Applicant Name: Diamond Protocol
Project Name: Diamond Protocol
Diamond Protocol helps users to provide only one token when providing liquidity on Uniswap V3, while the protocol will lend the users the other token in the liquidity pair. Through Diamond Protocol’s auto-features and fully customizable range & leverage choices, these leveraged liquidity positions provide a superior Defi-only risk/return profile not seen in TradFi financial instruments.
Team Members and Qualifications:
Anderson (CTO, multiple grant winners, main organizer of ETH Taipei) Evie (Co-founder, TradFi fund manager turned DeFi, ex-film producer)
Official Website: https://dmo.finance
Market Outlook & Product Demo：How to Survive the Down Market with Diamond Protocol
Twitter: @diamondprotocol (temp suspended by X)
Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?:
Requested Grant Size:
80k ARB of the grant will be used to reward the ARB liquidity providers for their activities and liquidities provided.
5k ARB will be used for marketing initiatives associated with the grant activities (the project team will top up the rest if necessary)
5k ARB will be used as the prize of trading competitions for all ARB liquidity providers on Diamond Protocol, judged by their actual earnings.
0x9Cf11F95FfB3F122be512f73918e63187a18A71d (Protocol Multi-Sig)
Funding Address Characteristics:
Protocol contract address, which is a 2/3 Multi-Sig with private keys securely stored.
SECTION 3: GRANT OBJECTIVES AND EXECUTION
The Grant will be used to drive liquidity in ARB related pairs on Uniswap Arbitrum. We hope to increase the total liquidity provided for ARB pairs through the grant and to make more community members aware of the merits of leveraged liquidity positions as provided by Diamond Protocol.
Key Performance Indicators (KPIs):
Numbers of liquidity providers for ARB Pairs in Diamond Factory
Total Liquidity Provided for ARB Pairs on Uniswap through Diamond Protocol
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?:
The overall TVL on DeFi and trading volume for crypto assets are at historical low. The persistent high Fed rates have penalized all risky assets, including crypto. There’s low liquidity across the board on all financial instruments, with little fresh liquidity from outside of the Web3 ecosystem. However, the assets already locked in DeFi and crypto are extremely sticky, we expect these assets to remain in crypto for a very long time and throughout the current macroeconomic and monetary cycle. The question here is where would people park their assets through this period and how to balance risk & return.
We think most people would want to park their assets in large amounts in top stablecoins, BTC & ETH during this dragged out bear period. Problem is high yields are hard to come by with these premium crypto assets. Diamond Protocol gives users the ability to keep their assets in premium assets (i.e. USDC, ETH, etc.) while participating in the market of the newer, more exciting tokens like ARB, GMX, Cake, etc.
Specifically, Diamond Protocol allows users to provide liquidity on Uniswap V3. Users provide token 1 and borrow token 2 from Diamond Pool (i.e. leverage), through the use of leverage, users get higher APR and additional long/short profit. Users has the full control of their liquidity range & the leverage to use, while enjoying the auto-features provided by Diamond Protocol at the same time.
The grants will be used to reward ARB liquidity providers for their activities and liquidities provided.
Through the promotion and additional rewards, we aim to introduce our product to more users in the Arbitrum community. For every dollar liquidity they provide, Diamond can amplify that liquidity up to 3X, so there are more liquidities for ARB and more returns for ARB LPs in a clear win-win situation.
Justification for the size of the grant:
Diamond Protocol has launched on Arbitrum since October 2022. At its height, we have about 1.35m USDC worth of TVL and the numbers have come down somewhat during the recent downturn, but we believe with this grant, and the current risk-averse market condition, Diamond Protocol’s value of allowing users to keep their assets in ETH or USDC while dapple in ARB related markets will shine through.
- Marketing Initiatives:
To raise awareness, we’ll roll out various marketing campaigns, including contests and Galxe quests highlighting our involvement with the Diamond Lending Pool.
- User Engagement:
Diamond Factory currently offers 5 ARB related Uniswap liquidity pools:
In order to earn ARB reward, users need to open leveraged liquidity positions in Diamond Factory. Users can deposit either USDC or wETH or ARB, and borrow the other token in the token pair from Diamond Pool. Each of the Diamond Factory leveraged liquidity positions are fully deployed on Uniswap V3.
- Reward Distribution:
Reward will be calculated on a weekly basis and be awarded to the Diamond Factory positions. The ARB rewards will be calculated based on position value, the liquidity range and duration of the liquidity position that’s in range.
Each Diamond Factory position will receive rewards pro-rataly based on the calculation method mentioned above.
- Week 1 Weekly distribution of 10k ARB pro-rata to all Diamond Factory liquidity positions that involves an ARB pair
- Week 2: Weekly distribution of 10k ARB pro-rata to all Diamond Factory liquidity positions that involves an ARB pair
- Week 3: Weekly distribution of 10k ARB pro-rata to all Diamond Factory liquidity positions that involves an ARB pair
- Week 4: Weekly distribution of 10k ARB pro-rata to all Diamond Factory liquidity positions that involves an ARB pair
- Week 5: Weekly distribution of 10k ARB pro-rata to all Diamond Factory liquidity positions that involves an ARB pair
- Week 6: Weekly distribution of 10k ARB pro-rata to all Diamond Factory liquidity positions that involves an ARB pair
- Week 7: Weekly distribution of 10k ARB pro-rata to all Diamond Factory liquidity positions that involves an ARB pair
- Week 8: Weekly distribution of 10k ARB pro-rata to all Diamond Factory liquidity positions that involves an ARB pair
- We will spend additional 5k worth of ARB for marketing (the project team will top up the rest if necessary)
- We will run a grand trading competition for all ARB Diamond Factory users based on their PNL earned, with a grand prize of 5k ARB (might split the prize into two or three tranches). All spending will be trackable on-chain.
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]
Diamond Protocol allows users to participate in providing liquidity for trading pairs without owning both the tokens in a trading pair. For example, for a ARB/USDC pair on Uniswap, in order to provide liquidity and earn fee APR, LPs need to provide both ARB and USDC on Uniswap. On Diamond Protocol, LPs can provide only USDC and borrow the necessary ARBs from Diamond lending pool, and in effect form a leveraged liquidity position on Uniswap V3. (These leveraged liquidity positions are all deployed on Uniswap V3 and are called Diamond Factory Positions).
Diamond Factory positions have two sources of income:
- The leveraged-up Fee APR
- Profit from long/short on the underlying assets (through the use of different amounts of leverage).
Is the Protocol Native to Arbitrum?: Yes, Diamond Protocol was launched on Arbitrum exclusively in October 2022. Today Arbitrum TVL represents more than 90% of total TVL on Diamond Protocol.
On what other networks is the protocol deployed?: Yes, on Polygon and BNB, though Arbitrum represents 90%+ of our overall TVL.
What date did you deploy on Arbitrum?: October 2022.
Protocol Performance: Since its launch, Diamond Protocol has seen more than 3000 Unique users and 17m+ cumulative liquidity positions, close to 1.5m TVL at its peak.
Launching Vault Solution: Q1 2024
Protocol API Service: Q1 2024
User generated lending Pool: Q1-Q2 2024
Audit History: Audited by Quantstamp. Full Audit Report here.
Is your team prepared to create Dune Dashboards for your incentive program?: Yes, we have multiple dune dashboard already set up for multiple purposes, we can set up one specifically for the grant related activities.
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread?
Yes. We can extract data from our Dune Dashboard, coupled it with marketing activities roadmap and updates to provide reporting and strategy discussion every two weeks.
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?: