SECTION 1: APPLICANT INFORMATION
Provide personal or organizational details, including applicant name, contact information, and any associated organization. This information ensures proper identification and communication throughout the grant process.
Basic
- Applicant Name: Eden
- Project Name: Aark
- Project Description: Aark is a 1000x perpetual DEX powered by LST/LRT assets
- Team Members and Roles:
Eden(CEO)
Demian(Smart contract dev)
Oliver(Back end dev)
Nick(Smart contract dev)
Kane(Infra dev)
Liam(Data dev)
Timothy(Frontend dev)
Pino(Design)
Cat(Biz)
Mike(Marketing)
Ocean(Marketing)
Ninja(Marketing)
Taylor(Operation)
Jane(HR&Mgmt)
Contact Information
- Point of Contact: Eden
- Point of Contactâs TG handle:@foundangeles
- Twitter: https://twitter.com/Edenfromspace
- Email: eden@aark.digital
- Do you acknowledge that your team will be subject to a KYC requirement?: Yes
SECTION 2a: Team and Product Information
Provide details on your teamâs past and current experience. Any details relating to past projects, recent achievements and any past experience utilizing incentives. Additionally, please provide further details on the state of your product, audience segments, and how you expect incentives to impact the productâs long-term growth and sustainability.
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Team experience (Any relevant experience that may be useful in evaluating ability to ship, or execution with grant incentives. Please provide references knowledgeable about past work, where relevant. If you wish to do so privately, indicate that. [Optional, but recommended]):
Eden â Founderâs Story
- B.S. in International Business
- Strategy and BD Manager at CEX
o Exchange Business Development & Relationships Management
o Margin Trading, P2P Lending, LP Program Architect in Maltese entity - BNP Paribas Asset Management | Equity Fund Manager
o $400mln AUM Long/Short MP Fund, Private/Public Fund - HSBC Equity Global Research
Demian â Product Lead
- B.E. in Computer Science
- Algorithm Lab | Research Engineer
o Dynamic Voronoi Diagram Research - Graphics Lab | Developer
o Computer Vision R&D
Cat â VP of Business Development
- Duke University | Master of Management
- Orderly Network | VP, Partnership
- Neo | BD, Ecosystem Growth
- Citi | Management Associate
- Pre-seed investors: Delphi Digital, OKX Ventures, Big Brain
- Seed investors: Hashkey, IVC, Cypher Capital, Morningstar Ventures, Apollo Crypto, Arrington Capital
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What novelty or innovation does your product bring to Arbitrum?
From top to bottom, Aarkâs architecture, or Aark-itecture, is full of unprecedented innovations on Arbitrum, including:
1/ 1000x offers 1000x trading secured by Aarkâs âIntervalsâ structure, eliminating bad debt;
2/ Hyper-Diversity LP allows LP with diverse assets like LST/LRT/RWA
3/ Leveraged LP boosts APR for LPs by 3x without interest or borrowing costs;
4/ RMM(Reflective Market Maker) uses oracles to retrieve CEX data providing CEX-level liquidity;
5/ Scalability allows more profitable LP while significantly reducing PNL volatility;
6/ Single-sided LP offers flexibility in LP assets to avoid unwanted basket exposures;
7/ Skewness Cap maintains a balanced OI, promoting delta-neutrality for LPs;
8/ Price Discovery creates unique onchain arbitrage opportunities, balancing OI; and
9/ Streaming Funding Fees eliminates JIT manipulations.1. 1000x Leverage trading without bad debt
All perp DEXs share similar product offerings including leverage trading, order types and low fees. However, Aark stands out with leverage innovations on killer-feature 1000x trading. Aark draws inspiration from BitMEXâs 100x and aims to make Aark the 1000x exchange. Aark ensures safety in its operations by dynamically managing fees for 1000x trading, ensuring that the liquidity pool has a win rate of over 51%.
2. Hyper-Diversity LP - Choose ANY asset in DeFi, earn yields
Aarkitecture allows a hyper-diverse set of assets for liquidity provision. Beginning from the basic assets such as ETH, ARB, stablecoins, Aark is the first perp DEX that allows for LST/LRT/RWA for LP, enabling dual yields.
Innovation doesnât stop here: Aark-itecture has the capability to broaden its horizons to include LP tokens. Uniswap v2 LP, Camelot LP, or any other tradable asset with liquidity can be added to the Aark pool to generate yields. This includes aUSD tokens and Aave USDC pool tokens, which users receive upon lending to Aave.
3. Leveraged LP - Higher APR for LP; More liquidity for trader
With 3x leveraged LP, LPs can earn 3x higher APR. The increased LP amount in turn provides more depth for traders. Leveraged LP is fee-free.
Traditional leveraged yield farming protocols, which borrow from lending pools, saw lending rates skyrocket. The Aarkitecture design removes uncertainty from cost. Leveraged LP uses a synthetic leverage that can be understood as an LP version of perpetuals:
- perpetual positions do not borrow; and
- no borrowing fees or interest.
4. RMM - lowest slippage
RMM (Reflective Market Maker) utilizes oracles to retrieve order book data from CEXs. For example, RMM retrieves data on the amount of liquidity in Binanceâs ARB-PERP market and simulates the same liquidity on to Aarkâs pool. As a result, traders can experience a price impact/slippage the same as trading on Binance.
If a token has sufficient liquidity on a verified exchange, RMM ensures that Aarkâs markets are as liquid as the most liquid exchange. Please refer to our simulation results to better understand how we designed this algorithm to be safe.
5. Scalability & Pool Profitability - makes pool safer + profitable
Aark can scale 16x more than peers. Aarkâs longs-shorts counterparty each other, and only the surplus is counterpartied by the pool. As such, in a long 53: short 47 OI, the long 47 counterparties short 47. Only the surplus 6 is counterpartied by the pool. This has three effects:
- The pool is exposed to less PNL volatility compared to legacy cases of counterpartying the entire OI.
