SECTION 1: APPLICANT INFORMATION
Applicant Name:
Philtsa
Project Name:
Azuro
Project Description:
Azuro is the tooling, oracle & liquidity solution for EVM chains to support powerful prediction & betting ecosystems
The project is hitting PMF with 20+ live applications, 20,000 users, 4,000 LPs. The growth is accelerating quickly with $1.4M in revenue in the last 90 days alone. Azuro is the N1 revenue-generating protocol on Polygon, topping household names like Curve & AAVE, and the prediction market protocol with biggest TVL, overtaking Polymarket.
Over next few months tens of new apps are to go live, making Azuro the defacto web3 solution for any thriving predictions and betting ecosystem.
Notable apps on Azuro:
Bookmaker.XYZ, Boxbet ($BXBT), Betswirl ($BETS), BookieBot ($BB), JuicyBet.net
Team Members and Roles:
Den, Tech lead: Dan Kaizer - Portugal | Professional Profile | LinkedIn
Paruyr, Business lead: https://www.linkedin.com/in/paruyrshahbazyan/
Philip, Operations: https://www.linkedin.com/in/philipp-tsagolov-a75ba7151/
Julia, DevRel
Project Links:
Dune dashboard: https://dune.com/azuro/stats
Docs: https://gem.azuro.org/
Github: Azuro · GitHub
Twitter: https://twitter.com/azuroprotocol
Website: https://azuro.org
Contact Information
Point of Contact
Philip Tsagolov (forum handle “Azuro”)
Point of Contact’s TG handle: @philtsa @rosstothefuture
Twitter: @azuroprotocol
Email: philipp.t@azuro.org
Do you acknowledge that your team will be subject to a KYC requirement?:
Yes
SECTION 2a: Team and Product Information
Team experience
The core team is a mixture of hardcore crypto tech natives who have built successful crypto products and people who have built large betting businesses in web2. There is currently approx. 35 people, contributing to the protocol in various forms. Of that around 80% is dev focussed.
Den, our tech lead (ex tech lead at clearpool.finance) is the winner of multiple top-tier hackatons, including ETHWaterloo (twice) and a respected builder in the space.
Paruyr is the founder of BR Labs & Bookmaker Ratings - the biggest online media network about sports & betting in Eastern Europe with 6M+ monthly subscribers.
What novelty or innovation does your product bring to Arbitrum?
Azuro innovates through connecting a custom oracle solution with a custom LP for predictions on real-world events, and adding tooling for builders to create apps, integrations and products quickly and easily. Using Azuro is the quickest, easiest way to launch a betting application in the world today.
The main actors on the protocol are the “dataproviders” (act as oracles), “liquidity providers” via the LP and “frontends” (applications using azuro). Their interactions are governed through a number of core concepts, starting with the prediction engines: Prediction Engines - Concepts - Azuro Gem.
Key Innovation pieces:
- The Azuro Liquidity Pool: The Liquidity Tree
Liquidity Tree: uses a segment tree data structure, offering efficiency in updating and querying liquidity data. In Azuro’s Liquidity Tree, each liquidity deposit is a “leaf” in this tree. Leaves (individual deposits) are grouped into parent nodes. This hierarchy continues up to a single root node, which aggregates the total liquidity available.
The mechanism behind Azuro’s Liquidity Tree:
- Array Storage: The Liquidity Tree is implemented as an array, where each element represents a node in the tree. The root is stored at index 1.
- Node Relations: Child nodes are easily located – the left child of node X is at 2X, and the right child at 2X+1.
- Actors:
- Liquidity Providers: They add liquidity to the pool (
addLiquidity), enabling the betting process. - Bettors: Users who place bets on various outcomes of events.
- Core Contracts: Connected to LP, managing specific betting mechanics for different types of predictions.
- Liquidity Providers: They add liquidity to the pool (
→ The Liquidity Tree is the most efficient liquidity solution for peer-to-pool prediction markets (aka onchain betting) to date (allows for the biggest volumes and the biggest single bet sizes on-chain)
→ the Liquidity Tree is the most user-friendly solution (allows for adding and withdrawing liquidity freely, whereas all other solutions do it in fixed periods (epochs)).
The Polygon USDT pool (TVL of $8.5M) has averaged an unsubsidized, direct return of ~18% over a 12 month period.
