[REVIEW] [GF: Phase 1 Proposal] Symphony Finance

📜 Grant Proposals Governance Fund: Phase 1
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Thanks for taking the time to read the proposal and providing feedback @jackanorak.

How do orders currently gain yield on OP and Polygon (I saw yearn on your website), and what are likely next steps in yield sources?

On Optimism, we use Aave v3 for the Yield source. On Polygon, we use Aave v2 and Aave v3 rn. We were planning to integrate more protocols such as a yield aggregator. In the initial days, we just want to integrate Safe Protocols but In the future, we plan to integrate a more complex yield strategy keeping in mind the risks attached to it.

(Apologies for the questions below if you have a subgraph – please lmk if you’ve got one)

Yes, we do have a subgraph. You can access it here:

Looks like roughly 2-2.5 limit orders per wallet. Do you have more detailed data on use likelihood? Specifically, the distribution of orders per wallet by size or frequency (which would help to identify churn and power users)? To be clear, what I’m asking for is different than the graphs on your provided dashboard, which look only at aggregate counts.

Yes. We have added a query on the dashboard. Now, you can see the orders per wallet for both Optimism and Polygon. Link to the query: https://dune.com/queries/1291722/2213461

Do you have data on the distribution of length of time limit orders have historically been held for?

Yes, Please check this query: https://dune.com/queries/1425970

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Any data on usage of stop-losses? Is there a risk of bad slippage or failed execution during large market swings? I’m guessing the risk would be dependent on liquidity so might be an involved answer.

The execution depends entirely on the liquidity of DEXes. So by nature, yes there is a risk of failed execution if prices are moving too frequently. But because of our price & liquidity aggregation feature, we have better chances of matching the best price & liquidity for trades.

Is the below image the most accurate volume chart in Symphony’s history, or is there something more comprehensive (ie is this missing Yolo?)?

This query has not been created by us but the contents seem true with respect to our deployment on Polygon. We have now added the cumulative volume area chart on the dashboard for both Polygon and Optimism. Here is the link to the optimism query: https://dune.com/queries/1428873

Similarly, is this an accurate graph of DAUs?

Yes. It’s accurate with respect to our deployment on Polygon.

This means that the team would have absolute discretion over how to mete out a third of all rewards. How exactly would you conduct this analysis and make decisions?

We operate on the principles of fairness and integrity, so decisions on token airdrops will be taken on that basis. Through token airdrops, we want to boost sustainable growth and minimize airdrop hunting. We will use the following metrics to analyze and disburse token airdrops -

  1. Unique wallets interacted with the protocol (OP side) for the most number of days. (Minimum 14 days)
  2. Has used (for example: Swapped at least $100 worth of crypto) in Symphony AND on another OP native project in the last X days.

As we keep getting more data, we’ll be in a better position to take decisions that would be in the long-term interest of the OP ecosystem and symphony DEX.

Given the rate of roughly 2-3 limit orders done by user to date (again, would like to see a distribution), how much in rebates do you project individual users seeing?

Apart from past usage, we’ll also consider future usage. Each user can possibly get a maximum of 90% gas rebate. There can be a possibility that the gas fee refund allocation is more than the actual gas refunds. In that case, the remaining tokens will be allocated to the user incentives.

How do bug bounties fit in with marketing?

That was an oversight, we intended to put it in the Development & Maintenance category. Thanks for the correction, we’ve edited our answer accordingly.

When you say “incentivize members,” who would you be hiring? Existing community members?

Yes. We’ll provide detailed guidelines for them (How to write an article, what bullet points need to be included). We have a strong community across socials, especially discord. This way we’ll be able to leverage our existing members and new users and allow them to participate and have a chance to contribute on the side. We’ll be able to leverage the economics of a capitalist market and be able to choose the best materials from users’ submissions. And, as a bonus we’ll be left with a lot of valuable article/research resources, since there will be only one winner for an RFI, we can always repurpose the rest.

I do respect the desire not to work with influencers. That said, if you don’t believe in working with KOLs, how do you intend to get eyeballs on the materials you are paying community members to create?

Community-made contents have to support bigger marketing goals. We truly believe that with the right form of content and the right purpose, we can achieve remarkable organic growth.

Incentives to create community-made TikTok videos

TikTok is an undervalued platform to get organic views. As mentioned previously, we can create RFIs like: Create a max. 30 sec TikTok video, explaining why Symphony is a better alternative to 1inch.

Rewards could be distributed based on performance:

  • Views
  • Unique Discord invitation link, so we can measure how a video performs.

