[REVIEW] [GF: Phase 1 Proposal] Tarot

I’m also a retail Beethoven/Tarot user (but on Fantom) so my opinion is biased, but I agree with the other posters who have mentioned the integrity of the team and the quality of their products.

The grant size is appropriate to the TVL and the distribution window is fair.

A Tarot DAO governance proposal has been introduced, which seeks to add protocol-held TAROT liquidity to Velodrome on Optimism and incentivize veVELO holders to vote for emissions to these TAROT-based pools:

TIP-019: Velodrome Liquidity

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Following the adoption of TIP-019, ~$110K of initial liquidity has been added to Velodrome for the vAMM-TAROT/USDC pair.

The contract address for TAROT on Optimism is 0x375488F097176507e39B9653b88FDc52cDE736Bf
Note that this address differs from that of the TAROT token on Fantom

The TAROT token can be bridged between Fantom and Optimism via Multichain: https://app.multichain.org/#/router

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Tarot has commenced weekly TAROT-based incentives for liquidity on Velodrome, and ~$300K of protocol owned TAROT/USDC liquidity has been migrated to Optimism.

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Tarot’s proposal has been updated based on the Grant Proposal Template v2 by @ben-chain.

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Moving this proposal to REVIEW status ahead of Voting Cycle #6, Week 2, as per OPerating Manual v0.2.0.

Summary of Incorporated Feedback

Since the introduction of this proposal in July, the following updates have been incorporated in response to community feedback:

  1. Matching TAROT Co-Incentives: A Tarot DAO governance proposal, TIP-018: Tarot Co-Incentivization on Optimism, was adopted to allocate 3,000,000 TAROT over a 12-month period towards Optimism incentives.

  2. Expanded Distribution: The distribution of OP token incentives for liquidity providers was expanded to include all TAROT-based pairs, over a longer period (12-16 months).

  3. Initial OP-TAROT Liquidity: A portion of the OP incentives (60,000 OP) will be paired with team-held TAROT and provided as initial liquidity on Optimism for a period of at least 12 months.

  4. Optimism Metrics: Usage metrics have been expanded to include transaction counts for Tarot’s router and vault contracts on Optimism.

  5. Updated V2 Template: The proposal has been updated to conform with the updated V2 proposal template. Further details provided include: distribution milestones, an explanation for how Tarot will incentivize usage and liquidity on Optimism, and how the development of future products and yield opportunities on Optimism will continue after incentives have concluded.

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This is looking great, ser! Strongly encourage the community to support.

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I am an Optimism delegate [Delegate Commitments - #136 by jackanorak] with sufficient voting power and I believe this proposal is ready to move to a vote.

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I am an Optimism delegate [Delegate Commitments - #42 by solarcurve ] with sufficient voting power and I believe this proposal is ready to move to a vote.

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As an Optimism delegate with voting power above the required threshold I believe this proposal is ready. Delegate Commitments - #71 by MoneyManDoug

Imo Tarot is degen enough as it is. No need to attract more people (who are often unaware of the risks (liquidation looms)) with juicy OP rewards.

Nobody has to use Tarot for levered farming. People also can just single-sided lend their tokens to any of the pools and will earn a return on that, with zero IL. Using Tarot that way is less risky than even providing liquidity to DEXs like Uniswap or Sushi.

There’s other use cases as well(auto-compounder like Beefy, for example, with near-zero fees). Nobody has to use the leverage part, and it still would be a big plus to the Optimism ecosystem.

And what if i told you tarot is also an auto-compounder ?

I’m a bit confused of such comment as it’s very pretentious to think about risk management on behalf of others, and neglecting leverage farming on Defi is a simple non sense and shows a clear lack of understanding on the basics of Finance.

Voted : Against

After reading comments in past few days I see many argument on both side but I will go with content mentioned in the proposal.

Suggestion:-
remove uncertainties. This mean there is no limit on pair.

TAROT-based liquidity (e.g., USDC/TAROT, TAROT/ETH, OP/TAROT).

Avoid your native project pair or match 1:1 in co-incentives. This user has good suggestion, why not reward for single side LP then the responsibility will on user.