- Aark can open 16x more OI with the same pool size.
- Profitability is 16x higher because only 6 in the pool receives trading fees from the 100 OI.
6. Single-sided LP - No more baskets
Aark-itecture allows for users to deposit any single asset they want into AALP to earn yields. Users may also opt for multiple assets, in any ratio they desire.
In the case of baskets, not only are users forced the exposure to unwanted assets, but also limited choices due to the inability for the basket to comprise too much diversity. Aark is the sole single-sided LP with hyper-diversity that is able to meet diversified user needs.
7. Skewness Cap - Balanced OI enables delta-neutral LP
Skewness measures the imbalance between long-short OI. If long:short OI ratio is 60:40, skewness is 20. Aark-itecture places a cap to this skewness. The cap is calculated by multiple factors, including the size of the liquidity pool, marketcap of the token, and size of simulated liquidity.
8. Price Discovery - On-chain arbitrage opportunities
Aark introduces price discovery similar to CEXs: the mark price is the unique trade price on Aark. The advantage of this is that, with a unique price, arbitrageurs can exploit opportunities between Aark and any other exchange. Such arbitrage opportunities help keep the OI balanced and the pool to be less directionally exposed.
9. Streaming Funding Fees - No more JIT manipulations
JIT(Just In Time) liquidity manipulates a pool-based market by enabling opportunistic LPs to earn fees without taking on potential risks or costs. In the case of Uniswap v3, JITs have diverted yields that mid/long-term LPs would otherwise have received. JITs have also been active even on perpetual exchanges where fundings are usually paid out every 1 or 8 hours.
To remove any such misappropriation, Aark-itecture implements Streaming Funding Fees where fundings are paid out every block. This ensures that LPs receive every penny in exchange for their liquidity provision.
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Is your project composable with other projects on Arbitrum? If so, please explain:
Yes, Aark is composable with several projects on Arbitrum including Lido, Rocketpool, Etherfi, Pendle, and others. Aark is the only perp DEX that enables single-sided staking of ARB and LSTs as LP. This hyper-diverse capability can further expand to RWA and LRTs including sDAI, eETH, PT eETH from Pendle, providing a unique use case for these tokens and secure another source of yield on top of these interest-bearing tokens.
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Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
Yes. Our comparable protocols are 1) P2Pool model perp DEXes, including GMX, Gains, Hyperliquid 2) high-leverage trading platforms: ApolloX.
Comparison table GMX, Gains, Rollbit, RabbitX, Binance
Trading:
- Aark distinguishes itself as the sole platform within the DeFi landscape offering high leverage trading up to 1000x. It prides itself on transparency and money lego capabilities, catering to sophisticated traders with advanced informational needs. Aark sets itself apart by delivering an exchange experience focused on trading excellence, rather than catering to the gamblefi sector.
- Liquidity, scalability and other safety mechanisms
DeFi:
- Aark is a DEX in nature. Transparency and money lego traits which are the essence of blockchain and DeFi are fully represented in Aark. Aark is not a stand alone CeFi product but a foundation to an ecosystem of DeFi protocols.
LP:
- All of DeFi can be added to Aark as LP: LST/LRT LP only possible on Aark. Other tokens, LP tokens including Uniswap USDC-ETH, and any other assets in DeFi readily available to add as LP.
- Aark is the only hyper-diverse LP that provides delta-neutral, singled-sided LP.
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How do you measure and think about retention internally? (metrics, target KPIs)
We evaluate user retention through various KPIs including cumulative users, active users, the ratio of old to new users over time before and after every new campaign / incentive programs. Additionally, we employ metrics like TVL and daily trading volume to gauge sustained engagement. Our internal benchmarks include a focus on maintaining a healthy balance between retaining existing users and attracting new ones.
1. Users:
Currently Aark has cumulative users of 11,400. The number of traders increased rapidly after the launch of Moon Mode in early February. The numbers in LP increased rapidly after the launch of diversified LPs
- Late January - all GMX GM tokens ranging from GM-BTC to GM-DOGE for dual-earning
- Early January - LSTs (stETH and rETH) for dual yields
- Late March - LRTs, Pendle PT tokens for multi-yields and points
We count approximately 21,000+ active users on non-Arbitrum perp DEXs by taking into account only those with deposits higher than $100 for both traders and LPs. We define this as our target market for user acquisition:
- KiloEx: 2,936
- ApeX: 1,690
- Kwenta: 4,033
- Synthetix: 10,571
- Level: 1,837
- ApolloX: 663
- and others
Based on our expectations that 10% of our target market will reach the final activation stage of LTIPP, we expect a minimum number of 2,100 unique users to participate by the end of the campaign.
2. OI wallet:
Aark has achieved 50x growth in OI (Open Interest) wallet volume, from $3 million in Sep and now $143 million as of February end.
Unlike other Perp DEXes cap OI (Open Interest) to TVL ratio below 1:1, Aark can scale over ten times the OI relative to its TVL. This advantage results in substantially higher returns for LPs and nurtures a positive feedback loop that attracts more LPs and traders.
Based on our expectations of Aark unique OI scalability, we expect additional OI wallet volume growth in accordance to user growth from non-arbitrum acquisition.
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Relevant usage metrics - Please refer to the OBL relevant metrics chart 6. For your category (DEX, lending, gaming, etc) please provide a list of all respective metrics as well as all metrics in the general section:
- Trading Volume, Open Interest, Funding Rate Stability(= Annualized Funding Fee) and Liquidated Volume: https://dune.com/queries/3466479
- TVL for each collateral: https://dune.com/queries/3239704/5419766
- Leveraged TVL https://dune.com/queries/3466544
- List of Traders, Trader Net P&L Improvement: https://dune.com/queries/3466568
- List of Liquidity Providers: https://dune.com/queries/3466626
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Do you agree to remove team-controlled wallets from all milestone metrics AND exclude team-controlled wallets from any incentives included in your plan:
Yes
- Did you utilize a grants consultant or other third party not named as a grantee to draft this proposal? If so, please disclose the details of that arrangement here, including conflicts of interest (Note: this does NOT disqualify an applicant):
No
SECTION 2b: PROTOCOL DETAILS
Provide details about the Arbitrum protocol requirements relevant to the grant. This information ensures that the applicant is aligned with the technical specifications and commitments of the grant.