Our team has a TikTok crypto influencer from Hungary with 140k followers, who can educate community members on how to make engaging videos and provide them with best practices, host AMAs, etc.
Here’s a bit of an insight into how we plan to do that: https://bit.ly/SymphonyTikTokGuide

Since we don’t believe in the shilling, what’s the best way to get your content seen by others with $0 on ads?

Collaborations

  1. Reach out to other OP projects in DeFi, looking to receive grants from the OP board (just like us) and ask them to collaborate.

This way, we can share each other’s organic content (tweets, videos, and medium articles made by our community). This approach also favors the OP foundation, since as you mentioned, you prefer seeing OP projects supporting each other. Plus, this way we reduce our chances of failure. It’s less likely for 2 projects to fail than 1.

  1. Reach our target audience

The worst part of working with crypto influencers is that you can not be sure that your target group will see your message. So why not create an incentive campaign for those users, who are most likely to use our product?

Let’s say our competitors are 1inch and 0x.

A Twitter organic marketing campaign could look like this:

Get rewarded in OP, if you traded at least $X amount in 0x token in the past 30 days AND / OR hold X amount of the (competitor’s token).

Come and create a limit order inside Symphony, and get your OP airdrop now.”

Why do we believe it’s a great marketing strategy?

For users: it’s free money, and rewards can be received in 5 mins.

For Symphony: a chance to present our product to users who actually use services like ours. Of course, there will be a retention rate, but our chances of increasing our DAUs are much higher this way than paying an influencer to share our Twitter post.
That’s because the target group in this case (niche audience) is 100% correct. And if our UX is as good as we stated previously then we’ll have a bunch of new active users.

For OP foundation: More activity on their chain, more adaption. Since it’s a bear market, for now, we don’t see new users’ joining the crypto world, meaning we are stuck with what we already have: DeFi users inside the Web3 ecosystem. The only logical solution is to onboard users from other chains. The previously mentioned use of funds is a perfect way to do that.

Given the roadmap you’ve offered in response to @ScaleWeb3, can you work out which specific features you’d be building with the grant, and over what amount of time?

Here are the features which we are looking to cover under the grant scope.

  • Integration of more protocols such as Velodrome, Paraswap on Optimism.
  • Order Book UI: Allow takers to fill orders directly from the interface.

Apart from this, the development allocation also includes other costs such as auditing, bug-bounty, and maintenance of the relayer service (operational cost).

What are the anticipated product and adoption effects of these features?

We anticipate that these features will bring additional volume and revenue to Symphony. As we are working on integrating more protocols in Symphony, we will be able to provide the best price for trades. The APY could potentially increase the interest earned by users incentivizing them to use Symphony over other competitors.

There is a demand for different types of orders such as iceberg orders. Once integrated, we can provide swap/iceberg orders which would be beneficial. The iceberg order will be beneficial for large-size orders.

The order book UI will allow users to fill orders directly from the UI. The Coincidence of Wants can reduce the risk of MEV to some extent. So, it could be beneficial for the users and we have already seen that there is a demand for these features.

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What sorts of costs do partners incur to integrate your product?

There is no cost as such to integrate Symphony into any platform. If they want to execute transactions themselves then, they have to run a backend relayer service which is good for decentralization but will incur some additional operational costs (eg: AWS instance cost).

How has your development to date been funded?

Initially, it was self-funded and from grants that we received from Aave, Balancer, etc. Then, we raised a small round to fund the development.

My suggestion here is to specify the nature of the wallets and trading volume. I think KPIs here ought to match the kind of growth we’d want to see, so instead of unique wallets: unique existing wallets onboarded onto Optimism (i.e., not new wallets), perhaps even existing wallets that hadn’t yet interacted with Symphony

I totally agree with your point. We will include existing wallets in the KPI.

some # of limit orders per unique existing wallet bridged

Yes, we could keep 2-3 limit orders per wallet as KPI.

there should also be some intermediate KPIs based on marketing, such as engagements or inbound interest

Yes. We could keep these metrics in the marketing KPIs:

  • Double average Twitter engagements under tweets.
  • Double weekly active communicators on Discord (notice: we didn’t say members since we believe in building a community based on active users and not engagement farming giveaways)
  • Community knowledge base with at least 20 articles/guides, made by the community (RFIs). We will use them to gain more Medium followers. Plus, we will repurpose them into SEO-friendly articles, and make a blog section to increase our likelihood of getting seen on Google Search.
  • 1,000 TikTok followers, with at least 200k views across all videos.

Please let me know if you have any additional questions, we would love to answer them.

