SECTION 1: APPLICANT INFORMATION
Applicant Name: Ric Feynman (co-founder, product & bd lead)
Project Name: Buffer Finance
Project Description:
Buffer Finance is a decentralized price prediction platform built on Arbitrum. The first to offer both crypto and non-crypto price prediction markets and the shortest time frames - as low as 1 minute.
Buffer’s products, with their simplicity, clarity, and engaging design, serve as an ideal user-onboarding tool for a broad range of users, extending beyond the crypto-native audience.
We have been Arbitrum lined for a long time now - initially launching as a pioneering as a exotic options platform. Throughout this journey, we gained critical insights into user behavior and market trends. This understanding led us to shift our messaging and GTM as a prediction market.
Team Members and Roles:
- Feynman (Co-founder, Product Lead, BD)
- Heisenberg (Co-founder, Chief Engineer)
- Curie (Backend Dev)
- Tesla (Backend Dev)
- Maxwell (Frontend Dev)
- Faraday (Frontend Dev)
- Jane (UI Designer)
- HL (Social Media Manager)
- Heloise (Marketing & Growth)
- Nick Dhillon (Moderator, Community)
- Mellboi (Moderator, Community)
Project Links:
- Web: https://app.buffer.finance/
- Docs: https://docs.buffer.finance/
- Github: Buffer Finance · GitHub
- Twitter: https://twitter.com/Buffer_Finance
- Discord: Buffer Finance
- Telegram: Telegram: Contact @bufferfinance
Contact Information
Point of Contact (note: this should be an individual’s name, not the name of the protocol): [forum handle]
Point of Contact’s TG handle: @feyman101
Twitter handle: feyman101
Email: Feynman@buffer.finance
Do you acknowledge that your team will be subject to a KYC requirement?: Yes
SECTION 2a: Team and Product Information
We have been building Buffer Finance for the last 2 years. We are proud to have the strongest partners including camelot (Buffer being the 1st ever camelot round table member).
As for grants and airdrops - Buffer has received airdrop from Arbitrum (most of which sits securely in our multisig) in March of 2023, and a recent allocation from Pyth Network’s Retroactive airdrop Phase 2.
We have very cognizant and intuitive around how we rally these incentives
What novelty or innovation does your product bring to Arbitrum?
Fastest Price Prediction Markets on Arbitrum:
Up/down markets on Buffer offer fast-paced trading on crypto, forex and commodities with timeframes as short as 1 min.
Trade any volatility conditions without any directional bias:
Above/Below markets on Buffer are a unique tool for multi-leg strategies with easy to pay-off multiples. Allows traders the ability to trade any volatility conditions without any directional bias. Additionally, traders can capitalize on periods of low volatility by purchasing in-the-money to secure profits.
One-stop-shop for trading and hedging:
Buffer’s price prediction markets are an effective tool to offset the risk of high leveraged positions. Since Buffer also offers perp-trading of up to 100x leverage (via perennial integration), it allows for seamless and effective cross-hedging strategies
Gasless, Instant, One-Click Trading:
Buffer’s unique one-click trading facility allows users to enjoy instant and gasless execution - mimicking a true CEX-like trading experience. Unlike traditional one-click modals, traders on Buffer do not need to go through the hassle of transporting assets from their web3 wallets to smart contract accounts, instead traders can use their collateral asset (USDC/ARB) directly from their EOA while still enjoying one-click, gasless trades.
Additionally, features like limit orders (using application-level intents) in-chart management and early close significantly improve trading flexibility.
Instant trade verification:
To further enhance the trading experience, our platform includes a suite of advanced augmentation features, designed to complement our streamlined one-click trading interface. A key highlight is the introduction of optimistic trade verification - done via our off-chain sequencer facility (which will be decentralized). This feature ensures that inbound orders receive immediate verification directly within the user interface, reinforcing the true CEX-like trading experience.
Real-Time Price Feeds: Buffer Finance leverages real-time price feeds from the Pyth Network Oracle, ensuring fair and reliable price sourcing for trading activities. This transparency enhances trust and confidence in the platform’s pricing mechanisms.
