[READY] [GF: Phase 1 Proposal] Socket

Project name: Socket

Author name and contact info
Rishabh Khurana
Telegram: khuranarishabh
Discord: Rishabh Khurana#3779

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

Yes

L2 recipient address

0x803CE4f6A0e064a01C56f7Ca21223a7b65e4b869

Which Voting Cycle are you applying for?
Phase 1, Cycle 6

Grant category:
Governance Fund, Phase 1

Is this proposal applicable to a specific committee?
Tooling

Project description:

Socket is an interoperability protocol for secure & efficient data and asset transfers across chains. Apps can simply plug in Socket in their apps to get access to liquidity & state of all chains. Asset transfers are live today, with data transfers launching soon.

How Asset Transfers Work: We aggregate all bridges & DEXs across chains for efficient asset transfers. The result is ultra-efficient cross chain swaps powered by an advanced routing mechanism that dynamically selects the best bridge/route & optimizes for developer preferences like cost, latency or security.

Top wallets, DeFi & portfolio management apps like Zerion, Zapper, Synthetix & Lyra use Socket for a seamless bridging experience in their apps. Some places to try out Socket asset transfers in action:

Project Links

Additional team member info

The Socket team includes super coders with deep engineering & research experience; and seasoned business operators. Some of our team members:

  • Vaibhav Chellani (Cofounder & CEO): First developer at Polygon; built first ever zkRollup & most scalable Optimistic rollup; Early core contributor at Flashbots.
  • Rishabh Khurana (Cofounder): 4+yrs of experience launching web2 products (scaled one from 0 to $40mn ARR at India’s first Unicorn).
  • Arth Patel (Head of Engineering): Early developer at Polygon, built Polygon PoS bridge, ex-developer at Union Protcol, advisor & fren to DeFi projects
  • Varun Bhalla (Product Manager): ex-founder. Last startup had $10mn+ ARR before it got acquired

Please link to any previous projects the team has meaningfully contributed to
Our team has prior contributions across Polygon, Flashbots, Ethereum Foundation, Union Protocol, Index Coop, UMA, Harvest Finance, dOrg & other projects.

Relevant usage metrics:

  • Total Volume Processed: $683mn
  • Total Txns Processed: 529k
  • Volume Onboarded to Optimism: $189mn
  • Wallets Onboarded to Optimism: 51k
  • 30+ Projects Leverage Socket for a Smoother Bridging Experience. Projects on Optimism include:
    • Synthetix Ecosystem: Synthetix, dHedge & Polynomial
    • Web3 exploration app Zapper & Smart, Social Wallet Zerion
    • DeFi dApps: Rubicon, Premia & Brahma Fi
    • Wallets & Portfolio Mgmt Apps: One Key, Plasma Finance, Choise, Ambire Wallet, Sequence Wallet & imToken
    • SoonTM- biggest Optimism dApps, wallets & portfolio management apps

Is/will this project be open sourced?

All our contracts are openly available & verified on Etherscan. Our Optimism contract addresses can be viewed here

Competitors, peers, or similar projects

Our peers are all bridging projects/protocols. Some of them include Across, Hop, Stargate, Synapse, Celer, Multichain, Li.Fi & Rango Exchange.

Optimism native?
No (as a bridging provider, we’re deployed on 9 chains as of today)

Date of deployment/expected deployment on Optimism:
Dec 2021

Ecosystem Value Proposition

What is the problem statement this proposal hopes to solve for the Optimism ecosystem?

We share the Optimism Foundation’s vision that the next billion users should be empowered to experience web3 through the security of L2s. We’re working towards solving one of the key pieces to enable this- seamless user onboarding.

