[D2.finance] [FINAL] [STIP - Round 1]


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: Luca, Head of Trading

Project Name: D2.finance (formerly known as Dsquared.Finance)

Project Description: D2.finance delivers actively traded Options-based DeFi Vaults on Arbitrum, utilizing key Arbitrum protocols as a base layer. Integrations for our V2 vaults audited by Paladin are with GMX (GMX team invested and token swap processes), Camelot (one of the first round-table members), AAVE, 1inch, Lyra, and TraderJoe.

D2.finance offers a range of strategies tailored for different risk appetites and on different platforms with dedicated vaults, operating on an epoch system with a vault specific to the Arbitrum ecosystem ARB++.

Our hybrid trading engine combines quantitative signals and qualitative judgment. Our core vaults capture and capitalize on opportunities across risk profiles.

Team Members and Qualifications: D2.finance has no employees; it relies on stewardship of BWS Labs until relaunching as a DAO under https://www.midao.org/ Dual Structure Governance when protocol will be valuable enough not to be easily attacked by “Risk-Free Value Raiders”. BWS Labs may hire and/or engage key contributors according to their areas of expertise.

BWS Labs Team/ Contractors:

  • Head of Trading- Luca ( portfolio manager in volatility strategy for multiple Billions Dollar AUM Hedge Funds. Generated about 21M for investors during 5 years in solely managed strategies in TradFi)
  • Growth - Frank (also Rodeo)
  • Communications/Community - Vate (also Mithical)
  • Solidity Contractors → https://twitter.com/BowTiedPickle / https://twitter.com/BowTiedOriole
  • Security Contractor → https://twitter.com/BowTiedIguana (also Jpeg69) / Renzor
  • Design Contractor → Edis (also Umami)
  • FE Contractor → Greypixel (also Umami) / FarmerCarlon (also Rodeo)
  • Socials → Pauline
  • Graphics / Meme- > Simone

Project Links:

Contact Information

TG: TG: Telegram: Contact @lucaBWS and Telegram: Contact @HWxFrank
Twitter: Twitter: https://twitter.com/Dsquaredfinance
Email: growth@d2.finance

Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?: Yes


Detail the requested grant size, provide an overview of the budget breakdown, specify the funding and contract addresses, and describe any matching funds if relevant.

Requested Grant Size: 500,000 ARB (Initial: 125,000; Additional: 375,000 only upon reaching KPI milestones and proving its effectiveness on the Arbitrum ecosystem)

  • 80% to the Vaults
  • 20% to GMX/DSQ V2 Pool distributed as Camelot Nitro Pool

Grant Matching: We will add the same amount on esDSQ in GMX/DSQ nitro pool (which allows 2 tokens as rewards)

Grant Breakdown: The primary objective of this grant is to create a flywheel for the start of our vaults and increase liquidity to the GMX/DSQ trading pair on Camelot. The D2.finance vaults utilize the assets under management for trading across Arbitrum protocols, which have a direct correlation between AUM and fees generated for Arbitrum ecosystem protocols. Additionally, at the time of writing, we have ~400k USD of Pool liquidity in both Camelot V2 and V3.


Our quant-based trading will drive substantial notional value through GMX and Camelot, and also through other Arbitrum protocols; this is especially true for ARB++ strategy, thus increasing volume and fees for the underlying protocols and ecosystem.

Our Unique Position in the Ecosystem:

For clarity, our proposal stands out in a unique way. To our knowledge, no other Active Vaults protocols boast the number of integrations we offer, all of which have been audited. If we attain a significant Total Value Locked (TVL), the impact of the grant will be magnified due to the increased volumes and fees generated through our partner integrations.

