[Gains Network][FINAL][STIP - Round 1]

Archive Short Term Incentives Program (STIP) Round 1
1

SECTION 1: APPLICANT INFORMATION

Applicant Name: Lunaman

Project Name: Gains Network

Project Description: Gains Network is developing gTrade, a liquidity-efficient and user-friendly decentralized leveraged trading platform. Our synthetic architecture and custom chainlink DON (decentralized oracle network) make gTrade more capital-efficient than any existing platform, allowing for a wide range of pairs and leverages: up to 150x on cryptos, 1000x on forex, and 250x on commodities.

Team Members and Qualifications:

  • Seb (Full-stack dev, Strategy)
  • Nathan (Full-stack dev, Management)
  • Crumb (Full-stack dev)
  • Atlas (Product Manager)
  • Lunaman (Biz dev, Partnerships)
  • Sam (Biz Dev, Partnerships)
  • Ross & Bill (Social media, Marketing)
  • Dreamersnat (Frontend dev)
  • Konrad (Frontend dev)
  • Vesnushki (moderator, community sentiment, graphics)
  • Brian (moderator, community sentiment)
  • 0xlegend (Frontend dev)
  • Deadstep (Smart contract dev)
  • Apaul243 (Smart contract dev)

Project Links:

Contact Information

TG: Telegram: Contact @luna_man, Telegram: Contact @sebgfarm

Twitter: https://twitter.com/GainsNetwork_io

Email: lunaman@gains.trade, contact@gains.trade

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

SECTION 2: GRANT INFORMATION

Requested Grant Size: 7,000,000 $ARB

Grant Matching: 100,000 $GNS

Grant Breakdown

  • Trading Incentives (85%): 6,000,000 $ARB for our custom trading points system. Rewards various productive behaviors, such as trading high volume, trading well (positive PnL), being consistent and loyal, etc. Flows back to the Arbitrum ecosystem as traders are rewarded for their active participation. Described in more detail in Section 3.

  • Liquidity Incentives (15%): 1,000,000 $ARB (+100,000 $GNS).

    Consists of collaborating with DEXes, Chainlink, lending platforms, and others to promote sustainable liquidity for $GNS and $gTokens (such as $gDAI). The ability for our tokens to be easily tradable with size and used as collateral on several Lending Protocols integrates them deeper into the Arbitrum ecosystem and creates positive feedback loops. Additionally, more gTokens liquidity helps entering and exiting our vaults without going through the regular withdrawal timelock, making it easier to gain new TVL in our vaults. Finally, these incentives will directly flow back into the Arbitrum ecosystem as they directly incentivize the usage of various Arbitrum DEXes and lending platforms.

Funding Address: 0xC0eCc613f6F5e979Ed0169Bf7Af50803E7072e16

Funding Address Characteristics: 4/6 community multisig with each key stored in a hardware wallet.

Contract Address: N/A (each week, trading incentives will be sent directly from our multi-sig to users using a multi-send tool, and liquidity incentives will be sent to DEXes/lending platforms)

SECTION 3: GRANT OBJECTIVES AND EXECUTION

Objectives:

  • Grow volume and daily unique traders on gTrade to position Arbitrum as a key infrastructure for decentralized derivatives.
  • Improve liquidity for our protocol token and vault tokens by supporting the usage of Arbitrum DEXes and lending platforms.
  • Increase our gTokens TVL to allow even bigger position sizes and maximum open interests on gTrade.

Key Performance Indicators (KPIs):

  • Daily Volume: Increase 30-day moving average of daily volume on gTrade to $80m+ (currently $46m) with the help of trading points incentives.
  • Daily Unique Traders: Increase 30-day moving average of daily active traders to 400+ (currently 199) by attracting new users and increasing retention.
  • $GNS and $gTokens liquidity: Double $GNS and $gDAI liquidity on Arbitrum (currently $1.2m for $GNS and $200k for $gDAI across all Uniswap v3 pairs) using strategic incentives on important liquidity pools.
  • gTokens TVL: Given the targeted increase in volume, which results in increased fees going to the $gToken vaults (such as $gDAI), we target a TVL increase for our vaults to $27m+ (currently $22m).