- Is the protocol native to Arbitrum?: [Yes/No, and provide explanation]
Yes. We are native and only on Arbitrum.
- On what other networks is the protocol deployed?: [Yes/No, and provide chains]
No
- What date did you deploy on Arbitrum mainnet?: [Date + transaction ID. If not yet live on mainnet, explain why.]
August 13, 2023
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Do you have a native token?: [Yes/No/Planned, link tokenomics docs]
Planned for March-April 2024. Go to our Tokenomics Page
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Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?
Yes. Aark had a Point/Trade mining program for traders and two Early Bird programs for LPs.
(says cant have more than 20 links, temporary deleted)[User results for 4 incentive programs](Past incentive user results - Google Sheets]
Aark Digital had a 18-week âTrade to Earnâ initiative, allowing participants to earn a share of the 3.6% reward allocation from the total supply of $AARK. As the fee-earning governance token, $AARK holders gain various benefits within the Aark ecosystem. The program is designed with 7-day epochs, commencing on October 11th, where participants earn $AARK based on their trading volume relative to the total market volume. The reward allocation, amounting to 0.2% of the total supply or 2,000,000 $AARK per epoch, is distributed among different pairs. It is designed as a fair competition and rewarding traders based on the volatility risk they undertake. Rewards are linearly unlocked for two months after TGE, and a dedicated Rewards page offers real-time tracking of airdrop earnings, trading volumes, and tier levels. Users can check their Trading and LP tier levels, each comprising six levels based on 30-day averages for trading volume and liquidity size, respectively. Higher tiers offer increased fee discounts and maximum leverage for Futures trading and ALP positions.
Aark trading competition ran from December 13th 2023 to January 10th 2024. Weekly rewards totaling $2,000 was distributed among the top traders in two categories: the Top 5 PnL and the Top 5 Based on Trading Volume. Winners received rewards directly in their USDC balance. The announcement of winners took place every Wednesday on the Discord. A dedicated leaderboard page allows participants to track real-time rankings, trading volume, and P&L. We had ~1000 participants.
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Current Incentivization: How are you currently incentivizing your protocol?
We are currently incentivizing our community through the MOON FESTIVAL and the final token mining event before the official TGE of April 1st.
- MOON FESTIVAL: Participants are ready for three distinct phases of airdrops, each presenting an opportunity to receive rewards and gifts. The details of these airdrop events to be announced soon.
- Final Token Mining Event: The mining allocation during this event is emphasized as being substantially smaller after this period, underlining the urgency for users to participate. Starting on February 14th, participants can seize this final opportunity to mine 0.028% of the total supply every Epoch or every day. The event allows users to acquire Escrowed $AARK (esAARK) rewards that can be staked to earn 40% of protocol profits or vested to earn $AARK.
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Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program? [yes/no, please provide any details around how the funds were allocated and any relevant results/learnings(Note: this does NOT disqualify an applicant)]
No
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Protocol Performance: [Detail the past performance of the protocol and relevance, including any key metrics or achievements, dashboards, etc.]
Concept origination - September 2022
Team setup - September 2022
Product closed test - May 2023
Product open test - Aug 2023
TGE - March 2024Total Vol: $7,728,329,299
LP Leveraged TVL: $13,249,343
Total Fee collected: $1,324,670
Total User: 8,503For real-time data, please check https://dune.com/aark_team/aark-obt-analytics
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Protocol Roadmap: [Describe relevant roadmap details for your protocol or relevant products to your grant application. Include tangible milestones over the next 12 months.]
We are outlining a series of initiatives set to reinvent the perp DEX industry, positioning the platform as a leader in high-leverage trading and user engagement. 2024 Roadmapâs core goals are:
1. 1000x (1Q24)
- 1000x Debut: Deploy Aarkâs unique Interval structure, a first-of-its-kind no-failed liquidation model, to provide safe 1000x trading for the first time in both CEX/DEX. Focus marketing and PR to build brand recognition as the go-to destination for 1000x, attracting higher leverage users, and creating a designated community. > KPI: Track volume of 1000x traders and eventually walletless CEX users with social login development; educate and optimize UX
- SocialFi - Chat: Increase user engagement through a chat service for perp traders whose visit rates are most frequent compared to any other user segments. -Partnership with Beoble.
2. Listing/ Multichain (2Q24)
- Listing: Targeting listing and TGE in 1Q24 or early 2Q24.
- 1000x Optimization: Collecting data and running simulations to optimize algorithms, providing the best trading, profit, and liquidation/retrade experiences for users. Focusing on gathering user feedback for UX.
- Social Login: One of our features that would expand our major target user from perp DEX users to CEX users. No extension installation is needed, enabling the only step needed for CEX users to google or other social login. Wallet management connected with social login and not device or separate passphrases.
3. Retrade System (3Q24)
- Retrade System: The core system for 1000x leverage usersâ retention. The Retrade System reimburses trading fees collected from users and 30% of the fees paid from 1000x traders are used to reimburse traders. Users can add additional collateral to receive the reimbursement and trade again on Aark. This mechanism is expected to demonstrate powerful retention for high-leverage traders. > KPI: 30-days retention. Maximize engagement with core customers and solidify Aark as go-to destination for 1000x
- Celestial(VIP) Program v2: Aarkâs VIP program with top high-volume users. Expand into v2 with more frequent 1:1 customized outreach and telegram chats to apply user feature requests and distribute personalized incentives.
- SocialFi - Builder: Clash-of-clan-style trading history management to manage user trading record with PNL by market portrayed by the height of buildings. Features to compare other usersâ trading patterns and top PNL users.
