenes and higher tvl’s

The problem here is you’re asking for 700k OP to stimulate artificial usage of your protocol with no explanation for why users would stick around and you might match incentives.

If this was actually a good use of funds why would you not match it?

Thanks for highlighting the need for these answers in the original post. Our goal is to design the system to optimize the activity and incentivize long term liquidity and active users not to promote artificial usage of the protocol. So we are open to any suggestions on how we can improve and align the incentives. Let me know if the below addresses the points you raised.

Why users will stick around after incentives end?

  • Seed liquidity to kickstart platform.

The liquidity incentives are used for initial liquidity to bootstrap platform usage. Liquidity would remain on the platform after initial OP liquidity incentives are removed because liquidity providers will earn a return on lent capital from people borrowing and trading on the platform. The OP incentives are used in order to solve the Chicken/Egg problem of traders not borrowing because there is no liquidity, and Lenders not adding liquidity because there are no traders. Once initial liquidity is established and platform usage builds up over time, then the liquidity incentives are no longer needed to retain lender or traders.

  • Sticky Liquidity

In addition, the liquidity incentives will be structured in such a way as to incentivize sticky liquidity with a few strategies:

  • Linking Demand with Usage

Linking demand for liquidity with usage. Increasing incentives as needed to meet trading/borrowing demands. For example, lenders receive a subsidized APY when lending out assets to borrowers. The funds will vest and taper gradually over time so lenders do not have incentive to stop providing liquidity as soon as incentives end. Incentivized pools will be those that require that liquidity. If a pool already has sufficient liquidity to meet trading demand, then rewards won’t be applied to the pool.

Traders would receive a fee rebate based on trading activity/volume. We also plan to hold biweekly trading competitions to reward top traders based on a variety of criteria (volume, size, leverage, etc.)

For borrowers we may not need to incentivize them. To prevent the abuse you mentioned we could place limits on borrow duration to qualify for rebate on borrowing interest.

Vesting

Liquidity incentives would vest over a period of time rather than being immediately liquid. This would also incentivize sticky liquidity together with the initiatives described above. As incentives could be introduced that would tie vesting of rewards with continued liquidity providing.

Why not Match incentives.

Similarly to Optimism, Ooki is also a DAO led organization and the team cannot decide unilaterally to match OP incentives with OOKI as it would need OOKI DAO approval. If the DAO approved matching the OP investment grant then it would certainly be something that would be possible. However, for the Ooki community to approve matching without knowing whether an OP grant is approved or how much would be approved the proposal would not have clarity on how much was being approved and could not be approved by the multisig without this information.

Please let us know if you have any questions, or if you have feedback.

1 Like

Thanks for the response. I think it is reasonable to expect a firm commitment from Ooki to match these funds before Optimism votes on this proposal. You can simply ask your DAO to approve a match if this proposal passes and vote on that (my organization did it this way).

This kind of incentive program requires a guaranteed full match in my view. Without that it does not feel like a good use of OP.

Are you deployed on Optimism? Your site doesn’t seem to support it yet. Is it basically if you get incentives then you will deploy or? The way I’d like to see something like this go is you deploy to Optimism & start bootstrapping it on your own, show some progress, THEN ask for OP incentives to accelerate what is already working.

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We are in the final stages of deploying on Optimism. From what I understand the launch should be taking place in the next week or two.

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I would like to echo @solarcurve view on not matching the reward. Why dont you submit a proposal to your DAO with “if OP proposal is approved, dao will also match the incentives”.

second, I have raised this question on discord but didnt get an answer on this “users will continue to use the product in order to earn interest, and engage in margin trading long short with up to 15x leverage”, I can do this at many other platform.

You contract is not live on OP chain yet, I am not sure well the contact will be tested before making it live.
Does it make more sense to check with your DAO, deploy the project on OP chain submit the proposal again in next Phase ?

2 Likes

I support this proposal.
100% grants will go to the OP users on the Ooki platform. Also Ooki project is building a secure and extend ecosystem for trading, borrowing and lending.
Ooki would be a good add/union for Optimism; present and future, under my point of view.
I’m an Ooki fan

I have to echo @OPuser here.

From what is being proposed here, this project is not unique and seems very similar to projects already approved in Phase 0.

I think matching incentives is a good idea when requesting OP. Seems like a fair compromise.

Voted : NO

Reason:

Incentives are not matched.

After incentives are removed, users will continue to use the product in order to earn interest, and engage in margin trading long short with up to 15x leverage. The liquidity incentives are used for initial liquidity to bootstrap platform usage.

I can do this on many DApps, this need some proper plan. Even an idea might work better than this.

L2 Recipient address is missing.

700K is too much. Better break into two-three proposals.

Now, I am requesting your feedback on these of my ideas. Feedback is two-way approach, you help us and we help you.

This proposal fits into Gov Fund Phase 1 but the value for Optimism is questionable: Voting No

Value-add: Small (based on given info and metrics)
Amount: High
Op distribution: Okayish but unclear
Co-incentives: Not clear yet

This funding round’s goal is primarily in increasing liquidity and users on Optimism. Ooki has so far little AUM and users. The product looks nice and the mentioned incentives could be interesting to grow your user base on Optimism but this proposal lacks detail and clarity and the Ask is very high. We look forward to your Optimism deployment, engagement and hope for a more detailed, value-adding proposal that focuses on co-growth initiatives for the Op ecosystem in one of the next Phases.

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@ScaleWeb3 I really like your way of evaluating a proposal. Gives a clear picture on why you are voting yes/no.

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Thanks for sharing. The amount requested is very high relative to where the current metrics are at so I don’t think it would be the best use of funds for Optimism at this time.