Recommendation from DeFi committee C
Details
The proposal describes broad potential value-adds to Optimism and the Op distribution lacks some specifics. It was a late submission and the latest discussion & incorporation of feedback seems to lead to some positive changes.
Value-Add
Overnight is developing the USD+ stablecoin. USD+ is USD that pays you a return through a daily rebase. It is 100% collateralized with other stablecoins (USDC, BUSD, USDT, USDT, DAI, etc.) that are invested on-chain in “low-risk strategies” such as LPing on stables, lending & more. The integration of a yield-generating stable in the Optimism ecosystem can have benefits for Optimism users. Whether Overnight can help with better liquidity & trade efficiency on top stables is still unclear at this point in time.
Traction
Overnight is an early stage project that intends to make Optimism its ‘innovation hub’. It has gathered a total TVL of more than $7+ Mio, and since its launch on Optimism in early September there is a clear trend towards Optimism (55% of TVL).
The yield strategies have decent APYs but one is capped at 100K (133 users; cap due to liquidity of underlying protocol), and others have attracted only a few 1K$ and users; and strategies will likely not offer 10%+ APYs with larger TVL amounts.
With this funding they also want to work on extending their ETS product line (currently 16 users on Op) along other “+” features.
Overnight does not have all the contracts public, it has closed open source portfolio rebalancing algorithms behind ETS until at least the public sale of the OVN governance token.
Amount
50% for Overnight products liquidity mining on Optimism. Approx 8K $OP/week for 6 months.
25% for expansion of “”+""and ETS product lines
25% for building insurance product: this would de-risk entire Overnight ecosystem: both USD+ and ETS
200K $OP for LP reward and 200K for product and feature development.
Co-incentives
Willing to match 100% of liquidity mining incentives along with llocating 50K USD worth of BAL received from Balancer for building boosted pool with USD+ on an L2 towards Beethoven’s USDC/DAI boosted pool.
Alignment
Overnight is a protocol that is in its early stages. In the future we can evaluate if they are aligned to the Optismim ecosystem.
Reccomendation
No
The protocol has not published its contracts and is in its initial stages. It is in an experimental stage, we are waiting for a bit more maturation, organic traction of the protocol where a better evaluation of product-market-fit can be made before incentivizing growth.
The co-incentives are solid, the trend towards building on Optimism and attracting TVL is also positive. Despite that, the positive impact on the Optimism ecosystem is still to be seen, for example whether incentives for Overnight and USD+ would cannibalize organic liquidity on Optimism DEXs and the success of the different yield strategies.
We recommend to possibly create two proposals: one for protocol incentives and another for development funding. A focus on the slightly more mature “+” product with a lower Ask, similarly good co-incentives & a clearly detailed LP / bribe distribution plan in a subsequent proposal could be a good starting point for spurring additional growth on Optimism for Overnight & Optimism.
Note :- This proposal was also an edge case at it was included in the cycle round up thread after the defined deadline. As there is no rule or process defined for such scenario, committee is considering this an exception.
cc @_Max_plus
Our past recommendation is available on committee recommendation thread.