We’re hearing support for:
We think these arguments make sense and would support tweaking the proposal to reflect the new params
We sincerely appreciate the community discussion and feedback! We’ve amended our original proposal above to integrate that feedback, such as allocating rewards fully to Optimism, allocating rewards fully to WETH<>OP 0.3% pool, and extending the program from 10 weeks to 6 months (24 weeks).
i see you’re multichain - can you show evidence of tvl having bridged and remained with with you over a long period of time? I assume there were rewards offered elsewhere as well?
Thank you all for reviewing the updates. It’s clear that we’ve strengthened the proposal with the Optimism and OP<>WETH focused incentives.
With the longer duration (from 10 weeks to 24) it may make sense to increase the requested token allocation as well, to ensure deep liquidity. We’d like to put it to a community discussion:
Should we a) keep the requested allocation at the initially scoped 500K OP tokens, b) increase to 700K, or c) increase to 900K?
I think the 900k requested is reasonable, the distribution of the tokens are very straight forward, they will be split between 3 distinct strategies(xToken Terminal, Gamma and UniV3staker) over 6months, all targeted at OP/ETH pairs on Optimism.
This proposal creates an abundance of diversity among OP paired liquidity programs from various other governance fund applicants as well as DEXs and will result in the benefit of the entire Optimism Ecosystem.
I support the proposal as is with 900k OP over 6months.
Hey Jack,
I’m Brian from Gamma Strategies. All of our TVL has been sourced organically thus far without incentives. We do have a few pools that we’re managing on Mainnet that are being incentivized by our partner, H2OData, but for the most part it’s all currently unincentivized. You can see our TVL on the three chains that we’re on here: Gamma: TVL and stats - DefiLlama
In terms of multichain, our TVL on Polygon has been slowly growing with the number of partnerships and pairs that we have opened up there. None of that is currently incentivized either.
On OP, we’ve recently opened up there, so our TVL has stayed relatively stable thus far, but we have been making a push to actively get more TVL on Optimism. We just recently passed a proposal on Frax Finance / Convex Finance to manage FPI-FRAX specifically on Optimism.
That particular Frax gauge will be the first Frax gauge on Optimism which will incentivize Optimism LPs with FXS rewards. https://twitter.com/GammaStrategies/status/1546480809275666432?s=20&t=W2W-wsTN_Y1MKb86pvhbUQ
So we are optimistic (no pun intended) that our TVL will grow on Optimism even in the absence of OP rewards going forward. Hope that answers your question. Thanks!
Yeah I think the increase to 900K makes sense. I’d rather have a bit more over a longer period of time. The fact that the rewards are split amongst all three sources also mitigates a lot of risk given no single point of failure. Additionally OP-WETH liquidity is something that is important to the Optimism ecosystem, so we should dedicate more to this particular trading pair. Deeper liquidity here will result in a greater distribution of tokens as price impact comes down and we can ensure that there’s more in-range liquidity.
If you’ve been able to show good results with a differentiated service elsewhere, I’m not sure what exactly the need here is to get such a large amount of OP distributed up front. The results ought to show themselves organically anyway, so it seems unclear that, as mentioned in the OP discord, a lower amount of funding would disadvantage you.
Distributing across three strategies isn’t risk mitigation by any stretch if one way or another we’re still disposing of 900k - 10% of the entities’ multichain TVL combined - in one clip without continued community oversight.
If anything, this lends more cause to shorten the duration of the grant. We could try a 6-8-week time period, scaling the distribution down by time, and see for ourselves how well these offerings are working - and it ought to have a pretty immediate effect.
And if some strategies are working better than others, we can collectively tune the grants to increase chances of everyone’s success.
There’s absolutely no need to worry about shorter-term disruption of LPs; xToken Terminal and Gamma Strategies can simply reapply a few weeks before the end of rewards. That’s the point of these highly phased distributions.
It strikes me as likely that these offerings meet a need but unnecessary for us to deliver such a huge grant package up front.
To preempt any claims of conflict: I mentioned here and in the OP discord that I’m on the Velodrome team but value a strong Uni v3 environment as well as community-benefiting market making. I’d also like to point out that in this thread I’ve been supportive and dismissed someone else’s suggestion to redirect incentives onto Velodrome.
Following revelations about Perpetual Protocol’s management of the OP grant, I’ve decided that to increase participation I will begin to offer my private opinions about these proposals, always disclosing any potential conflicts.
The 900K split is appropriate given the timelines and the liquidity levels desired.
Right now, that’s about $625k total split over six months to three providers. Or about $35k per month per platform of rewards going out to LPs.
On this part, I think it’s just going to be 300K to each of xToken, Gamma Strategies, and the Uni v3 Staker. That’s around $219K in incentives for each, more or less? I think xToken has 4M, Gamma has 5M TVL. So that’s < 5% of the their entire multichain TVL combined. The other 300K OP is allocated to those using the Uni v3 Staker contract, so that’s pretty much public LP funds. I think having active management is good to ensure that at least a good portion is in range, as public LP funds may not always be in range, but do provide an additional safety buffer in decentralized liquidity.