- LRT/RWA collateral: With increased TVL of LRT/RWA coming to Arbitrum ecosystem, add LRT/RWA assets for double-yield features, creating synergy with LST collaterals.
4. Super Long Tail (3Q24)
- Super Long Tail: Cooperation with market makers to balance OI for super long tail assets. After test period, once balancing mechanisms turn out effective, add super long tail assets with OI cap.
- veTokenomics: Apply Curveâs veTokenomics to increase use case for veAARK. veAARK can vote for which (1) trade market gets more trade mining incentives; and (2) LP asset gets more yield from trading fees.
- Exotics: Add exotic asset trading, starting with Coinbase premium, GBTC discount, Fed interest rate, and others. PR for unique differentiation feature to attract CEX users interested in trading exotics.
- Order book: Add order book feature with visualization for AALPâs liquidity and limit orders, catering to CLOB-accustomed users, including CEX users.
- SaaS - 1000x as a Service: CLOB perp DEXs inherently cannot provide 1000x due to liquidation constraints while pool-based perp DEXs must build a new dedicated pool for 1000x or have their initial pools take on the risk of 1000x. Due to such risk, we expect many exchanges that want to provide 1000x to integrate a third party 1000x provider which Aark intends to provide as a SaaS.
5. Exchange Eco (4Q24)
- Expand Exchange Ecosystem: Provide native spot trading, native token liquid staking with additional yields provided by staking into AALP, launchpad, and other verticals with clear synergies. Expand interoperability through money lego with other Arbiturm or multichain protocols for advanced features.
- Governance: Launch Aark DAO for assistance in overseeing the exchange ecosystem.
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Audit History & Security Vendors: [Provide historic audits and audit results. Do you have a bug bounty program? Please provide details around your security implementation including any advisors and vendors.]
We are audited by Secure3 zero core issues) and Hacken (Security Score 10/10)
Secure3: https://2336450750-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FLvi8UrgF3zdMBMU70WOL%2Fuploads%2F0OF9YhjgGgmqhkueX7ck%2FAark%20Digital_Secure3%20Audit%20Report.pdf?alt=media&token=3b1b7f5f-fca9-4046-96d4-9a5fbb885f73
Hacken: https://2336450750-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FLvi8UrgF3zdMBMU70WOL%2Fuploads%2F4XuWdG7kNsA199Khof8r%2FAark%20Digial_Hacken%20Audit%20Report_Final.pdf?alt=media&token=4c11df75-0817-4dca-b3c9-d724f04c2bae -
Security Incidents: [Has your protocol ever been exploited? If so, please describe what, when and how for ALL incidents as well as the remedies to solve and mitigate for future incidents]
No.
SECTION 3: GRANT INFORMATION
Detail the requested grant size, provide an overview of the budget breakdown, specify the funding and contract addresses, and describe any matching funds if relevant.
- Requested Grant Size:
900,000 ARB
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Justification for the size of the grant 25
Many perp DEXs that received either STIP or Back Fund have distributed incentives through trade mining. Volumes have successfully increased but growth was slow in (1) acquisition of new non-Arbitrum users and (2) retention strategy post-STIP so as to maintain engagement after incentives have ceased.
As such, our LTIPP designâs goal is to âonboarding non-Arbitrum users on to Arbitrumâ. Our strategy focuses on all stages of the AARRR funnel and is defined as âAcquisition of non-Arbitrum Users â Activation through Incentives â Retention through Referral Systemâ.
Though a long-term incentive model such as Wormholeâs $W with multi-years action-based unlock is preferable to ensure continued user engagement, because the LTIPP rewards are mandated to be distributed within a 12-weeks period, our design utilizes the referral system. The referral system is preferred here because referrers who have made a network of followers during this period are incentivized to continue encouraging their referees as it works as a revenue stream for referrers even after the LTIPP period.
Specifically, allocation will be distributed as followed:
- (A) Acquisition of non-Arbitrum Users: 30%
- (A) Activation through Incentives: LP â 20%, Trading â 30%
- (RR) Retention through Referral System: 20%
The user action and expected conversion rate is as followed:
Funnel User Action Conversion Acquisition sees campaign 100% Acquisition visits app through referral 25% Activation deposits 15% Activation trades 10% Retention revisits 10% Referral invites 1+ users 5% 1. (A) Acquisition of non-Arbitrum Users:30%
This is the first stage of the funnel for accomplishing our goal of onboarding non-Arbitrum users on to Arbitrum. Airdrop is the most universal and effective user acquisition strategy. Our first step is to acquire users through airdrop, but to minimize the entry of mere airdrop hunters, we provide eligibility to only those who are active users on perp DEX on other chains. This ensures highest conversion rates. So the airdrop amount required to acquire these users are calculated as followed:
Total Acquisition Cost = (target market) * (activation rate) * CAC
Target Market & Activation Rate
We count approximately 21,000 active users on non-Arbitrum perp DEXs by taking into account only those with deposits higher than $100 for both traders and LPs on major perp DEXs. We define this as our target market for user acquisition:
- KiloEx: 2,936
- ApeX: 1,690
- Kwenta: 4,033
- Synthetix: 10,571
- Level: 1,837
- ApolloX: 663
- Total: the above equals to a total of 21,000 active users
Others that are included in the TAM but not considered as main targets are as follows. These DEXs are relatively young and the wallets can be interpreted as yet-to-be active perp DEX users. Including the below perp DEXs, the TAM is approximately 60,000+ wallets:
* Aevo, Orderly, Drift, Paradex, Helix, Pancakeswap, BluefinBased on our expectations that at least 10% of our main targets(21,000 wallets) will reach the final activation stage(trade), we expect 2,100 unique users to participate in the campaign and trade. These users must go through a wallet verification process to earn eligibility.