Here’s a snapshot of our integrations:

  • GMX: (Swaps, Limit Orders, Leverage Positions, GLP)
  • Camelot: (Swap, LP)
  • Lyra: (Options, LP)
  • Rysk: (Options, LP)
  • Aave: Lending and borrowing
  • TraderJoe: Swaps, LP
  • 1inch: Swaps, Limit Orders

By incentivizing liquidity in the vaults, we can drive more trading volume and, in turn, will increase the fees generated by our vaults, which will help us sustain our operations and continue to innovate.

Given that we particularly value our official partnerships with both GMX and Camelot we are looking to deploy 100% of the grant funds in a way that benefits them either directly into the GMX/DSQ pool or indirectly through trading of our Vaults.

In particular, we are very grateful to GMX for which we completed a token swap on December 10, 2022.

And where GMX team has been invested in our pre-seed rounds, and they are the top shareholder of the protocol (after recent reorganization)
*Arbitrum Transaction Hash (Txhash) Details | Arbiscan

More details on how GMX and Camelot benefit directly can be found in the community call with them below:

Camelot x GMX x DSquared - 9th Feb 2023 (with coinflipcanada and IronBoots)

Or our Masterclass for V3 with (IronBoots).

This grant will help us achieve our goals and significantly contribute to the Arbitrum ecosystem.

Funding Address: 0xe7eb925300075E49fc5CAaD5d408A50Dd22f92D6

Funding Address Characteristics: This is a multisig address requiring 3/5 signatures. The signing wallets are hardware-protected and controlled by BWS team and trusted members of Arbitrum ecosystem bluechip protocols. You can see the esGMX allocation in the safe

Contract Address:

DSQ/GMX Pool (Camleot LP V3)

ARB++ Vault

ETH++ Vault


USDC++ Vault

GM vault (formerly known as G-apex)

Vaults Version FAQ

Vaults V0: Vaults have been live since November 2022, funded exclusively with internal capital. They are unsecured and managed by an EOA.




Vaults V1: This is the original design we were developing before the FTX blow-up, which prompted changes in both regulatory compliance and security standards. Vaults V1 are semi-custodial.

Vaults V2: The focus of the current Paladin audit, Vaults V2, operates under a fully modular architecture. It incorporates embedded risk management rules and can only be deployed from a tradeApp. Vaults V2 boast two layers of security: first at the Solidity level and then risk management limits at the OMS level (internal traderApp), akin to hedge fund practices that Luca is used to.

Vaults V3: Code name “Omni Vaults”, aims to meet institutional requirements and is under development utilizing Chainlink CCIP.


Clearly outline the primary objectives of the project and the Key Performance Indicators (KPIs) used to measure success. This helps reviewers understand what the project aims to achieve and how progress will be assessed.

Objectives: The primary objective of this grant is to create a flywheel for the start of our vaults and increase liquidity to GMX/DSQ. Our architecture utilizes, but not limited to:

  • AAVE, Camelot, GMX, Lyra, Rysk, TraderJoe and 1inch

Our quant-based trading will drive substantial notional value through Arbitrum protocols, thus increasing volume and fees for the underlying protocols and ecosystem. By incentivizing liquidity in the vaults, we can drive more trading volume and, in turn, will increase the fees generated by our vaults, which will help us sustain our operations and continue to innovate.

To demonstrate our commitment and belief in our project, we’re initially requesting a grant of only 125k (comprising 100k for vaults and an additional 25k for GMX/DSQ liquidity). This represents approximately 1/3 of the TVL. We wish to highlight that we will seek the further 375k only if the vaults, set to expire on 19th January, reach their maximum capacity (CAP). The maximum request will, in any scenario, not exceed the Cap.

Indeed, as our vaults go live, we project a surge in liquidity needs, especially once the market grasps the full breadth of our offering. This anticipation aligns with our strategy for the second version (v2) liquidity, as we predominantly envision utilizing v3 exclusively for POL.

