[Contrax] LTIPP Application - FINAL

SECTION 1: APPLICANT INFORMATION

Applicant Name: Soheeb Aziz

Project Name: Contrax

Project Description:

The Contrax platform allows non-DeFi native users to access DeFi services by abstracting away all complexities that would prevent the web2 user from accessing a web3 service. At no point would they be stuck or confused, with ample help provided along the way.

Users are met with a “sign in/up” screen instead of “create wallet.” Selecting it will give them the option to select a “social login.” This is powered by Web3auth, which creates a wallet for them and ties it to their social network. It is fully non-custodial since neither we nor web3auth has access to any of their funds, and they can easily export their private key at any time.



Once the sign up is completed, the user will see a prompt for them to buy to fund their account and a tutorial video on how to get started.



We have multiple simplified KYC gateway options that buy Arbitrum USDC directly onto the platform, which can be used to deposit into all in-app vaults.



Once they fund their account, users can go to the earn page to see auto-compounding vaults. Single-sided vaults are emphasized as they are both easy to understand and have no impermanent loss. Common dual-token vaults are also available below for those who prefer.



The users can easily deposit by just tapping the vault they want, typing in their desired value (or tap “max”) and then deposit, with a confirmation appearing in seconds. The withdrawal is also just as easy. For social wallets, gas is paid via a backend that supplies just-in-time gas. We are aiming to upgrade to EIP-4337 to make the gas payments decentralized in the future.



The user is now earning in an auto-compounded vault, meaning they also will not have to swap reward tokens into anything else, completing the “one token” abstraction. The users can see their position on a simple card on the dashboard showing their value, APY, and DAO tokens per year.



The user has also been onboarded to the Contrax DAO. They can vote on DAO proposals directly in the DAO tab using their xTRAX balance.



The dApp is a web application and so it can be used on any common device or browser. It also has a dark mode. Here is a screenshot showing the desktop & dark mode.



Here is the full video demo made for the user (click to play):

Watch the video

Contrax is under the ownership of Contrax DAO, LLC, a Wyoming-registered legal entity that is governed by the xTRAX token.

Team Members and Roles:

Soheeb Aziz - Co-founder
https://www.linkedin.com/in/SoheebAziz/

Soheeb is a software developer, educator, and a serial entrepreneur. He holds degrees in computer science, education, and business management. He believes in the power of simplicity to bridge the gap between DeFi and the mainstream market.

KJ Magill - Co-founder
https://www.linkedin.com/in/kjmagill/

KJ is a full stack web and smart contract developer with a background in marketing and business development. He has an aptness for dissecting new technologies, and an unmatched enthusiasm for refining the user journey within DeFi applications.

Rafay Siddiqui - Lead full stack developer.
https://www.linkedin.com/in/abdul-rafay-siddiqui/

Abdul Rafay developed most of the features of the Contrax platform and currently manages the codebase. He is a Senior Full stack Web3 developer and co-founder of Dechains.

Abigail Cameron - Lead smart contract developer
https://www.linkedin.com/in/abigailtcameron/

Abigail wrote and deployed the smart contracts of Contrax. She is a Dartmouth graduate and has been a smart contract developer in the DeFi space since its inception. She helped create the infrastructure of Snowball Network before she came to Contrax.

Project Links:

Homepage: https://contrax.finance

dApp: https://beta.contrax.finance

X: https://twitter.com/contrax_finance

Discord: Contrax

Newsletter: https://www.contraxfi.medium.com

GitHub: GitHub - Contrax-co/contrax-dapp: Official Contrax.finance web app, offering DeFi development tools & auto-compounding vaults on Arbitrum. Built with React/Typescript

Docs: https://docs.contrax.finance

Contact Information

Point of Contact: Soheeb Aziz

Point of Contact’s TG handle: @SoheebAziz

Twitter: @SoheebAziz

Email: soheeb@contrax.finance

Do you acknowledge that your team will be subject to a KYC requirement?: Yes

SECTION 2a: Team and Product Information

Team experience

The Contrax team is composed entirely of DeFi-native software developers. We have previously worked together on other projects and we’re active contributors in multiple DAOs. Since our audit completion in mid-February, Contrax has begun integrations with several other projects building on Arbitrum, to help grow the ecosystem and provide their communities with a simplified alternative for on-boarding liquidity.

What novelty or innovation does your product bring to Arbitrum?

