[REVIEW] [GF: Phase1] Homora V2 x Ironbank on Optimism

Project Name: Homora V2 on Optimism

Author Name and Contact Info:

  • Alpha Venture DAO – Arin Trongsantipong (Head of Product) arin@alphaventuredao.io
  • Iron bank - Iron Bank Core Team (partnerships@ib.xyz) and/or Puff - Lead Contributor (L@ib.xyz)

L2 Recipient Address: 0xCDE30CC7502290a6B8827254810F4C852f5f3EE6

I understand that I will be required to provide additional KYC information to the Optimism Foundation to receive this grant: [Yes/No]

Which Voting Cycle are you applying for? : Voting cycle #8

Grant category: Optimism Governance Fund (Phase 1)

Is this proposal applicable to a specific committee?
This proposal may fall under the revision of DeFi committees

Project Description:
Homora is the world’s first multi-chain leveraged yield farming and lending protocol, and is also the first and flagship product from Alpha Venture DAO’s build arm. Homora V1 was first launched on Ethereum in October, 2020. To offer a more disruptive value proposition, Homora V2 was introduced on Ethereum in April, 2021, with enhanced technology and functionalities such as single asset liquidity providing and flexible borrowing of multiple assets for leveraged yield farming. After the Homora V2 launch, the product has reached significant usage and adoption with a record high Total Value Locked (TVL) of 2 billions USD in May, 2021.

To enable our users to take leverage on many assets, Homora is partnering and integrating deeply with Iron Bank, a protocol-to-protocol lending platform and liquidity backstop for the DeFi ecosystem as our main source of borrow liquidity.

Homora V2 x Ironbank has continuously expanded across other L-1 chains, including Avalanche and Fantom, to bring high yield opportunities to mass users at lower transaction expenses. To continue lowering the barrier of entry for users, Homora V2 x Ironbank scaled to L2s, starting with Optimism and launching Homora V2 on Optimism as the first leveraged yield farming protocol to integrate with Uniswap V3.

Project links:

Homora V2

Ironbank

Additional team member info:

Relevant Usage Metrics: (TVL, transactions, volume, unique addresses, etc.)

Since the launch, Homora V2 x Ironbank has witnessed explosive growth on the platform, which rides along with Optimism’s growth. At the moment of submitting the proposal, Homora V2 ranks #1 in the leveraged yield farming and lending category and #9 among protocols within Optimism ecosystem while Ironbank ranks #2 in the lending category and #14 among protocols within the ecosystem

Public dashboard: Grafana
Total Value Locked:
Total Value Locked (all chains): ~70M (1B at peak)
Total Value Locked on Optimism: ~20M (35M at peak)

No. of opened positions:
No. of opened positions (all chains): 17,231 positions
No. of opened positions on Optimism: 433 positions

Unique address: undefined: TVL and Stats - DefiLlama
Total unique address (all chains): 4,966 addresses
Unique address on Optimism: 211 addresses

Ironbank:
Total Value Locked: Iron Bank: TVL and Stats - DefiLlama

Competitors, peers, or similar projects (please link):

Homora V2

Ironbank

Is/will this project be open-sourced?

  • Ironbank – Yes
  • Homora V2 – No

With Homora V2 product nature, we intend to innovate fast and support future integrations while maintaining protocol security. As a result, we decided to make our code close-sourced to strengthen our user’s security

Optimism native?: Yes/No

Date of deployment/expected deployment on Optimism:

  • Ironbank – 16th August, 2022
    Homora V2 --18th August, 2022 10AM UTC

Ecosystem Value Proposition:
Optimism is the first L-2 chain that Homora V2 and Ironbank launched since we believe in the growing ecosystem and the vision of decentralized governance. With our growth strategies to integrate and build partnerships with more DeFi projects on Optimism, we believe that our launch will further drive DeFi activities and liquidity locked on chain, supporting Optimism to grow into a leading L2 chain. Moreover, we believe that our launch will benefit the whole ecosystem stakeholders, including

  1. Users on Optimism to get access to high boosted yields on high-quality pools from top DEXes with enhanced protocol security through leveraged yield farming on Homora V2 and lending on Ironbank.

