Please see below updated section 3 & 4 of Bedrock’s grant application. Based on the feedback received from the council, the ask amount has been reduced by almost 50%, with much more details added as to how the grant will be distributed, managed, and utilized to maximise its efficiency. More details have also been added to ensure stickiness after the grant incentives stop, not only allowing for continued success, but encouraging further growth in a sustainable manner.
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: 262,000 ARB Tokens
Justification for the size of the grant 35: [Enter explanation. More details are better, including how you arrived at the required funding for individual categories of expenses covered by your grant plan]
Of the requested amount, 238,000k will be used to incentivize TVL growth to Arbitrum split between bridging from Ethereum and minting directly on Arbitrum, thus rewarding restakers.
Bedrock will be subsidizing gas fees for users to bridge their assets onto Arbitrum. Bedrock and our Cross-chain partner(s) will match the ARB subsidy partially. We have already developed integration with both Axelar and Celer bridges. According to historical evidence from other protocols like Renzo, we anticipate that our approach can bring in an additional 1,000 - 2,000 new users onto Arbitrum, growing in line with our Milestones outlined below.
Bedrock will also subsidize and incentivize minting on Arbitrum through a 2x Diamonds points boost just for minting and holding uniETH on Arbitrum. We will also provide an additional ~15% APY through the ARB received in this grant to further promote strong ecosystem growth. Users will then be eligible to receive additional incentives through utilizing our DeFi opportunities for uniETH. These opportunities will provide additional Diamonds boosts, ARB tokens and partner incentives.
The remaining 24,000k will be used to incentivize on-chain activity like LPing, trading, Lending/borrowing, and yield farming.
- Increase overall TVL to cater to multiple partner Defi Protocols, encouraging trading volume, and a healthier ecosystem
- Currently at $177m TVL ($150M ETH mainnet TVL and $27M IOTX TVL)
- Targeting $25M TVL on Arbitrum (~15% increase on overall TVL)
- We will be using two types of incentivization:
- Restaking Bonus: Incentivize APR
- DeFi Bonus: Incentivize APR
- While we aim to achieve $25m TVL on Bedrock Arbitrum, Arbitrum’s total market cap according to DefiLlama is $3b. Other chains have staking ratios of 20-70% of total TVL.
- Therefore, giving space for other protocols to come in, we believe $25m is a very achievable initial target, equating to <1% of Arbitrum’s total market cap.
- To put this perspective of Bedrock’s capabilities, IOTX has a market cap of $600m according to DefiLlama. At $27m IOTX staked on Bedrock, this equates to capturing 5% of the total market cap
- From our expertise and knowledge in the space, we predict that between 10-30% of Bedrock’s TVL will be locked into additional DeFi protocols. This equates to $2.5-$7.5m ($5m average) in additional activity.
- Just accounting for the value locked on the Curve pool and Pendle Pool, 11% ($16m) of uniETH’s TVL is locked on these two platforms and we anticipate this to increase. uniETH is also integrated into other DeFi protocols like TimeSwap, Lyve, Balancer, etc.
- According to Camelot, Arbitrum’s largest DEX, a realistic base ratio of TVL to Trading volume is 1:1. Meaning we can comfortably aim for $5m in trading volume for $5m TVL in DEXs. Other DEXs like Ramses have even higher ratios.
- For each incentivization mechanism:
- We target an average of 15% APR in ARB for all restakers. Combining this with the native staking yield, we feel confident the overall APR of 18-19% and all additional DeFi integrations that are already confirmed will strongly attract our target TVL in the 12-week timeframe. To achieve this level of rewards for restakers across 12 weeks, it would require the following:
- USD equivalent = $25M * 15% * 12/52 = $865,385
- ARB amount = $865,385 / $1.2 = 721,154 ARB at $1.2
- We target an average of 15% APR in ARB for uniETH activity on DeFi protocols. To achieve this level of rewards for DeFi users across 12 weeks, it would require the following:
- USD equivalent = $5M * 15% * 12/52 = $173,077
- ARB amount = $173,077 / $1.2 = 144,230 ARB at $1.2
- We are working in collaboration with multiple key protocols within the Arbitrum ecosystem and will be co-incentivizing with them. As such, we will reduce the ARB amount requested for DeFi users by 50%
- ARB requested for Defi users = 144,230 * 50% = 72,115 ARB
- Using a logarithmic model, scaling up to $20m TVL by the end of the 3 months, we cut the total ARB required by 2/3 to allow for the gradual increase over time.