No other auto-compounder on any chain has abstracted away the difficulties that prevent non-DeFi natives from being users. Contrax has introduced social logins, gas coverage, default-zapping for all vaults, and a simplified UX, opening the doors of DeFi to the masses. The target users of Contrax are not current users of Arbitrum products, but rather, those that may struggle to understand or use any L2. On Contrax, users can fund their account with Arbitrum USDC on-ramps, then just deposit, without needing to think about bridging or asset-types.

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

Yes! Contrax is built atop a variety of protocols on the Arbitrum One network including Hop, GMX, Plutus and Sushi. Contrax has agreements to integrate, and then partner with, the following

  • Savvy Defi ($500k TVL): Savvy relies on auto-compounding vaults to hold the collateral deposits of their users and is integrating Contrax’s vaults to have their users earn auto-compounding yield.

  • PeaPods Finance ($34m TVL): PeaPods have many single-sided yield opportunities. Contrax will bring less-DeFi comfortable users, as well as those just seeking a more automated UX, to Peapods’s pods.

  • Steer Protocol ($18m TVL): Contrax will bring Steer’s upcoming single-sided smart pools to Contrax, opening up a new category of users for them. This partnership was requested by Sushi, which has agreed to help boost the exposure of this integration when completed.

  • Origin Protocol ($208m TVL): Contrax will bring in OETH and OUSD to Contrax, providing yet another single sided yield opportunity to its users that bears yield. This introduction was also by Sushi, who have agreed to amplify the outcome post-integration.

Since integrations are much more in our control than TVL, Contrax is willing to commit to these integrations as part of the milestones roadmap.

Contrax is also currently working with Sushi to find further applications of our platform’s USP for other Arbitrum projects. As a project, Contrax aims to be a corridor between DeFi non-natives and existing DeFi projects on Arbitrum.

Contrax is committing to these integrations as part of its application for the LTIPP.

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

Yes. Beefy & Yearn also provide yield aggregation and auto-compounding, but their products are more complex and thus built for a different end user than Contrax. We’re building a simpler experience (through account abstraction) for users who are currently overwhelmed with anything more than a CEX.

Contrax is also not confined to auto-compounders. Any type of DeFi product where users input tokens for yield-bearing opportunities

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

As a DeFi platform that earns its revenue from deposits, total platform TVL is of course our main metric, followed by users, and TVL per vault, along with time in vault for users. We are currently upgrading our metric tracking to also include lost APY changes from Contrax-offered vaults, and slippage fees paid for zaps. Our goal is to use these metrics to find the weaknesses in our product while also spotting opportunities based on user trends.

Retention for us is retaining TVL in our vaults. We are setting up our metrics to distinguish between retained TVL and new TVL, so that we understand 1.5m differently if it is the same deposits as the previous day vs. $1.5m where 500k was lost from previous users and replaced by newer ones

Relevant usage metrics -

  • Daily active users
  • Daily active growth
  • Daily transaction count
  • Daily protocol fee
  • Daily transaction fee
  • Daily ARB expenditure and user claims
  • Incentivized user list and gini coefficient
  • Platform TVL
  • TVL for each vault

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

Is the protocol native to Arbitrum?

Yes.

On what other networks is the protocol deployed?

We are Arbitrum exclusive. We do have a chain select for mainnet and Polygon as options, but only for the purpose of facilitating users who are trying to bridge to Arbitrum One

What date did you deploy on Arbitrum mainnet?

We actually skipped testnet and did all of our building on mainnet (this was after consulting with another founder of a similar protocol who said the benefits of actually integrating real farms will outweigh the network costs). Contrax was launched for testing a closed community from January 1st, 2023.

This is the earliest contract we have deployed from our records: StrategySushiWethDai | Address 0x1AAD889B2bF25926fC76e79250674F33AEe5E5bC | Arbiscan

It was deployed on 2022-08-18 19:02:00

Do you have a native token?

No, but we have a temporary non-transferable token that is just limited in purpose to voting. The temporary token is xTRAX. xTRAX tokens will mark users for the airdrop of the TRAX token, scheduled to be Q3 of this year.

We also have tokenomics for the TRAX token that has passed the DAO vote and are planned to be implemented by token launch.

Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?

We are just launched so we have not run any programs just yet.

Current Incentivization: How are you currently incentivizing your protocol?