- Live betting
Live (in-play) betting now in testnet is the first ever onchain implementation of livebetting on sporting events. Mainnet is expected to go live in March. 11/20 Live betting in Polygon Mumbai testnet - Developer Hub - Azuro Gem
- Tooling
Azuro is now the fastest/easiest way to launch a betting application in the world. It takes just an hour to bring up a fully working app live via the SDKs:
Overview - Developer Hub - Azuro Gem
Tokenomics
Community oriented with 37% to community/builder/user incentives.
The vestings of the team and investors are at least 3 years with a minimum lockup of 6 months, which enables long-term commitments and motivation
Two main utilities:
1/ Governance
2/ Staking rewarded by value sharing. The revenue generated by the protocol allows to acquire tokens from the market and reward the stakers. This enables both the buying pressure and the value-sharing mechanism for the token holders.
Two auxiliary utilities will be added at a later stage
1/ Betting with native token (best odds)
2/ Staking into the jackpot games (yield in stablecoins)
Is your project composable with other projects on Arbitrum?
Yes. Azuro provides autonomous and modular components that operate independently, yet can be executed cohesively, reducing the risk of partial failures and enhancing transactional integrity.
Firstly, this is evident in the self-contained processes of installing and running the open-source Azuro SDK and using an optimized API. Developers can use, remix, and integrate this SDK into their projects, be it a web-based DApp, a telegram bot or else. On top of that, our API uses GraphQL, providing the easiest way to access on-chain data with clean, optimized queries, same for different chains, thus ensuring interoperability with other projects and chains.
Secondly, Azuro smart contracts can be connected all together or selectively, depending on the use case. The modification or removal of one component doesn’t disrupt the entire system.
For example, for a sports prediction application, a specific Betting Engine can be plugged into a DApp to handle forthcoming sports events. This engine would autonomously manage the predictions related to the future sports events, independent of other Betting Engines that might be focused on different types of predictions, like live events or combo betting.
Finally, developers can adapt the protocol to different blockchain environments simply by setting the appropriate chainID and providing the RPC URLs for the chains they are using. This ensures compatibility across various platforms, leading to a broader application of the protocol on any chain, including Arbitrum.
Some apps on Azuro have already been connected and successfully operated on Arbitrum (the Azuro oracle for Arbitrum is paused which means there is no active markets atm). Some of these apps describe using Azuro on Arbitrum in their docs (Welcome to bookmaker.XYZ | bookmaker.XYZ
; 🌌 Analytics / API - BetSwirl documentation)
Feel free to access the Azuro subgraph for historical data on Arbitrum via the endpoint:
https://thegraph.azuro.org/subgraphs/name/azuro-protocol/azuro-api-arbitrum-one-v3
Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
There’s a number of projects working on sports markets and other prediction-related solutions, which however differ much in terms of:
- the approach (most are actual apps, not abstract base layer protocol for builders)
- tech advancement
- recent hard business traction (applications live, volumes, revenue, users)
Comparisons can be made with GMX - in the sense that pooled liquidity is used to counter users’ trades and to provide liquidity. The main difference is that Azuro has much more focus on detaching the base layer from the applications, through very powerful tooling allowing application growth & experimentation both through portability and composability. And ofc that Azuro is focused on real-world events predictions and sports.
Comparisons can be made with Thales/OT - in the sense that pooled liquidity is used for sports markets. However there are significant differences in terms of the efficiency of the pools and the scaling potential (how much betting volume can a unit of liquidity support); significant differences in pool performance and user experience for LPs (LPs free addition and withdrawal of liquidity (azuro) VS epoch-based approach); significant differences in the level of tooling provided for apps (SDKs for all main use-cases (azuro) vs no SDKs); the presence of a critical usecase implementation: livebetting in testnet (azuro).
How do you measure and think about retention internally?
At the app level we look at monthly active applications (>$100,000 monthly prediction volume and >100 MAU)
At the user level we look at MAU & Monthly adjusted rolling retention, however these metrics are harder to track as some applications interact with Azuro’s smart contracts on behalf of their users.
**
Relevant usage metrics:
- Number of Live Applications
- Revenue
- Volume
- TVL
- MAU
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?
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?
No.
On what other networks is the protocol deployed?
Polygon and Gnosis Chain.
