[READY TO VOTE] Deliver a Best-in-Class Perp Dex Mission Request

Governance Fund Missions šŸ¹
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Deliver a Best-in-Class Perp Dex Mission Request

Delegate Mission Request Summary: This Mission Request is focused on developing and supporting a best-in-class perpetual decentralized exchange on Optimism. The goal is to offer a trading experience that rivals centralized exchanges in terms of performance, user experience, and feature set, thereby attracting more traders, liquidity providers, and users to the Optimism ecosystem.

The missionā€™s primary objective is to develop and support a Perps DEX on Optimism that competes with CEX perps, targeting the significant market gap highlighted by Binance Perpsā€™ $30 billion daily trading volume compared to the $1-2 billion across all DEX perps protocols. This presents a substantial opportunity to attract users and capital to Optimism and support anchor protocols, which generate substantial economic value for the chain and generate sequencer revenue.

S5 Intent 19: Intent 3: Improve the Consumer Experience

Proposing Delegate: Matt

Proposal Tier 16: Begins at Fledging & scales up to tier of proposer.

Baseline grant amount: The Baseline grant amount for a project applying to this grant is 250k OP, with a max amount distributed for this mission set at 700k OP tokens. This amount has been determined as the required amount to support and incentivize a best-in-class perp dex effectively, which will migrate CEX users to DEX Perps.

Should this Foundation Mission be fulfilled by one or multiple applicants: Multiple.

Submit by: To be set by Grants Council

Selection by: To be set by Grants Council

Start date: ASAP

Completion date: To be set by Grants Council

Specification

How will this Delegate Mission Request help accomplish the above Intent?

Perpetual Futures DEXā€™s represent a critical segment in the cryptocurrency ecosystem, demonstrating substantial growth in user acquisition, trading volumes, and liquidity provider capital. Despite significant advancements in DeFi Perps, a considerable portion of crypto users continue to favor centralized exchanges for perpetual trading (30b in Binance Perps Volume daily vs 1-2b in DEX Perps volume). This preference underscores existing barriers within DeFi Perps, with complexities and perceived risks deterring potential users. This mission request is strategically designed to address and dismantle these barriers, offering robust incentives and fostering technological advancements crucial for transitioning users from centralized to decentralized perpetual trading platforms.

This mission will leverage the inherent strengths of perpetual DEXs to enhance the overall DeFi ecosystem on Optimism and the Superchain. By focusing on user experience improvements, account abstraction, and improved oracle integrations, we aim to bridge the gap between centralized and decentralized trading platforms. This will not only shift the current volume from centralized to decentralized exchanges but also create a robust ecosystem attracting and retaining capital within the Optimism network.

What is required to execute this Delegate Mission Request?

  • Technological upgrades in perpetual DEXs, including simplified trading interfaces, social logins, smart account usage and recovery, one-click trading options, expanded collateral and margin options, MEV-resistant order settlement and liquidations, off-chain decentralized oracle usage, and more.
  • Enhance user onboarding processes, including integration with bridges, account abstraction and smart wallet usage, to streamline user experience.
  • Key focus on risk management to ensure delta neutrality for LPs and deep liquidity for traders while supporting major and long-tail pairs.
  • Open-source standards to support long-term development of innovations around Perp Dexs.
  • Deployment of OP incentives to encourage sustained LP and Trader Migration focused on gas rebates, bridge rebates, developer incentives, and trading fee rebates.

How should the Token House measure progress towards this Mission?

  • Tracking the implementation of technological improvements and user experience enhancements.
  • Monitoring the volume of capital migration from Mainnet/CEX/etc to the DEX and its retention rate.
  • Evaluating the increase in trading volumes, active users, LP capital flow.

How should badgeholders measure impact upon completion of this Mission?

  • Assessing the growth in daily and monthly trading volumes compared to baseline figures.
  • Analyzing the increase in the number of active users and the expansion of the user base.
  • Reviewing feedback from users regarding the trading experience and user interface improvements.
  • Analyzing the flow of LP capital which will be used to support Perp DEXā€™s compared to baseline figures.

Have you engaged a Grant-as-a-service provider for this Mission Request?

  • No external service provider has been engaged for this Mission Request.

Has anyone other than the Proposing Delegate contributed to this Mission Request?

  • Both Matt and Jack Anorak have contributed to this mission request.
10 Likes
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I am an optimism delegate with sufficient voting power and think this is ready to go to a vote

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I think this is a great proposal. I would love to see some KPIs added, and see the grant be issued based on these KPIs being met. Iā€™m curious to hear what you think is more important between TVL, volume and number of active users.

I feel like a good way to distribute this grant is to provide the grant to an order book based perps platform and an AMM based platform given I think they cater towards different audiences.