- Total ARB amount = (721,154 + 72,115) * 0.33 = 261,779
- Achieving this TVL and subsequent DeFi activity will ensure we generate enough base fees + additional yield opportunities to attract new users moving forward. At $35M TVL, and significant activity, we believe we can substitute the majority of incentives with trading fees, AVS fees, and Bedrock Token incentives.
- The 15% APY for restaking will not be required long term and the 15% yield for DeFi protocols can be taken over by the protocol’s organic incentive systems. We already have seen Pendle’s APY for the uniETH pool hit as high as 65% organically.
- In addition, Bedrock will match and allocate boosted Bedrock Diamonds to be distributed specifically to restakers who engage in DeFi activities.
- From our analysis of previous incentive programs, we are estimating a reduction in growth post-incentives, however, we believe we can offset this and continue to encourage more TVL growth with our own future growth strategies.
Grant Matching: [Enter Amount of Matching Funds Provided - If Relevant]
Bedrock will provide Bedrock Diamonds to match ARB incentives.
In addition, bedrock partners have confirmed they will provide their own matching incentives to this grant. We have already confirmed over $60k in incentives for our Arbitrum DeFi campaigns.
Grant Breakdown: [Please provide a high-level overview of the budget breakdown and planned use of funds]
| Bedrock restakers on Arbitrum & uniETH Bridging from Ethereum | 238k ARB |
|---|---|
| uniETH holders on DeFi | 24,000 ARB |
Funding Address: [Enter the specific address where funds will be sent for grant recipients]
0x4CDa7F8F6AdDE30e5a7bB7b67ecF465de412ae08
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.
The address is a 3/4 multisig wallet via Genosis.
Treasury Address: [Please list out ALL DAO wallets that hold ANY DAO funds]
N/A
Contract Address: [Enter any specific address that will be used to disburse funds for grant recipients]
Manual process initially.
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: [Clearly state the primary objectives of the grant and what you intend to achieve]
We use ARB incentives in conjunction with other incentives like points boosts and partner programs to encourage users to restake their ETH / Stablecoin / ARB on Arbitrum and promote the liquidity and use case of uniETH on Arbitrum. This serves several purposes:
- Provide native restaking rewards to users on Arbitrum
- Increase liquidity and trading volume in DEX on Arbitrum
- Increase Yield Trading volume and liquidity on Arbitrum
- Increase TVL on Arbitrum
Execution Strategy: [Describe the plan for executing including token distribution method (e.g. farming, staking, bonds, referral program, etc), what you are incentivizing, resources, products, use of funds, and risk management. This includes allocations for specific pools, eligible assets, products, etc.]
The will be mainly using 2 types of incentivization:
Native Restaking
- Incentivize users to restake on Arbitrum - accepting ETH on mainnet & Arbitrum, Stablecoins, & ARB tokens. All uniETH TVL must end up on Arbitrum to be eligible for rewards.
- Users will be able to hold eligible uniETH from two sources: 1) minting on Ethereum with ETH and bridge the uniETH tokens onto Arbitrum 2) minting on Arbitrum with wETH, ARB or stablecoins.
- To encourage retention and ensure a consistent 15% APR is applied to all restakers, each wallet will need to hold uniETH tokens for 2 weeks to unlock their ARB tokens.
For every 1 ETH staked on Bedrock, users will receive up to (0.15 * 12/52) = 0.0375 ETH worth of ARB tokens. In the final 1 week of the 12-week program, all unused ARB tokens will be distributed evenly to all uniETH Arbitrum holders.
The initial 20% of the grant will fund incentives for the first 2 and a half weeks.
For restaking, 47,600 ARB will be used across the first 2 and a half weeks. 19,000 ARB tokens will be awarded each week for this initial period promoting explosive growth at the start. It will not matter if the user has minted directly on Arbitrum, or bridged their uniETH across from another chain.