What date did you deploy on Arbitrum mainnet?:
Date: May-25-2023 03:57:31 PM +UTC
Transaction ID: 0xff464b83d173b4518f299180581958c7ba05c15bd4014ccb7974d3d46216b221
Transaction Details: Arbitrum Transaction Hash (Txhash) Details | Arbiscan
The current Arbitrum implementation is paused because the launch was initially purely technical, and there was no time/budget capacity and focus to market it or push it in a strategic way. We intend to change that with the LTIPP, as outlined in our application here.
Do you have a native token?:
No. Token is planned for release in Q2.
Initially to be released on Ethereum mainnet, then on other chains where Azuro is present, including Arbitrum.
Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?
We have incentivized LP-ing and using Azuro applications (making predictions/betting) via the Azuro Score - the Azuro pre-token points program, the points from which will be transferrable into the native $AZUR token when launched.
Since starting the program in February 2023, all key metrics such as Volumes, Revenue, MAU, TVL, number of applications have seen very significant increases. https://dune.com/azuro/stats
The full information about the current and historical structure of the program can be found here: Overview - Concepts - Azuro Gem
Current Incentivization: How are you currently incentivizing your protocol?
We are still incentivizing LP-ing and using Azuro applications (making predictions/betting) via the Azuro Score (as mentioned above) - the Azuro pre-token points program, the points from which will be transferrable into the native $AZUR token when launched.
The program is expected to end shortly (upon token launch in Q2). It is very likely that timing of token release and LTIPP’s start will be within few weeks of each other.
Passing from pre-token points to token will not change the mechanics of incentivizing the builders & community significantly. We plan to continue with the points program (as a general approach) focusing on incentives that enable builders to pursue users more aggressively and on liquidity concentration to create a bigger liquidity moat for the main pools.
Have you received a grant from the DAO, Foundation, or any Arbitrum
ecosystem related program?
No
Protocol Performance:
- 22 applications
- $2,000,000 protocol revenue ($1.4M last 90 days)
- $207M+ Volume
- 4,000 LPs
- $9M TVL
- 20,000+ users
The main Dune Dashboard covers the high-level metrics fully both in total and in progression (monthly, weekly, daily): https://dune.com/azuro/stats
The Applications Dashboard: https://dune.com/azuro/frontends
Protocol Roadmap:
- Livebetting (first ever onchain implementation, currently in testnet)
- Token Launch / token-DAO Launch
- Politics markets
- Predictions jackpot games
- Casino games liquidity and game providers (aka “games oracle”) solution
- Cross-chain liquidity
- Azuro Apps token economy tooling
The above products will be live on all blockchains where Azuro is active. Current plan is Polygon, Arbitrum (if LTIPP enables strategic push) and Gnosis.
Audit History & Security Vendors:
Audits - Contracts - Azuro Gem (latest audit reports pending to be added shortly)
Security Incidents: [Has your protocol ever been exploited? If so,
please describe what, when and how for ALL incidents as well as the
remedies to solve and mitigate for future incidents]
No, never
SECTION 3: GRANT INFORMATION
Detail the requested grant size, provide an overview of the
budget breakdown, specify the funding and contract addresses, and
describe any matching funds if relevant.
Requested Grant Size:
1,203,000 ARB
—-
The grant is meant to support Azuro/Arbitrum to become the BEST sports markets solution in the world, delivering a more appealing end user proposition than any betting platform globally (incl. centralized ones) through a true/fair* odds proposition and well planned convergence of marketing (AZUR token launch), product release (livebetting), sports calendar (Season finals & Soccer EuroCup) and incentivization ($ARB LTIPP).
*true or fair odds are odds that do not have spread or vig. I.e. odds without house advantage.
The blueprint for the approach will be the Azuro Score program with which we have over 12months experience and which incentivizes LPing & betting.
To achieve the above what is required is:
1. Incentivize LP:
→ Increasing the TVL of the Arbitrum/Azuro USDT pool, to $5M in the 2nd week, and $15M by week 5.
In Azuro’s design the LP seeds liquidity behind the betting markets. $1M in liquidity can easily support 10-20x in betting volume in a month, however the total risk the pool can take at any given time will be limited, and this will be represented in slippage for big bets, thus making the odds unappealing to big players. That is why it is important that the TVL in the pool builds up quickly to support big stakes and whales’ activity. The pool will have to grow nearly from scratch (as it is currently suspended).
