[READY] [GF: Phase 1] xToken Terminal, Gamma Strategies, and Uniswap V3 Staker

ah, great – glad you made me go back to my notes.

If this passes – and I want every Optimism-native protocol guided to ask for less or rejected outright to think about this – this will be the single largest Phase 1 grant to date, with Biconomy being #2 at 750k.

I think the size of the grant should be reduced. However, I do appreciate and like the distribution and focus of the grant to exclusively reward on Optimism side and this will greatly deepen OP liquidity.

Either the duration of distribution should be extended to longer than 24 weeks, or the size of the grant should be reduced. Otherwise the use of the grant is great.

Just wanted to weigh in with some of our views. First off, the work being done is pretty important in our opinion. However, it comes down to how much extra value this adds, and the opportunity cost of the grant. Penn Blockchain has voted no, here’s our reasoning why:

  1. First concern was how much this proposal has changed over the last few days, and the seemingly “uncertain-ness” about the ask. Whether it was the size of the $OP, the distribution of the grant (Mainnet included?, Velo or Uni?), just in the last few days it seems a bit all over the place.
  2. We have big respect for Jack Anorak and the Velo team. The last few comments and some deleted messages haven’t instilled, once again, the highest confidence in “the ask.” Although proposals have been formed in the past that don’t have much quantitative data backing the ask, using that reasoning as a semi-validation for your proposal isn’t the most confidence inspiring.
  3. The ask is pretty big… and if passed, may be the largest grant given to date. As unfortunate as it may be, the current state of DeFi might make this unluckily timed. For this sheer size of grant, and the pure amount of talent and coming through the pipeline, this huge amount might be better allocated elsewhere.

Overall, a lot of our concerns can be solved by just decreasing the ask size, and taking a few days/weeks to finalize the ask, sticking with it, and waiting a few weeks to maybe resubmit. Finally, we really appreciate the team reaching out regarding our no vote, and are continuously trying to express our opinions as much as possible.

Stopping by as a keen observer of CLMs and Uni V3 platforms

Seeing three things here

  1. This proposal’s “size” has come up. Yet it’s three projects partnering up to do a liquidity rewards program, which are notoriously expensive. These guys are competitors with each other and dropped that to make a proposal for OP that would give Optimism the best value. I think that deserves credit. There is no slush fund or dev development here.

  2. @Juanbug criticizing the proposal for making adjustments on the duration and ask is not fair. Nobody has criticized the commitment, the preparation, the dedication, the tech. The only criticism in this thread has been “change the length” and “change the amount”. It’s impossible to appease everyone realistically. Posts are asking this to be six weeks, and posts are asking it to be 6+ months.

  3. I don’t like what I’m reading from @jackanorak. You made a simple claim that you want the proposal to be a trial period of 6-8 weeks to test and continue. That’s a fair assessment, but it really should just have ended there. As a competitor, with a 3m OP proposal up and who received phase 0 funds, it looks like you’re purposely trying to derail this proposal. Engaging in flame wars in this thread and calling the proposal “dumb” on the OP discord is not appropriate.

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I didn’t want to come back and derail this thread but supporters of this proposal continue bizarrely to take issue with my tone (rather than the content of my asks) and are now taking my comments in the discord out of context in response. There I also made continued appeals against the kind of zero-sum thinking entering into complaints like the above.

I haven’t engaged in flame wars - have only directly responded to others’ questioning of my intentions. I invite readers to go through my posts and ask themselves if I’m being in any way insulting.

Whether Velodrome got a grant from the Foundation shouldn’t enter into any conversations on the merits of this proposal. It was not something proposed to governance. It’s not an advantage we enjoy over other protocols here. It was also the only fundraising we’ve ever gotten, being a bootstrapped project, and every protocol and user here has benefited as a result, including Uniswap and the protocols making this ask.

I don’t understand how this new anon poster can on the one hand say with a straight face that the literal one thing I’m requesting over and over again for an otherwise good proposal is reasonable and on the other hand say I’m behaving inappropriately due to bias.

It’s a 900k OP grant, the largest yet for Phase 1, devoted to juicing a single pool for a year with no opportunity for OP to reassess. The number of projects asking for this is irrelevant, as is the fact that rewards would go to LPs (that’s the case for virtually all liquidity mining projects, and there’s always the question of who’s providing the platform’s LP).