To further make effective the use of funds, the eligibility criteria attends to the following rule:
wallets that have more than 20% their total derivatives volume made on arbitrum are excluded. According to defillama, the Arbitrum network composes 35% of total derivatives volume, and we assume that a trader making 20% or more of their volume on Arbitrum is already an active user of Arbitrum. Thus, if less than 20%, the wallet can be seen to have room to expand activities on Arbitrum.LTV & CAC
We calculate CAC(Customer Acquisition Cost) based on LTV(Lifetime Value). We calculate a customerâs LTV based on GMX as it is one of the few leading perp DEXs without trading incentives. As of date, GMX has cumulative fees of approximately $200m and cumulative margin trading users of 100,000 unique wallets, resulting in a LTV of $2,000. This value is further reinforced when taking into account that Gains Network, also another perp DEX without token incentives, has an LTV of $1,600 as calculated from $40m cumulative fees from 25,000 unique traders. However, fee rates are becoming more competitive and from the seemingly industry standard of 0.1% many pool-based perp DEXs are providing 0.05% fees. Thus, we assume a conservative LTV of $800.
Thus, CAC under $800 is justifiable, and we aim to acquire users at a lower CAC of $250.
Total Acquisition Cost
Thus, the total acquisition cost is calculated as followed:
Total Acquisition Cost = 21,000 * 10% * $250 = $0.54m
A $300 CAC equates to a total acquisition cost of $0.54m which is 270,000 ARB at $2
2. (A) Activation through Incentives: LP â 20%, Trading â 30%
The activation phase builds upon the acquisition phase to ensure that these non-Arbitrum users donât stop after fulfilling quests, but are incentivized to try out Aark. This further expands to those not eligible in the acquisition phase to participate.
Further, as Aarkâs goal is to onboard non-Arbitrum users, the team finds it essential to enable users to discover reasons to continue to use Aark rather than just incentives. Incentives should be considered a mere initiation as in growth hacking cases, the real retention comes from the usersâ discovery of new features that are absent on other perp DEXs. Taking this into account, it is very difficult for any perp DEX to differentiate on the trading side whilst there is still much room to innovate on the LP side. As such, Aarkâs strategy to onboard non-Arbitrum users focuses on LP innovation. The reason why there are more allocations for traders is that, in the end, fees generated from trading are channeled into LPs.
LP
Aarkâs LP innovation is one-of-a-kind not only on Arbitrum, but in the entire perp DEX scene. For instance, Aarkâs LP pool(AALP) enables single-sided staking of any quality tokens that have sufficient liquidity and price stability. As of now, Aark is the only perp DEX that enables single-sided staking of ARB, stETH and rETH as LP. This hyper-diverse capability can further expand to RWA and LRTs, providing a unique use case for these tokens and a reason for these holders on non-Arbitrum chains to move on to Arbitrum.
Trading
The team is committed to a design of no trade-to-earn opportunities: in other words, total rebates shall not exceed the fees paid. The team will closely monitor user activities and update the campaign in parallel to prevent wash trading and Sybil attacks. Specific methodologies include approaches studied and founded in GitHub - ArbitrumFoundation/sybil-detection and OpenBlock Labs STIP Efficacy + Sybil Analysis (2/24)
Anti-Sybil Methodologies
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Use on-chain data to identify related addresses owned by the same user
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Remove entity addresses bridges, exchanges, and smart contracts using data from Nansen, Hop, and OffChain Labs
- What is HOP: a scalable rollup-to-rollup bridge Hop Blacklist Hop eliminatedSybilAttackers
- Utilize Hop to the non-Arbitrum users bridging identification
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Manual inspection: donation addresses, L2 alias
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Analyze:
- similar patterns in funding, especially the first gas funding
- a minimum monthly and transactional funding
- depth and number of descendants, if larger than ten then categorized as Sybil
- Cluster analysis, branching/chaining of ATG
Aark rewards traders with bigger volumes, or more sticky users, with higher fee discounts based on historical volume. This is to sustain the momentum of highly engaged users as such users have stronger tendencies to stick to the exchange even after incentives are ceased.
Further, Aark has a unique differentiation on the trading side as well: MOON MODE. This feature enables users to trade with 500x~ leverage. Rather than applying the same standard incentive structure for these higher leverage trades, the team introduces a new gamified rebate mechanism called Moon Tickets.
Users receive one Moon Ticket for every 10 seconds they maintain a 500x~ position. When users aggregate ten Moon Tickets, it can be used as approximately $10 of trading collateral by depositing an additional $10 collateral. We expect this gamified feature to increase high leverage tradersâ engagement in the long term. Initially, our simulations have shown that this feature is statistically sustainable without any additional incentives. Thus, the team seeks to allocate ARB incentives as a means to educate users of Moon Ticketâs mechanism.
3. (RR) Retention through Referral System: 20%
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One of the most powerful yet most overlooked retention mechanisms of exchanges is the referral system. Taking into account that DEXs are more community driven than CEXs and that the âhotâ perp DEX narrative can change easily, the team finds it critical to retain opinion leaders/KOLs on to Aark. This ensures that, even though an individual may at times seek to find new opportunities on other exchanges, the KOLsâ interests are bound to Aark that they will continue to advocate continued usage of Aark. This section of allocations are used to sufficiently incentivize KOLs to actively share their referral links to their followers, and that the network of referees they build during this period generate a substantial revenue stream for the KOLs so that they are compelled to advocate Aark in the long term even after incentives are ceased.
This creates a positive relationship for Aark as KOLs are continuously incentivized without bearing cost to the protocol while KOLs will continue to share new features, tradable markets and updates on the trading side. Further, this creates a strong network effect as one KOL participating in the referral system can expose Aark to a myriad of new potential users. Again, to further endorse the onboarding of non-Arbitrum users, referral codes that have onboarded more non-Arbitrum wallets will be given higher allocation than those that have onboarded wallets that have initially been mostly active on Arbitrum.Incentives will be distributed so as to take into account both (1) the total amount of volume generated by referees, and (2) the number of active wallets invited. Active wallets are defined as wallets trading above $100,000/week.
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Grant Matching:
8,000,000 $AARK (0.8% of FDV) or $1.6m at 200m FDV.