The target TVL growth will be $2m per week, thus after the first 2 and a half weeks, we aim to hit the next two milestones, unlocking another 35% of the grant. After this initial period, we will have traction on DeFi protocols, resulting in additional yields of more than 30%. This, in turn, will encourage more organic growth with the ARB grant starting to transition into a supporting tool, rather than the core incentives. By the end of the 12 weeks, the yields will be almost entirely organic, resulting in a smooth transition out of the ARB grant period.
For DeFi integrations, 7,920 ARB (33% of DeFi grant allocation) will be used across the first 4 weeks. ~2,000 ARB tokens will be split to the following projects per week:
- Camelot: 500 ARB
- Ramses: 500 ARB
- Poolside: 500 ARB
- DeFi Lender/Borrower TBA: 500 ARB
After this initial period, the amount of ARB tokens for the DEXs will be adjusted, allowing for incentives to be added to approximately other new DeFi integrations. Due to the growth these incentives will encourage, we anticipate that the APY will continue to grow as organic fees and emissions will grow.
Poolside will be providing approximately 3,300 ARB tokens per week to the uniETH pool for the entire 12-week period.
Ramses will also provide similar incentives in RAM tokens and Camelot will provide incentives in their Grail & xGrail tokens.
DeFi Integration
- Incentive LP and Trader on uniETH/wETH on Camelot, Rameses, Trader Joe, Poolside, Curve, &/or Balancer (DEX)
For each DEX we will start with a uniETH/wETH pool, incentivizing up to $1m per pool @ 15% APY. This means the reward cap for each pool will be $35k in rewards over the 12 weeks. - Incentivize Lender to uniETH / wETH / ARB on xx (Borrow Lending)
For each Lender, we will start with a uniETH/wETH lending/borrowing pair, incentivizing up to $500k per pool @ 15% APY. This means the reward cap for each pool will be $17.5k in rewards over the 12 weeks. - Incentivize PT-uniETH / SY-uniETH pool on Pendle Arbitrum (Yield Trading)
We will start with a uniETH pool, incentivizing up to $5m per pool @ 15% APY. This means the reward cap for each pool on Pendle will be $175k in rewards over the 12 weeks. - Incentivize UniETH pool on Equilibra Arbitrum with the support of the Equilibria team
- Incentivize UniETH pool on Penpie Arbitrum with the support of the Penpie team
The following Projects have confirmed their support and collaboration for Bedrock incentive programs:
- Celer - Any user who bridges their uniETH or other tokens to mint uniETH on Arbitrum will receive a reward in-conjunction with possible Celer rewards.
- Poolside - Any user who LPs their uniETH into the Poolside uniETH pool on Arbitrum will receive a reward in-conjunction with Poolside rewards.
- Ramses - Any user who LPs their uniETH into the Ramses uniETH pool on Arbitrum will receive a reward in-conjunction with Ramses rewards.
- Equilibria - Any user who votes or LPs into the uniETH Pendle pool via Equilibria on Arbitrum will receive a reward in-conjunction with Equilibria rewards.
- Thetanuts - will launch additional utility through PT-uniETH as a pipeline asset with a custom, collaborative promotion campaign.
- Pendle - We will launch an incentivized uniETH pool on Pendle Arbitrum
- Penpie - Any user who votes or LPs into the uniETH Pendle pool via Penpie on Arbitrum will receive a reward.
- API3 - Will support all integrations with marketing support and possible incentives.
- OKX - Will support the campaign driving many of their users to mint uniETH on Arbitrum. In the first 3 days of the OKX uniETH campaign on mainnet, more than $1m uniETH was minted.
What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric? [Provide relevant design and implementation details]
Stickiness post incentives
To further encourage stickiness, Bedrock will continue to provide additional incentives to uniETH holders and DeFi users beyond the initial 12-week period. This will be accomplished in the form of Diamonds, uniETH tokens, Stablecoins, and Bedrock’s Governance token (once launched). uniETH holders will also receive airdrops from multiple AVSs on EigenLayer and ongoing fees.
Bedrock is in a unique position with strong experience growing user stickiness. The team’s background in RockX resulted in the platform’s native staking AUM to grow to $2b this year.