Co-incentive are case dependent but good to see that you are matching $500K in OP to $140K in Tarot.

Defi Committee A Recommendation

Voting recommendation: No

Rationale: All of tokens are being used to bootstrap Tarot’s own token; the use of the tokens being distributed to the core team for operational costs is unclear in terms of breakdown of resources, and there is a long distribution period.

Next Steps: Our recommendation is to focus on Optimism pairs and add transparency around the use of funds for operational costs.

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So the committee won’t revisit or even address its misunderstanding of the role of liquidity incentives in Tarot’s proposal?

How is this not a snub of a respected dev in @TigrisOfGaul?

Hello Op Gov Watch, we have clarified our position here and here and we standby our decision as a committee. However, delegates are free to vote on any proposal as they wish. As a committee, we will not be approving every proposal that comes our way which is in no way a “snub” to the project itself or the people involved. Additionally, any project is free to submit the proposal again in future voting cycles.

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The defi shadow committeewhich is not an official committeesupports this proposal in principle.

We think this proposal is promising as a catalyst for substantial growth in use and economic multipliers for neighboring protocols, and we believe the emphasis on providing LP support for TAROT is a clever, cost-efficient means of incentivizing non-LP yield generation and potentially introducing new connections to other financial activities.

We believe that @katie and DeFi committee A rejecting this proposal because it deals with a native token is missing the forest for the trees. It is also puzzling that the same committee supported without reservation Kromatika’s own proposal, which does the same thing—uses both protocol-owned-liquidity and liquidity incentivization of its native token $KROM—with less justification. We will publish our own review of this other proposal shortly.

Would still like to see a breakdown of Tarot’s intended dev activities, though, and we agree that the term of the distribution is far too long.

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Katie,

The risk of this feeling like a snub doesn’t come from the committee’s rejection of the proposal. That is your committee’s right. It is that the committee’s rejection seems to be born a misunderstanding of the nature of Tarot and the role that LP incentives will play in driving protocol activity, even after it has been clarified by @TigrisOfGaul and @jackanorak.

Statements like “all of tokens are being used to bootstrap Tarot’s own token” doesn’t acknowledge that doing so is a more capital efficient way to incentivize Tarot usage then direct protocol incentives and “our recommendation is to focus on Optimism pairs” seems like you’ve entirely missed the point of the incentives. Why would a lending and borrowing protocol looking to grow on Optimism ask for a grant to incentivize OP pairs?

If this is where you all choose leave things, I see two risks:

  1. Tarot doesn’t have specific and actionable feedback to submit an improved proposal, maybe doesn’t even try

  2. Builders develop a perception that they can’t trust governance to understand or engage with nuanced proposals resulting worse outcomes for the ecosystem

If the committee is going to stick to it’s no recommendation, I would like to see them at the very least demonstrate they understood and remain unpersuaded by the thoughtful clarifications offered below.

From Jack:

Tarot, an incentivized leveraged yield protocol, is unlike many projects in that it can (and would) directly incentivize general use selectively with token emissions. Borrow and lend on the protocol, get TAROT in addition to your compounded yield.
Because of this, using OP to incentivize liquidity on TAROT is more or less tantamount to directly incentivizing borrowing and lending activity. More liquidity → more capacity to issue TAROT → more users of the protocol.
In this way, Tarot would have the flexibility to juice certain types of activity it wants to promote without having to redirect OP to farmers looking to dump it. Pairing TAROT with OP isn’t necessary but does offer a marginal liquidity backstop for OP.

From Tigris:

We view the OP incentives program through the lens of efficient capital allocation , and structured our proposal to align the long-term success of Tarot on Optimism with that of the Optimism network.
Currently, the direct incentivization of DEX liquidity is 30-50x more capital efficient than incentivizing borrow activity in Tarot. For example, $1 of OP bribes results in $2-3 of DEX rewards almost immediately, compared to $1 of OP borrow incentives resulting in ~$1 of borrow activity over one year. From the protocol’s point-of-view, it makes no sense to bribe non-TAROT pairs on DEXs, as the impact of bribing other pairs does not flow to Tarot directly.

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Voting against the proposal following the DeFi committee’s A recommendation.