Rewards may be distributed in esAARK or $AARK depending on the market conditions and token demand. All rewards in this application is designated as $AARK for the ease of understanding. -
Grant Breakdown: [Please provide a high-level overview of the budget breakdown and planned use of funds]
| % of Total Ask | Breakdown | ARB Weekly | Matched AARK Weekly | ARB Total (*12) | Matched AARK Total (*12) |
|---|---|---|---|---|---|
| 30% | Acquisition of non-Arbitrum Users | 270,000 | |||
| 20% | LP | 15,000 | 83,333 | 180,000 | 1,000,000 |
| 30% | Trading | 22,500 | 583,333 | 270,000 | 7,000,000 |
| 20% | Referral | 15,000 | 180,000 | ||
| 100% | 900,000 | 8,000,000 |
- Funding Address: 0xe9B14203B4C914aFcbD1bCaB9827b2B89e4D86CB
- Treasury Address: Aark does not have a DAO
- Contract Address: 0x7A5df878e195D09F1C0bbba702Cfdf0ac9d0a835
SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES
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Objectives:
- Onboard non-Arbitrum users onto Aark(Arbitrum) via unique positioning as the go-to destination for high leverage perps.
- To accomplish this, focus on onboarding rewards and retention campaigns on non-Arbitrum users.
- Grow TVL by offering a unique use case of LPing with LSTs / LRTs / RWA.
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Execution Strategy:
Acquisition 30%
- Strategy: first stage of the funnel of onboarding non-Arbitrum users on to Arbitrum via airdrop quest
- Distribution amount: 21,000 * 10% * $250 = 0.54m = 270,000 ARB
- Specifics:
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Needless to say, for airdrop eligibility, users must fulfill quests that activate and educate users about Aark and its innovative features. Without fulfilling quests, users will not be eligible for any rewards. Airdrops will not be distributed instantly but will be unlocked on a pro rata basis to their quest completion status. Quests are designed with the goal of enhancing Aark LTIPPâs goal of acquiring and activating non-Arbirum users.
The quests need to be structured easy so as to not create an entrance barrier, but also effective so as to encourage real usage of the product. Our past 6 months experience of being live on Arbitrum and conducting trade-to-earn campaigns have provided us insight that such campaigns are considered the most difficult among quests; users prefer quests where they are incentivized for providing appropriate amounts of liquidity ie. staking, lending and yield farming.
Thankfully the insights weâve gained for the past months provides a solution: focus more on collateral deposit quests than trading. This is because enforcing a certain amount of volume results in users merely opening and closing low collateral-high leverage positions using market orders; users are not exposed to an actual trading experience. On the contrary, if there is a imminent market opportunity such as an asset gaining momentum on a steep rising trend, users would quickly jump into an exchange where they have their collateral to open positions to trade on the trend. In this short timeframe, users calculate and set specific parameters(leverage, TP/SL, slippage tolerance) and actually experience how seamless the UX and functionalities are. As such, bootstrapping tradersâ collaterals to Aark is the most important inception point to engaging and educating the traders.
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Specifically, above is the trading pattern of one of Aarkâs most active traders who has $400m in cumulative volume. Initially, until early November, the accountâs engagement was largely described as repetition of opening and closing positions. When MATIC, the accountâs most actively traded asset, began a steep rise in early November, the user jumped in to trade the opportunity. After the incident, the user has stopped a repetitive trading pattern and has been keeping positions open for longer periods(lines that are diagonal are positions that have been open throughout the width of the diagonal line). This new pattern goes against trade-to-earn activities but is rather the user strategically and deliberately executing trades. Since then, the wallet has paid a cumulative fee of $80k to Aark, or 6% of Aarkâs total revenue up to date.
Thus, bootstrapped traderâs collateral can be an inception point for traders to experience real-time trading, and the duration of positions, or OI, can be the criteria to determine whether the users is executing a strategy or merely mining the token.
As such, execution strategies for this phase focuses on collateral deposits supported by minor trading quests. Quests will be provided as followed:
Deposit 0.5 stETH or 2000 USDC as trader collateral for 12-weeks (the amount is large as to prevent Sybil and encourage users to engage in serious trading, while profitable enough to provide an 80% APR(=400/2,000*4))
Trade at least once on MOON MODE(500x~)
Trade at least thrice on classic mode(~50x) on different daysIn the end, the success rate will be determined by how many users keep OIs for sufficient durations as to be determined as activated traders. At the end of the 12-weeks, the team will further analyze the average engagement of respective traders to determine the most adequate duration.
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Activation ( LP â 20%, Trading â 30%)
- The activation phase builds upon the acquisition phase to ensure that these non-Arbitrum users donât stop after fulfilling quests, but are incentivized to try out Aark. Not using ARB rewards for trade-to-earn but as a fee-reducer, the activation rewards further lowers the entrance barrier for users who have bootstrapped collateral on Aark to more actively engage in trading rather than other non-Arbitrum perp DEXs where they would likely be charged higher fees. The activation phase further expands to those not eligible in the acquisition phase as well as LPs.
LP
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Strategy: higher incentives allocation for LP assets only available on Aark
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Distribution amount: 15,000 ARB/week + 83,333 AARK/week
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Specifics:
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Aarkâs pool architecture stands out the most in the poolâs capability in enabling users to stake the widest variety of assets in a single-sided manner without exposure to other assets or IL. As such, to educate users of such functionality, Aark will distribute higher incentives for LP assets unique to Aark than more commonly available LP assets.
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Assets available only on Aark(80%): GM tokens(ex-BTC, ETH), LSTs(stETH, rETH), single-sided ARB, BTC and ETH
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Common assets(20%): stables
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Upcoming assets(TBD): RWAs, LRTs, USDe, Camelot ETH-USDC LP token, and others. The team will continue to collect feedback from users and potential partner protocols throughout the 12-weeks period to add new assets. These new assets, depending on their TAM and demand, will be allocated rewards from the former two.