But there are certainly conflicts of interest here. More incentivization to the Uniswap v3 pool would lead to higher liquidity in Uniswap v3 and lower price impact. So when using a DEX aggregator, the trades are more likely to go thru Uniswap v3 as opposed to Velodrome.
But from a trader perspective, a dollar of liquidity goes much further on Uniswap v3 versus a constant product AMM like Velodrome in terms of lowering price impact on trades. So I guess those are two tradeoffs to be making here.
Do we favor having the lower price impact on trades via Uniswap? OR do we favor having more DEXes service this pair at the expense of higher price impact on trades?
I’m more inclined with the former as I am a trader and an OP holder in that I would want incentives going to where they would have the greatest effect.
I think the math there isn’t quite right. With 900K OP incentives, you’ll have 300K going to each xToken, Gamma, and the Uni v3 Staker. So that’s approximately $219k USD to each xToken and Gamma. xToken has around $4M TVL, so that would equate to 5.4% of their TVL. Gamma has around $5M TVL, so that would equate to around 4.3% of their TVL.
Additionally, the remaining 300K OP tokens will be going to the LPs using the Uni v3 Staker contract. So that would be split amongst all LPs who are using that contract. I think that makes sense given that we do want a decent amount of in-range liquidity so it makes sense to have xToken and Gamma actively manage that. But we also do want the safety buffer in terms of having the decentralized liquidity providers providing via the Uni v3 Staker contract.
There certainly is a conflict of interest here as well because the more incentives that are allocated to Uniswap v3, the deeper the liquidity will be there, and the more trades will be routed to Uniswap v3 versus another AMM like Velodrome when using a DEX aggregator. However, because Uniswap v3 is a concentrated liquidity AMM versus a constant product AMM, a dollar of liquidity will go much further in terms of lowering price impact on trades on Uniswap v3 than on Velodrome.
So I guess the main question is do we value having deeper liquidity on Uniswap v3 as well as more bang for the buck in terms of OP incentives per effective liquidity? Or do we value having a more OP-WETH trading activity take place on more AMMs?
I’m more inclined to say the former because the Uni v3 Staker contract does allow for decentralized liquidity without splitting the OP-WETH liquidity so many ways and causing more price impact than there could be. Also as an OP holder myself, I would want the biggest bang per OP incentive. For that reason, I’m supportive of the 900K OP rewards split over 6 months.
My math is just fine; you’re obfuscating the intention of 300k, which goes to Univ3 staker to facilitate the function of their proposal: juice yields on pools. Same as what other protocols are asking for when they want liquidity mining – even though that goes to LPs, or when they’re asking for user incentives.
I’m all for proving out the thesis. Over less time, with less OP funds. If they demonstrate effectiveness, then by all means let’s continue it.
They’re saying that people will bridge for their product and stay with it as an enduring eco benefit. Have they bridged for their product elsewhere (or here, for that matter)? Seems like not really. Why not demonstrate this conclusively over a shorter amount of time, confirming your thesis that we’d see more liquidity and efficiency systemwide (to the detriment of my own interests, apparently)?
There’s no conflict here because, again, I’m not saying they shouldn’t get funds. I’m saying they should get the same amount proportionately over less time. If what you say is true, then I should be arguing that the proposal is bad, that these people aren’t providing value, and so on.
This is a lot of money for an unproven thesis. Let’s try to prove it before giving out what’s likely their entire combined market cap in rewards.
I mean the Uni v3 Staker contract would be a separate contract entirely. That would be separate from the funds going to xToken and Gamma or at least I would hope? And only then, would I support this proposal. If it were the case that all 900K tokens were going to solely xToken and Gamma, I would oppose it as well.
Therefore, I think we should definitely make that extra clear in the final proposal that 300K goes to xToken, 300k goes to Gamma Strategies, and 300k goes to a separate account custodied by Optimism that will fund the Uni v3 Staker contract.
Let me add some some different distribution scenarios
All values are the current value of OP ($0.70) as of today July 21, 2022
900,000 OP Distribution - 6 months
600,000 OP Distribution - 6 months
300,000 OP Distribution - 6 months
450,000 OP Distribution - 3 months
300,000 OP Distribution - 3 months
150,000 OP Distribution - 3 months
Has now been changed to 100% emissions on Optimism, 100% to LPs on WETH-OP 0.3% pool
Updated proposal sounds like a nobrainer… but… since xToken and Gamma Strategies are not providing (any?) co-incentives, can we at least expect active encouragement for users to LP on Optimism? Current TVL doesn’t look promising tbh…
I think the same could be argued for Velo, you guys got 3m OP without having any prior data.
I had nothing to do with your post being flagged. Also not sure what you mean by it being a top 2-3 grant?
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.