Dynamic Fee Structure: Buffer Finance implements a dynamic fee structure for trading, with settlement fees and platform fees adjusted based on open interest (OI). This flexible fee model ensures fair and competitive pricing for traders while optimizing platform revenue while still being able to protect liquidity providers that underwrite positions on Buffer.
Is your project composable with other projects on Arbitrum? If so, please explain:
Yes, Buffer’s Above/Below markets can be integrated permissionlessly by any protocol on Arbitrum. Up/Down markets are composable but require our API to send trades to support 100% gasless trading.
Buffer also offers perpetual trading, in partnership with Perennial Finance, currently supporting 12 perp markets directly on Buffer.
In the future we also plan on offering an easy-to-use automation SDK.
Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
Yes, thales, however we are the only price prediction platform to offer timeframes as short as 1 mins.
How do you measure and think about retention internally? (metrics, target KPIs)
We measure retention value via our Stats page and dashboard
Key metrics includes:
- Daily Volume: enhanced 30-day moving average of daily volume on Buffer Finance with the help of trading incentives
- Daily Unique Traders: increase in 30-day moving average of daily active traders by attractive new users and increasing retention via competitions and jackpots.
- BLP TVL: Enhance BLP vault liquidity on Arbitrum using strategic incentives for liquidity providers
- Daily Protocol Fee - a 30 day moving average data indicating daily protocol fee generated.
General Metrics:
- Daily Active Users
- Daily User Growth
- Daily Transaction Fee
- Daily ARB Expenditure and User claims
- Incentivized User List and Gini
Options:
- TVL
- Trading Volume
- Open Interest
- List of Traders
- List of Liquidity Providers
- Fees
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):
This proposal is written by Buffer contributors and with feedback and insights from the Serious People team.
None of these groups will receive ANY of the incentives in this proposal, and therefore have no conflicts of interest.
SECTION 2b: PROTOCOL DETAILS
Is the protocol native to Arbitrum?:
Yes, deployed on 01.30.2022
On what other networks is the protocol deployed?:
Buffer Classic App - https://classic.app.buffer.finance/ is live on Polygon via MetaVault, with trading pools on Polygon jointly seeded by MetaVault and Buffer, each contributing 50%. Fee distribution is equally shared, allocating 50% to MetaVault and 50% to Buffer. However, 95% of our volume is generated on v2.5.1 that is live on Arbitrum.
What date did you deploy on Arbitrum mainnet?:
22.08.2022 Arbitrum Transaction Hash (Txhash) 0x3d86c68027ee763cc93fe7def11fe793e991a446aaa656a716fc4249f41b832a
Do you have a native token?:
Yes, $BFR is the utility and governance of Buffer Finance. It is currently available on Uniswap V3 and Camelot. Tokenomics - BFR Token | Buffer Documentation
Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?
In early 2023 we ran daily and weekly trading competitions. Albeit the competitions being run for a relatively short time, the run was highly successful in boosting trader count and total trade volume:
- Daily Competitions (Feb 9 - Feb 20, 2023; 11 days):
- Total volume generated: 197,591 USDC
- Trades: 3,307
- Weekly Competitions (Feb 20 - April 17, 2023; 8 weeks):
- Total volume generated: 2,132,573 USDC
- Trades: 34,226
All competition results, including trade volumes, number of trades, rewards, and participation levels, are available on our competitions leaderboard - Daily & Weekly
Additionally, 50% of the trading fees generated from BFR trading have been used to burn BFR tokens. So far, a total of 136K BFR has been burned through this mechanism. This burn mechanism has been paused as we recently pushed a new proposal (BIP-03) outlining revenue share and staking mechanism for temp check - , pending community approval. A successful vote will set in motion a stronger, more sustainable $BFR buy back and burn strategy.
Current Incentivization: How are you currently incentivizing your protocol?
- $BFR staking is powered by esBFR (escrowed BFR), Multiplier Points and 25% protocol generated revenue
- Trading boosts for Buffer’s Optopi NFT holders are live on Buffer Classic App.
- Referral Incentives in the form payout boosts are offered to both referrer and referee using as a tiered approach.
