[Charm Finance] LTIPP Application - FINAL

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.

Applicant Name:

Tom C

Project Name:

Charm Finance

Project Description:

Charm is the easiest way to provide and manage liquidity, and the only way to create fully permissionless LP vaults. In 1-click, anyone can create a vault to manage the liquidity in any Uniswap V3 pool.

Team Members and Roles:

  • Tom - Co-founder, CEO, Marketing and business development
  • Max - Co-founder, Head of Research, Solidity developer
  • Dima - CTO, Full-Stack developer

Project Links:

Contact Information:

  • TG: Tom at @cryptoma20
  • Twitter: @cryptoma20
  • Email: tom@charm.fi
  • Do you acknowledge that your team will be subject to a KYC requirement?: [Yes]

SECTION 2a: Team and Product Information

Provide details on your team’s 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 product’s long-term growth and sustainability.

Team Experience

What novelty or innovation does your product bring to Arbitrum?

  • Anyone can use Charm to create fully permissionless LP vaults to manage the liquidity in any Uniswap V3 pool.

  • Charm help liquidity providers earn fees and reduce capital loss. It offers an unlimited number of vaults, is self-custodial, and has fully transparent performance metrics.

  • Charm help liquidity mangers manage liquidity. They don’t need to choose a range, or build strategies, because they can create an LP Vault to do this on their behalf.

Is your project composable with other projects on Arbitrum? If so, please explain:

  • Yes. The contracts are open source, and everything is permissionless. There are public methods that allow all the vaults’ infrastructure, strategy, performance metrics, and operating metrics to be queried or executed. In addition, the vault shares are ERC-20 and is fully-composable with most DeFi projects.

  • This composability attracted large groups of users with different use cases, such as DAOs using treasury funds to improve liquidity, new projects using project funds to bootstrap liquidity, and LPs creating vaults to generate returns and farm rewards.

Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?

  • Charm is the only protocol that can create fully permissionless LP vaults for any Uniswap V3 pool.

  • Comparable protocols are found at https://defillama.com/protocols/liquidity%20manager.

  • Charm is different because all its vaults and strategies are on-chain, which means it is more composable, robust, secure and transparent.

How do you measure and think about retention internally? (metrics, target KPIs)

The goal of this application is to increase Arbitrum’s TVL and number of users on Charm. The KPIs will therefore track all the Arbitrum vaults created by all users. These KPIs include:

  • TVL Growth: % increase in TVL.

  • Unique LPs: % growth in the number of unique wallets depositing into a vault.

  • Unique Liquidity Managers: % growth in the number of unique wallets managing a vault.

  • Active Vaults: % growth in the number of active vaults (ie vaults with non-zero balances).

Relevant usage metrics - Please refer to the OBL relevant metrics chart . For your category (DEX, lending, gaming, etc) please provide a list of all respective metrics as well as all metrics in the general section:

Daily Active Users

Daily User Growth

Daily Transaction Count

Daily Protocol Fee

Daily Transaction Fee

Daily ARB Expenditure and User Claims

Incentivized User List & Gini

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. Charm was deployed on Arbitrum at the same time or before 5 other chains. Arbitrum achieved the best performance and usage so far.

On what other networks is the protocol deployed?:

  • ETH Mainnet, Optimism, Polygon, Base, Boba

What date did you deploy on Arbitrum mainnet?:

  • Date: 7th July 2023 (but first version of product deployed on ETH Mainnet on 7th May 2021)

  • Transaction ID: 0x9f3aaf393510be398a141ab54dc46a174bfb7c358e7561c71c6fa89386121fe8

Do you have a native token?:

  • No

Past Incentivization:

  • None

Current Incentivization: How are you currently incentivizing your protocol?

  • None. Charm is not currently incentivizing users.

Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program?

  • No

Protocol Performance:

Detail the past performance of the protocol and relevance, including any key metrics or achievements, dashboards, etc.