Please note that although higher TVL in our $gToken vaults contributes to bigger position sizes, this is currently not a bottleneck. We’re far from reaching the maximum volume we can handle with the current TVL due to our very high liquidity efficiency and our substantial over-collateralization layer (currently worth $4m). Therefore this is only a secondary objective.

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

This grant is a significant catalyst for short-term growth and sustained growth of gTrade, one of the core platforms having achieved product-market fit in the Arbitrum ecosystem. Some protocols on Arbitrum such as gTrade have reached a point where they can start competing against centralized platforms. One of the main reasons mass adoption is not there yet is due to a lack of marketing and education about self-custody and transparent trading execution. While we are working on our own marketing & education efforts, making it a no-brainer to try protocols such as gTrade with the help of incentives temporarily removes this obstacle. It gives a chance to new users who wouldn’t have otherwise made the effort to try a new platform to learn about DeFi products such as gTrade, try them, and enter the Arbitrum ecosystem. We anticipate that a significant proportion of these new users will not only stay for the long term but also share the platform with other traders they know, leading to sustained growth over the long term.

Justification for the size of the grant:

gTrade is already one of the top protocols in terms of Volume and Revenue in the Arbitrum Ecosystem. Given our current and projected weekly volume and trading fees, we strongly believe the size of the grant is justified to achieve the next growth phase. A lower grant would not be as significant compared to even our current weekly fees of about $140k (and they are much lower than usual, like most perps), which means at best it would refund fees for our existing traders only. Additionally, the points incentives system rewards genuine and organic trading activity and completely prevents any form of wash trading through a cap on volume points. Finally, we believe gTrade is highly competitive in terms of UX (self-custody, guaranteed execution, median spot prices, high number of pairs, 1-click trading, lowest latency possible, excellent UI, etc.) and therefore believe we are well positioned to retain a high proportion of the incentivized volume so that it benefits the adoption of the Arbitrum ecosystem in the long run.

Execution Strategy (Weekly):

  • 400,000 $ARB for Trading Incentives.

Screenshot 2023-09-27 at 22.23.29
Screenshot 2023-09-27 at 22.23.291386Ă—210 43.7 KB

  • 66,666 $ARB (+6,666 $GNS) for Liquidity Incentives.
    • GNS-ETH pool on Uniswap v3 through a collaboration with Gamma
    • gDAI-DAI pool on Uniswap v3 through a collaboration with Gamma
    • Equilibria gDAI pool
    • Penpie gDAI pool
    • GNS Collateral on Silo Finance
    • GNS Collateral on Radiant Finance (Once we have applied for it)
    • Other similar pools if new partnership opportunities arise

More details on the point system:

Users earn points as they trade on the platform. All points reset at the start of each week except for loyalty points, which can accumulate over the whole period. The exact weights for each type of point are to be determined. Weights can also vary as we can, for example, decide to increase the weight of skill points for one particular week to generate more engagement, like a trading contest.

  1. Loyalty Points:
    • Encouraging daily engagement is essential to optimize user retention.
  2. Skill Points:
    • Rewarding traders based on their PnL is one of the best ways to incentivize organic and genuine trading activity.
  3. Volume Points:
    • Incentivizing volume directly contributes to the primary goal of this proposal. Pairs that cost more fees to trade on will generate more volume points for the user to prevent farming points on lower-cost pairs such as forex. Finally, the rewards of this category are capped at the weekly fees generated by the platform to ensure traders are not getting paid to generate volume, therefore preventing wash trading. Rewards above the cap are redirected to other point categories, proportionally to their weights.
  4. Diversity Points:
    • Encouraging traders to trade on different asset classes and explore them can lead to more robust trading volume in the long run, as there is always an interesting asset class to trade on at any point in time.