I am saying that we could just as easily offer the same package over less time to ensure that it’s accomplishing the intended goals, which would absolutely help Optimism.

I’d like to ask xToken and Gamma Strategies, if they feel heavily disadvantaged here — how much money have they fundraised from VCs, and how much of their current TVL do they estimate is from those VCs? This question is highly relevant because the answer tells us whether they have a track record attracting organic TVL, whether they’ve been able to use deposited funds efficiently (ie adding value), and why they won’t match incentives.

Voted:- No

Reason:- This proposal was discussed quite in dept on this forum as well on our discord.
Cons:

  1. Very low liquidity compare to number of token asked.
  2. No Co-incentives.

Pros:-

  1. A huge plus point for this proposal is that team is focusing on OP paired based liqduity pair
  2. 900K does seems a lot for 6 months but its for three projects, 300K each for 6 Months seems very reasonable amount.

From our conversation, team want to jump start project launch on OP chain I would love to support with this suggestion:-

  1. Match the co-incentives in $ value
  2. Wait until you have enough liquidity to support your proposal

Thank you all for your feedback here, and I think certainly valid questions were raised. One thing to note is that the end recipients of these rewards will all be public liquidity providers who either provide in accordance with the strategies provided by xToken or Gamma or in accordance with their own strategies via the Uni v3 Staker contract.

To address @Juanbug 's issue of size, it’s important to note that these rewards are split amongst 3 projects. None of these rewards will be used to fund any sort of protocol development, pay salaries, or anything else. For Gamma, all 300K will go into a MasterChef contract which will all get distributed to LPs. For xToken, they will use their own staking contract to distribute all 300K of OP rewards to public LPs. The remaining 300k OP tokens will again go strictly to public LPs who provide in accordance with their own ranges. So to address the issue of size, on a per project basis, this request here is quite low.

With regards to whether this is too much incentives for one pool, I do agree with @cryptokitty that incentives for Uniswap v3 liquidity has much higher returns per cost of incentive due to the capital efficiency of the AMM. $1 of incentives towards Uniswap v3 liquidity will lower price impact more than $1 of incentives going towards a constant product AMM, so if the theory is that more incentives go to where they will be put to the highest and best use, I think allocating more rewards over a longer timeframe to an OP Uniswap pool would be the right move in increasing the liquidity for OP, which will result in a wider distribution for governance and further decentralization.

Speaking on behalf of Gamma, we have sourced all of our TVL organically without any incentives provided by us thus far mainly due to our strategies. In terms of our strategies, we utilize automated rebalancing strategies as well as machine learning algorithms on certain pairs to mitigate against impermanent loss and optimize fee revenues. This occurs by setting rebalance triggers that automatically rebalance the price ranges in a new range when certain price targets are hit.

Additionally, much of the liquidity that we manage currently is B2B liquidity via our partnerships with key players in the DeFi ecosystem. Our recently passed proposal with Frax Finance and Convex Finance will bring to Optimism, FPI/FRAX liquidity, which will be incentivized with FXS rewards.

So we do believe we can bring significant value and TVL to Optimism without any further incentives. The passed Frax proposal will be the first Frax gauge on Optimism, which is likely to bring in considerable TVL to Optimism as well that doesn’t involve any OP incentives.

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Voted yes - This is a great way to drive ecosystem growth which is the purpose of the governance fund. Thank you for a well thought out proposal!

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This was a difficult one, but ultimately what made me lean towards For is the focus on the ETH/OP pool. Separate thought - if the projects can’t match co-incentives, for whatever reason, then perhaps they should ask lower amounts of OP they can match to begin with. If they succeed, there can be a future proposal expanding.

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I’m voting yes on this proposal. Initially I felt the amount requested was very high but it is a lot more reasonable across 3 different service providers. I like that rewards are going to LPs for the WETH<>OP 0.3% pool and 100% paid out on Optimism. I also like that tokens are distributed over a longer period of time and that the team(s) incorporated feedback well from the community.

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Vote: Yes

We will support this. Since it is being split across 3 different projects, it is essentially 300k each. Not too hard to digest. Since they focus mainly on OP pools, it’s a win for optimism.

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This is a difficult one for me. I read the entire thread and I can see both pros and cons.

But ultimately I am leaning towards a NO.