  • Dashboard currently in construction. See here for work in progress.

Protocol Roadmap:

  • Scaling the current product on the most promising chain (which is Arbtirum). Timeline is now to 3 months.

  • Launch and scale another product with new features. Timeline is in 2 to 6 months.

  • Launch Charm on Uniswap V4. Timeline is in 7 months.

Audit History & Security Vendors:

Charm’s docs contain fulls details of the audit history. To summarise:

  • First audit: Certik, Minor findings, all resolved.

  • Second audit: Peckshield, minor findings , all resolved.

  • Third audit: Peckshield, minor findings, all resolved.

  • There is on-going bug bounty from Immunefi.

  • Our security vendors are Peckshield and Sherlock.

  • The above has worked well, because Charm never had a security incident (for over 3 years).

Requested Grant Size:

  • 55k ARB

Justification for the size of the grant:

Enter explanation. More details are better, including how you arrived at the required funding for individual categories of expenses covered by your grant plan

  • The grant proposal uses 55k ARB to incentivise the migration of $600M worth of WBTC&WETH liquidity to Arbitrum, and to create a critical mass of LPs and Liquidity managers to support a self-sustaining ecosystem of liquidity at Arbitrum:

  • $600M is the total amount of WBTC and WETH liquidity in WBTC&WETH pools outside Arbitrum. After Dencun, it is likely this liquidity will migrate to L2 due to lower gas fees. An incentivised Charm WBTC/WETH vault will help these liquidity migrate to Arbitrum.

  • Charm is applying for 55k ARB incentives to be distributed over 12 weeks. This will target a TVL of $1.6M for the Charm WETH/WBTC vault, with a reward APY of 30% (7% over 12 weeks) based on ARB price of $2.

  • $1.6M was chosen as a sufficiently large headline figure to create a critical mass of LPs and liquidity managers, and a reward APY of 30% is enough for most depositors to stay in the vault during the incentive period. The vault’s un-incentivised performance will encourage them not to withdraw after the incentives end, and will encourage all users to create their own vault using Charm or deposit into existing vaults.

  • All the ARB grant will be used to incentivise the vault, and Charm will not use the grant for its own expenses. The vault’s operations will be covered by a management fee of 5% Uniswap fees received into the vault.

Grant Matching

  • None

Grant Breakdown

Please provide a high-level overview of the budget breakdown and planned use of funds]

  • 55k ARB will be used to incentivise the Charm WBTC/WETH vault for 12 weeks.

  • All the ARB will be used to incentivise the vault. Charm will not use any incentives for internal expenses, and any unused ARB will be returned to the Arbitrum foundation.

Funding Address

Enter the specific address where funds will be sent for grant recipients

  • 0x2c84547f7076c4d834f14c5b2fF627f1913291e4

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.

  • ⅔ multisig

Treasury Address

Please list out ALL DAO wallets that hold ANY DAO funds

  • 0x2c84547f7076c4d834f14c5b2fF627f1913291e4

Contract Address:**

Enter any specific address that will be used to disburse funds for grant recipients

  • Merkl will be used to distribute incentives to eligible users.

Objectives

Clearly state the primary objectives of the grant and what you intend to achieve

  • The primary objectives are:

    • Facilitate the migration of $600M** WBTC & WETH liquidity to Arbitrum. This is the amount of liquidity in Uniswap V3 WBTC/WETH pools outside Arbitrum.

    • Create a critical mass of LPs and Liquidity managers to support a self-sustaining ecosystem of liquidity at Arbitrum.

  • This is achieved by incentivising the Charm WETH/WBTC vault.

  • At the end of the incentive period, Charm is targeting a TVL of $1.6M for the vault, an APY of at least 6% vs Full-Range without incentives, and an APY of 36% with incentives.

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 incentive program will be executed using Merkl.

  • After receiving the incentives at the end of the week, a campaign will be set up at Merkl to incentivise deposits for the following week.