Grant Timeline: Monday, October 16, 2023 - Monday, January 29, 2024 → 15 weeks

Do you accept the funding of your grant streamed linearly for the duration of your grant proposal, and that the multi-sig holds the power to halt your stream? Yes

SECTION 4: PROTOCOL DETAILS

Is the Protocol Native to Arbitrum?: No. We originally launched on the Ethereum Mainnet in January 2021, then migrated to Polygon POS in April 2021, and finally launched on Arbitrum on the 31st of December 2022. The vast majority of our trading activity happens on Arbitrum now.

On what other networks is the protocol deployed?: Polygon POS

What date did you deploy on Arbitrum?: 31/12/2022

Protocol Performance: $47b+ total trading volume, 16k+ total traders, $32m+ total fees generated, 1m+ total trades.

We publish a monthly recap on our Medium blog:

TokenTerminal also publishes independent data on gTrade, which can be found here:

Gains Network fundamentals

Protocol Roadmap:

  • Listing of more pairs (crypto and other asset classes)
  • Continuous frontend UI/UX improvements
  • Spreads and price impact optimizations
  • Multi-collateral support (trade with ETH, USDC, etc.)
  • Contract refactors to allow smart contract trading
  • Partial adding/closing of trades
  • Borrowing fee / OI hedging optimizations
  • Cross-margin support
  • And more…

Audit History:

SECTION 5: Data and Reporting

Is your team prepared to create Dune Dashboards for your incentive program?: Yes. For example, here is our existing Dune dashboard for gTrade: https://dune.com/gains/gtrade_stats

Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread? Yes. We have dashboards in place that monitor the KPIs of section 3.

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

16 Likes
2

Reserved for comment

3 Likes
3

I think that this could be a great way to attract new users to Arbitrum. Gains should attract users outside of Arbitrum who may not participate in the rest of the ecosystem, with arb tokens earned they are much more likely to. Adding these extra bonuses is a great way to attract new users to Gains so serves as a win-win.
This also adds to the decentralization of Arb governance getting the token in more holders hands.

10 Likes
4

6M for trading rewards is excessive. This is a short term proposal to see what’s efficient for future grants and that’s a full budget marketing campaign.

3 Likes
5

Reserved for comment

6

Reserved for comment

7

This incentive program, will certainly provide a greater enhancement benefits to GTOKEN, driving TVL growth and attracting more liquidity, expanding the user base.

6 Likes
8

I think GNS is a good perp DEX and adds value to Arbitrum, however, this is way too much for a non-native protocol and also there is way too much incentives for the GNS token.

These incentives should be focused on driving value and growing the ecosystem - how does incentivising GNS use-case do this?

The amount should be reduced heavily, and there is a significant amount that is only going to the GNS token. This should be removed, otherwise I struggle to see how this is an ecosystem-focused application.

4 Likes
9

This is a great incentive program , the trading incentive points seem well though to focus on growing organic volume. Size seems ok compared to volume.
UX is a lot better on Arbitrum and so is volume.

I support this proposal

6 Likes
10

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

9 Likes
11

Definitely not enough budget. Asking GMX adjust their requested amount to one-third of the original amount might be.

3 Likes
12

Your argument regarding Gains Network not being “native on Arbitrum” is sustained purely on tribalistic ideology. The fact that Arbitrum was not the first chain Gains Network launched on is in no way related to the amount of value it provides to the Arbitrum Ecosystem. The great majority of Volume, TVL and users are on Arbitrum.
Addressing the second point, the 15% of the grant allocated to liquidity incentives benefits not only GNS (which is being pushed as an important collateral on CDPs and Lending platforms now that it has a Chainlink oracle) but it also bolsters the adoption of gDAI and soon to come gTokens which is the next step in cross-building initiatives between Gains Network and other Arbitrum Projects.

10 Likes
13

The core part of the proposal is this loyalty point system that’s aimed at both attracting new users and retaining them in the ecosystem. So you are on the money regarding the main objective of our proposal :).

8 Likes
14

This request is significantly above guidelines.

My suspicion is this is a knee-jerk ask given what GMX are asking for. I respect the Gains Network team and platform and what is provides for Arbitrum. But cannot see the genuine value return to the Arbitrum ecosystem for a grant of this size, where 85% of it is directly put into trading incentives.