Rewards will be distributed at the end of the weekly epoch based on the daily average dollar value of respective asset types. For instance, if there is 1 stETH($3,000), 1 ETH and 1,500 ARB($3,000) in the pool throughout the week, each LP will receive one-third of the weekly incentives.
Trading
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Strategy: further users activation + educate users on Moon Creditâs mechanism
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Distribution amount: 22,500 ARB/week + 583,333 AARK/week
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Specifics:
- The fee rebates will be distributed at the end of the weekly epoch based on the amount of fees traders have paid. Incentives distributed proportional to fees paid in the form of a rebate. For instance, if a trader traded $1m volume and paid $500 fees trading on SOL and another $2m volume and paid $500 fees trading on MATIC, each trader will receive half of the weekly incentives without exceeding 80% of the fees paid. Due to the BTC and ETH markets being zero-fee on Aark, these two markets will be excluded from incentives.
In the case where weekly ARB incentives are greater than the fees paid during the week, the leftover ARBs will be allocated to the next epoch. If the rewards are not exhausted at the end of the 12-weeks period, the remaining rewards will be returned to the DAO accordingly.
Fee rebates are only applied to the MOON MODE where users trade 500~1000x leverage. The reason for this is because Aarkâs LTIPP mechanism implements both fee rebates and referral incentives. If a malicious actor earns 100% rebate on their fees, and then receives incentives on top of that by self-referral, they may be able to conduct a Sybil attack. Thus, we make a clear divide by focusing ARB incentives on MOON MODE, and referral rebates focused on classic mode.
(RR) Retention through Referral System: 20%
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Strategy: incentivize affiliates to build a network of non-Arbitrum referees that will act as a revenue stream even after the incentivization period
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Distribution amount: 15,000 ARB/week
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Specifics:
- Referral incentive focuses explicitly on the classic mode where traders pay fees and do not receive rebates. To prevent Sybil attacks where a malicious actor may create a wallet referring to itself to earn referral bonuses, referral rewards are distributed so as to not exceed the amount of fees paid by the referees. The goal is to distribute ARB incentives so as to make Aarkâs referral program more profitable so as to encourage potential affiliates who would have otherwise not participated. Thus, the incentives and fees paid by referees are balanced as followed:
- Initial Referral Profitability = Fees Paid by Referees * 20%(Gold tier, highest level)
- New Referral Profitability = Fees Paid by Referees * (20%(Gold tier, highest level) + 40% ARB incentives)
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Fee rebates are not provided for these traders, thus referral profitability does not exceed fees paid by referees. The following measure is further implemented to ensure a healthy distribution of referral incentives.
- Prevention of self-referral: to prevent users from referring to their own wallets to receive incentives, a referral link must have a minimum of ten active wallets. Active wallets are defined as wallets trading above $100,000/week.
- In the case where weekly ARB incentives are not paid out due to shortage in referral fees paid out during the week, the leftover ARBs will be allocated to the next epoch. If the rewards are not exhausted at the end of the 12-weeks period, the remaining rewards will be returned to the DAO accordingly.
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What mechanisms within the incentive design will you implement to incentivize âstickinessâ whether it be users, liquidity or some other targeted metric? [Provide relevant design and implementation details]
Our approach incentivizes âstickinessâ across a comprehensive set of KPIs and mechanisms within our design. These mechanisms emphasize the importance of maintaining a healthy expansion of Aark.
Sticketiness Evaluation through KPIs
We assess user stickiness by utilizing KPIs such as cumulative users, active users, and the ratio of old to new users over different periods, including before and after the introduction of new campaigns. Additionally, we leverage metrics like TVL, daily trading volume growth, OI wallets growth as indicators to measure sustainability.
Mechanisms for Stickiness
- Moon Ticket: The gamified feature of Moon Mode introduces the Moon Ticket system, incentivizing users to maintain high-leverage positions for extended periods. Target metrics of Moon Ticket are active users and trading volume. Our implementation is users can earn one Moon Ticket for every 10 seconds they maintain a 500x~ position. This mechanism aims to encourage prolonged engagement and commitment to trading activities.
- Ex-Arbitrum Referral Program: Our referral program targeted at KOL fosters stickiness within the community-driven aspect of our ecosystem. Target metrics of Moon Ticket are active users and trading volume. Our implementation is on top of the normal revenue share ratio of 15%(Silver tier) and 20%(Gold tier) Our program will extend beyond the incentivization period after 12 weeks to retain their interest in Aark despite more perp DEXs will come in.
- Ongoing LP innovation: Our LP incentive strategy is only for AARK exclusive LP assets. We have calculated the possibility that other P2Pool DEX will follow our trend of including these assets (all GM tokens, LSTs(stETH, rETH), ARB (and stables, wBTC, ETH) for dual yielding. So we will be the one to bring forth the new through the old. Our upcoming assets include RWAs, LRTs, USDe, Camelot ETH-USDC LP token, and others. Making sure the weekly distribution of 16,667 ARB and 83,333 AARK is directed always to the Aark-exclusive LP assets. Aside from the metrics of TVL, we will continue to promote stickiness through a distinct LP experience not found on other perp DEXs.
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Specify the KPIs that will be used to measure success in achieving the grant objectives and designate a source of truth for governance to use to verify accuracy. [Please also justify why these specific KPIs will indicate that the grant has met its objective. Distribution of the grant itself should not be one of the KPIs.
To accurately measure the success of our grant objectives, each KPI has been chosen based on our objectives and historical performance. Below metrics reflect the health expansion of Aark and a source of truth to use to verify accuracy.
New Active Users
Based on our research there are 21,000+ active users on non-Arbitrum perp DEXs. Based on our expectations that at least 10% of our target market will reach the final activation stage of LTIPP, we expect a minimum number of 2,100 more unique users to participate by the end of the campaign.