Key Performance Indicators (KPIs): We will measure the success of this grant using the following KPIs:

  • Total value locked (TVL) in our vaults growing steadily toward the 10M scalability goal
  • Number of users of our vaults with more than 10k USDC allocations
  • Fees generated by our vaults in relation to TVL and performance
  • Fees and Volumes generated for the underlying integrations
  • Number of partnerships with other Arbitrum DeFi projects

We expect significant growth in all these metrics due to this grant.

Tracking TVL growth is crucial, as it directly correlates with the protocol’s success. Higher TVL translates into increased fees and reflects growing user trust and confidence in our protocol. This will be beneficial not only for our protocol but also for our partner tokens like GMX and Camelot, as it will drive higher liquidity and trading volume for them.

How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?: Receiving this grant will enable us to foster growth within Arbitrum in 2 key areas:

Attracting liquidity into the actively managed trading vaults

  • greater volume in the trading vaults equates to more active trading volume/fees across the underlying protocols

By showing growth and proof of concept, ART, our sister protocol tailored at institutions, will have measurable back data to help onboard significant institutional funds into the Arbitrum ecosystem via the quant trading vaults.

Justification for the size of the grant: Our estimated capacity for the vault is approximately 10M USD.

A 4% boost ( ⅘ of the grant) to create a performance floor can go a long way, especially under these market conditions.

D2.finance / BWS Lab’s hybrid model leverages the specialist skills of a world-class team with a provable P&L from years of profitable trading in TradFi. Head of Trading, Luca, brings his unique investment philosophy, process, and approach to risk-managed volatility trading. Each vault at D2.finance combines tailored quantitative signals with the expertise of direct, real-time human judgment, all while leveraging the operational infrastructure and technical integrations made possible by DeFi protocols on Arbitrum.

By funding a grant for D2.finance, the funds will be put to active use within the Arbitrum ecosystem, driving a continuous flow of trading volume and fees across the ecosystem integration partners.

Beyond direct application, our vaults have an inherent advantage of indirectly bolstering Arbitrum’s appeal. Particularly with traditional finance entities that have remained on the sidelines, introducing a robust Hedge Funds offering catalyzes their interest in the crypto space and Arbitrum ecosystem. This inevitably magnifies the allure of exploring the ecosystem, leading to increased liquidity and activity on Arbitrum. Our strategy is designed not only for immediate benefits but to also serve as a magnet, drawing both conventional and emerging financial players into the fold. The greater the TVL D2.finance can capture, the bigger net benefit to the entire ecosystem through notional trading value.

V0 Notional performance:
With TVL driven by internal funds (v0 vaults ranged from 2000 to 20000 USDC) D2 vaults have been able to create already over 1 Million USD+ in notional volumes across the Arbitrum ecosystem (see EOA wallets above)


  • The first epoch of the ETH++ Vault generated 300k of volumes in GMX alone:
  • ETH++ Vault generated ≈3.6% fees of AUM in GMX in 1-2 months epoch, ≈20% if annualized.

As DSQ can be staked for claims on platform rewards, we expect the demand to grow with the TVL in the vaults and, as such, we aim to incentive a GMX/DSQ Camelot V2 LP pool to both meet the demand and benefit both Camelot and GMX.

Execution Strategy:

Vault Incentives (4/5 of grant) will be distributed gradually based on the performance of the quant trading vaults, and distribution will be ramped up based on successful KPIs

DSQ/GMX V2 Liquidity Pair (1/5 of grant) will be distributed proportionally over a 3 month period to the Vault Incentives in order to accommodate the expected need for DSQ liquidity

A conservative estimate is that if our Vaults achieve 10M TVL / AUM we will generate north of 1M dollars of fees in the ecosystem annually.

Risk Management for the trading/vault products:
A sustained period of live trading experience is required to learn important risk management lessons. Theory alone is not enough. Our Systematic Dynamic Risk Management framework has been developed through many years of practical experience and academic research and has been battle-tested at the institutional level in TradFi.

Our core approach is to manage risk through efficient use of options and hedges dynamically optimized according to market conditions. By adding market hedges to the portfolio, we can take advantage of opportunities created by downside volatility and market crises, while still maintaining some upside potential.