  2. Builders on Optimism, including

  3. DEXes we integrate on top will gain higher TVL and deeper liquidity added to their pools, facilitating higher efficiency and lower slippage on AMM swaps.

  4. Other protocols that integrate on top of Homora V2 and Ironbank can leverage this partnership to expand more use cases of leveraged yield farming, such as yield strategies and vaults.

Additionally, we have strengthened the Optimism ecosystem by co-launching with ecosystem partners, including Iron Bank, Yearn Finance, and Perpetual Protocol and gained impressive traction of ~$20M in TVL, > 30k impressions and >900 engagement.

Has your project previously applied for an OP grant?: No

Number of OP tokens requested: 684,000 $OP

Did the project apply for or receive OP tokens through the Foundation Partner Fund?: Yes/No/In Process

How much will your project match in co-incentives?

Homora V2 x Ironbank is willing to match additional 45,000 IB tokens to be distributed as LM incentives on top of leveraged yield farming and lending pools
Beyond this, Homora V2 x Ironbank has already committed up to 15,300 IB (~$50,000) to celebrate our launch on Optimism and bootstrap the liquidity locked on the platforms over 4 weeks. See more details of our previous LM program here. (Edited 2 Nov 2022: The LM period is extended until 20 Nov 2022)

Proposal for token distribution:
How will the OP tokens be distributed?

As a builder on Optimism, Homora V2 is requesting 684,000 $OP tokens where

  • Type1: ~56% of granted OP tokens (~384,000 $OP) will be allocated to users as promotional liquidity mining rewards to help bootstrap liquidity at launch in addition to the organic usage. We plan to prioritize listing the pools with OP tokens to ensure that the distributed rewards benefit back to the ecosystem. The tokens will be allocated to supply pools at a fixed rate of a 16,000 OP tokens per week with the distribution rate at start as follow

Supply pools

  • OP = 11,000 OP per week
  • ETH = 5,000 OP per week

The rationales behind our token allocation is to incentivize OP lending activities, which will lower the number of OP tokens in circulation while advertising borrowing activities against OP, ETH, DAI, USDC that such that higher farming yields will attract more liquidity providers. Higher borrowing demand will lead to higher yields for lenders. Overall, this will help shape a positive feedback loop, leading to more lending and borrowing activities. However, the allocation of the requested tokens may be adjusted based on market conditions.

  • Type2: ~44% of granted OP tokens (~300,000 $OP) will be allocated as builder’s grant for protocols looking to integrate on top of Homora and Ironbank. For example, building yield strategy vaults on top of Homora’s leveraged yield farming pools that also contributes usage on Ironbank. This will allow Homora to leverage the synergies with integrated protocols and further increase liquidity and leveraged yield farming and lending activities on Optimism. See example of previous integration here

We target 3 protocols to integrate on top of Homora with the builder’s grant given out on the FCFS basis, with more allocation ratio given to the protocols committing to integrate with us before the grant is approved (as they take on more uncertainties of the grant itself). Currently, we have reached out to 4 partners in our contact whether they are interested in building strategies on top of Homora and 2 of them confirms to integrate with us (Sharpe.AI and Blue Swan Labs)

For the requirements to receive the grant, the integrated protocols must use the OP received in a way that

  1. Incentivize on-chain activities and contributes to increase in TVL on Optimism
  2. Distribute in a span of at least 3 months

How will this distribution incentivize usage and liquidity on Optimism?

As a leveraged yield farming protocol, Homora aims to help bring large TVL and liquidity to the underlying DEXes and become the majority contributor of underlying liquidity pools that it integrates with. (e.g.Homora V2 aims to contribute over 70% to Uniswap V3’s liquidity for the pools that are integrated with Homora)

Since many of Homora’s users are degens and advanced investors looking for opportunities to boost their yields, distributing OP tokens as promotional liquidity mining rewards will help incentivize protocol usage and bootstrap the liquidity on Optimism after deployment. As a result, higher farming yields will attract more liquidity providers, while higher borrowing demand will lead to higher yields for lenders. In overall, this will help shape a positive feedback loop, leading to more lending and borrowing activities.