*$20,000 per week for first $5M in the pool (max 12 weeks X $20,000 = $240,000)
$12,500 per week thereafter (max 12 weeks X $12,500 = $150,000)
$390,000 / $2 = 195,000ARB*
2. Incentivize predictions
→ increase betting volume through negating the spread (aka vig) thus allowing apps on Azuro to have the defacto betting offering with the best odds across the board. I.e. odds without house-edge, the only true odds in the world.
On Azuro the odds of the sports markets contain a spread normally ranging from ~2% - 8%. Over the longterm this spread (aka vig) is how the LP makes money (as the spread is the difference in real-world probability of an event happening and the price with which users can bet on that outcome). Over nearly 2 years the spread has returned in revenue ~4.8% on average, on the volume.
With current betting volumes averaging ~$7M a month, and growth of 2-3x Quarter-to-Quarter, plus the deployment of livebetting which normally represents 50-80% of betting volumes wordwide (3x-4x increase expected), we conservatively expect monthly betting volumes of ~$30M+ in May, $30M+ in June, and $10M+ in July (low sports season).
What part of that can be expected on Arbitrum?
- having no spread is significant enough for any application to desire offering it, and promoting it to their users, immediately
- implementing the Arbitrum chain takes under 10min of effort for the Azuro applications, as Azuro abstracts the effort for the apps.
Thus, with said incentives, it is expected that 60%+ of the overall volumes happen on Arbitrum:
60% * (30,000,000+30,000,000+10,000,000)= $42,000,000
On $42M in volume we expect ~$2.016M in player losses through the spread (4.8% * 42,000,000). Thus in order to remove the spread and have “true odds” i.e. - the best possible fair odds on sports markets in the world, we would need ~$2.016M in incentives.
This approach could be looked at as smth similar to a fee rebate, which creates the most powerful and attractive pricing for sports markets in the world at the time.
$42,000,000 prediction volume * 4,8% spread = $2,016,000 (in spread/fees)
$2,016,000 / $2 = 1,008,000ARB
Grant Matching:
No, but it is planned to continue incentives post LTIPP via the native $AZUR token.
Grant Breakdown: [Please provide a high-level overview of the budget breakdown and planned use of funds]
195,000ARB for LPs
1,008,000ARB for users (distributed via the applications)
Total: 1,203,000 ARB
(as outlined above)
Funding Address: [Enter the specific address where funds will be sent for grant recipients]
0xeF18F2f054A7Ad2909333051aA42D5c0bb3f92F6
Funding Address Characteristics: [Enter details on the status of the
address; the eligible address must be a 2/3, 3/5 or similar setup
multisig with unique signers and private keys securely stored (or an
equivalent custody setup that is clearly stated). The multisig must be
able to accept and interact with ERC-721s in order to accept the funding
stream.
3/5 SAFE Multisig Wallet
Treasury Address: [Please list out ALL DAO wallets that hold ANY DAO funds]
0x2a2441DbC6f033E3b6e74e3E0bdc66fA4ef8Bae8
Contract Address: [Enter any specific address that will be used to disburse funds for grant recipients]
TBD
SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES
Clearly outline the primary objectives of the program and the Key
Performance Indicators (KPIs), execution strategy, and milestones used
to measure success. This helps reviewers understand what the program
aims to achieve and how progress will be assessed.
Objectives:
- make the Arbitrum/Azuro implementation the de-facto zero to one moment for onchain sports predictions (the BEST product for sports prediction markets in the world during the LTIPP (May: sport-season finals, June: the soccer EuroCup))
- fuel a bigger than ever boom of new betting applications on Arbitrum (20+ active apps with 20,000+ users)
The combination of the 2 LTIPP incentives (for LP and for making predictions) creates a product which delivers:
- the only true (no spread/vig) odds in the world
- biggest single bets possible in the world
incl. in comparison with any centralized betting platforms (be it traditional: draftkings, bet365; crypto - stake, rollbit or others)
Achieving this unprecedented level of product in May (sports season finals) and June (soccer EuroCup) will greatly increase numbers of users and awareness. These newly acquired users are likely to continue pushing volume and driving revenue on the protocol for applications, LPs and oracles.
Moreover with US elections looming after summer - the transition from the end of the program into US elections and new sports season can be seamless.
Execution Strategy:
Our Arbitrum implementation is ready and is in stealth mode.