Here’s a quick example of what an Avalanche user with AVAX, who wants to stake sETH on Synthetix on Optimism needed to go through:

  1. Leave Synthetix app to find the most cost-effective bridge from Avalanche to Optimism
  2. Swap AVAX into USDC/some bridge supported token (fee)
  3. Bridge to Optimism (fee)
  4. Get ETH from CEXs/Optimism Gateway
  5. Swap to sETH (fee)

This is a ton of friction! For users & liquidity to migrate into Optimism at scale, this experience needs to be a lot simpler & affordable.

How does your proposal offer a value proposition solving the above problem?

There are 2 major problems for users as seen in the above example:

  • High onboarding cost for user
  • The friction associated with the whole onboarding journey filled with multiple steps (above process requires 20+ steps/clicks)

Socket will use the allocated $OP tokens to solve both these problems for users by using the allocated tokens to:

  • Reduce the net cost for users to onboard to Optimism
  • Encourage app developers to provide a smoother in-app onboarding experience such that users on other chains can migrate their liquidity to Optimism & start using their app.

This would mean an amazing experience for users which allows them to come from any chain, get any token they want, along with GAS (oETH) to start transacting on Optimism easily & quickly! Here are some ways apps on Optimism are already leveraging Socket to make this happen:

  • DeFi projects like Synthetix, Premia & dHedge use Socket to allow users to come from different chains and start transacting on their apps easily
  • Web3 exploration apps like Zapper, social wallets like Zerion & more allow users to bridge over (via Socket) & participate in the Optimism ecosystem easily
  • Polynomial, Brahma Fi & more are powering the next generation of multichain apps to get liquidity on Optimism with Socket:
    • Polynomial is introducing chain-agnostic deposits into its vaults powered by Socket
    • Brahma provides multichain yield with Socket. Deposit into Brahma vaults on any chain, & Brahma earns yield for you on Optimism!

Why will this solution be a source of growth for the Optimism ecosystem?

The objective of the token distribution is to supercharge our existing efforts ****of liquidity migration and user onboarding into Optimism. The token distribution eliminates one of the biggest problems hindering user onboarding & protocol adoption to create an accessible & prosperous Optimism ecosystem.

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

Number of OP tokens requested:
1,000,000

How much will your project match in co-incentives?

Socket doesn’t have a token and hence can’t match with token co-incentives. However, we plan to allocate significant marketing efforts & resources with our partners to attract users & liquidity. To achieve these we will be conducting marketing campaigns, tutorials, guides & more!

We also plan to allocate significant developer efforts & resources to help our partners build great onboarding experiences, or truly multichain apps, along with 24*7 user & developer support.

Lastly, we will continue to educate users & community about bridging with things like bridge risk framework, which we launched in collaboration with L2Beats.

Proposal for token distribution

How will the OP tokens be distributed?

$OP tokens will be distributed to developers building on Optimism & users bridging to Optimism using Socket

Users (60%)

Every user that onboards to Optimism via Socket (from partner apps) will have 90% of their total onboarding fees refunded in $OP. Total onboarding fee includes the total GAS spent + the bridging fee from the underlying bridges

Note: We plan to keep a max cap per user per transaction & minimum bridging amount

Builders (40%)

We put a strong focus on incentivizing builders on Optimism to encourage great onboarding experiences & migration of liquidity into Optimism. We propose the following allocation strategies for builders leveraging Socket to onboard users onto Optimism:

  • Developers who integrate Socket as a part of their UX (20%): Teams that integrate Socket as a part of their user experience using our APIs/SDK/Plugin would receive $OP over 6 months pro-rata based on the nominal USD value that their integration has transferred to Optimism.
  • Grants (20%): Teams building dApps with Socket that makes onboarding & using Optimism easier by building capabilities that allow users on other chains to directly interact with/migrate liquidity into Optimism based dApps with one-click UX. Examples include:
    • Chain Agnostic Deposits: Allow users to deposit into vaults native to Optimism, from any chain & with any token
    • Uniswap LP Migration: Allow users to migrate their LP position on Ethereum to LP position on Optimism in 1 click

Note: Bungee is an app built on Socket, by the Socket team. Hence, Bungee developers (Socket Team) will not be applicable for the developer rewards

Over what period of time will the tokens be distributed for each initiative?