Contrax is building up toward an eventual airdrop to the holders of xTRAX and those that complete airdrop quests, and DAO tasks on Notion. We ran our first Intract campaign recently which ended on March 13th, and plan to hold campaigns there again along with Guild and Galxe ones. Contrax will create a public “points board” to display the points per wallet. Points will play a role in the Contrax airdrop as well.

On the Contrax platform, stakers earn xTRAX tokens for staking at the distribution rate of 0.002 TRAX per $1 per 1% per day.

Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program?
No.

Protocol Performance:

Our protocol began advertising with the launch of the Intract campaign a week ago. Our current TVL is at about $20,000 (March 17th). The live TVL can be seen on DeFi Llama.

For users, Contrax is currently 100 users, with about 50 of those users staking in the past two weeks. We were the 4th fastest growing protocol on Arbitrum last week due to our first Intract campaign.

Here is a chart pulling the data of our top 5 vaults. The deposits are mainly in our single sided vaults, validating that these are the vaults to focus on for our target users.

Rank Vault Deposited TVL Average Deposits Number of Deposits
1 ETH $19,475 $314 63
2 USDC $1,344 $56 34
3 WETH-MAGIC $992 165 6
4 USDT $674 51 13
5 WETH-DAI $350 70 5

We want to emphasize that our audit completed mid-February and our go-to-market with our majority integrations seeking to bring in our target TVL will be in early Q2, the same time as the grant release. Our current TVL is mainly friends, family, and some participants from our first Intract campaign to begin our attempt to spread the word of the live dApp to potential users. Although we have received overwhelmingly positive feedback from users and other projects alike, we are still relatively small and unknown right now, and hope to change that upcoming integration and co-marketing partnerships.

Protocol Roadmap:

These are the milestones Contrax is aiming to achieve this year:

March

  • Airdrop campaign will continue on multiple airdrop platforms
  • Integrate Savvy so that users loaned on Savvy can deposit on Contrax.
  • Integrate PeaPods so that users can autocompound their Pod assets.

Q2 2023

  • Integrate Steer Protocol
  • Integrate Origin Finance
  • Token-based seed round
  • EIP-4337 upgrade to decentralize our gas coverage

Q3 2023

  • Continue DeFi project integrations
  • TRAX token airdrop to stakers, questers, & DAO contributors
  • DAO Treasury will release its first batch of TRAX to allocate.
  • Upgrade xTRAX to vTRAX that will be redeemable for TRAX post-lockup.

Q4 2023

  • Continue DeFi project integrations
  • Upgrade to ERC-4626 Upgrade to allow for more efficient auto compounding.
  • Launch IOS & Android Apps to widen the reach of Contrax users.

Contrax is also in the process of applying with accelerators that have shown interest with the following: Sushi, Accelerator DAO (HyperNest), and Orange DAO.

Audit History & Security Vendors:

Contrax has been listed with Immunefi since last year. We have kept our contracts up to date. We have also recently completed our security audit with Cyberscope. We have also run Consensys diligence fuzzing to run automated tests of known exploits on our contracts.

Security Incidents:

None.

SECTION 3: GRANT INFORMATION

Requested Grant Size:

39,000 ARB with strict milestone-based claw back conditions

Justification for the size of the grant 27:

Contrax is newly launched, and also fully bootstrapped. Our current TVL of about $20k is not reflective of our product at all, since it is mainly friends and family depositors before our go-to-market. We are basically pre-TVL and have yet to actually start executing on our go-to-market plan of integrating DeFi partners (Savvy, PeaPods, Steer, and Origin), which will bring TVL by simplifying UX for their users.

In our projections, we believe Contrax will start at about $50,000 in TVL when the grant program begins, and we assume an aggressive 44% week over week growth scenario as we are acquiring our first users via our airdrop token and hopefully LTIPP incentives as well. However, this growth rate does not need to be believed by the council given our clawback conditions. If Contrax hits at least the 44% WoW milestone every week, then it can emit the full amount of ARB in the period. Otherwise, it can only emit proportional to the target milestone (example: 90% of the target would allow for 90% of the period’s ARB to be emitted).

In terms of the benefits for Arbitrum: Contrax is exclusively on Arbitrum and does not intend to ever bring a fractured chain experience on our platform, as it would confuse and drive away our target audience. In the short term, we are against chain expansion, as the idea of chain-specific farming goes against the simplified UX-centric nature of our platform. In the future, Contrax may work with other chains on the strict condition that these chains are abstracted away in a non-custodial manner.