Besides these initiatives, no ongoing liquidity mining incentives or programs are live on the platform.
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
Protocol Performance:
- 4th largest options trading platform by fee and revenue
- Peak TVL $10 Million
- 985K generated solely as $ARB token volume
- $930K in total fees generated since deployment on Arbitrum
- 101964 trades since deployment on Arbitrum
- 1830 traders
- 57% of the total circulating supply staked
Metrics:
Buffer Stats | Buffer Dashboard
Protocol Roadmap:
- New Incentive Layer
- Daily Competitions and Trading Leagues: with social features such as social tracking and profile tracking to engage the community and promote trading activity.
- Custom Trading Points System: a hybrid points based system integrated with daily/weekly competitions and leagues to incentivize trading activity through gamification
- Launch No-Loss Tournaments: first of its kind of gamified product on-chain - facilitating low-risk PvP trading with virtual tokens on Buffer. Tournaments can be hosted by anyone, featuring multiple formats depending on reward pool structures and buy-in options.
- Advanced Features for Integrators and Prop Traders:
- Open bot integration program: incentives for testing new bot partnerships and automation strategies, aimed at attracting integrators and prop traders by facilitating high-volume trading strategies.
- Liquidity Enhancement:
- Bootstrap BLP Vaults: establish a highly efficient market for liquidity where demand on-chain is met by supply on-chain.
Audit History & Security Vendors:
Security Incidents:
Yes, two exploits back in 2023 caused due to BTC/USD and SOL/USD price manipulation.
A bit of backstory -
Buffer price prediction markets require a specific pull-based, oracle system that necessitates real-time oracle price updates on-chain. At the time of our launch (late 2022), low-latency oracles that could achieve this were still under development.
As such we developed our own proprietary on-demand oracle system that fetched prices from specific off-chain oracles, signed and stored it along with a signature for the keeper to use for opening/closing the trades.
Although robust, Oracle’s dependency on second-level data aggregation introduced a single point of failure to the dApp, especially during times of low liquidity/volume.
Swiftly learning from this incident - we worked closely with Pyth Network, shifting to their low-latency oracle solution. Since making the switch, we have safely executed 101,758 trades executed to 1819 traders on Buffer.
The exploits occurred due to the lack of a low-latency oracle; it was resolved by adopting a 2-second lag solution and transitioning to Pyth Network oracle.
SECTION 3: GRANT INFORMATION
Requested Grant Size:
500,000 $ARB
The goal of this grant is to continue growing TVL within Buffer 2-3x over the course of the next 3 months. Mirroring the innovative approach of Dolomite’s oARB mechanism during STIP, we are deploying a similar strategy.
The majority of the grant sizeof 490,000 ARB will be emitted as esARB for LPs and trARB for trading competitions and fee rebates. The remaining amount of 10,000 ARB will be distributed as incentive to further boost engagement and trading activity through a jackpot mechanism.
Users will be required to reserve esARB and trARB tokens to completely vest their ARB - leading to a stickier and more effective program than typical incentive programs. If locked for a max period - users LPs will receive an upfront yield @ 25%.
Grant Matching:
N/A
Grant Breakdown:
-
250,000 ARB to be deployed as liquidity incentives for u-BLP vault to be distributed in the form of esARB.
-
120,000 ARB to be distributed as fee rebates, distributed as trARB, to encourage traders new users to try the platform at minimal cost (onboarding).
-
120,000 ARB to be used for hosting trading competitions, distributed as trARB - the competition structure is designed to emphasize consistent performance than a single high score (retention)
-
10,000 ARB for a jackpot system to further stimulate user acquisition and engagement
*We have mentioned a comprehensive overview of grant usage, and execution in the section below (Execution Strategy).
Funding Address: 0x5558CD6480A63601EC780D8f40FD7cD97dea48a7
Funding Address Characteristics: ¾ multisig SAFE
Treasury Address: 0x691FA1d4dc25f39a22Dc45Ca98080CF21Ca7eC64
Contract Address: TBC
SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES
Objectives:
- Grow fees and daily unique traders on Buffer to position Arbitrum as the key infrastructure for fast-paced prediction markets.