Overall, we expect the distribution will take 6-8 months. It will vary based on the price of $OP & other factors such as gas markets on various supported networks, prices of native tokens of supported networks & developer adoption.

Please list the milestones/KPIs you expect to achieve for each initiative, considering how each relates to incentivizing sustainable usage and liquidity on Optimism. Please keep in mind that progress towards these milestones/KPIs should be trackable.

Key KPIs:

  • Number of wallets onboarded onto Optimism
  • Liquidity onboarded into Optimism

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

The incentives will help bring users to onboard to Optimism & start using their favourite apps easily. Once users get a taste of Optimism, they will want to stay for cheap & fast transactions, seamless user experience & the rich ecosystem of dapps.

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

All smart contract addresses are available in our docs here

9 Likes

Thanks for the proposal! If you plan to have this reviewed in Voting Cycle 6, can you please specify which committee should review your proposal (NFTs and Gaming, Tooling, or DeFi) under the grant category field in the updated proposal template for Cycle 6?

hey @lavande done ser, also updated to the updated tempalte

Disclosure: Rubicon integrated with Socket to provide an in-app Bridge and would benefit from the Builders portion of this proposal.

We chose to integrate with Socket because we think they have the best tech stack for helping users navigate across chains. As outlined above, several Optimism apps, Coinbase Wallet, and others rely on Socket as critical cross-chain infrastructure for their users.

Their requested amount is appropriately the exact same as other bridge/cross-chain infra proposals (Hop, Stargate, and Celer). Socket has already onboarded 51k (!) addresses to Optimism, and these incentives would only accelerate users onboarding to L2.

I will be voting in favor of this proposal.

3 Likes

In support of this so far and love the work you guys are doing with Socket. Got a couple of questions.

Do you have a rough figure of what the cap might be? Also, thoughts on refunding 80-90% instead of 100%?

Cumulatively, you’d be able to refund more people, and covering 90% of their cost is a great catch anyway.

Thanks @Bobbay_StableNode !

  1. Do you have a rough figure of what the cap might be?

Currently, at 15 gwei, GAS spent for a swap & bridge txn from Ethereum is ~$11. Estimated spend at:

  • 50 gwei → $33
  • 110 gwei → $70

We plan to have a max cap such that users are encouraged to onboard to Optimism even (& especially) during high L1 GAS periods, while still ensuring we can optimize for onboarding max users to Optimism. Based on last few months, we feel cap should be based on 110 gwei i.e. $70 fee. Of course, open to suggestions/feedback here

  1. Also, thoughts on refunding 80-90% instead of 100%? Cumulatively, you’d be able to refund more people, and covering 90% of their cost is a great catch anyway.

This makes 100% sense, as this acts like a discount for users instead of a free functionality. Will be editing the proposal accordingly.

Based on the 90% reimbursement, the cap of reimbursement will be $63 (or $60 to round it off)

2 Likes

Hi @khuranarishabh, some days ago another updated was made on Grant Proposal Template. Please re-check it, thank you!

Disregarding the above grant proposal template changes, I’d like to post the following

I am an Optimism delegate [Delegate Commitments - #65 by mastermojo] with sufficient voting power and I believe this proposal is ready to move to a vote once these grant proposal template updates are in.

Thx

3 Likes

Hi @DeFi_LATAM_Joxes - made the edits accordingly. Kindly let us know if there’s anything we might have missed :slight_smile:

2 Likes

I am an Optimism delegate [Delegate Commitments - #18 by katie] with sufficient voting power and I believe this proposal is ready to move to a vote.

2 Likes

Hi, I have a few questions:

1- Do you have link from Dune about the metrics you mention in Optimism.

2- Can you list the number of Optimism projects that have already integrated your SDK?