As a product for onboarding, Contrax would also serve a pipeline for non-DeFi native users to be onboarded to Arbitrum. As a product, Contrax builds atop of existing DeFi infrastructure on Arbitrum, and our value proposition is ease of access and understanding of these currently-inaccessible products.

This grant will not only catalyze Contrax Finance’s growth but also contribute significantly to the Arbitrum ecosystem by attracting new users, retaining them through innovative services, and generating revenue that sustains these growth initiatives. By targeting liquidity, volume, and user engagement, we aim to establish a virtuous cycle of growth benefiting both Contrax Finance and the broader Arbitrum community.

Grant Matching:

Contrax is not in a position to commit to any definitive match, but is committed to also emit its own DAO token (xTRAX pre-airdrop, TRAX post-airdrop) to all vaults during the entirety of the LTIPP program.

Important note: xTRAX does not yet have a price, so it is not included in the TVL or the APY for Contrax now, nor will it be for any point during the LTIPP period.

Grant Breakdown:

  1. 24,500 ARB for increased APR via auto-compounding.
  2. 8,000 ARB for loyalty rewards that will also allow users to become participants in the Arbitrum DAO.
  3. 6,500 ARB for gas coverage of social wallets.

Details on executing for each one are in the strategy section.

Funding Address:

0xCb410A689A03E06de0a6247b13C13D14237DecC8

Funding Address Characteristics:

The multisig must be able to accept and interact with ERC-721s in order to accept the funding stream. The Multi-Sig is a 2/3 Gnosis safe wallet. All wallets are hardware wallets, and they are held by the two Co-founders and our Smart contract engineer. The wallets can interact with ERC-721.

Treasury Address:

0xCb410A689A03E06de0a6247b13C13D14237DecC8

Also, this wallet for smaller expenses that extends the treasury: 0x1C9057544409046f82d7d47332383a6780763EAF

Contract Address:

N/A

SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES

Objectives:

The objectives of this grant are:

  1. Bring further liquidity to the Arbitrum chain via existing Arbitrum projects through Contrax.
  2. Incentivize DeFi stakers to come to Arbitrum for the Contrax experience and rewards.
  3. Onboard new users not in DeFi to Arbitrum One.
  4. Onboard new users to DeFi in general.
  5. Allow Contrax’s unique value proposition to be competitive in the current DeFi market

Execution Strategy

1. Increasing APRs (24,500 ARB)

This portion of the grant will be used to provide Contrax vaults a competitive APY with auto-compounding and adding liquidity to the underlying Arbitrum-based protocols our vaults built on top of (currently Hop, GMX, Sushi, and Plutus). Our proposal has been designed with the target increase of ~52% APR (or slightly higher as an APY due to our auto-compounding, but disregarded as is only for a 12 weeks) during the incentive period. If we use our current metrics of the a average user depositing $200 in TVL, our emission target would translate to about 2 ARB per user period. (If our actual TVL-per-user is much higher, it doesn’t matter, as it does not affect our emission calculations.)

Here is our proposed auto-compounding emissions chart with milestones baked in.

Growth Scenario: 44% WoW Growth
2-Week Period Start TVL Assumption User Count ARB to be emitted Max ARB Allowed As a % Cumulative ARB Emitted ARB Emitted Per User APR Boost to all Vaults
1 $50,000 250 500 500 100.00% 500 2.00 52.00%
2 $94,000 470 950 950 100.00% 1,450 2.02 52.55%
3 $176,720 884 1350 1350 100.00% 2,800 2.00 52.00%
4 $332,234 1,661 3500 3500 100.00% 6,300 2.11 54.78%
5 $624,599 3,123 6200 6200 100.00% 12,500 1.99 51.62%
6 $1,174,246 5,871 12000 12000 100.00% 24,500 2.04 53.14%

Here is a definition of each column for full clarity:

