[REVIEW][GF: Phase 1 Proposal] Angle Protocol

We also support Angle Protocol’s grant request. They have their own ve-token model that aims to keep LPs invested even after the OP rewards are gone, and they’ve shown themselves to be a top notch team that can deliver.

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Hey everyone,

Community feedback looks great overall!

Looking forward to hear your final thoughts @OPUser @Dhannte @DeFi_LATAM_Joxes @MinimalGravitas @ScaleWeb3 .

As always, let us know if there is anything.

Thank you for the tag. I just notice that you have assigned this proposal to Defi Committee C, ideally it should be just DeFi Committee.

Thanks, just updated!
Moving the proposal to [REVIEW].

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Hey @OPUser , @ScaleWeb3 and others!

Is the proposal finally ready to be moved to a vote?

If I remember correctly you have up until today to consider the proposal to be ready for voting in this round.

Hey @tuta Thank you the tag.

From defilama, your number to token request is quite high compared to TVL on OP but you have a good TVL on mainnet even in this bear market so with the incentives you might be able to bring some liquidity. I am afraid that most of tvl will be farmers but may be few will stay.

Could you provide details on distribution, weekly/daily/day and pair you are targeting

Also, do you have any KPI ? goal that you want to achieve ?

On co-incentives, I dont think buying token of other project is a co-incentives. What are offering as part of your proposal, that is a co-incentive.

The daily/weekly distribution would entirely depend on the number of pools we incentivize.

Getting OP tokens would help us change our Optimism pools. For now, agEUR/USDC in on a volatile Velodrome pool. With OP tokens as incentives, we could move agEUR/USDC to UniswapV3 where liquidity could be much more efficient. Here, additional incentives could be offered to users leveraging Gamma (cc @BP_Gamma) to provide their liquidity.

At the same time, we are thinking about creating two new volatile Velodrome pools that would be incentivized with OP tokens:

  • agEUR/ETH
  • agEUR/OP

This would provide more liquidity to OP, and strenghten agEUR liquidity on Optimism. This is helpful for users wanting to get leverage on their OP tokens through the Angle Borrowing module, one use case that we expect to be especially demanded when the bull market comes back.

KPIs

In terms of KPI, this is pretty straightforward for Angle: growing 1) the number of vaults on Optimism, and 2) the agEUR total supply on Optimism.

By going into more details, with 200k OP (80% of 250k) of incentives distributed linearly over 6 months, $5M of TVL would be receiving an APY of 8% at current prices. This should be enough to bring around $2-3M of agEUR on Optimism on a stable pool.

Co-incentives

In terms of co-incentives, once again we have tokens set aside (5% of the weekly distribution) that could be voted to be distributed as co-incentives on Optimism. As there is no liquidity for ANGLE there yet, this would require to setup a bridge similar to agEUR and build liquidity there, but it is very possible!

It would make ANGLE available to smaller users.

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Hi, thank you for the updated proposal!

A EUR stablecoin is a great value-add to DeFi & Optimism and we generally like the possibility of using (shorting) the EUR in DeFi (vs. other USD-denominated stablecoins).

Appreciate the qualitative analytics and first traction on Optimism since June, the demonstrated long-term move into the Op ecosystem with locking veVelo, and thinking of optimal liquidity usage on Velo / Uni.

250K Op seems to be a reasonably large amount for the size (marketcap) of Angle & the planned Op distribution over 6 months - mainly focusing on agEUR liquidity which is essential for agEUR usage.

We agree, moving (some if not all) token liquidity to l2 should be beneficial for almost all projects as transaction costs don’t eat up purchasing power & execution generally moves up the stack.

Co-incentives would make the proposal much stronger and accelerate growth on Optimism. Why can only 5% be distributed to Optimism as co-incentives? Is that a changeable, votable protocol parameter?

(We only have 0.4% of votable supply and can’t give you a formal approval to move to Snapshot voting.)

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Thank you for your comment @ScaleWeb3 !

In terms of co-incentives, I should have pointed out that we used $90k of the protocol funds to buy and lock VELO to incentivize agEUR pools with VELO tokens. We plan on keep that going, and be split between the different agEUR pools co-incentivized by OP! This can be seen as co-incentives originally coming from Angle protocol reserves.

The 5% of the distribution is what is set aside weekly for temporary programs such as this one. The rest of ANGLE incentives are voted by veANGLE holders on mainnet and distributed between the different gauges. Adding a gauge is a significant process (vote by the DAO + contract deployment), especially when tokens need to be distributed on L2s. Though it is not impossible, the goal of a gauge is definitely not to be temporary which makes it unlikely in this case. Sorry if it may seem uncooperative, but I wouldn’t want to leverage something that I can’t ensure later on.

However, adding an ANGLE gauge could make total sense in 6 months if we get this first pocket of tokens approved and it appears interesting for both Optimism and Angle to continue and reinforce the program!

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Hey guys, tagging you here for final feedback after the latest comments @DeFi_LATAM_Joxes @MinimalGravitas @Dhannte !

