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

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.

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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 ?

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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.

The amount asked for the size of the project seems to be quite substantial. It looks like 100% is to be used on incentives which wont provide value after incentives dry up.

This proposal lacks a fair amount of detail to make an informed decision so we are going to have to vote no. Disregarding that Ooki has little traction, the product isn’t on Optimism yet. It would be easier to demonstrate a working product on Optimism then ask for x amount of OP tokens. We recommend applying again in future rounds.

Ooki is already deployed on Optimism. The UI on the front end dapp at ooki.com is being updated to allow users to connect to Optimism. There is a slight delay because there is no sushi / uni v2 AMM on Optimism. It is currently possible to trade, lend and borrow but there are some “small things” that need fixing like estimation of profit and liquidation price.

Ooki DAO has discussed matching OOKI to OP rewards in the Ooki governance forum. Ooki grant Op proposal, matching incentives - Ooki Improvement Proposals - Ooki

The consensus following these discussion is that due to the OOKI treasury there are not enough funds available to match rewards.

To everyone saying that the requested OP grant is too large and matching funds would be better. Would you all be willing to support if Ooki matched funds at a smaller ratio, for example 10:1 and if the OP grant was reduced from 700k OP to a smaller amount, for example 400k OP tokens instead ?

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It sounds good to me however I understand part of the scepticism from people (Ooki has big potential but it’s in development) but I keep considering Ooki proposal as a good one for Optimism.
Good discussion in Ooki DAO btw, I recommend visit it, there is good information.

Echoing other delegates above I will also vote NO.

  1. The amount is very big.
  2. Protocol not yet deployed on optimism.
  3. Amount will be used to attract mercenary users to get the incentives and I am not convinced that they will stay.
  4. Protocols asks for tokens but is not willing to match them as incentives.

As I’m understanding it:
1- they are shaping to OP DAO interests
2- Ooki is close to do it on its platform but it is already deployed: DefiLlama - Ooki
3- ? I’m not agree with this (OokiDAO explained it in one of its replays)
4- they made a proposal about that, keep in mind Ooki is a low MC and they need be careful about their treasury

  1. We posted previously that we would be willing to adjust the grant amount if the community thinks it is too large.
  2. Ooki is currently deployed on Optimism.
  3. The OOKI DAO community is willing to match a reduced amount because the OOKI treasury can’t afford to match 1 to 1.
  4. The grants are used to kickstart trading volume and incentivize sticky liquidity. See details above about how these rewards are structured to achieve this, not attracting mercenary users.

We would love to have your support for this grant and are willing to work with you to get your approval by adjusting grant parameters to address concerns.

Snapshot vote - Not passed