Column Explanation
2-Week Period The start of each 2 week period of the LTIPP grant program.
Start TVL Assumption The ARB emitted is dependent on the TVL. In the above model, we start at 50,000 and assume a 44% WoW growth to calculate each period
User Count Every $200 in TVL is counted as a user, based on our current metrics. Although the true value may vastly differ in the program, the milestones are TVL-based, so user-based data is purely illustrative.
ARB to be emitted This is the actual ARB that will be emitted based on the TVL. In this chart, we assume we hit our 44 WoW target, so we always emit the full bucket. Higher TVL would not emit more ARB, so the APR for all users will be lower.
Max ARB Allowed Given the grant request of 24,500 for this category, we have assigned maximum emissions for the period in line with the expected growth of the period.
As a % The % of the allocated ARB that was emitted in this model.
Cumulative ARB Emitted This is just keeping track of the ARB emitted up to and including the period. The final period shows the full ARB to be emitted in this projection model.
ARB Emitted Per User Assuming a user as $200. Based on our set buckets, this is target to be around 2 ARB per user per period.
As APR boost on all Vaults $2 ARB assumed. ARB emitted per user extrapolated as an APR using the TVL and ARB emitted values. Its not a true “APR” as it is for 3 months. It will actually be about 13% when the 0% ARB for the rest of the year is considered.

Note that xTRAX is not calculated as part of the APR here or anywhere else. Also note that we preferred APR to APY in calculations as the period is not significant and the data becomes harder to read when APY is considered.

Claw-back Explained with Scenarios

The emissions above are our target scenario, and represents the highest emissions possible at the lowest TVL. If all those TVL figures end up being double, then our APRs on all vaults will be half the stated values. However, the main concern the council may have is the scenarios where our TVL is much lower, a fair risk to be concerned about given that we are just starting our go-to-market. It is for this reason we are committing to only emitting the full ARB amount if all milestones leading to $1.17m TVL by the end of the program are met. Otherwise, emissions will be proportional to the TVL.

To illustrate this, here are some TVL assumptions and how they would translate to our ARB emissions.

Middle Scenario: 33% WoW growth
2-Week Period Start TVL Assumption User Count ARB to be emitted Max ARB Allowed As a % Cumulative ARB Emitted ARB Emitted Per User APR Boost to all Vaults
1 $50,000 250 500 500 100.00% 500 2.00 52.00%
2 $83,000 415 839 950 88.30% 1,339 2.02 52.55%
3 $137,780 689 1364 1750 77.97% 2,703 1.98 51.49%
4 $228,715 1,144 2409 3500 68.84% 5,113 2.11 54.78%
5 $379,667 1,898 3769 6200 60.79% 8,881 1.99 51.62%
6 $630,247 3,151 6441 12000 53.67% 15,322 2.04 53.14%
Clawback: 9,178

In this scenario, we assume a 33% week over week growth instead of 44%, ending with $630k in TVL by the end of the program. We see that the APRs and ARB per user remain the same, as intended by this model. The ARB emitted, however, have been reduced for all periods after the first one.We can see the culalitive ARB emitted is 15,322, leading to a claw-back of 9,178 ARB (by subtracting 15,322 from the requested 24,500).

Here, we present the scenario for a 22% WoW growth rate:

Weak Growth Scenario: 22% Wow Growth
2-Week Period Start TVL Assumption User Count ARB to be emitted Max ARB Allowed As a % Cumulative ARB Emitted ARB Emitted Per User APR Boost to all Vaults
1 $50,000 250 500 500 100.00% 500 2.00 52.00%
2 $72,000 360 728 950 76.60% 1,228 2.02 52.55%
3 $103,680 518 1027 1750 58.67% 2,254 1.98 51.49%
4 $149,299 746 1573 3500 44.94% 3,827 2.11 54.78%
5 $214,991 1,075 2134 6200 34.42% 5,961 1.99 51.62%
6 $309,587 1,548 3164 12000 26.36% 9,125 2.04 53.14%
Clawback: 15,375

Finally, to demonstrate the scenario of no growth throughout the entire program, almost the entire allocated ARB would be returned:

No Growth Scenario
2-Week Period Start TVL Assumption User Count ARB to be emitted Max ARB Allowed As a % Cumulative ARB Emitted ARB Emitted Per User APR Boost to all Vaults
1 $50,000 250 500 500 100.00% 500 2.00 52.00%
2 $50,000 250 505 950 53.19% 1,005 2.02 52.55%
3 $50,000 250 495 1750 28.29% 1,500 1.98 51.49%
4 $50,000 250 527 3500 15.05% 2,027 2.11 54.78%
5 $50,000 250 496 6200 8.01% 2,524 1.99 51.62%
6 $50,000 250 511 12000 4.26% 3,034 2.04 53.14%
Clawback: 21,466

2. Loyalty Rewards & DAO Education (8,000 ARB)

This portion of the grant will give stakers who stay within their vaults a one-time payment in ARB at the end of the incentives period, and then direct them to become active in the Arbitrum DAO by adding the DAO’s Snapshot voting directly in the Contrax dApp (as we already do with our Snapshot). Users must stay within their vaults without exiting to be eligible for the ARB. Given our target of less crypto native users, this may be their first exposure to a DAO (other than Contrax itself), and be a gateway into becoming lifelong DAO members. Additionally, Contrax will also add a single sided ARB by this time so that users who want to earn a return from the ARB can easily do so.