You can elaborate on both points, keep in mind that this point is one of the most important when making decisions.

You can elaborate more on your incentive program. And in the case of contributors, how are you going to select that they are actually contributing to the ecosystem. Who decides?

We have updated the token distribution after the different feedback we got on the proposal. The original post has been updated, and it is now much more detailed (cc @Defi_LATAM_axlvaz , @OPUser ).

Here is what has changed:


How will the OP tokens be distributed?

  • 80% for agEUR liquidity on Optimism (spread between Velodrome - agEUR/USDC and Curve).
    → This would grow agEUR borrowing on Optimism and increase the stablecoin liquidity.
  • 20% for bounties and teams building on top of Angle on Optimism, with something similar to the Angle Contributions Program.
    → This would incentivize Angle ecosystem to grow on Optimism rather than on another network.

Here, we lay out a revised proposition for the distribution of the received OP tokens, and a new way for Angle to help push Optimism’s adoption.

After reading the comments, we realized that the main issue with the previous proposal was the unclear distribution of received tokens. An 80-20% split with unclear guidelines as to how would either of those would be distributed. This is an attempt to clarify that.

A) 100% of received OP tokens to be distributed as liquidity incentives, linearly over 6 months between 3 agEUR pools.

The 250,000 OP tokens would be distributed linearly over 6 months, for a total of 10,416 OP / week. This distribution would be split equally between 3 pools:

  • agEUR - OP volatile pool on Velodrome, in the form of bribes
  • agEUR - MAI volatile pool on Velodrome, in the form of bribes
  • agEUR - USDC pool on Uniswap V3 directly, with the option of having LP liquidity managed by @Gamma. (We have by the way created a new UniV3 LP incentivization mechanism detailed here, and we hope to push for a more global adoption on Optimism).

This would amount to 3,472 OP / week / pool, or ~$3,000 at current prices. This is equivalent to 3,000 x 52 = $156,000 / year distributed on each pool, or a 4% APY per pool with $4m in liquidity each over the first 6 months.

Depending on where the APY stabilizes, we can expect around $4-6M of $agEUR to be minted on Optimism across these pools. As $OP is now accepted as collateral to mint agEUR on Angle, this creates an interesting opportunity for $OP holders to increase the token liquidity without selling some of their tokens.

B) Matching incentives through our veVELO votes, as is already the case

Angle has bought and locked more than $90,000 of VELO (2M tokens) to incentivize agEUR - USDC and agEUR - MAI pools on Optimism. (tx 1, tx 2) The VELO distributed on those pools can be see as a form of co-incentives coming from Angle Protocol.

Additionally, all the $OP tokens received by our voting power are not dumped but redistributed in new bribes every week (between 500 and 700 $OP / week currently). Similarly, all the $VELO received by the protocol liquidity used to seed the agEUR-USDC Velodrome pool ($200k agEUR + $200k USDC) are also relocked, increasing our ability to co-incentive the pool alongside $OP tokens.

With the received $OP, we would bribe on Velodrome on pools on which we already have voting power and we’ll keep reinvesting all the $OP received as bribes.

C) Doubling Angle contributions program for Optimism contributions during the span of the $OP incentives.

As detailed here, Angle is currently running a program rewarding external contributors with 5000 ANGLE for meaningful contributions. As this is currently under the discretion of the Angle team, we understand that OP tokens shouldn’t be used to reward such contributions.

To push Optimism’s adoption, we think it would be a great idea to double these incentives to 10,000 ANGLE when the Angle contributions are made on Optimism. This would require a DAO vote on our side, but we are confident Angle community will be in favor of such a proposal.


Let us know if you have any feedback, so we can update the proposal in time for Voting #cycle-7 !

Leaving Voting #cycle-7 schedule here as a reminder:

  • Week 1: Community and Delegate Feedback, until October 6th
  • Week 2: Committee Review, from October 7th to 13th
  • Week 3: Voting, from October 14th to 19th
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I think Angle commitment to Optimism is already greater than most protocols applying for the grant. Also the protocol has an allocation of ANGLE tokens it can use for such incentive programs (on top of everything mentionned by @tuta), so commitments can only be increased from here!

hello @tuta and @sogipec , thank you for your proposal and congrats on your Optimism Deployment!

Angle Protocols has a unique proposition with its EUR pegged stablecoin, and I am not aware of other protocols doing so on Optimism.

I can see since June that you have achieved traction on Optimism and incorporated feedback from other community members and delegates. The incentives have the potential to catalyze a growth, and your ask and time frame now matches that the expectation of the community and delegates.

A few notes that will strengthen you proposal:

  1. Be clear on the co-incentives of 5000 ANGLE contributions. If the co-incentives requires a vote, I would encourage you to start the discussion, and submit for a vote in Angle Gov. You can communicate updates on your proposal mentioning that you have started the process.

