Kwenta x Perennial: Arbitrum Onboarding Incentives (UPDATED)

I would love to answer this question, though keep in mind the broader alignment of Kwenta may be a bit beyond the scope of this proposal. I’m still happy to provide some context so the Arbitrum community can understand our roadmap, and how Arbitrum fits.

First, I believe that simply bringing existing OP users is a bit of an understatement of our value. Kwenta’s multichain expansion has already begun, and we’ll be continuing to onboard users from Base through our Synthetix partnership. During this process, we’re well incentivized to surface our Perennial integration and future Arbitrum products to any newly onboarded users, as well as lobby other partners to launch products on Arbitrum and migrate trading activity there. Here are a few reasons why these incentives are so strong:

  1. Our partnership with Perennial is more favorable for the KwentaDAO than any other partnership, and the Perennial team has demonstrated themselves to be incredibly capable, and uniquely committed to working with us to deliver a product which meets the needs of our traders. The economic incentive to direct volume to Perennial is 75% higher for Kwenta, which is a significant reason to feature Arbitrum prominently in our communications and our own native token incentives. While I don’t wish to represent our incentive cynically here, I believe a purely objective answer to be the strongest reason. Spinning up, scaling, and maintaining a new perps product is an expensive, laborious task, and the best possible outcome for Kwenta is to see sustainable returns from these efforts from a sticky user base. There is no way to achieve a sticky user base for a sustainable product simply by acting as mercenaries jumping from chain to chain, so we necessarily need to make a serious effort to attract loyal users and respond to their needs by working with Perennial to improve the product.

  2. Beyond our Perennial integration, Kwenta’s immediate goal is to set the industry standard for perps aggregation. We believe Perennial is an incredible partner for our first Arbitrum integration and is likely to produce a highly competitive product, but a successful aggregation product requires that we deploy on a chain with a sufficiently rich perps ecosystem. While there have been other attempts at perps aggregation, we see a huge unmet need in the market for a platform which can provide a user friendly perps aggregation tool, including tools for arbitrage and other advanced cross-platform strategies. This current product focus should demonstrate why Arbitrum is clearly the best place for us. While Kwenta has worked closely with Optimism on past product launches, our previous decisions were based on our committment to support Synthetix as our only partner. Kwenta’s first foray in to forging an independent partnership is centered squarely on the Arbitrum ecosystem as our first choice for this product.

  3. Likewise, our Quanto Perps product is most likely to be successful when surfaced to users alongside existing popular perps markets, and ideally as part of our arbitrage product. While Arbitrum is not yet explicitly named in our development proposal for this product, a strong showing of support from the Arbitrum community would create an excellent case for us to push this product to Arbitrum. Once this initial deployment is finalized, Kwenta would need to move ahead with establishing a pool of sticky liquidity to back the product and further cement our committment to ongoing support and contribution to the Arbitrum ecosystem.

I believe these 3 points not only give insight in to our own thought process and why we’re huge fans of the Arbitrum ecosystem, but also why the decision to develop our most ambitious products on Arbitrum is a logical decision, and highly unlikely to change based on any shortsighted opportunities to become protocol level airdrop farmers or mercenaries. Our ability to make this commitment only improves if the Arbitrum ecosystem continues to support a healthy DeFi ecosystem, and extends this support to Kwenta.

Hopefully my answer can provide some detailed context for how Arbitrum and Kwenta might move forward together. While I’m advocating for an expansion to Arbitrum in any case, I believe support from the DAO would allow is to prioritize this work and maximize the impact of our launch in terms of user awareness and attention.