Protocol Security:D2.finance has industry-leading security and risk management practices in place. Security - D2.Finance

Grant Timeline: Funds will be used over November, December (up to 125,000 ARB) and January ( up to remaining 375,000 epochs), starting from the initial grant deposit.
We understand that the funds will be streamed linearly over the 3-month grant program duration.

This funding structure ensures that resources are allocated efficiently and in line with the protocol’s performance. It also incentivizes us to achieve sustained growth and success by linking the release of funds to specific, quantifiable milestones.

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


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, D-Squared is native to Arbitrum and was launched in Q4 2022 on Arbitrum

On what other networks is the protocol deployed?: N/A

What date did you deploy on Arbitrum?: Nov 21, 2022

Protocol Performance: BWS Labs provided performance updates regarding the vault initially hosted on the legacy protocol of dsquared.finance.

Please note that past performance is not indicative of future results.

GLP++ 86% APR (5 epochs) https://twitter.com/BondiWealthSec/status/1645687589637328896?s=20

ARB++ 33% APR (1 epoch) https://twitter.com/BondiWealthSec/status/1663034922611937281?s=20

ETH++ 31% APR (1 epoch) https://twitter.com/BondiWealthSec/status/1630469337453821952?s=20

Protocol Roadmap: Q4 2023 Live vaults

We’re delighted to inform that the audit of Paladin as 27th September 2023 is now completed.

Trading via the ARB++ and ETH++ vaults will commence on Friday 6TH October.

In the spirit of stress-testing our security, we will invite hackers to attempt to breach our system, and if successful, they will be rewarded with 100% of the hack, similar to the approach taken by Yearn Finance in the past.


Following this phase, we plan to incorporate both Luca’s and Medallion funds (Private Investor class). After one epoch, the Medallion allocations will be returned to their original addresses for those who may choose to reinvest once vaults are open (no action is required).

With a successful phased rollout of the vaults, we will accept funds into the vaults for active quant trading.

Note: For V3 Vaults we are looking to integrate other Arbitrum protocols such as Rysk, aevo, dopex, rodeo, and more alongside Chainlink CCIP, allowing liquidity from other chains to be seamlessly and securely utilized on Arbitrum

Audit History: Paladin Sec Audit: D2

SECTION 5: Data and Reporting

Provide details on how your team is equipped to provide data and reporting on grant distribution.

Is your team prepared to create Dune Dashboards for your incentive program?: Yes, our team will create a Dune dashboard to report incentive program data and key KPI indicators. We have created a Dune dashboard to report the DSQ token sale details and will implement it similarly, see below:

Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread? We agree to provide bi-weekly updates on the Arbitrum Forum thread, including the use of the Dune dashboard as a key reporting metric. We are committed to transparent communication of the KPI status and progress of grant incentives. We have committed to weekly updates on our discord to maintain transparency and accountability to our community.

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



More details on d2.Finance on weekly alpha Friday on D2.Finance discord.

1 Like

Grant landing on DSQ its a win-win since GMX and Camelot also benefit from this
Perfect symbiosis :brain:


It’s great to see this proposal going live. We need NEW players to enter the arena and bring innovation.

1 Like

Really hope we can get this going.

Would be really amazing if arbitrum.foundation supports this great project and the arbitrum ecosystem.
Because this proposal benefits more then one project - DSQ, GMX, Camelot.

1 Like

D2 Finance is a project that doesn’t have too many special features and I also don’t see the project making clear contributions to the Arbitrum ecosystem in the future.

I do not agree with this proposal.

1 Like

I have conducted some background research on some of those grants. Dsquared Finance is a new project with no proven track record and a questionable history, highlighted by a pause in the project between June and August due to a dispute among the founders and treasury outflows exceeding 380k (GnosisSafeProxy | Address 0xe7eb925300075E49fc5CAaD5d408A50Dd22f92D6 | Arbiscan), which occurred 52 days ago. I disagree with this proposal and do not believe they should receive 500k ARB.

