[CVI] LTIPP application - FINAL

Archive Long Term Incentives Pilot Program
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SECTION 1: APPLICANT INFORMATION

  • Applicant Name: cvi.finance

  • Project Name: CVI (Crypto Volatility Index)

  • Project Description:

    CVI, or the Crypto Volatility Index, is a trading tool designed to measure the expected 30-day volatility in the cryptocurrency market. Inspired by the traditional stock market’s VIX, CVI focuses on the implied volatility of Bitcoin and Ethereum options. Developed in collaboration with Professor Dan Galai, a co-creator of the original VIX, the index serves as a gauge of market sentiment in the crypto space.

    Operating on a scale from 0 to 200, the CVI reflects varying levels of expected market volatility, with higher values indicating greater anticipated fluctuations. It’s calculated using the Black-Scholes option pricing model, which assesses cryptocurrency option prices to determine the market’s expectations of future volatility.

    Primarily, CVI serves as a strategic instrument for traders and investors, enabling them to decipher market sentiment and apply trading strategies that focus on volatility, rather than the directional movement of price. Additionally, CVI has garnered attention from speculators who utilize it as a day trading tool, exploiting short-term volatility to capitalize on swift market movements.

    CVI stands out in the DeFi landscape as the only protocol offering traders the unique opportunity to engage directly with real-time, on-chain implied volatility trading. This pioneering approach allows for sophisticated investment and hedging strategies.

  • Team Members and Qualifications:

    • Moshe Cohen, CEO - LinkedIn
    • Yoni Neeman, CINO - LinkedIn
    • Vlad - Backend Engineer + Smart Contracts
    • Idan - Smart Contracts Engineer
    • Anton - Mathematician and Researcher
    • David - Frontend Engineer
    • Bar - Marketing Lead
    • Tamir - Business Development and Partnerships

  • Project Links:

  • Contact Information:

  • KYC Requirement Acknowledgement: Yes

SECTION 2a: Team and Product Information

  • Team Experience: Our team has extensive experience in blockchain development, smart contract security, quantitative finance, and decentralized application (dApp) design. This multidisciplinary expertise has been instrumental in CVI’s development and ongoing success.

  • What Novelty or Innovation Does Your Product Bring to Arbitrum? Leveraging advanced mathematical formulas such as Black-Scholes and utilizing the CVI oracle, built in collaboration with Chainlink, the CVI technology introduces the crypto market to an unprecedented opportunity to track and trade market volatility. As the first fully operational, on-chain volatility product on Arbitrum, CVI revolutionizes how traders can interact with and respond to market sentiment.

  • Is Your Project Composable with Other Projects on Arbitrum? Yes, Uniswap V3.

  • Do You Have Any Comparable Protocols Within the Arbitrum Ecosystem or Other Blockchains? CVI stands unique as the sole platform offering an implied volatility trading experience in a decentralized framework.

  • How Do You Measure and Think About Retention Internally?
    CVI assesses retention by focusing on a streamlined set of key performance indicators that illuminate user engagement, liquidity stability, and the overall economic impact on the Arbitrum ecosystem.

    During a previous campaign aimed at incentivizing trading on our platform, we observed a significant surge in daily trading volume, which nearly retained its momentum post-campaign, demonstrating a high level of user engagement continuity without active incentives.

For CVI, the following metrics are crucial for measuring retention and platform health:

  • Trading Volume: Monitored daily and denominated in USD, this metric helps gauge the overall activity on our platform.
    – TVL: This is a critical measure of the liquidity available in our protocols, providing insights into the long-term commitment of our liquidity providers.
    – Open Interest: Tracked daily in USD, open interest offers a glimpse into the prevailing market sentiment and the level of participation in our index.
    – Unique Trader Addresses: An essential metric for understanding the breadth of our user base and tracking growth in the number of participants.

  • Relevant Usage Metrics: Since its V4 launch, CVI has seen over $10 million in cumulative trading volume, and a community of over 500 unique traders and a TVL of $1M in the Theta Vault (The Theta vault is capped to 1M$). These metrics underscore our platform’s impact and adoption.

  • 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, but Arbitrum is the main chain of activity for CVI.100% of CVI’s trading volume on CVI V4 is on Arbitrum.

  • What Date Did You Deploy on Arbitrum Mainnet?: Jan-04-2022

  • Do You Have a Native Token?: Yes, $GOVI is the governance token of CVI.