To note, Buffer’s dynamic fee model offers a powerful advantage in fee generation efficiency, markedly outperforming the typical perp dex.
Here’s a direct comparison:
Buffer charges a 10% fee, transforming every $1 million in trading volume into $100,000 in fees. In stark contrast, a perp dex, with its 0.03% fee rate, requires an enormous $333.33 million in volume to produce the same amount of fees. This stark efficiency means that, with Buffer, each dollar of trading volume is 33 times more potent in generating revenue compared to a perp dex. This efficiency not only underscores Buffer’s superior revenue-generating capability but also highlights its strategic advantage in leveraging trading activity far more effectively.
- Increase TVL that allows to increase volume by larger position sizes and maximum open interest on Buffer supporting trades
Execution Strategy:
-
Liquidity Incentives (250,000 ARB):
- LPs much deposit USDC into uBLP (USDC-BLP) vault to receive esARB
- Users will be required to vest esARB for a period of 28 days to receive 25% yield upfront
- Staking $BFR can reduce the vesting period, depending on the amount of $BFR staked:
- 0 to 25000 BFR staked - 28 days vesting
- +25000 to 50000 BFR staked - 21 days vesting
- +50000 to 75000 BFR staked - 14 days vesting
- +75000+ to 100,000 BFR staked - 7 days vesting
- +100,000 to BFR staked - 1 day vesting
- All measurements will be done via subgraph eligible wallets would be able to claim their share
- We will deploy a new vault and vesting contract in the first week - once the pool is deployed we will share a verified addresses on Arbiscan in the forum post
-
Competitions (120,000 ARB):
- The competition will run over a course of 10 weeks, with rewards distributed as trARB, trARB can be vested for a period of up to 28 days to redeem 1:1 for ARB.
- Holding an Optopi NFT can reduce the vesting period depending on the tier of the NFT being held:
- 0 NFT - 28 days vesting
- Silver NFT - 21 days vesting
- Gold - 14 days vesting
- Platinum - 7 days vesting
- Diamond - 1 Day vesting
- Leagues
- Traders are categorized into 5 leagues based on their previous week’s trading volume and number of traders.
- 5 Leagues - Bronze, Silver, Gold, Platinum, Diamond
- Leagues reset at every epoch
- Reward structure:
-
The competition is designed to reward on-going performance rather than a one-off end score.
-
Competition rewards would be capped 12,000 ARB per epoch or 25% of volume whichever is lower
-
Total rewards for rank (n) will be calculated using a geometric sequence and daily ranking for that epoch (1 epoch = 7 days)
Total rewards for a rank (n) are calculated using the following geometric sequence: 20 * 1.15587^(30-n)
-
Pending rewards are accumulated daily based on the trader’s rank on the leaderboard at the end of each 24 hours
-
200 trARB to 8 random traders each
-
300 trARB and 100 trARB distributed to the 2 traders will the lowest PnL respectively
-
Leaderboards:
- Two leaderboards in each league
- Highest PnL%
- Highest PnL value
- Two leaderboards in each league
-
Trading Rebates(120,000 ARB):
- The rebate program will run over the course of 10 weeks
- Rebates will be capped at 12,000 trARB per epoch or 15% of the volume generated in the epoch, distributed on a pro-rata basis based on volume contribution (1 epoch = 7 days)
- trARB can be vested for a period of up to 28 days to redeem 1:1 for
- Holding an Optopi NFT can reduce the vesting period:
- 0 NFT - 28 days vesting
- Silver NFT - 21 days vesting
- Gold - 14 days vesting
- Platinum - 7 days vesting
- Diamond - 1 Day vesting
- All measurements done via subgraphs and distribution of trARB will be done via smart contract where all eligible wallet addresses can claim there share directly from their profile page
- We will deploy vesting contracts during the first week - once the contracts are deployed we will share the verified Arbiscan address in the forum post
-
Jackpot (10,000 ARB):
- The user qualifies for the jackpot if the position size is equal to or exceeds the minimum bet size for the jackpot. An additional random number is requested from the vrf
- Along with the game results, an additional random number is received from the vrf (if the user qualifies for a jackpot), which is used to calculate the user winnings.