- We will incentivize LPing directly connected to the time of LP position opening:
- LP positions added before the pool reaches $5M and LP positions added after pool reaches $5M
- We will incentivize predictions directly connected to the amount of player losses risk generated by the users of each application:
- Prediction volume * Spread
- Spread = The spread (aka vig, aka margin) for each particular prediction
- Prediction size = The amount (in respective cryptocurrency) of each particular prediction
Incentives will be distributed weekly, during the program. I.e. If LTIPP starts 01 May, then all rewards will be distributed by 07 Aug.
OPTIONAL: We may use gamification in 1 of 2 ways:
- use the tested (12months+) approach from the Azuro Score program ([https://azuro.org/score;](https://azuro.org/score;](https://azuro.org/score)) Overview - Concepts - Azuro Gem) to gamify the rewards with a leaderboard at the Azuro level
- allow applications to gamify through leaderboards of their own (e.g. First decentralised bookmaker / Trustless Web 3.0 betting - Bookmaker.XYZ)
NB! Gamification does not depend on the size of the grant.
Using some form of gamification is very likely as it leads to higher volumes through engagement and some uncertainty. Exact details of gamification to be fleshed out.
What mechanisms within the incentive design will you implement to
incentivize “stickiness” whether it be users, liquidity or some other
targeted metric?
LPs will receive $ARB during the incentives period, but will also get direct USDT return via the prediction volumes. With USDT APY of ~18% our experience shows most LPs will continue staking in the pool with more coming in over time (case in point - our Polygon un-incentivized pool).
Application users will experience livebetting onchain for the first time ever, with true odds, which is unprecedented and will not have an analogue at scale, in general.
With the implementation of the Azuro/Arbitrum integration requiring just as much as a few clicks with the SDK, we expect that current and future applications will continue using the Arbitrum implementation and keep promoting it to their users.
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.
TVL in the USDT pool: $3M after 2 weeks; 10M+ after 4-6 weeks
Betting volumes: $5M+ in the first 30 days
Source of truth: https://dune.com/azuro/stats (specific tables to track the program exclusively will be added)
Grant Timeline and Milestones:
Timeline: starting in April, the incentives will run for 12 weeks.
- 3+ applications live on Arbitrum in the first week
- TVL in the USDT pool: $3M after 30 days
- Betting volumes: $5M+ in the first 30 days
Context: There’s 20 live applications on Azuro, already. 6 applications making >$10,000 in monthly revenue atm (2 of them in the hundreds of thousands p/m). 3 applications already have enabled Arbitrum on Azuro in the past. We are sure of having 3 active applications implement immediately, with certainty. But we expect all of them to do it in the first 2-3 weeks due to the significance of the true odds proposition. And we expect to have 20+ brand new ones to go live in this period.
How will receiving a grant enable you to foster growth or innovation
within the Arbitrum ecosystem?
The LTIPP is a great-timing opportunity to build upon the momentum from $AZUR token launch, the release of livebetting, and the end of sports season (finals across all major tournaments and leagues in May) + the Soccer EuroCup in June.
We expect it leads to the factual realisation within crypto and DeFi that finally we have on-chain sports prediction markets covering thousands of events, which can compete in liquidity, odds and features with centralized solutions.
Azuro’s portable and composable solution will lead to tens of builders launching new apps, derivative products and integrations. Applications on Azuro (20+ already, with 6 generating monthly revenues of $10,000 or more) can add the Arbitrum chain in just a few clicks.
We expect the program (in the 3 months of its duration) will deliver net growth to Arbitrum of:
20+ active applications (as explained above)
20,000 real active users
~$2.304M in overall protocol revenue (distributed among applications, dataproviders(oracles) and LPs)
~$50-250k in gas fees (Azuro is currently averaging ~300,000 transactions a month on Polygon. We expect to this to triple during the LTIPP on Arbitrum, leading to >2,000,000 transactions in total for the 12 weeks)
~$200M+ in total transaction volume (currently Azuro is getting ~$27M a month in total transaction volume on Polygon/Gnosis, but we expect volume to multiply (as justified specifically above in the grant justification section) and Arbitrum to capture 60% of it during the LTIPP period)
We expect that 50%+ of that will be sticky due to the novel, meaningful proposition which will be exposed to participants during this period, and the recurring and stable nature of sports markets user activity.
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
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 19. Along with this list, please answer the following:
Is your team prepared to comply with OBL’s 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
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
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
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 program’s funding
stream?: [Y/N]
Yes