Fee revenue from altcoin pairs
Based on our expectations that altcoin sum-up volume will exceed after LTIPP, we expect additional fee growth from altcoins, by implementing an ongoing proper incentives program and listing more popular tokens in addition to our 30 pairs now across classic mode and moon mode.
New OI wallet
Unlike other Perp DEXes cap OI (Open Interest) to TVL ratio below 1:1, Aark is able to scale over ten times the OI relative to its TVL. This advantage results in substantially higher returns for LPs and nurtures a positive feedback loop that attracts more LPs and traders.
Based on our expectations of Aark unique OI scalability, we expect additional OI wallet volume growth by continuing focusing on acquirting non-arbitrum users so aark user can increase by 10k by end of year.
Participation rates in both Trading and LP staking
Benefit from the new LP asset and trading activity spike, we will be monitored weekly, aiming for a 10% increase in activation in both. Right now the user portrait shows a choice of either-or, either be a trader or LP provider. With more balanced incentives applied, we expect the two core features of Aark to be both attractive to our users.
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Grant Timeline and Milestones: [Describe the timeline for the grant, including ideal milestones with respective KPIs. Include at least one milestone that shows progress en route to a final outcome. Please justify the feasibility of these milestones.]
Our timeline is a 12-week campaign. It is projected to achieve specific milestones with a phased approach.
Week 4: Achieving 50% of the Target Acquisition (at least 1,050 users):
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Justification: The airdrop strategy will be our most extensive user acquisition in the first 4 weeks. The minimum target acquisition of 2,100 users over 12 weeks aligns with an initial goal of 1,050 users by Week 4. A 75% quest completion rate is set as a benchmark, indicating a high level of engagement among the acquired users.
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Feasibility: airdrop quests design are socially viral, as it required tweet posts, providing ample exposure and time for users to complete tasks.
Week 8: Attaining at least 3 more new assets in AALP Pool
- Justification: This milestone emphasizes increased participation in LP staking. We expect to expand our collateral assets categories, including RWAs, new LRTs, USDe, Camelot ETH-USDC LP token, Etherfiâs eETH in 8 weeks of development step by step. Due to our capacity, we will release week by week and echo the community feedback for any new listing, and make sure of every new asset that is absent on other perp DEXs.
- Feasibility: By Week 8, users are expected to be familiar with the Aarkâs pace of onboarding new LP assets and more inclined to participate in new LP staking.
Week 12: Establishing a Robust Referral Network with 20% Growth in Active Wallets
- Justification: In this stage, the focus shifts to the referral system, aiming to establish a robust network with sustained growth in active wallets.
- Feasibility:The first eight weeks lay the groundwork for user acquisition and LP TVL boost, setting the stage for KOLs to actively participate in the referral program. Aarkâs unique referral incentives and prevention measures against self-referral contribute to the feasibility of achieving a 20% growth in active wallets by Week 12.
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How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem? [Clearly explain how the inputs of your program justify the expected benefits to the DAO. Be very clear and tangible, and you must back up your claims with data]
- Aark introduces a unique RWA use case by adding to LP pools, as the Arbitrum ecosystem currently lacks RWA use case. This unique synergy will attract the holders of non-Arbitrum chains to move on to Arbitrum.
- Rather than focusing on increasing the quantity of Perp DEXs, Aarkâs goal is to enhance the quality and meet the needs of perp traders. Currently, liquidity is fractured among Dapps on Arbitrum. By consolidating liquidity into a single pool on Aark, Arbitrum users can enjoy a superior trading experience with sufficient liquidity and price stability. Aarkâs hyper-diverse pool enables users to deposit in any asset that is ERC20, including LP tokens.
- Our strategy diverges from competing for market share with other Arbitrum Dapps. Instead, we are strategically airdropping to non-Arbitrum Dapps to broaden our user base.
- LTIPP can realize AARKâs scalability initiatives. Our team has experience in successful phased incentivization programs, such as point mining (3700 participants), token mining (3900 participants), and early bird programs (1400 unique users across seasons 1 and 2). With LTIPP, the team is confident to execute our scalability plan of acquisition, activation and retention based on our proven track record.
- Perp DEX, due to its frequent transaction nature, benefits from on-chain interaction. Unlike other semi-decentralized DEXS, Aark ensures that every open and close position is conducted on-chain, guaranteeing robust network activity.
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Do you accept the funding of your grant streamed linearly for the duration of your grant proposal, and that the multisig holds the power to halt your stream? [Yes/No]
Yes
SECTION 5: Data and Reporting
OpenBlock Labs has developed a comprehensive data and reporting checklist for tracking essential metrics across participating protocols. Teams must adhere to the specifications outlined in the provided link here: Onboarding Checklist from OBL 26. Along with this list, please answer the following:
- Is your team prepared to comply with OBLâs data requirements for the entire life of the program and three months following and then handoff to the Arbitrum DAO? Are there any special requests/considerations that should be considered?
Yes
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Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that reference your OBL dashboard? [Please describe your strategy and capabilities for data/reporting]
Yes. We have a data developer and we maintain this dune dashboard that refreshes every 6 hours. https://dune.com/aark_team/aark-obt-analytics We will closely monitor the incentivization progress and highlight it on the top of our dashboard.
First Offense: *In the event that a project does not provide a bi-weekly update, they will be reminded by an involved party (council, advisor, or program manager). Upon this reminder, the project is given 72 hours to complete the requirement or their funding will be halted.
Second Offense: Discussion with an involved party (advisor, pm, council member) that will lead to understanding if funds should keep flowing or not.
Third Offense: Funding is halted permanently
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Does your team agree to provide a final closeout report not later than two weeks from the ending date of your program? This report should include summaries of work completed, final cost structure, whether any funds were returned, and any lessons the grantee feels came out of this grant. Where applicable, be sure to include final estimates of acquisition costs of any users, developers, or assets onboarded to Arbitrum chains. (NOTE: No future grants from this program can be given until a closeout report is provided.)
Yes
- Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the programâs funding stream?: [Y/N]
Yes
Thank you!