This model also has a claw back based on TVL mechanism built in. Simply put, if some or even most of the ARB is not earned by stakers, then it is returned.

Earning Parameters

  • Users will earn at a set rate that is a factor of their TVL & time deposited.
  • Each vault will have its own ARB amount earned. (However, given that earnings are based on deposit amount, a user will earn the same whether they have $1,000 in 1 vault, or $100 in ten vaults).
  • For each vault, if the user withdraws, their ARB earned reset to 0.
  • A user will only get ARB for the vaults they are in at the end of the LTIPP time frame.
  • If all of the granted ARB to Contrax depletes, then no more ARB will be earned, but users must still remain in their vaults to actually receive their earned ARB at the end of the program.

Users will be shown the ARB they have earned if they stay until the end of the program. If they withdraw, the ARB earned will reset to 0. Users must be deposited at the end of the LTIPP grant to receive their ARB. This will be clearly communicated to the participants. The tracking of ARB earned based on deposit size and time is not unlike how we currently track the xTRAX tokens to distribute to users based on time and size. Therefore, it will be relatively easy for us to implement this tracking.

Earning Rate

The earning rate for every user ($200 in TVL) will be 0.7 ARB per period. This rate is set and will not change no matter the user count. It will only go to zero if 8,000 ARB have been earned in total.

To see this practically, lets look at how the ARB would be distributed in our target 44% WoW scenario (ignoring the 8k cap for this illustration):

Earners by Week 1 2 3 4 5 6 Earned Per Bucket
1 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 1,050.00
2 0 $44,000 $44,000 $44,000 $44,000 $44,000 770.00
3 0 0 $82,720 $82,720 $82,720 $82,720 1,158.08
4 0 0 0 $155,514 $155,514 $155,514 1,632.89
5 0 0 0 0 $292,366 $292,366 2,046.56
6 0 0 0 0 0 $549,647 1,923.77
Total TVL: $50,000 $94,000 $176,720 $332,234 $624,599 $1,174,246
ARB Earned 175 329 619 1,163 2,186 4,110 8,581.30

Note: we are assuming that new stakers all join at once at the start of a period, but in reality, they will join at any time, so there won’t really be “buckets” with clean cut-offs. This is for illustrative purposes.

We see the ARB emitted as buckets per users that in come during each period. We see that the users from week 1 ($50,000 in TVL for 6 periods) earn just about half of what the $550k of new TVL earns in period 6 if there was no cap.

This is now the actual distribution that would happen by with our 8,000 ARB available.

Earners by Week 1 2 3 4 5 6 Earned Per Bucket
1 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 1,050.00
2 0 $44,000 $44,000 $44,000 $44,000 $44,000 770.00
3 0 0 $82,720 $82,720 $82,720 $82,720 1,158.08
4 0 0 0 $155,514 $155,514 $155,514 1,632.89
5 0 0 0 0 $292,366 $292,366 2,046.56
6 0 0 0 0 0 $549,647 1,342.47
Total TVL: $50,000 $94,000 $176,720 $332,234 $624,599 $1,174,246
ARB Earned 175 329 619 1,163 2,186 3,529 8,000

Now, the latest bucket has significantly reduced rewards. harming the late earner’s emissions. If our TVL grows faster than expected, the rewards run out earlier and may not be available in later weeks.

Claw back Condition: If we do not hit these TVL targets, then the emission formula not reach 8,000 ARB, since there will not be enough TVL to emit it at the set rate of 0.7 ARB per $200 per period. The rest of the ARB will be returned

3. Gas Coverage for Social Wallets (6,500 ARB)

This portion of the grant will allow us to continue to cover the gas costs paid for deposit and withdraws on social wallets. This is a better version of a gas rebate, since it is automatically paid at the time of the transaction and removes another friction point for the user, further encouraging on chain activity. Contrax provides just-in-time gas to cover transactions done by social wallets, so no ETH need be in the wallet before the transaction.