In addition to organic restaking incentives, Bedrock is lined up to integrate with multiple DeFi protocols that will further boost the token’s yield. Current integrations have resulted in organic APY’s to grow to more than 65%. These integrations include Balancer, Curve, Sushiswap, Pendle, Penpie, Equilibria, Timeswap, Vector Reserve, OKX, Lynex, Linea, Scroll, Manta, Sturdy, Coin98, Agilely, Yearn Finance, Redstone, StakeEase, Long Hash, Poolside, and more.
These integrations will encourage more organic growth with the ARB grant starting to transition into a supporting tool, rather than the core incentives. By the end of the 12 weeks, the yields will be almost entirely organic, resulting in a smooth transition out of the ARB grant period. Organic APY could be as high as 50+% for uniETH on Arbitrum.
Bedrock provides boosted Bedrock Diamond as time-based rewards, increasing the longer a user engages or “sticks” to the ecosystem for those that. Examples of where these rewards are provided include:
- LP of uniETH/wETH, uniETH/ARB on any DEX
- LP of PT-uniETH / SY-uniETH pool
- Locking uniETH as collateral on integrated lending protocols
- Voter on Equilibra
- Voter on Penpie
Bedrock will also continue to develop new campaigns with partners to encourage further growth as new integrations on Arbitrum occur. These campaigns will include a combination of strong collaborative marketing from each partner, token incentives, points boosts, and other incentives.
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.]
There is no liquidity of uniETH/wETH on arbitrum yet. We target to achieve $25mil TVL Arbitrum minimum, however our final goal is to hit $50mil TVL Arbitrum. Due to the nature of the incentive program, we will require portions of the grant in advance to hitting the final target and have broken up our milestones accordingly.
KPIs will focus on TVL on Bedrock Arbitrum and the amount of uniETH added to specific DeFi protocols.
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.]
We anticipate that the following milestones should be hit every 1-2 weeks. Periodically, we will check in with our progress towards the next metric.
Milestone 0: Launch Cross-chain Restaking on Arbitrum; (20% Grant)
Milestone 1: uniETH on Arbitrum reaches $1mil TVL; (20% Grant)
Milestone 2: uniETH on Arbitrum reaches $5mil; (15% Grant)
Milestone 3: uniETH on Arbitrum reaches $10mil TVL; (15% Grant)
Milestone 4: uniETH on Arbitrum reaches $15mil; (15% Grant)
Milestone 5: uniETH on Arbitrum reaches $20mil; (15% Grant)
Milestone 6: uniETH on Arbitrum reaches $25mil TVL;
We anticipate Milestone 0 will start at the beginning of the grant period with Milestone 1 to start approximately 1 week after. We aim to hit Milestone 5 in the final 2 weeks with Milestone 6 before the end of the 12-week period. We expect the majority of each grant release to be used before the next milestone is hit. The amount of Grant amount needed in the later stages is less due to the growth of organic incentives over this period.
DeFi Milestones:
Milestone 0: Integrate uniETH onto 3 DeFi protocols on Arbitrum; (33% Grant)
Milestone 1: DeFi TVL on Arbitrum reaches $1m; (33% Grant)
Milestone 2: DeFi TVL on Arbitrum reaches $4m; (33% Grant)
Milestone 3: DeFi TVL on Arbitrum reaches $5m;
We anticipate to hit Milestone 1 approximately in the first 2 weeks after the initial DeFi integrations are laujnched with Milestone 2 hitting around week 8.
Approximately 2,000 ARB will be awarded each week to DeFi users.
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]
The rapid growth of TVL in Restaking sector has demonstrated great potential in Restaking sector. There is strong user demand for Restaking Reward. Pendle, Equilibria, Penpie have demonstrated potential within the Yield Trading platform. However, the recent surge of gas fees makes Restaking and Yield Trading NOT friendly to users. Arbitrum network, known for its efficiency, low fees, and active user base, presents an ideal for long tail ETH holders who look for restaking reward and yield trading opportunities.
Within the Arbitrum ecosystem, Bedrock can not only provide native restaking rewards to users but also become an important member in the Arbiturm ecosystem.