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

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.

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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.


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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.

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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.

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

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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.

Thanks for the great and in-depth feedback, sir. We are proud to have you in our community!

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To me this proposal should be approved. I have joined and engaged in the D2 community for about 7 months. I changed my mind from being suspicious to completely supporting the project. Discovered many stories about how the team started, and their experience in tradiFi, especially how they were trusted and supported by many OGs in DeFi. As a long-term investor, I did a lot of due diligence and was convinced by the vault’s performance (utilizing the internal fund should be appreciated). Finally, the dispute in 2 months was unexpected but it turned out that transparency and community-oriented is what the team always keeps in mind. After all, the community has shown unwavering support more confidently. Also, worth mentioning that bringing more exposure from traditional institutions to thrive the whole ecosystem is what the team attempting to do.


appreciate it ser, a couple of good points to highlight missing in the proposal! will be ready for the snapshot :saluting_face:

Hello @HWxFrank,

Now that your application has been marked eligible, please be advised of the remaining steps in the application process to be completed prior to the Review Period Deadline:

Please complete the following steps required for your application to proceed to Snapshot:

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@HWxFrank To change your proposal to final, please tag an Arbitrum Foundation Forum Moderator (@ stonecoldpat @ cliffton.eth @ eli_defi) by the Review Period deadline to notify them of your proposal’s readiness to proceed from [Draft] to [Final] status.

Once notified, the Arbitrum Foundation Forum Moderator will adjust your title from [Draft] to [Final] status. Once marked as [FInal], your application post will be locked by moderators and you will no longer be able to edit your proposal.

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Firstly, thank you for your proposal and keen interest in the Arbitrum ecosystem.

Introduction and Rationale

D2.finance is seeking a grant to incentivize the initiation of their vaults and boost liquidity to their GMX/DSQ pair on Camelot with a request of 500k ARB. This project, a native Arbitrum application, holds the potential to tailor yields on underlying assets, accommodating investors with varying risk tolerances. Despite the promise, D2.finance has yet to establish a substantial presence within the Arbitrum ecosystem, reflected by the low DSQ TVL on Camelot. While the endeavor to enhance the composability of underlying assets and diversify risk for a broad investor base is commendable, the current stage and effectiveness of D2.finance in Arbitrum remain uncertain.

Major Concerns

Concern on Track Record and Benefit to Arbitrum

  • D2.finance has yet to prove its effectiveness on the Arbitrum ecosystem
  • Paused development and minimal liquidity and volume for GMX/DSQ pair on Camelot
  • Our recommendation for change: Focus on product development and establish a solid footing within Arbitrum before seeking grant incentives.

Minor Concerns

  • The project is not yet live with vaults, raising questions about its readiness for the requested grant
  • Unresolved internal governance issues have previously halted development


Castle Capital appreciates the efforts put forth by D2.finance and the potential enhancements they could bring to the diverse investor community. However, in its current form, we do not support the proposal moving forward. Namely, we believe issues regarding D2.finance’s track record and its unproven benefit to the Arbitrum ecosystem need to be addressed.

Our recommendations can be summarised as follows:

  • Concentrate on consistent product development
  • Establish a solid presence and proven functionality within Arbitrum

We hope that our comments serve as constructive feedback for the continuous improvement and eventual success of D2.finance in contributing positively to the Arbitrum ecosystem.

Dear Castle Capital,

We genuinely appreciate the time you’ve taken to review our proposal and provide insightful feedback.

  1. Regarding the “low DSQ TVL on Camelot”: We believe there might be a discrepancy in the TVL figures observed. As of my writing, the TVL stands at approximately 400k. It’s crucial to ensure that all pools have been accounted for when determining the TVL. [Reference Image 1]
  2. Focus on Product Development: We understand the importance of consistent product development. I’m pleased to inform you that we will be deploying our newly audited vaults this week. This move has been pending the final approval from Paladin for our V2 vaults that we received on 27 September. Perfect timing to start generating real yield and fees on Arbitrum. [Reference Image 2]
  3. On the topic of the project’s live status with vaults: D2.finance has been operational since November 2022. We’ve utilized internal capital, which has generated significant fees within the Arbitrum ecosystem. This is proportional to just the internal TVL, details of which can be found in our application. It is our belief that our commitment to security and compliance should be seen as an asset, especially in light of recent events like the FTX mishap, which shifted the risk-reward dynamics of deploying V1.
  4. Internal Governance Issues: We acknowledge the past governance challenges but wish to emphasize that these have been fully resolved through a legal settlement under Swiss law.
  5. Track Record: We take pride in our vaults’ performance. Historically, they have delivered between 30% and 80% APR. This is verifiable on-chain, as evidenced by the over 1000 trades across multiple vaults such as ARB++, GM++, GLP++, and ETH++.

We strongly believe in maintaining an open dialogue and invite you to join our Discord community. This will provide you with an opportunity to closely follow our development and have a more comprehensive understanding of our operations.

Your feedback is invaluable, and we are committed to addressing any concerns to ensure that our proposal aligns with the broader goals of the Arbitrum ecosystem.

Warm regards,


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