1 Like

I support this proposal. A few things worth noting is the commitment shown by the team to the Arbitrum ecosystem, while also having experience and exposure to the expectations and feedback from Tradfi. The project appears to keep much of the activity and strategies within the Arbitrum ecosystem and not only seeks to increases TVL and liquidity for Dsquared, but also for GMX and Camelot. As vaults and strategies are implemented, it seems it would apply to more projects.The project also appears to focus on Arbitrum native platforms for its options trading strategy with the intent of meeting return expectations of Crypto native and Tradfi. In this current environment, I think its important to take a harder look at institutional adoption. This is not only for increased capital into the Arbitrum ecosystem, but provides education and use cases for institutional money and potentially regulators to consider. I think the space is maturing overall and appealing to different subgroups are important for the space to continue growing.I did notice a comment about an internal dispute amongst the team that resulted in a pause. I understand that as a consideration. However, the ability to resolve a dispute and continue forward with a resolution instead of closing shop is an accomplishment in itself during the depths of a bear market. I think this dedication redirected to advancing the project within the Arbitrum ecosystem is further evidence of the need to support the project.


Hello @HWxFrank thank you for your application! Your submission meets all requirements to be considered for a snapshot vote.


Gm ser,

Thank you for reviewing the d2.finance proposal.

Which quantitative metrics do you deem essential when evaluating contributions to the Arbitrum ecosystem? I posit that the fees generated within the ecosystem and their projected values are crucial.

Despite having a minimal Total Value Locked (TVL), our LIVE trading has demonstrated the capability to produce substantial fees not only to the official partners as GMX, Camelot but also on higher margins Options protocols Lyra (top 50 trader), Dopex (high % of open interest in multiple epochs), Rysk ( 1# trader by # of trades in their alpha)…

You might have overlooked the links to all our active vaults and the trades executed within the ecosystem, amounting to over 1 million USDC in notional traded. If you do not concur with the projections (i.e., extrapolating the data with a 10M TVL, which would set us on track to generate over 1 million in the ecosystem), could you please share your hypothesis or the data you’re relying on?

Even you have pessimistic projections does seems d2.finance should rank well in #realYield.


1 Like

Thank you for taking the time to investigate d2.finance. We indeed had an eventful summer. However, every challenge was amicably resolved through legal settlements governed by Swiss law, with leading Swiss law firms steering these settlements. These resolutions have firmly and legally positioned us to establish a protocol that, in the foreseeable future, can cater to the institutional readiness sought by our traditional finance contacts. This has been our vision ever since we ventured into this domain.

Although the precise terms of the settlements remain confidential, we have divulged all information that we’re allowed to share during our Alpha Friday sessions on our Discord server, which encompassed eight distinct issues, and during one AMA session. For further clarity, a substantial part of the payment you alluded to was channeled through vesting contracts, both as completion payments and as part of a voluntary buyback scheme for our investors. It’s crucial to emphasize that the buyback offer at 15 DSQ/USDC was made available to ALL our investors, whether primary or secondary. However, only a select few opted for this offer, with the majority (~70% of net liquidity) choosing to stake.

We also extend our heartfelt gratitude to the GMX and Camelot teams. Their guidance and unwavering moral support were pivotal in helping us reach this stage, enabling us to introduce what we believe will be the most innovative vaults in the entirety of DeFi on Arbitrum.

You can review the bid liquidity on Camelot Camelot DEX | Arbitrum native Decentralized Exchange


Thank you for responding. However, my stance remains unchanged regarding the proposal and the arbitrum community should as well. You have six active users in the discord. Zero traffic on your X account (nine likes, half is your staff). Last post was from 2nd of September. Seeking to gather 500k for an incentive under these circumstances seems questionable to me.