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Your proposal and quality of responses is impeccable; I support Symphony as a great little protocol with an interesting value proposition.

I agree with the amount requested, but not with the distribution

1- I do not consider subsidizing the development and maintenance of the protocol

2- Subsidizing marketing strategies is not usually a coherent decision; but from the way you present it, from an educational point of view with participation of the community; designating about 6% of the distribution would seem correct to me, this represents half of the grant awarded to Bankless Academy

3- Regarding distribution to users:
Good strategy to minimize airdrop hunting

I am not very clear how they would allocate the gas reimbursement

Would you agree to modify the distribution with my comments?

Honest question, I’m not a communication expert, but do you think you have a potential audience looking for alpha on Tik-Tok?

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Appreciate all the detail here, @kakashi – really unusual and welcome to see so much info back. Gonna dig through the data here and subgraph. Couple more background q’s if it’s all right.

Data

I’m getting a 404 on this. Would it be possible to make this public?

Questions

  • You say you raised a small round and had grants previously. How much runway do you have on these funds?

  • Given the two statements below, if integrating these protocols is free, what exactly is the OP subsidizing?

  • Order Book UI: other than potentially preventing frontrunning, how is this different from simply placing an order on a standard dex aggregator? Is the point that the UI provides knowledge of extra liquidity where there are limit orders?

  • Can you provide a rough breakdown in development costs between these additional pieces (auditing, bug bounties, maintenance, etc)?

  • Finally, I couldn’t see in your docs how the protocol earns revenue. I see $0.50 in Order Time Calculator – I assume that’s a $0.50 fee on every limit order placed or filled? Or is it $0.25 on placement and filling? And are there any other fees or sources of protocol revenue? Does the platform do its own trading?

KPIs look solid. In general I’ve got to think about bot resistance for marketing metrics.

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Hi @kakashi love the engagement here from your side.

Still need to go though couple of links you have provided but overall I am in favor of this proposal. We need innovative new approach from Dexs on OPtimism.

I am usually supportive of marketing allocation as i believe there are scope of improvement and i see knowledge gap in community. But, I would like to see more about Optimims and not just about specific protocol.

We will also highlight at the end of every article that it was made possible by OP funds.

Foundation is already doing this at different community event and majority of web3 space knows that Optimism is giving grant to on-board user and new platform. We need to work on future roadmap of Optimism, Bedrock, possible path towards zk-rollup and Citizen house.

How are you planning to show accountability for dev fund use?

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Okay, in that case can you please provide comparative stats for any products on Polygon that provide limit/stop-loss orders?

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They are not a DEX. They are a “Meta DEX aggregator” that only allow limit/stop-loss orders.

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I’m getting a 404 on this. Would it be possible to make this public?

sorry. this is the correct link: https://dune.com/queries/1428873

You say you raised a small round and had grants previously. How much runway do you have on these funds?

Approx 4-5 months.

Given the two statements below, if integrating these protocols is free, what exactly is the OP subsidizing?

This is the case if some other protocol (eg: Uniswap) wants to integrate Symphony limit order on their interface. But, if we add support of any protocol (eg. Uniswap, Aave, etc) in Symphony to provide better prices then, we have to write a handler contract and additional relayer code. Similarly, if we want to add support for any protocol to provide better yield, we need to write a yield adapter contract. These also need auditing & testing which require resources.

Order Book UI: other than potentially preventing frontrunning, how is this different from simply placing an order on a standard dex aggregator? Is the point that the UI provides knowledge of extra liquidity where there are limit orders? If so, what’s preventing toxic order flow using information provided by the UI?

The order book UI would display all the open limit orders. So anyone with sufficient liquidity would be able to fill these orders directly from the interface. There won’t be a need to run a backend service for this. This would result in better price discovery. As of now if someone wants to fill any trades with owned liquidity then they need to run a backend service which is not very convenient, the order book interface would change that.

Can you provide a rough breakdown in development costs between these additional pieces (auditing, bug bounties, maintenance, etc)?

The cost of auditing depends on the size of the contract and the auditor. Apart from that, every month we need to spend at least $200 on operations.

Finally, I couldn’t see in your docs how the protocol earns revenue. I see $0.50 in Order Time Calculator – I assume that’s a $0.50 fee on every limit order placed or filled? Or is it $0.25 on placement and filling? And are there any other fees or sources of protocol revenue? Does the platform do its own trading?

There is a platform fee on every order, which is currently 5bps. We may change that eventually depending on our strategy. The platform doesn’t do its own trading.