Although Contrax already has been doing this in production for a while, it can become expensive, especially at scale and when gas costs are high. Because we have only just started our first funding round, we cannot guarantee the ability to cover this cost as transactions outpace our available funds. Halting gas coverage will also break the user’s account abstraction experience. Before each period, Contrax will swap the ARB to ETH and send it to our gas-funding wallet based on our expected growth, with the option to refill if it runs out before.

As with the other strategies, Contrax will return all ARB not used, which would occur if the ARB amount is more than the social wallet transaction costs in the LTIPP period.

Justification for requested amount

The request of 6,500 ARB is based off of our attempt to map the expected number of transactions on Contrax to the gas needed to cover them. Here are the factors we considered:

  1. Gas cost per deposit/withdraw: Historically, it has cost between $0.50 and $2.50 to cover the gas for all transactions to complete a deposit (or a withdraw). Gas costs have consistently increased, so most transactions recently cost more than $2. Therefore, we can assume that 1 ARB = one deposit or withdraw covered.

  2. Multiple deposits/withdraws per user: A user may experiment with different vaults, or decide to deposit into several vaults in Contrax (note: we cover up to six transactions a day). If we assume the average user may stick to only one vault (a deposit and a withdraw) but some others may do anywhere between 2 and 10. Assuming 4 deposit/withdrawal coverage per user is a reasonable assumption.

  3. Only social wallet coverage: Our go-to-market is attempting to make social wallets more popular. We can take up the assumption that most (70%) of users will be using social wallets.

  4. Definition of a user: We have defined a user to be $200 in TVL, but in reality, the average deposit will very likely increase. For this calculation, we can assume $500 in TVL is an average deposit, giving us 2,400 users in a success scenario.

The estimated ARB needed for gas coverage: 2,400 users × 4 deposits/withdraws per user × 0.7 being social wallet users = 6,720 ARB

Our request amount is slightly below this value. If the true value is higher, then we will commit to continue covering gas for the period of grant. If it is lower, as stated before, the unused amount will be returned in full.

What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric?

We believe there is built-in stickiness to the ease-of-use portion of the product, in that, it may be the only DeFi auto-compounder our target user would be able to use. The APR increase incentives users to deposit, the gas coverage facilitates the deposits, and the ARB learned via loyalty would especially encourage users to keep providing the liquidity as there is a “penalty” in withdrawing in the form of not receiving any ARB accumulated.

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.

Total Platform TVL - The TVL metric is more useful than user count, which can be Sybiled and doesn’t always reflect the value brought to the project or ecosystem. DeFillama will be our source of truth.

Weekly Cumulative Vault Deposit - The WCVD metric will allow us to measure inflows of new capital. We can also view the deposits on a per vault basis to see which vaults out/underperform. The source of truth will be a subgraph pulling data from our smart contracts.

Average Time-Staked - Tracking the amount of time that users remain staked, on average, before exiting a vault will allow us to track whether users are increasing their time staking or not. Knowing whether this value is increasing or decreasing will help us to better allocate our staking incentives. The source of truth will be a subgraph pulling data from our smart contracts.

Grant Timeline and Milestones:

We have provided charts to break down expectations period by period. Contrax commits to sharing any data requested related to the grant allocations and metrics that relate to the allocations.

How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?

Contrax’s meticulously planned approach is designed to benefit the Arbitrum ecosystem from multiple angles, showcasing a holistic project strategy that not only boosts current ecosystem metrics but also sets a foundation for perpetual onboarding and engagement within the Arbitrum DAO.

Liquidity in DeFi Pools: Contrax will increase the liquidity of several pools on the Arbitrum ecosystem. Contrax is designed to bring in new users to DeFi, so we expect the liquidity brought in to be new liquidity that was not already elsewhere on Arbitrum.

Retention Strategies for Sustained Engagement: With 8k ARB dedicated to loyalty rewards, we are now providing ARB directly to users of Contrax, who likely would not have used any other DeFi platform. Alongside the ARB, we are are also providing a way to stake that ARB to provide liquidity, and a way to vote with it Snapshot. In this way, our users will be given clear pathways to contribute to the liquidity and governance of the DAO.