Additionally, you mention trading vaults with 10 million in a market that currently has no on-chain volume and volatility. Could you explain on how you plan to achieve a net positive under these conditions not speaking of how you’ll be able to get such amount from users?


Hope this grant gets approved as:

  • This grant will benefit a lot of players in the Abitrum ecosystem
  • D2 aims to bring tradFi quality hedge fund to arbitrum
  • Is one of very few projects aiming to bring compliant instutional players into arbitrum
  • Are innovating next to CCIP to bring assets from any other public/private blockchain into arbitrum

So this will greatly benefit the ecosystem by helping mature the hedge fund DeFi ecosystem while reinforcing Arbitrum as the leading blockchain for DeFi.

1 Like

Thank you for your detailed feedback and for taking the time to delve deeper into our proposal. We genuinely value constructive discussions like these as they help us refine our approach and understand community perspectives.

Allow me to address your concerns:

  1. Activity Metrics : We concur that the number of likes or superficial metrics don’t holistically reflect the essence of our operations. We are in the business of creating tangible value, not mere online influence. Our focus is predominantly on substantial institutional players, with an emphasis on family offices in this current environment. Your understanding of our community’s strength would benefit from a review of our Alpha Fridays updates. These updates illuminate the unwavering support we’ve received from core community members like the D2 Rangers and D2 Hunters, especially during trying times. A testament to this commitment is our impressive staking ratio of around 70% of the net supply. For a deeper understanding, you can refer to DeBank | The Web3 Messenger & Best Web3 Portfolio Tracker
  2. Engagement Outside of Discord: We recognize that not everyone has the luxury of time to stay active on platforms like Discord throughout the day. Our approach has always been about quality over quantity. We have been making significant efforts to engage with potential allocators through our existing network in TradFi. This community, which highly respects and trusts Luca’s reputation as a leading derivatives trader in Asia, has traditionally been hesitant towards Crypto and DeFi. However, the proposed incentives aim to bridge this gap and encourage people take the opportunity in more serios considerations.
  3. Objective of the $10M Vault: The figure might seem substantial in the context of DeFi, but in comparison to the potential of our existing contacts in TradFi, it is a relatively modest amount. We believe it provides a feasible starting point to integrate these entities into the world of DeFi.
  4. Options Liquidity: We are fully aware of the importance of robust options liquidity for the success of our proposal. To that end, we rely on established protocols such as Lyra, Rysk, and Dopex to ensure the necessary liquidity is available. Supporting proposals that aim to incentivize Options Liquidity is in line with our vision and strategy.

In conclusion, we understand your concerns and appreciate the opportunity to provide clarity. As always, we remain open to further discussions and welcome more insights from members like you.


ChatGPT, thanks for your reply.

We appreciate your great feedback ser!

We will definitely highlight the third and fourth points in the final proposal!

Most credit to HWxFrank who has invested significant effort into crafting this proposal and devising ways to contribute to the growth of Arbitrum.

1 Like

Thank you, sir, for your support since the beginning! We take pride in our D2 Rangers! :saluting_face:

1 Like

Please do not vote yes. There is no vault live and d2 is asking for 500k arb to be distributed. The protocol has 0 users and 0 tvl and most importantly 0 demand:

The dsq / gmx pool (which would get 20% of the incentive) on camelot does $100 of volume in 24h over the last couple of weeks.

It’s interesting that this is the only protocol you have an opinion on. It almost seems as if you have a targeted agenda, perhaps even in violation of a settlement agreement.

D2.finance provides Options-based DeFi Vaults on Arbitrum, leveraging key Arbitrum protocols. Their V2 vaults, audited by Paladin, integrate with GMX, Camelot, AAVE, 1inch, Lyra, and TraderJoe. They offer diverse strategies for varying risk levels across platforms, including a special vault for the Arbitrum system (ARB++) which will be live as soon we receive the Paladin thumb-up.