Over what period of time will the tokens be distributed?

The liquidity mining incentives of $OP token will be distributed over 24 weeks (6 months), with 12 active liquidity mining period (2-week each)

Key milestones/KPIs you expect to achieve

  • Launch on Optimism (18 Aug 2022) with 3 leveraged yield farming + 3 lending pool listing
  • Target 1-week after launch (with IB tokens LM rewards on lending pools)
    • Gain an average of 20% organic traction on leveraged yield farming pools: 5M (exceed, actual TVL = 10M, contribution = 50%)
    • Bootstrap 20% of the target liquidity on lending pools: 7M (exceed)
  • List ETH-OP pool and OP lending pools (07 Nov 2022)
  • Target 1-month after launch
    • Gain an average of 50% organic traction on leveraged yield farming pools (meet, actual TVL = 12M, contribution = 50%)
    • Bootstrap 30% of the target liquidity on lending pools (exceed, contribution = 57.5%)
  • Target 2-month after launch (with OP tokens LM rewards on leveraged yield farming pools)
    • Gain an average of 70% on leveraged yield farming pools after the LM rewards are distributed
    • Bootstrap 50% of the target liquidity on lending pools (meet only on ETH/USDC and ETH/DAI pool, contribute = 74%)
  • Continue new DEXes, asset listing, and explore integratation with other protocols to increase protocol use cases
    • Integrate with >=3 ecosystem partners on Optimism
  • Target 4-month after launch
    • Maintain a TVL share of 2% across Optimism DeFi landscape

Why will the incentivized users and liquidity remain after incentives dry up?

After incentives dry up, there are three key factors that can help sustain the liquidity on Homora V2, including organic traction, a strong track record of usage from Uniswap V2’s liquidity pools, and the first-mover advantage from integrating with Uniswap V3. First, by launching without distributing additional liquidity mining rewards on liquidity providing pools, we can organically bring in a total of $20M in TVL at its peak since launching on Optimism, with ~80% liquidity locked on Uniswap v3 ETH-DAI 0.03% pools from Homora. Secondly, with proven track records on other chains that Homora is currently live on, such as Ethereum, ~50% of Homora’s TVL on Ethereum comes from Uniswap V2 even after incentives dry up. This proves that integrating leveraged yield farming protocol on top of a large DEX like Uniswap can bring sticky organic usage without extra incentives. We aim to replicate a similar impact to Homora on Optimism after integrating with Uniswap V3. Finally, Homora is the first leveraged yield farming protocol to integrate with Uniswap V3, which gives it a first-mover advantage to offer a more unique value proposition towards the Optimism community.

4 Likes

Thanks for the proposal! Under the ‘Grant category:’ field, please specify which committee should review your proposal (NFTs and Gaming, Tooling, or DeFi).

1 Like

Thanks for the feedback! We already revised the proposal to include the committee specific section.

14 Sep 2022

Summary of incorporated feedback
After the first week [DRAFT] of submitting our governance fund proposal for community review, we have constantly been gathering feedback from discord, Optimism team discussion, and the community. Here is the summary of the feedback and how we act In response to them accordingly.

1. Add the specification on which committee type Homora proposal will fall under: Homora is the DeFi’s first leveraged yield farming and lending protocol

2. Reduce the number of requested OP tokens: We benchmarked our protocol organic traction (TVL) to similar protocols and their granted OP tokens from previous voting cycles and decided to lower the number of requested tokens by 20% to reflect our best interest to grow along other protocols on Optimism

3. Adjust allocation of OP tokens: We pushed back the allocation % for contingency usage to only 3% and decided to add that to allocation for builder’s grants instead. The reason is that we agree with the feedback to focus more on allocating the requested tokens to acquire new integration partners in order to leverage synergies between protocols rather than using the granted tokens on operation costs. Also, we refined this section to be more aligned with the previous distribution reflection from the last cycle retrospective.