  2. Be clear on the KPIs that you have set

  • What is the total increase of agEUR supply and TVL of related pools you expect?
  • What is the increased the number of integrations, and the number of external contributors you expect?

I know it’s not evident to estimate these KPIs, but you can specify your target goals based on the your previous performance, as well as other lending protocols that are currently running incentives. This will both give an idea of your potential to the community and delegates, as well as strength your case for your second proposal in 6 months if you got closer to your goals.

Overall, your proposal make sense to Optimism and you have in-cooperated important feedback that was given earlier. I am giving support for Angle’s proposal, both for its unique proposition and its previous history to demonstrate traction.

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Thanks for your reply and questions @marc!

  1. As for the co-incentives on contributions, these do not require a vote, and Angle Core Team has a dedicated allocation it can use for this!
  2. In terms of KPIs, you’re right to ask us to be more specific:
  • Total increase of agEUR supply: at least 2m, and for the TVL of the protocol we expect it to increase by around 3.5m to 4m depending on the collateral ratio of users borrowing.
  • Total increase of TVL of related pools: we expect our agEUR-USDC pool to reach at least $2m TVL, and our agEUR-OP and agEUR-MAI to be each $1m. We already support our agEUR-MAI with veVELO votes + OP bribes, so expect it to keep building flywheel effects there.
  • Number of integrations: we’ve already had a vote to get agEUR listed on Aave on Optimism. While this is an important integration, we expect that increased agEUR liquidity on DEXes will help it get integrated in different Perpetual swaps, and used as a treasury asset by DAOs built on Optimism that have European contributors. Overall, we count on having at least 5 integrations unlocked by this grant
  • As for the number of external contributors, this is also something that’s hard to quantify. What we care about as a DAO is the number of active people in the governance, and pushing for Angle integrations. If we manage to get at least 4 active community members from this airdrop, this could greatly help Angle governance make a leap forward.

Should you have other questions, please do not hesitate to ask them!

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Hi @tuta , with new changes this proposal look much better. Also, thank you for your engagement.

I am looking at the TVL on Optimism, when you launched on Optimism in august your protocol TVL jumped to $2.3M and now its around 200K, a 10X fall in TVL in just 2 months which give me an impression that the liquidity is not sticky or am I missing something here ?

With your TVL I believe the token ask and distribution plan has some scope of improvement. My suggestion would be to reduce the number of weekly distribution.

Do you know how much of co-incentives we can expect(weekly) from your voting power and protocol owner liquidity. I think $90K worth of Velo locking shows your long term direct vision on velo protocol and indirectly on Optimism which should not be combined with co-incentives of a proposal.

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Point of clarification here, not related to Angle’s proposal in particular:

Because Velodrome is Optimism’s liquidity hub, a liquidity-based DeFi protocol signaling commitment to Velodrome in this way is in effect signaling direct commitment to Optimism.

If you’re spending money on an Optimism-exclusive activity (Velodrome exists only on Optimism) so you can do more things on Optimism past the end of the grant program, and you are bidding up the demand for liquidity (or bidding for control of incentives), you are committing your own resources to ecosystem stimulus over and above what the grant is offering, and you’re doing it in one of the most direct ways possible.

Any time a proposal says they’ll co-incentivize liquidity mining on Velo or Uniswap or even their own protocol, they’re actually signaling less commitment to Optimism than something like locking. Why? Because once the liquidity mining is gone, they don’t have anything else to do on Optimism if they don’t want it. If you lock Velo, you are highly incentivized to continue doing things on Optimism.

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You’re right to point that liquidity decreased here! We expect it to grow more steadily now for the future as a big fraction of it was mercenary liquidity which was attracted by the boost offered by the Velodrome team.

The reason why we expect liquidity to be more sticky in the future is that most of it could stay without token incentives because fee incentives should be enough: having a lot of agEUR liquidity is interesting for people willing to take leverage and short the € or long the € and short the $. You still need two things for that:

  • more awareness on your product: which we didn’t have among the Optimism community as we launched the protocol. Angle is still the cheapest way to get leverage on any collateral asset at the moment on Optimism
  • enough liquidity for agEUR: to avoid high slippage when swapping from/to agEUR

We expect that the Optimism grant and the OP incentives we’ll place on Velodrome and Uniswap (to not only reward rent seekers who own veVELO but actual users) will help get both of it and start creating flywheel effects around agEUR.

On the TVL side, it is true that the TVL dropped but the number of active position increased back in September. I prefer to have multiple medium holder than larger ones with high stakes and less sticky.

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This make sense, thank you.

I see Angle is also available on Abritrum but very low traction, is it because of lack on incentives ?

any insight on these.

With your TVL I believe the token ask and distribution plan has some scope of improvement. My suggestion would be to reduce the number of weekly distribution.

Do you know how much of co-incentives we can expect(weekly) from your voting power and protocol owner liquidity. I think $90K worth of Velo locking shows your long term direct vision on velo protocol and indirectly on Optimism which should not be combined with co-incentives of a proposal.