- The winning from the jackpot is calculated using the formula:
JackpotWinAmount = jackpotWinningPercentForUser × (RandomNumberGenerated % jackpotPoolAmount)
Where,
-
jackpotWinningPercentForUser = Percent of the jackpot that will be transferred to the user
-
jackpotPoolAmount = Percent of the incentive pool that will be used for the jackpot
-
Token Balance Check in the incentive pool:
- The contract checks if the balance of tokens for the specified token address in the pool is greater than the calculated jackpot win amount.
-
Token Transfer:
- Checks if winnings are greater than the configured ‘minWinningsForTransfer’.
- If true, transfers the winnings to the specified “To” address.
> All measurements of volume are in USDC terms and the caps are in the absolute number of ARBs. The price taken at the time of distribution is 24 hour TWAP.
What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric?
Buffer’s unique prediction markets (up/down and above/below) offer a novel way of attracting and sustaining users regardless of market conditions - bullish, bearish or sideways and of diverse risk appetite.
For liquidity incentives:
LPs need to provide liquidity and lock it for 12 months in-order to receive the upfront 25% Yield this makes them understand how long term passive LPing in our liquidity pool can make them a positive yield over their stables
For trading incentives:
A trader’s position in the league depends on the volume and number of trades completed in the previous week. Rewards accumulate daily, based on the trader’s leaderboard rank at the close of each 24 hours from the contest’s start. Instead of grouping positions into equal reward buckets, we design a mechanic where rewards are calculated using a geometric sequence - meaning rewards increase exponentially for level up. As a result, the model incentivizes consistent performance and a strategic approach throughout the competition period.
Moreover, both competition and rebates are distributed as trARB - requiring traders to reserve a vest for their trARB over 28 days to fully redeem 1:1 for ARB - leading to a stickier and healthier incentive model
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.
Volume is our primary KPI to quantify liquidity and trading activity. However, this metric alone might not fully capture platform dynamics due to potential concentration among few participants. To address this and ensure a multifaceted and granular analysis, we will be measuring other supporting KPIs:
- TVL - Higher TVL allows for higher size trades in our risk management
- Daily and monthly active traders - more users allow for a more diversified trading
- Ratio of daily new and repeat traders - offers insights into the platform’s ability to sustain and grow its user base
- Number of trades - offers a more granular view of trading behavior beyond aggregate volume
- Fees
These KPIs collectively ensure the platform’s volume reflects a diverse and active user base, providing a more accurate assessment of its health and sustainability.
Grant Timeline and Milestones:
- 2M USD in TVL locked in uBLP vault
- 2.5M USDC in total volume generated over 3 months via fee rebates and trading competition
- Minimum of 228,000 USDC generated in trading fee over 3 months via fee rebates (12,000 ARB distributed as rebates per epoch on a pro-rata basis. Total ARB distributed = 120,000 ARB, with ARB price @1.9, total fee generated via rebates = 228,000 USDC)
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?
Since launch in late 2022 - Up/Down markets have seen consistent interests - with TVL rising rapidly especially in early 2023 (peak TVL 11.65 million). In fact, Buffer has already proven to be instrumental in promoting the $ARB token, utilizing it as collateral for Up/Down options trading on our platform.
Around this time, we implemented - dynamic fees and stricter trading parameters that increase exponentially to prevent overleveraging of the pool close to 100% utilization. Interest in Above/Below markets has risen even more rapidly in a very short span of time.
As such, overall protocol usage has a potential to rise exponentially but limited by the amount of liquidity on Buffer to support the size of an average degen. Injecting liquidity into Buffer will increase both trade volume and TVL in tandem. Once the trajectory is set in motion, it is designed to persist - thanks to Buffer’s focus on short-term trading instruments which allows liquidity to be churned and utilized multiple times - generating higher fees with significantly less amount of capital.
As we drive Buffer further towards mainstream adoption, we organically inject increasing liquidity, and positive network effects across the Arbitrum ecosystem.
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 12. 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?
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.