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Iā€™d add a metric system for incentivizing the behavior of moving CEX funds onchain:

OP DEXs that can prove they brought non-crypto native funds on to OP (depositing funds from a CEX or similar) + retaining those users and generating on-chain activity will be eligible for rewards.

This would create conditions where OP DEXs have clear incentive to compete for these incentives by fostering this kind of activity, creating conditions for more active off-chain user acquisition.

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Brilliant proposal. I am all for this and would love to be involved. Please reach out, Matt.

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Great proposal, thank you! Can you point me to where this was discussed and determined?

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Looks like I didnā€™t tag this properly originally, just set it as a mission request so that should improve visibility.

Iā€™d imagine a mix of all of the above KPIs, as it would limit the ability for growth to be merely a flash in the pan with a quick initial spike following incentives without any real growth.

A mixture of the following would work pretty well - fees, open interest (majors vs alts), volume, active unique users, performance of LPā€™s, and then user engagement tracked via frontends (time spent on site, typical engagement time, etc)

I like this a lot. Building in incentives to more easily onboard capital from offchain environments, and provide traders with incentives for moving from CEX to DeFi is great, the only issue I forsee is ensuring that these incentives leave users long-term aligned instead of short term OP incentives.

Using tools that allow users to deposit directly from offchain (say coinbase pay, or deposit via bank/cc) + proving some history of recent CEX trading via API, could help towards this.

Iā€™d see a potential for decreased trading fees, gas rebates, VIP/whiteglove matching for certain users, etc.

Thank you Kagan, will do!

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This mission could have some interesting outcomes. Done properly a vamp attack on major CEX platforms could be a large catalyst for OP adoption. On the other hand it would need to be pulled off flawlessly and offer a familiar CEX experience or would flop. Interested in possible unicorn applicants we could rope in for this mission, even if ultimately none fit the bill. As a top 100 delegate I believe this proposal is ready for vote. Delegate Commitments - #71 by MoneyManDoug

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Also, I would like to add that we at Fudzi Labs can help with the incentives for the targeted audience using a point-based system that relies on all data about the wallet to build a user profile for any project. It works across all chains so we can attract people from other chains/perps by providing them personal offer based on their history on other chains/perps.

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Interested to see how this one develops.

I am an Optimism delegate with sufficient voting power and I believe this proposal is ready to move to a vote.

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Hi,

Are the three successful applicants meant to come from the already available Perp DEXs on Optimism, or are they meant to be new projects? Or is it an either/or case?

As someone who might have ā€˜He Hit His Last Stop Lossā€™ on his gravestone one day, Iā€™m keen to know if this mission is aimed at boosting familiar favourites or encouraging new entrants.

Cheers.

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Either/or - Both existing projects on Optimism and new entrants should apply to this, given that theyā€™re presenting a sufficient plan to deploy and scale up their Perps Dex (+ corresponding ecosystem, including frontends/integrators, etc) on Optimism.

The perps dex space is so small at the moment, comparative to the centralized perps space, that excluding new entrants would be extremely detrimental to the growth of defi.

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GM @MattL! This mission is on my list of assignments, and I have a few comments. Firstly, I believe the budget is quite high. While I understand the significance of this mission, the baseline grant amount constitutes 75% of the total budget allocated for this intent. Would you be open to considering a budget modification?

Additionally, I would recommend mentioning the Trust Tier. It could start from the Ember Tier, and projects with higher tiers could also apply.

Thank you for proposing this mission!

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This seems pretty high tbh especially if teams propose if theyve already built most/theres already source that does perps so the actual impact/new shit this creates for the value am not sure. Would feel better to see this at 500k OP net/ $500k/team, but itll depend on how grants handle the actual amount/what they pay for/whats proposed. That said worth a vote, especially if allocation brought down.
I am an Optimism delegate with sufficient voting power and I believe this proposal is ready to move to a vote.

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@brichis / @Pr0

Thanks for the helpful feedback, Iā€™m scaling down the mission request to 700k OP in total size. Iā€™ll leave it to the Grants Council to properly break that up within projects.

Also set the minimum tier to Fledgling.

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As a top 100 delegate, Iā€™m in favor of this mission request. Optimism should help incentivize a balance with Arbitrumā€™s perceived lead in the DeFi and perps space.

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Marking this as ready to vote! Would still love more feedback here to improve the mission, thanks!

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Hey @mikegriff & @Pr0 could you please update your approvals to follow the format outlined in the Operating Manual, which includes a link to your delegate commitments?

Thank you! :sparkles:

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I am an Optimism delegate with sufficient voting power and I believe this proposal is ready to move to a vote.

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The Grants Council has opened early submissions as an Indication of Interest for this mission request here

For your application to be considered, the Mission request must pass the Token House vote on February 14th. Submissions will not be considered if a Mission Request is not approved on the 14th.