2 Likes

21 Sep 2022

On this second week [REVIEW] of proposal submission, we have been actively reaching out to the delegates on both discord and telegram to gather more feedback on our proposal. Here is the summary of the delegate feedback and how we act in response to them accordingly.

1. Reduce the number of total requested OP tokens from 1M to 800k: We received feedback from the delegates regarding the too many OP tokens being requested in one round. Therefore, we decided to break down the requested amount into different requests to reflect different milestones acheived.

As a result, we lowered the requested tokens in this 6th voting cycle by another 20% (to 800k OP) to kickstart the first phase of using requested tokens to drive usage on the Optimism ecosystem to show our fairness and sincere intention to grow alongside the Optimism community.

2. Adjust allocation of OP tokens: We cut off the allocation % for contingency usage and distributed the allocation to 80% (640k OP) to be used as Liquidity Mining Incentives on the pools with OP tokens instead to ensure that the OP requested tokens used will be circulating and benefiting back to OP community, delegators, and holders. Another remaining 20% (160k OP) will be used to support new integrations on top of Homora, emphasizing the usage growth even more.

3. Update all the statistics and relevant metrics (ie. Public Grafana dashboard, no. of positions, etc …) to be up to date on a daily basis and include the link to public dashboard ie. DeFillama and DeBank for more transparency

4. Extend the distribution period from 8 weeks to 10 weeks to encourage a more sustainable usage and tractions from requested tokens

Thank you @OPUser @ScaleWeb3 @katie @Netrim @MinimalGravitas for your support and useful feedback.

2 Likes

I see two section from the Template is missing in this proposal.
Please include them :- Grant Proposal Template

could you also update the excel screenshot too, correct me if i am wrong but 3.40TVL increase was possible when 1.12M OP token was requested. How much you expect now ?

I would suggest to reduce the weekly distribution significantly. It seems liquidity on protocol is sticky which is a plus point but you are burning token too fast for my taste.

Not being open source is also a point to consider here, I am more aligned towards OSS. This is my personal view and not of committee, committee is reviewing your proposal and once you have approval from 2 delegate and included in snapshot, we will share our recommendation.

@Dhannte

1 Like

Hi, thank you for the feedback. As per the proposal improvement, we have
1. Include the missing section: Voting cycle & Co-incentives matching

2. Update the sheet to reflect the current market condition and our expectations: gaining 5.4M TVL increase with 640k OP usage (~10x impact)

3. Extend the distribution period to lower incentives burning rate: the rewards will be distributed over 16 weeks (from the previous 10 weeks) at a rate of 40k OP per week

4. To clarify why we do not open source our code, the main reason is that we see it as another security buffer layer for our users.

If you have any further questions, please do not hesitate to let us know!

1 Like

I am an Optimism delegate [Delegate Commitments - #18 by katie] with sufficient voting power and I believe this proposal is ready to move to a vote.

2 Likes

I am an Optimism delegate [Delegate Commitments - #65 by mastermojo ] with sufficient voting power, and I believe this proposal is ready to move to a vote.

As mentioned earlier, really appreciate your engagement.

Liquidity is sticky, new innovative approach, focused on V3, good tvl in short time after your launch along with liqduity on main net.

I dont like that the protocol is not OSS and high weekly distribution. I assume, we cant do anything about OSS but token distribution still need improvement and I am talking about 5-7K/weekly. Adjust accordingly and focus on 6 month distribution period or even shorter, you can always submit another proposal in future once current incentives are over.

Homora has potential to grow OP ecosystem but not being OSS is against my personal opinion so I will most likely abstain from voting but only if token distribution is adjusted.

Most important, remember that I am really small delegate so making change according to my suggestion does not necessary mean bigger delegate will share the same thought. Check with them too and decide.


From committee stand point, if you feel that your proposal need to be reviewed by DeFi committee A please let me know and I will talk to them.

1 Like

Hi, appreciate your feedback. We agree to lower the distribution per week to the suggested number and extend the allocation period as a response to that. We are also now finding potential workarounds to address the co-incentives matching and OSS concerns and will keep gathering more feedback from the delegates and incorporate into our proposal once ready.