PROS

  • Really cool to see 3 different teams coming together to make a proposal that would push the OP ecosystem
  • 100% Focus on OP pair liquidity

CONS

  • low liquidity
  • 900k $OP tokens is too big an ask
  • no co-incentives

For suggestions for the future if this does not pass (though it seems it will), I will simply echo @OPUser as I agree with them.

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I’m going to very reluctantly vote yes, I tend to agree with @lefterisjp that the amount is too high, but @linda has some good points about the reward structure and length of distribution. Perhaps most importantly, as noted, feedback was taken into consideration which is always important to see.

Still, I think we should be very careful about setting precedent around such large amounts for initial grants moving forward.

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I’ve said my piece about this particular proposal though am continuing to want to hear more about the breakdown of these projects’ TVLs and previous funding to date. If it passes, I’m sure liquidity on that pool will increase, which is a good thing.

As a general matter I’d like to point out that increasing the token ask along with the duration of the distribution does not make a proposal better – it increases the stakes of the grant and decreases the ability for governance to lend ongoing oversight and course-correct if necessary. This was the original issue I had with this proposal (I had no major objection before, to be clear), and I’d like to encourage delegates to look past the high-level features in making their final determinations.

For instance, I commend Byte Masons for lowering their ask along with decreasing the duration. This allows for more thoughtful review and staging of distributions.

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Thanks for your feedback Jack! I really appreciate the ongoing constructive criticism here. However, I do think it is worth mentioning that risk assessment was a key factor in structuring the proposal the way that we did.

We had originally intended on each service provider creating their own separate proposals. However, we realized that having multiple sources of liquidity was important without any single point of failure. So we wanted to avoid the outcome where it was just one provider distributing all the rewards according to their own strategy. I think having two managers and the community via the Uni v3 Staker adds to decentralization and security of the OP liquidity, while also ensuring good active management around the current price.

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Proposing a means of splitting up the management of the distribution is fantastic and, frankly, something I’d love to see more of from other proposals.

But then give the community the opportunity to review and propose adjustments over time rather than asking for more money and more time without oversight.

I’d still love to hear more about funding to date of these protocols and how much organic TVL is coming from venture investors. This would have gone a long way toward enabling the community to do its own risk assessment.

In the future, for instance, I’d love to see how much money xToken raised from these investors, when this fundraising occurred
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and how much of xToken’s TVL is coming from them. This would enable us to know how sticky new TVL is likely to be.

Similarly, Gamma Strategies have gotten some remarkably high-profile investors, some of whom have a high likelihood of adding value through beefing up TVL metrics. Would love some more information on this.
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OP distributions are for the funding of public goods; for some people these refer to benefits that otherwise go unfunded by the private sector.

Again, this is not a knock on the current proposal, but I think all those voters who held their nose at the size of the ask - @polynya , @linda , @ceresstation - ought to take these issues into account going forward. I’ll be recommending for Season 2 that protocols be asked to disclose up front their funding and liquidity sources.

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Hi Jack,

To my knowledge, our investors have not been contributing to our TVL. If they have, it’s not coming from any of their official ENS accounts or wallet addresses, and it would have been without our knowledge. However, I don’t think that’s a likely scenario.

More than half of our TVL to date have been sourced via partnerships with DAOs and protocols that we manage liquidity on behalf of. These include Liquity, Ribbon Finance, Index Coop, Friends with Benefits DAO, etc. We have made countless announcements on our Twitter page. The other portion has come from public LPs, mostly on Ethereum Mainnet and Polygon thus far; however, we are focused in growing Optimism at the moment, both from a partnership standpoint and public LP standpoint.

The TVL that has been incentivized on our end came from partnering protocols such as H2OData. But that makes up a minor portion of our overall TVL, and we do plan to keep partnering with protocols on Optimism that will incentivize pairs on Optimism. This should work in favor of the Optimism ecosystem as liquidity incentives not from $OP are driving liquidity to Optimism.

Hope that answers your questions.

Thanks!

Brian

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To clarify, this governance fund is not for funding public goods, it is for growing the Optimism ecosystem. @vonnie610 clarified in Discord:

"The governance fund is actually NOT FOR FUNDING PUBLIC GOODS. It is for growing the ecosystem. The Citizen house (which is not live yet) is for public goods funding.

The token house is for fostering and growing the ecosystem."

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Why wait? Ask now before we find out about another “Perp” cash grab.