3- What is the maximum and minimum amount of bridgning to avoid a farmeo? How will you avoid sybil attack?

4- Will the protocols that have already received Optimism grants participate in your grant to builders?

2 Likes

hey, I leave some doubts about your proposal

Do you mean any tool / service that can be considered a public good for Optimism? Could you elaborate a little more on this?

based on your statement; What do you think will happen after the subsidy ends?

Is the amount of tokens requested based on any metric? which is the reason

in the case of bridges such as Hop Protocol, which have incentives in $Op tokens; How would the double incentive of this interaction play out?

1 Like

Excellent point, i would include Li.fi as well to the list. Or in more general term, what is your approach toward protocol with already approved OP grant with respect to double incentives

3 Likes

1 - Do you have link from Dune about the metrics you mention in Optimism.

The stats were sourced from our internal on-chain analytics since we couldn’t use Dune as it doesn’t support all chains.

You can however refer to this Dune dashboard to track our daily activity on Optimism: https://dune.com/optimismpbc/Optimism-Project-Deep-Dive?1%20Project%20Name=Socket

2 - Can you list the number of Optimism projects that have already integrated your SDK?

There are different projects on Optimism that have done this:

  • DeFi apps: Synthetix, Lyra, dHedge, Polynomial, Rubicon Finance, Premia, Brahma Fi
  • Wallets/Portfolio Apps: Zapper, Zerion, One Key, Sequence Wallet, Ambire Wallet, Plasma Finance, Choise
  • Many more coming soon, including more top apps on Optimism & biggest Ethereum wallets

3 - What is the maximum and minimum amount of bringing to avoid a farming? How will you avoid sybil attack?

We are just rebating 90% of the bridging fees, hence it is by default sybil-resistant since it is unviable & a person trying to sybil just ends up with a net loss.

4 - Will the protocols that have already received Optimism grants participate in your grant to builders?

No, we only plan to reward builders/protocols that haven’t received an Optimism grant

1 - What do you think will happen after the subsidy ends? Is the amount of tokens requested based on any metric?

Running calculations on the historical txns for the users we onboarded we found that on average a user coming into Optimism spends $4 in gas + bridge fee

We are requesting 1M tokens with 60% allocated to onboarding = 600K $OP or roughly $600K based on average $OP prices
So with $600K we aim to onboard 150K users (4$ for 1 user) over 6-8 months which we think is a reasonable target since we have onboarded 30K+ users in just the last 2 months with zero incentives!

2 - In the case of bridges such as Hop Protocol, which have incentives in $OP tokens; How would the double incentive of this interaction play out?

Currently Socket supports the following bridges to Optimism, and here are our plans for each:

Optimism Native bridge - No $OP grant. Hence Socket OP incentives will apply

Hop - Have already committed in their proposal that they won’t consider bridge aggregators. Hence Socket OP incentives will apply

Across - Use a combination of referrals to know wallets to reward & also mentioned they are strongly against farming. We plan to request Across to blacklist Socket contracts, so no rewards are received. Hence Socket OP incentives will apply

Biconomy - Their incentives are towards builders and LPs. Hence Socket OP incentives will apply

Multichain - No $OP grant. Hence Socket OP incentives will apply

Celer - Has plans to use incentives for onboarding. We are in touch with Celer team and can ensure we get blacklisted here too. Socket OP incentives will apply after we do this.

3 -

Could you clarify this question, unable to get you?

Answer for other bridges answered here:

For LiFi, since they are just doing gas rebates which are also unviable to sybil, we feel their proposal & incentives are irrelevant to our distribution plan

Thank you. Appreciate your detailed response covering all point

1 Like

if you can tell us a little more about these plans; specifically if what you plan to build is only tied to Socket and its peer dapps or think it could be beneficial for projects not tied to the protocol?

I appreciate your clarity in the other answers.

I have voted against this proposal.

My reason for voting against, is the 40% allocation is simply providing a team with a lot of working capital.

I refer to…