For the final point, we would appreciate your support to consider and facilitate transferal of our proposal to be reviewed by DeFi committee A. Let me know if you need any more clarifications.

1 Like

Regarding transfer, we are moving forward with initial distribution so transfer would not be possible.

But please join community call tomorrow, if possible, and raise this topic, always good idea to see what community think. From my side, whole point of distributing the proposal according to block height was to remove bias and distributing individually might raise more concern.

1 Like

Hello Prima, I don’t think proposals should be transferred to different committees upon request. Defi Committee C has been assigned your proposal, so it is appropriate for them to review and give a recommendation on your proposal in the next round. Transferring this proposal to a different committee for review doesn’t make sense and creates a bad precedent.

1 Like

Sharing our comment from Discord here as well for better visibility in this thread:

Appreciate that you lowered Ask slightly and extended distribution period. Imo 640K Op for liquidity incentives (short-Term APY boost) without co-incentives is still pretty hard to vote for.

Potential improvements (in the best case a combination of the following):

  • (Lower Overall Ask, put higher focus on project onboarding than LM)
  • Co-incentives: Match at least the liquidity mining rewards
  • Adjust distribution & or incentive design for more sustainable, sticky incentives
  • Target existing user groups, pools, projects to move over to (your pools on) Optimism

We believe Alpha Homora can significantly contribute to initial liquidity flow to important Optimism pools ($30M already, good initial pool choice :+1:) with this proposal.

As Homora is mainly attractive to “smart money” though, we are afraid these LM incentives will be picked up by professionals and excess users & liquidity will leave as soon as Op incentives run out.

Thinking out loud…end-user onboarding is tough at the moment but we believe it’s a great time to onboard stablecoins, large projects to Optimism DEXs and consequently to levered pools on Homora.

Looking forward to your ideas around co-incentives matching and OSS concerns!

1 Like

Thank you for the update @OPUser @katie , understood and respect the delegates’ decision

Voting Cycle #7: Roundup Make sure you guys post here with your two delegates (Katie and myself).

Key updates on Homora V2 on Optimism proposal (06 Oct 2022)

1. Proposal submission structure change

Homora V2 will apply the Optimism governance fund with our partner: Ironbank, which is a multi-chain protocol-to-protocol lending platform that provides excess liquidity for leveraging on Homora V2. Thus, the previous Homora V2 on Optimism proposal will now become a co-proposal between Homora V2 and Ironbank.

2. Protocol information update

As a result of (1), key information (contact person, website link) and all relevant metrics relating to the Ironbank protocol will now be included in the proposal.

3. No. of tokens request and allocation

We adjusted the number of tokens requested to the amount that we believe could attract more TVL and activities on Optimism given the contribution of both Homora V2 and Ironbank. We also add the allocation to bootstrap OP lending pools as an additional to only the borrowing side to help lower the amount of OP in circulation.

4. No. distribution period

We extend the distribution period from previous 16 weeks to a total of 50 weeks (roughly 1 year) to show lower the requested tokens burn rate and show our intention to support sustainable growth on Optimism.

I don’t believe that anyone here has suggested a longer term and yet you’ve gone from 8 to 10 to 16 to now 50 weeks in response to feedback that the weekly ask is too large.

Could you explain why this is preferable to lowering the ask but maintaining the term?

I also see that today you’ve increased the ask from 800k to 1mm – can you please break down the feedback that’s gotten you here?

1 Like

Hi, thanks for the feedback. To clarify, we benchmark our protocol TVL contribution with other protocols applying for the grant, so we considered the ask a reasonable amount given that we are applying as a joint proposal between Homora V2 x Ironbank. However, we will take this to the team to reconsider our ask amount.

Thank you for the changes.

One suggestion would you consider replacing WETH-OP 0.3% to a different $OP pair. Gamma has a join proposal of 900K OP dedicated for this pair, so what do you think about using different pair ?

Could you also share which proposal you are referring too ? Also, weekly distribution plan and duration is final or you are still getting feedback on those ?

1 Like