Lowering Friction for Transactions: By covering social wallet transaction costs, users who may not be able to manage gas will be participants in DeFi, and feel comfortable in joining vaults because there is one less cost and logistical barrier in their way.

Contrax’s approach is not just about immediate benefits but establishing a perpetual onboarding mechanism into the DAO, ensuring long-term vitality and innovation within the Arbitrum ecosystem. Through these data-driven strategies, we aim to deliver substantial, lasting contributions to the DAO, fostering a knowledgeable, engaged, and ever-growing community.

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

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, and no special considerations from our side.

Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that reference your OBL dashboard?

Yes, we agree. We are capable of creating the dashboards for all metrics we have outlined. If we receive the grant, we’ll have them in place before the program begins.

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?

Yes

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Hello @Soheeb ,

Thank you for your application! Your advisor will be SeedLatam Gov @SEEDGov

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

Let’s get to work. We are waiting for you at discord

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We are obviously excited to have Peapods integrated for auto-compounding of pod assets.

Also really liked seeing some very creative ideas in here around community reach and engagement to help product and brand awareness beyond just protocol participation.

Nice work frens.

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@raam and @cliffton.eth , our application is final. You guys can mark it as such and close it. Thank you again for everything.

Hey there this proposal has been updated to show that it is FINAL. All the best!

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The proposal was satisfactory according to the evaluation criteria. Appreciate the collaborative efforts with other Arbitrum protocols. However, there’s limited product distinctiveness (apart from web3auth/social sign-on), and the product hasn’t gained significant adoption compared to competitors. The requested grant size surpasses their Total Value Locked (TVL). There’s a risk that incentives and APR boosts won’t result in sustainable, long-term usage. It’s advisable for them to demonstrate more traction before resubmitting the proposal in a future grants window.

Hello Arbitrum community, advisors, and council.

Thank all once again for selecting us for this grant. As we discussed with our advisors (Seed LATAM), due to changes in the market as well as gas prices, the calculations we used to hit a ~50% APY target are no longer correct, and we need to adjust our emission schedule differently in order to continue to target 50% APY at the current price point. Therefore, we are making three notable changes to ensure we achieve this:

  1. Due to the Ethereum Decun upgrade which has dropped Arbitrum gas costs to pennies, the 6,500 ARB allocated for gas will be moved to our auto-compounding category, with Contrax covering all costs related to gas directly.

  2. The target TVL for each two week period will be decreased so that the target APY increase of above 50% is possible for all period.

  3. ARB tokens are being assumed to be $1, not $2.

These adjustments lead to the following release schedule for the ARB tokens:

2-Week Period Start TVL Assumption User Count ARB to be emitted Max Arb Allowed As a % Cumulative ARB Emitted ARB Emitted Per User APR Boost to all Vaults
1 $50,000 250 1000 1000 100.00% 1,000 4.00 52.00%
2 $82,500 413 1700 1250 136.00% 2,700 4.12 53.58%
3 $136,125 681 2800 2000 140.00% 5,500 4.11 53.48%
4 $224,606 1,123 4800 4000 120.00% 10,300 4.27 55.56%
5 $370,600 1,853 7700 8000 96.25% 18,000 4.16 54.02%
6 $611,491 3,057 13000 15000 86.67% 31,000 4.25 55.27%

Note that nothing else changes, including the important caveat of these TVLs being the minimum required to emit all ARB. The APY target is the maximum for that period, so no additional ARB will be emitted if we have more users, meaning the TVL for all users will just lower if have more users than the ARB emissions will allow.

Also, in the time that we have had to plan out the emissions, we’ve realized some further details that should be clarified as we have begun to set up emissions on the technical side:

  1. Pools will receive their next 2 week ARB allocations at the start of each period based on the TVL of the pools the period before, but this could be adjusted to be more frequent if there both a demand from the community to do so, and if it required for for distribution of APY due to frequent changes to TVL in pools.

  2. Only liquid pools with notable TVL will receive ARB emissions. As a new platform, many of our pools has little activity or TVL. These pool sill not get ARB incentives since it wouldn’t make sense as the APY would quickly become inaccurate with a few deposits. These pools can always be reconsidered every two weeks when TVL is used to determine the placement of ARB in pools.

  3. If ARB is not earned during a period, that ARB will be rolled over to the next period. This does not mean all ARB will eventually be emitted or that APYs will increase more that period. Rather, it will just mean a higher TVL threshold for all rewards to be released.