  • Past Incentivization: Our past incentive programs have focused on engaging our user base through educational initiatives and trading competitions, yielding significant engagement and feedback. Most recently, we concluded a 4,500 $ARB tokens reward trading competition, running from January 15 to February 28, which had a significant impact on our platform’s activity and user engagement. The effects of this competition are clearly demonstrated in our analytics on Dune. The competition was widely publicized and details can be found in our announcement posts on Medium and Twitter. This initiative not only increased trading volume but also enhanced our community’s engagement and visibility within the DeFi ecosystem. The success of this competition serves as a strong validation that our incentive plans are effective. Encouraged by this outcome, we are keen to extend our incentive programs to attract a larger user base from other networks, reinforcing our commitment to fostering an active and vibrant trading community across the DeFi landscape.

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  • Current Incentivization: CVI launched a $ARB rebate program for traders on Jan 24, coinciding with the V4 launch, detailed here: Introducing CVI V4. This program initially offered a 50% rebate on open/close fees and 10% on funding fees, fully paid in $ARB, demonstrating CVI’s dedication to enhancing the user experience and engaging the community.

    The program has since been updated: now, traders receive a 25% rebate on open/close fees and a 5% rebate on funding fees, with a split payment of 50% in ARB and 50% in esGOVI for open/close fees, and 70% in esGOVI and 30% in ARB for funding fees. The updated rebates also introduce a tiered system based on GOVI holdings, offering increased rebates up to 67.5% on open/close fees and up to 15% on funding fees for higher tiers.
    The current fee rebate program is scheduled to finish in the coming weeks, with the possibility of extension based on program success.

  • Have You Received a Grant from the DAO, Foundation, or Any Arbitrum Ecosystem Related Program? No

  • Protocol Performance: Since its V4 launch, CVI has achieved remarkable milestones, including reaching a $1M Total Value Locked (TVL) in Theta Vault and surpassing $10 million in cumulative trading volume within just two months. Moreover, our platform has attracted a vibrant community of more than 500 unique traders. These accomplishments reflect our dedication to enriching the DeFi landscape and the Uniswap-Arbitrum ecosystem. Notably, our open interest (OI) has exceeded $450K daily, and CVI has hit its trading cap twice since the introduction of V4, highlighting the intense activity and robust engagement within our platform - https://dune.com/dbustos20/cvi-v4

  • Audit History & Security Vendors:
    – CERTIK USDT Audit, January 6th, 2021: https://v2.cvi.finance/files/usdt-audit.pdf

    – CERTIK ETH Audit, March 29th, 2021: https://v2.cvi.finance/files/eth-audit.pdf

    – Solidity.Finance Audit: CVI Smart Contract Audit by SourceHat

    – Zokyo Audit, November 30th, 2023: audit-reports/CVI/CVI_Zokyo_audit_report_30thNov_2023.pdf at main · zokyo-sec/audit-reports · GitHub

  • Project Links:

  • Contact Information:

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

Security Incidents: [Has your protocol ever been exploited? If so, please describe what, when and how for ALL incidents as well as the remedies to solve and mitigate for future incidents]: No

SECTION 3: GRANT INFORMATION for CVI

Requested Grant Size: 250,000 ARB

Justification for the Size of the Grant:
CVI is set to deploy a 250K ARB grant towards initiating a multifaceted incentive program aimed at elevating platform engagement, augmenting liquidity, and boosting trading volumes on Arbitrum. This initiative is strategically designed to propel sustainable growth, leveraging insights from past initiatives and aligning with Arbitrum’s broader ecosystem objectives.

Grant Breakdown:

  • LP Incentives: 80,000 ARB to significantly enhance liquidity and stabilize the market.
  • Trading Competitions (PnL & Volume): 80,000 ARB divided equally across three rounds, incentivizing trading excellence and activity.
  • ARB Raffles Based on Volume: 30,000 ARB allocated to encourage widespread trading activity through random rewards.
  • Trading Fee Rebates: 60,000 ARB

SECTION 4: GRANT OBJECTIVES, EXECUTION, AND MILESTONES for CVI

Objective 1: Encourage Trading Excellence and Activity

  • Execution: Use 80,000 ARB for trading and trading competitions. Past data show trading competitions significantly boost TVL and engagement in CVI.

    – Note: By making consecutive trades every day, users will raise their chance of receiving a bigger allocation of $ARB.

Milestones:

  • Milestone 1: Achieve $30M in trading volume by week 4, allocating 20,000 ARB.