  • Only depositors of the Charm WETH/WBTC vault will receive incentives. The vault’s strategy was publicised and verifiable on-chain.

  • Depositors will earn incentives based on the size of their deposits, and how long they stay in the vault.

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

The incentives will create a headline vault (ie the WETH/WBTC vault), in order to attract a critical mass of LPs and liquidity managers into to Arbitrum. Here is the mechanism to achieve this:

  1. Incentives campaign begin for the WETH/WBTC vault.

  2. More users deposit into the WETH/WBTC vault.

  3. They see the organic returns achieved by the WETH/WBTC vault and other vaults.

  4. They provide liquidity into the other vaults.

  5. They create their own vaults if they cannot find a pair, because a vault can be created for any pool.

  6. Users generating organic returns independent of the incentivised WETH/WBTC vault.

  7. When the incentives end:

    • Some users will withdraw from the WETH/WBTC vault, but many will not due to the un-incentivised performance.

    • Users who have not provided liquidity into the incentivised WETH/WBTC vault will not withdraw.

    • Users who created and managing their own vaults will offer more choice to LPs.

  8. The outcome is a critical mass of:

    • LPs searching for higher yields, which attract more liquidity managers.

    • Liquidity managers generating organic yields, which attract more LPs.

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.

The goal of the incentives is to increase Arbitrum’s TVL and number of users on Charm. The KPIs will therefore track all the vaults on Charm. This KPI will be displayed on a Dune Dashboard.

The KPIs are:

  • TVL growth: % increase in TVL.
  • Unique LPs: % growth in the number of unique wallets depositing into a vault.
  • Unique Liquidity Managers: % growth in the number of unique wallets managing a vault.
  • Active Vaults: % growth in the number of active vaults (ie vaults with non-zero balances).

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.

  • The grant will be distributed over 12 weeks. Charm is targeting a final outcome 30x increase in Arbitrum TVL, 15x increase in number of Unique LPs, 15x increase in Unique Liquidity Managers, and 7x increase in Active Vaults.

  • Charm is targeting a 6 week milestone of 15x increase in Arbitrum TVL, 7x increase in number of Unique LPs, 7x increase in Unique Liquidity Managers, and 3x increase in active vaults.

  • Charm’s TVL on Arbitrum is currently around $80k, with 50 Unique LPs, 14 Unique Liquidity Managers, and 18 Active Vaults.

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

  • Charm will use 55k ARB tokens to incentivise the migration of $600M** worth of WBTC&WETH liquidity to Arbitrium, and to create a critical mass of LPs and Liquidity managers to support a self-sustaining ecosystem of liquidity at Arbitrum. The gain to the Arbitrum DAO will therefore outweigh the amount of incentives being applied for.

    *amount of liquidity in Uniswap V3 WETH/WBTC pools outside Arbitrum.

  • The Charm WETH/WBTC vault is the only vault of its kind for WETH/WBTC. It is permissionless, fully transparent, delivered 13% APY over 98 days, and backtested using 2.5+ years of historical data on Uniswap V3. It is therefore well positioned to deliver the above for Arbitrum DAO.

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 10. 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
1 Like

Hello @tomc ,

Thank you for your application! Your advisor will be @JoJo.

Please join the LTIPP discord and ping your advisor in the general chat so they can create a new channel and start communicating with you.

2 Likes

@cliffton.eth We are ready to finalise this application. Can you change the title to ‘[Charm Finance] LTIPP Application Final’, as I don’t have the permission to change the title. Many thanks!

Hey there, I’ve amended the title to reflect that this is FINAL. All the best!

1 Like

Charm Finance is clearly a protocol that deserves to be supported, and small grants might also be an incentive for not leaving the other ecosystem to swap with larger amounts, but the justification of grant size is not sufficient for now. We vote abstain because of some of the dilemmas we have explained, but we must reiterate that the potential of the protocol is high if it’s made clear.

1 Like