Thanks again for taking the time to read the answers. And, let us know if you have any additional questions.

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We really appreciate you taking the time to read the proposal and the relevant answers. Your feedback will really help us.

I do not consider subsidizing the development and maintenance of the protocol

We believe that the development of additional features will help us attract more users to Symphony and Optimism. To ship new features we would need to compensate devs. The genesis of Symphony’s yield-generating feature came out of innovation and this innovation is helping a lot of users earn yield in an easy manner creating a great value add-on. By subsidizing development, we wish to keep improving our features and find ways to simplify DEX trading with new features that can serve as a catalyst for growth on Optimism.

Subsidizing marketing strategies is not usually a coherent decision; but from the way you present it, from an educational point of view with the participation of the community; designating about 6% of the distribution would seem correct to me, this represents half of the grant awarded to Bankless Academy

I agree with your point but our marketing strategy not only includes incentivizing education among our community members but also social media marketing where there is a potential to attract new users to Crypto & DeFi by creating an aggressive marketing campaign in order to convert leads given the number of people that consume content in the form of short-form reels on platforms like Youtube, Instagram, Facebook and TikTok for which paid campaigns will be utilized. Onboarding and educating users who are used to Web 2 services to Web 3 takes some investments but it can help convert a huge number of leads. We’ll also be targeting Twitter as it’s the most used platform by crypto users. Our plan also includes collaborations & partnerships with other projects and given the current market sentiment in the medium term, we will need to incentivize participation in order to attract exposure and wide involvement of potential leads. So keeping in mind these varied resource requirements, We believe 15% of funds are adequately allocated in order to ensure that we reach out to more users and to educate them about both Optimism and Symphony.

I am not very clear how they would allocate the gas reimbursement.

Currently, we have planned to reimburse users a maximum of 90% of gas cost. We would do it retrospectively in fixed intervals through airdrops.

Honest question, I’m not a communication expert, but do you think you have a potential audience looking for alpha on TikTok?

With the rise of short video content consumption, many big social media players are trying to keep up with TikTok. Youtube Shorts, Instagram Reels, and Facebook Reels are all similar content streams.

We honestly believe that people’s attention lifespan is getting smaller and smaller, meaning that content providers/brands need to adjust to that. Meaning: provide as much value as you can in the smallest time possible.

These short reels have the potential to show your content to millions of people, with $0 on ads. You can do thousands of videos and get average views close to 1,000, but you need 1 video to put your brand out there.

By doing this, we won’t have to spend $3-4 on user acquisition. Another selling point on why we think it’s one of the best ways of marketing Symphony is the For You section on an average user’s feed.

The algorithm shows content based on what content a user likes. There is no “THE VIDEO” everyone sees - like the news - because each social media user has a different taste, since different for you pages. This gives us the ability to niche down our videos (use captions, descriptions, and hashtags which are crypto-related, to put us in the Web3/Crypto on a user’s feed)

We already have a precedent in one of our team members, who reached 140k followers on TikTok around his personal brand(Crypto) even in a country with a 9M population with record low crypto-adoption. We’ve accordingly set our KPI and given the nature of this grant, We shall be utilizing not only Tiktok but also other platforms like Instagram, Facebook, and twitter and by heavily investing in content production for whole Optimism ecosystem and Symphony, we are confident to meet those metrics.

Please let me know if you have any further questions, we would love to answer them.

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Thank you for taking the time & effort to review our proposal. Your feedback & support is valuable for Symphony.

I am usually supportive of marketing allocation as i believe there are scope of improvement and i see knowledge gap in community. But, I would like to see more about Optimims and not just about specific protocol.

Yes, content related to Optimism & ecosystem will be a high priority.

How are you planning to show accountability for dev fund use?

We’ll publish updates about new features regularly in our community. This would give transparency to our community & also hold our team accountable. We’d publish an expense sheet at the end of finishing all the milestones. The expense sheet would highlight the usage of all the allocated OP tokens for development.

Thanks again and please let us know if you have any additional questions, we would love to answer.

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Thank you. Appreciate your engagement answering all our queries.

I dont have any other question but remember to get two delegate approval before second week and once you have the approval, include your proposal in round up thread.

Also, remember to summarize all the feedback your proposal has got before moving to second week of current cycle.

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Thanks for providing the details. Your comments were really helpful and we will keep note of the same.

If you are in favor of our proposal, It would be a great help if you can give your approval.

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@OPGovWatch Thanks for taking the time to read the proposal & answers.

Okay, in that case, can you please provide comparative stats for any products on Polygon that provide limit/stop-loss orders?