  • Milestone 2: Reach $60M in trading volume by week 8, allocating an additional 30,000 ARB.

  • Milestone 3: Hit the final target of $100M in trading volume by week 12, allocating the remaining 30,000 ARB.

Objective 2: Amplify Liquidity and Market Stability

  • Current Status: $1M TVL in Theta Vault. (the Theta vault is currently capped to 1M)

  • Target: Increase TVL to $2.5M to enhance market stability and liquidity.

  • Execution: Allocate 80,000 ARB to incentivize LPs.

Milestones:

  • 1-month Milestone: Evaluate engagement, adjust APR expectations and fund allocations.

  • Milestone 1: Reach a TVL of $1.5M within the first 4 weeks, allocating 30,000 ARB.

  • Milestone 2: Reach a TVL of $2M by week 8, allocating an additional 20,000 ARB.

  • Milestone 3: Achieve a final TVL of $2.5M by the end of the 12-week period, allocating the remaining 30,000 ARB.

Milestone TVL Target Weeks Total ARB Allocation Allocation Breakdown
Milestone 1 $1.5M 1-4 30,000 ARB Allocated based on liquidity provided in various categories.
Milestone 2 $2M 5-8 20,000 ARB Additional ARB allocated as incentives continue based on updated categories and volumes.
Milestone 3 $2.5M 9-12 30,000 ARB Final push with ARB allocated to reach the ultimate TVL goal, adjusted for maximum engagement and impact.

Allocation Categories and Maximum Individual Allowance

Liquidity provision (in $) Total ARB for Category Max ARB per Individual
$1 - $1,000 4,000 ARB 5% (200 ARB)
$1,001 - $10,000 8,000 ARB 10% (800 ARB)
$10,001 - $50,000 12,000 ARB 15% (1,800 ARB)
$50,001 - $100,000 16,000 ARB 20% (3,200 ARB)
$100,001 - $200,000 20,000 ARB 25% (5,000 ARB)
$200,001 - $300,000 20,000 ARB 30% (6,000 ARB)

– Note: The allocations are designed to proportionally reward liquidity providers across various levels, from smaller investors to larger stakeholders, promoting inclusivity and broad participation towards achieving the liquidity milestones. The actual distribution would be fine-tuned based on participation rates and contributions within each category, ensuring the program’s goals are met effectively.

Objective 3: Foster Widespread Trading Engagement

  • Execution: Implement 30,000 ARB in raffles and 60,000 ARB for trading fee rebates. Past raffles have proven effective in boosting engagement.

    The raffles are based on the open source code written by the CVI dev team specifically for $ARB raffles. It utilizes Chainlink VRF, making it a transparent on-chain and verifiably random.
    In addition, the solution is designed to be fair, giving every wallet a chance to win while preventing multi-walleting. The design is explained here:

Milestones:

  • Milestone 1: Increase to 700 unique traders by week 4, allocating 10,000 ARB.
  • Milestone 2: Grow to 850 unique traders by week 8, allocating an additional 10,000 ARB.
  • Milestone 3: Achieve the target of 1000 unique traders by the end of the 12-week period, allocating the remaining 10,000 ARB.
Phase Weeks ARB Allocation Rebate on Open/Close Fees Rebate on Funding Fees Objective Distribution Method
Initial Engagement Boost 1-4 15,000 ARB 50% in ARB 30% in ARB Attract new traders and re-engage inactive ones Bi-weekly distribution, with a focus on immediate engagement and incentivizing early participation.
Sustained Trading Incentive 5-8 20,000 ARB 35% in ARB 15% in ARB Encourage sustained trading activity Bi-weekly distribution, maintaining interest and rewarding continued trading activity.
Final Push and Trader Retention 9-12 25,000 ARB 25% In ARB 5% in ARB Incentivize traders to achieve end of program targets Bi-weekly distribution, with higher rewards for top contributors to encourage competition.

Timeline:

  • Incentives Period (12 weeks):

    • The incentive programs will be executed over a 12-week period, with funds distributed bi-weekly to support ongoing engagement and reward achievement.
    • Continuous evaluation and adaptation of incentive strategies based on performance data and trader feedback will be undertaken to ensure program effectiveness.

  • Post Incentives Period (2 weeks):

    • Following the conclusion of the incentives period, a comprehensive analysis will be conducted to assess the impact of the programs.
    • CVI will return any unused funds in accordance with the Pilot Program’s guidelines.
    • CVI will publish detailed closeout reports summarizing achievements, insights, and recommendations for future incentive strategies.