4 Likes
15

This grant proposal was created over the course of a month, there is nothing knee jerk about it. We did not consider GMX and indeed how could we know the status of another project?

Drop the speculation from your evaluation please sir.

7 Likes
16

To clarify the incentives go to platform traders which would help pull users from other chains back to Arbitrum. The protocol customers receive the benefit and as a result moves some of these users back to the ARB ecosystem through the incentives.

9 Likes
17

Hi, thank you for your feedback.

Please refer to the “Justification for the size of the grant” part of the main post. We believe the amount is justified as our current weekly fees are about $140k (and historically much higher). The goal with these short-term incentives is to drive adoption to the perp ecosystem of Arbitrum, therefore, the amount needs to be high enough, or unfortunately, there won’t be much to learn as it would only, at best, compensate the trading fees for our existing volume.

Finally, the perp ecosystem of Arbitrum is imo what makes it special, it is one of the highest drivers of adoption and engagement for the chain and has already proven to have found product-market fit. We therefore strongly believe the amount is justified.

9 Likes
18

Hi, thank you for the feedback.

I believe calling our protocol non-native to Arbitrum is unfair. We initially deployed on the Ethereum Mainnet in January 2021 when Arbitrum did not exist, and L2s / rollups weren’t even a thing yet. Then we deployed to Polygon in April 2021 when it was the most popular L2 / sidechain, and that was before the Arbitrum Mainnet was even live :sweat_smile:

For your information, 85%+ of our volume happens on Arbitrum (average over the past 6 months).

Additionally, even tho we deployed on December 31 2022 (9 months ago), we announced we would deploy on Arbitrum in May 2022 (16 months ago). A significant delay to our deployment on Arbitrum happened due to the amount of work to finish the gToken contract first, as we wanted to deploy with the revamped vault architecture directly.

I’m afraid I also disagree that the incentives are for the GNS token; 85% of incentives go towards traders directly, and 15% go to LPers on various DEXes/lending protocols of the Arbitrum ecosystem.

Nothing directly goes to the GNS token, only indirectly because GNS staking receives fees from the trading activity. I do not think we should be ashamed of having well-designed tokenomics and therefore do not think it should impact the size of the grant, it would set a bad precedent.

The trading points will drive value to the Arbitrum ecosystem by making the perp ecosystem on Arbitrum much more attractive than before to trade on compared to other chains and even CEXes. The LP incentives also support other Arbitrum projects’ usage directly.

To conclude, we have considered rewarding projects that build on top of gTrade but did not find it realistic given the short-term nature of the grant and given the fact we have to spend everything before Jan 31st. We still plan to do it in the future but this particular grant did not seem to fit.

9 Likes
19

Hi,

We did not know what GMX was going to ask for until they posted and we’ve been working on this proposal for weeks. I think we’ve even posted on the forum before them. I can confirm this accusation is false.

However, now that we know they are asking for 14m ARB and, more specifically, 6m ARB in trading incentives, I do not think our ask of 6m ARB for trading incentives is unreasonable at all, given the fact we do approximately the same daily trading volume as them currently.

To be clear, I hope that GMX succeeds with their proposal too so that we can make Arbitrum the most attractive place to trade derivatives ASAP! :muscle:

5 Likes
20

I completely agree with the grantee that using the rewards to incentivize traders would be the most logical way to distribute ARB for Gains Network. There is some irrational support for mercenary ARB emissions for rented useless liquidity or staking in this DAO forums for some reason (I guess most people just want the easiest entry to free farm and dump rewards instead of ecosystem growth).

The whole point of a grant program is to bootstrap chain activity and let builders and users get involved with the core mechanics of each protocol. Making a simple staking vault to farm free ARB would be pretty useless compared to this.

On the other side, I completely agree that the grant size is not reasonable at all. Please, check the biggest asks of 100% native protocols such as GMX, Camelot, Radiant, Ramses… and then think again if this is proportionate.

There is only 50M ARB to be matched between all protocols, and of course fully native ones will have preference. I cant see it happening that Gains gets >10% of total grant size.

That said, I do believe Gains should be granted once the amount is revised. Best of luck.

2 Likes