SECTION 1: APPLICANT INFORMATION
Applicant Name: Tex
Project Name: Bond Protocol
Project Description: Bond Protocol is a permissionless marketplace for projects to acquire assets, own liquidity, and diversify their treasuries. Bond helps decentralized organizations build sustainable treasury management practices.
Team Members and Roles:
- Tex - Product
- Oighty - Smart Contracts
- Jem - Smart Contracts
- Aphex - Frontend
- Tiago - Business Development
- Derrick - Marketing
Project Links:
Website - https://www.bondprotocol.finance/
Twitter - https://twitter.com/bond_protocol
Github - Bond-Protocol · GitHub
Contact Information
Point of Contact: @Tex
POC TG handle: @Tex0x
Twitter: https://twitter.com/0xTex
Email: tex@bondprotocol.finance
Do you acknowledge that your team will be subject to a KYC requirement? Yes
SECTION 2a: Team and Product Information
Team Experience
Bond Protocol’s team formerly led Olympus Pro, the DAO-to-DAO product under OlympusDAO that helped bootstrap over $100m in liquidity on multiple chains. In addition to our work at Olympus Pro, the team brings experience working with Arbitrum protocols for the past two years. We originally launched Olympus Pro on Arbitrum in December 2021 and Bond Protocol a year later. Our team also brings experience from projects such as Liquity, Ankr, and GuardianUI.
What novelty or innovation does your product bring to Arbitrum?
Bond Protocol originally launched on Ethereum mainnet and Arbitrum. We have since expanded to other chains, but Arbitrum remains our largest network of projects that have used bonds to support their treasuries.
Is your project composable with other projects on Arbitrum?
Bond has been utilized by several major projects on Arbitrum, including key partners such as GMX, Camelot, Y2K, Pendle, TreasureDAO, Sperax, CVI, Lodestar, MetavaultDAO, prePO, Buffer, and Poolshark. In addition, the protocol is composable for others to build integrations on their dApp or natively for their tokenomics.
Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
There are few comparable protocols within Arbitrum or other blockchains. Similar projects like ApeBond use minor variations on contracts we developed 2+ years ago which have significant trust assumptions and are not permissionless in any way. In addition, they charge substantially higher fees to compensate for manual management of funds which is made redundant by our protocol architecture. As a standard for permissionless bond marketplaces, Bond Protocol stands alone as the only solution for protocols to deploy and manage their own programs. Our protocol also allows others to build on top of it, like the recent launch of Sushi Bonds which use Bond Protocol under the hood.
How do you measure and think about retention internally?
Retention for Bond Protocol is complex since our main customers are other protocols with their own sets of treasury management goals. While some projects used bonds on a continuous basis, we often see projects ramp up and down based on their specific goals. These include treasury diversification, protocol-owned liquidity, or acquisition of strategic assets.
KPIs for bond programs include average discount and unique bonders. These metrics reflect the overall competitiveness of a given bond market. Unique bonders are also a positive indication for projects that value decentralization of their token supply.
Relevant usage metrics
Usage metrics are captured via our Dune dashboard and focus on the following:
- Total Bonded Value (TBV) - the amount of value distributed per market
- Average Discount - discount percentage paid vs. market value at point-of-purchase
- Unique Bonders - number of unique bonders per market
- Bond Issuers - number of projects that have used bonds
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
Is the protocol native to Arbitrum? No, Bond Protocol is multi-chain but has a strong network of partners on Arbitrum.
On what other networks is the protocol deployed? Ethereum, Polygon, Optimism, and Base
What date did you deploy on Arbitrum mainnet? December 2022
Do you have a native token? No
Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? None, Bond Protocol does not have a token
Current Incentivization: How are you currently incentivizing your protocol? N/A
Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program? No
Protocol Performance: Bond Protocol has generated nearly $10M in TBV on Arbitrum to-date for 14 projects over the past 14 months. Performance details can be found on our Dune dashboard and Tokens list.
Protocol Roadmap:
- Develop and deploy additional auction modules
- Create new derivative implementations for new vesting types
- Extend protocol functionality beyond fungible ERC20 tokens
- Implement novel callback functions to enable new integrations
Audit History & Security Vendors:
Audits - Sherlock, Zellic, and yAcademy
Bug Bounty - ImmuneFi
Security Incidents:
Our Fixed-Term Teller contract was exploited in October 2022 shortly after we launched in Beta. Two audits did not catch the bug allowing for counterfeit bond tokens to be minted. After this event, we prioritized threat model analysis for code review and updated our approach to audits. We believe that a mix of private audits and code contests provides the optimal approach to security.