These metrics are of Quickswap limit orders which use Gelato on Polygon.

table

Sources: https://dune.com/queries/648193, https://dune.com/queries/1438781

The transaction cost of Gelato is 0.1% whereas on Symphony it’s 0.05%.
tx details

Please let us know if you have any further questions, we would love to answer them.

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Dear delegates, It was nice to get some of your feedback, we have updated our proposal accordingly. If you like to see this proposal moving forward, please state your approval.

Tagging a few delegates here: @jackanorak @Joxes @solarcurve @MoneyManDoug @fig @tongnk @mastermojo @quix @katie @ScaleWeb3

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Hey @kakashi thanks for all the details provided and the answers to all the questions with a very high level of detail. Good to see the commitment of the applicants in clarifying all the doubts.

No doubt Symphony Finance is a protocol with a unique value proposition. I only have one comment, allocating 15% to marketing when they could use those funds to incentivize users more. In these last cycles some projects have applied that will do the job of spreading the Optimism ecosystem, so I don’t see the need to use the funds for marketing.

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I’m sorry to keep bothering you about this; it’s just that I can’t find alternative sources of info on this point.

I see that you charge 5bps on the trades. This might’ve gotten lost in the mix last time, but in what circumstances is the fee charged? Is it when the order is just placed, or when it’s filled? Or half on each event?

Second (and I think last) q again concerns the dev incentives

You’re asking for roughly 80k OP in dev incentives. You say you spend $200/mo on operations and have 4-5 months of runway.

  • Does this mean that you have $1k left in your treasury? If not, please clarify.
  • Of this 80k OP, now much are you budgeting on the order book UI, integrations, audit(s), etc? Line items would be helpful here because I’m having trouble making a mental budget based on what you’ve proposed.
  • can you confirm that no integration is free, then, that it’s just a matter of who’s paying for dev costs? (Eg Uniswap integrating symphony into its UI would require dev work) And if so, which dev costs are being subsidized?
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but in what circumstances is the fee charged? Is it when the order is just placed, or when it’s filled? Or half on each event?

It gets charged when the order is filled.

Does this mean that you have $1k left in your treasury? If not, please clarify.

Yes, we have more than $1k left.

Of this 80k OP, now much are you budgeting on the order book UI, integrations, audit(s), etc? Line items would be helpful here because I’m having trouble making a mental budget based on what you’ve proposed.

Integration:

  1. New Contracts Development: 20k OP
  2. Make changes in the backend Relayer: 10k OP
  3. Auditing: 25k OP

Order Book UI:

  1. UI development: $15k
  2. UI Designing: 10k OP

Please note all these costs are rough approximations.

can you confirm that no integration is free, then, that it’s just a matter of who’s paying for dev costs? (Eg Uniswap integrating symphony into its UI would require dev work) And if so, which dev costs are being subsidized?

If Uniswap makes changes to integrate Symphony limit order on their interface then, they need to bear the development cost. But In case, if we create any pull request we will use OP to subsidize the dev work.
On the other hand, if we integrate Uniswap to provide better prices then, we have to create a handler contract and make changes in the relayer to execute the orders.

Feel free to let us know if you have any further questions, we would love to answer that too.

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Thanks for taking the time & effort to read the proposal. Really appreciate your kind words.

We agree that the project funded earlier has done a great job of spreading knowledge about the Optimism ecosystem. But our process targets new users with a different form of marketing. We are also targeting unpenetrated platforms such as short-time video platforms, which have many potential Web3 users. Optimism ecosystem can be the first one to target these users hence, we need the marketing budget.

Please let us know if you have any additional questions, would be happy to answer them.

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Okay actual last question: without a grant, how much of your roadmap could be completed with your current runway assuming little user growth from here

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It would be a bit difficult to add new features without any additional funds. So, a grant will help us to achieve that. As we believe in regular innovation & improvement so, we think community-requested features should be taken on priority.

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My impression is that your product has yet to meaningful adoption even on busier chain. I have trouble understanding how it will support meaningful growth on Optimism.

Why should Governance to fund yet another product that combines some combination of DEX aggergation with stop/limit orders? How many of these products do we need to subsidize or have a successful ecosystem?

I was also confused why governance approved a similar proposal from Kromaika before they had demonstrated that there was actually some demand for their product.

We need to be much more discerning for grants.

My suggestion would be that the team takes time to fully integrate into the ecosystem and demonstrate a ability to attract meaningful users and volume. Then come back to governance with a request that shows us how we can accelerate your growth for a big return on investment, not subsidize it.