  • Compliance and Reporting:
    – CVI commits to adhering to all guidelines set forth by the Pilot Program, ensuring transparency and accountability throughout the incentive period.
    – Bi-weekly reports will be submitted, detailing progress toward milestones, insights from incentive execution, and any adjustments made to maximize the grant’s impact on platform growth and ecosystem development.

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?: Yes

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

    – Answer: Yes. Our team agrees to provide bi-weekly updates on the Arbitrum Forum, ensuring that all updates reference our OBL dashboard for transparency and accountability.

    – Strategy and Capabilities for Data/Reporting: Our team has established a robust system for tracking key performance indicators and other relevant metrics in real-time. This system allows us to generate detailed reports efficiently, ensuring that we can provide comprehensive updates every two weeks. We plan to allocate dedicated resources to manage this process, including data analysts and communication specialists, to ensure timely and informative updates.

  • Does your team agree to provide a final closeout report not later than two weeks from the ending date of your program?

  • Answer: Yes. Our team commits to providing a comprehensive final closeout report within two weeks of the program’s conclusion.
  • 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 @cvi.finance ,

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.

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Great proposal! A totally unique DeFi platform and already getting decent organic traction so if there’s one project that deserves this grant, it’s CVI :+1:

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Been following those guys for quite a while. They were early to move from ETH mainnet to Arbitrum because they saw the potential.

Professional team with a unique product and top quality coding :+1:

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$GOVI INCOMING FEES · ARBITRUM Received: 57.6 USDC (~$58) From: 0xaf7a…5e58 Tx hash

One of the many transactions during AND after the competition! The platform usage is growing nicely.

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Very dedicated team. CVI is becoming one of the best platforms being used on Arbitrum. Very unique one offering trading volatility and this trading volatility is going to be very big as we get more crypto adoption.
Even Michael Saylor mentioned volatility in his recent punlic appearance.

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GOVI CVI is an impressive project, addressing a crucial need in the crypto trading space. There’s no doubt that the CVI team is putting in dedicated and diligent efforts to make this project a success.

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@cvi.finance
Let’s get to work. We are waiting for you at Arbitrum LTIPP

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@cliffton.eth, @raam, our application is ready to be marked as final.

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

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Professional and very dedicated team and great potential. Got my full support! Great proposal.

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Most deserving project. Product ‘trading volatility and crypto VIX’ much much needed in this crypto space. Just imagine its potential as more and more crypto adoption takes place.
CVI has excellent team working round the clock to make this complicated product.

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Great and well defined proposal. Have been following the team and really impressed with the development. The product is user friendly, tech is great and they know have to do business.Very added value for the Arbitrum foundation.

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The VIX has massive trading volumes in the stock market. The Crypto VIX which is CVI on ARB can be as big as the VIX perhaps. The potential $ volume that can come to Arbitrum if it has some help from the CVI can be huge. Lets make this the best chain with top projects. CVI on ARB makes huge sense & we need this collaboration to help both projects grow. :nerd_face:

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A unique project backed by a professional team - will bring a lot of interest from both retail and institutions to arbitrum ecosystem.

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The VIX is indispensable tradFi infrastructure that does $2-6 billion dollars in volume per day. CVI Finance has the co-creator of the VIX as an advisor. With the influx of tradFi capital and investors, CVI provides an excellent and somewhat familiar trading experience for new comers. As the crypto market and its existing traders mature, we are seeing drastically increased volumes on the CVI platform. Arbitrum can be the chain for serious, important, time tested DeFi. Supporting CVI through grants will drive tens and soon hundreds of millions in platform volume, gas fees, and TVL. CVI will draw people to Arbitrum and helps keep their funds on the Arb chain.

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As a very early adopter and current staker on Arb, it’s clear CVI and Arb are a match made in heaven. Arbitrums innovations have set them apart as the clear leader, with your help we can be the ultimate hedge for crypto volatility, a completely unique standout adopter of arb, and build out the most popular tradfi staples and make them work in our decentralized world we are building together. The team at cvi has always been about doing things correctly and fairly, they are the epitome of crypto values and it’s visible in our community. Arb could be the game changer we are looking for, so I guess I just want to know if Arb is ready to build? If so then CVI should be a no brainer.

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@cvi.finance introduced me to arbitrum network by staking $GOVI and I really like what I see here. So with volatility trading on arbitrum I could really see tremendous possibilities for both partners. Speed and security united with lots of volume has my full support!

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