SECTION 3: Grant Information
Requested Grant Size: 140,000 $ARB
- 120k $ARB for weekly bonding incentives
- 20k $ARB for treasury management incentives
Justification for the size of the grant:
Treasury management is an important focus for projects returning from the bear market. Current market conditions are ripe for new projects launching tokens and existing projects to evaluate their treasury composition. The grant will be distributed to protocols and users on the platform to expand Arbitrum bond markets and improve average discounts. This approach emphasizes both sides of the dual marketplace created by Bond Protocol, where all incentives pass through to the bonder.
Over the course of the 12-week program, 120k $ARB incentives would allow offsetting bond discounts up to 10% at current bonding volumes. Building in expected growth would allow us to offset 5% discounts for new bond programs confidently.
We propose an additional 20k $ARB incentives for new projects with treasury management goals. Critically, these earmarked funds will be awarded to six projects that develop a formal treasury management framework as part of the bonding program.
Importantly, incentives will be capped at 10% per market based on capacity. In the event that incentives do not have the intended effect, we will return unused incentives to Arbitrum DAO. See the Grant Breakdown below for more details on the performance-based incentives.
Grant Matching: None
Grant Breakdown
Over the 12-week incentives period, Bond Protocol plans to distribute incentives in the following amounts:
- 10k $ARB weekly - distributed as bonding incentives for Arbitrum bond markets proportional to their capacity bonded, capped at 10% capacity per project
- 20k $ARB earmark - reserved as additional bonding incentives for six bond issuers (3,333 $ARB each) who incorporate bonding as part of a formal treasury management framework, capped at 3.3% of capacity in addition to weekly incentives
Funding Address: 0x007F3eD580c754A9495881b066e9FC98e406c214
Funding Address Characteristics: Address is a 2/3 multisig. Further information on key security can be shared privately.
Treasury Address: Same as funding address
Contract Address: Fixed-Term Teller contract to track bonding activity - 0x007F7735baF391e207E3aA380bb53c4Bd9a5Fed6
SECTION 4: Grant Objectives, Execution, and Milestones
Objectives
The primary objective of the grant is to boost the number of protocols running bond markets on Arbitrum as part of their treasury management strategy. Leading protocols on Arbitrum have used bonds to great success and we believe this grant will provide additional incentives for protocols to develop treasury management strategies. Coherent treasury management signals planning for the long-term and can differentiate the Arbitrum ecosystem.
Execution Strategy
All funds will be distributed as bonding incentives to purchasers. These incentives will reduce the expected discount to market price that projects can expect to pay for any vesting period, incentivizing projects to trial bond programs.
Excess funds will be returned to Arbitrum DAO if performance targets are unmet.
What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric?
Reserving funds for new protocols to develop treasury management strategies should incentivize “stickiness” of bond markets. There are few mechanisms for protocols to diversify their treasuries in a permissionless way. Bond Protocol’s marketplace is the best solution for protocols to acquire assets by mobilizing treasury funds.
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.
KPIs to measure success of this grant objective include new bond markets deployed and improved discounts on existing markets. These KPIs should reflect increased interest in treasury management and competition on bond markets. Source of truth for these KPIs should be the Dune dashboard monitoring TBV and new projects opening bond markets.
Grant Timeline and Milestones
Prior to grant approval, Bond Protocol will raise awareness of incentives program and treasury management goals. The goal is to secure two newcomers to launch programs at the beginning of the incentives program. By the end of the program, the goal is to launch programs for six protocols with treasury management practices on Arbitrum. We have prospects in the pipeline including eight projects currently applying for LTIPP incentive plans.
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?
Long-term focused projects require stability of funding and resiliency against market conditions. In crypto, we’ve seen many projects get funding an interest for a single cycle, but die out before the idea has been proven or had a chance to find the right model. By helping more projects in the Arbitrum ecosystem improve their treasury management practices, we can help them be poised for long-term growth and innovation.
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 34.
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, we are prepared to comply with the data requirements. We need to update our Dune analytics, so will prioritize this for OBL specifications. Bonding metrics are slightly different from existing categories, but we will work closely with Arbitrum advisors to ensure we capture the right data.
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that reference your OBL dashboard?
Yes, we will provide bi-weekly updates on our analytics dashboard and summaries of in-flight discussions about new bond programs.
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? 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? Yes
