SECTION 1: APPLICANT INFORMATION
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: Manuel
Project Name: Lumin Finance
Project Description:
Lumin Finance is a Peer To Peer Fixed Rate Lending Protocol that incentivises the Lender, Borrower and Stakers of Lumin.
Each loan is individualized, so not affected by any other loans facilitated on the platform. The protocol makes use of NFT technology as a vehicle to hold the loan. This allows the loan to be tradable on our marketplace.
Team Members and Roles:
-Edison: Lead-Dev
-dAlchemis: Core-Dev
-jmcadg: Joint Project Lead, Design and Business Development
-Manuel: Joint Project Lead, Community Management & Business Development
Project Links:
https://www.lumin.finance/
https://vue.lumin.finance/
https://twitter.com/luminprotocol
Contact Information
Point of Contact: Manuel_Lumin
Point of Contact’s TG handle: @blubifu
Email: team@lumin.finance
Do you acknowledge that your team will be subject to a KYC requirement?: Yes
SECTION 2a: Team and Product Information
Provide details on your team’s past and current experience. Any details relating to past projects, recent achievements and any past experience utilizing incentives. Additionally, please provide further details on the state of your product, audience segments, and how you expect incentives to impact the product’s long-term growth and sustainability.
A brief synopsis on our Fixed Rate Lending Protocol
You have an amount of capital you want to earn a return from. You can post your capital to your account and offer your own individualised loans at a rate or rates you decide.
These are fixed rates between 2% and 12% for the duration of the loan. You can set all at one rate or break it down and offer different rates. Fixed rates here are important to understand. You get exactly what you request. These are NOT APYs. Often with pooled loans, you will think you are getting an APY, but in actual fact your APY gets diluted. Other lenders in your pool share that APY, which ultimately trends towards 0%.
So if you set $1,000 at 5% for 30 days, in 30 days you will receive $1,000 + $50. You can specify differing loan durations and fixed interest rates on your deployed capital. Loan duration is anywhere from 1-10 terms in 30-day increments.
There are 3 different ways to pay interest, decided by the lender:
-
interest + principal every term
Lender requests the borrower pays both the interest and principal each term of the loan. The borrow can over pay, but must pay the minimum requirement each term otherwise your collateral will be at risk of liquidation if you are late on the payment. -
interest every term
Lender has requested just interest each term, with the principal being paid in one complete payment at the end. Again over payments can be made, but your collateral will be at risk of liquidation if you are late on the payment. -
everything at the end
Lender only requires both interest and principal to be paid on completion of the loan.
Team experience (Any relevant experience that may be useful in evaluating ability to ship, or execution with grant incentives. Please provide references knowledgeable about past work, where relevant. If you wish to do so privately, indicate that:
The current team members met through another crypto telegram community and decided to start working together on Lumin Finance. We started working on Lumin Finance in May 2023 and thanks to our successfull investment rounds, our two devs were able to work full-time since since August 2023.
This accelerated our developement and we are finally live since 17.03.2024.
Although we are all in the crypto space for longer, we really got hooked to the space in DeFi summer.
As we aren’t doxxed, we will only be able to give a short introduction of our experience.
We can provide further info privately.
-Edison: Lead-Dev
15 years experience as software developer, mainly in embedded development.
Did two unknown projects before Lumin Finance and decided to fully switch to the crypto industry for our project. His skill can be testified by our Auditor Pashov Krum, wo kind of acted as a colleague for a few weeks during our audit.
-dAlchemis: Core-Dev
Mainly responsible for the front-end of our v1 version and tooling. Worked mainly in the Cosmos ecosystem for 2 years before starting Lumin Finance.
-jmcadg: Joint Project Lead, Design and Business Development
Very good connections in different crypto ecosystems. Founder of several NFT projects.
Graphic design before switching to the crypto industry.
-Manuel: Joint Project Lead, Community Management & Business Development
Beside in crypto since 2016, relevant professional experience consists of working as a community manager in 2017 and 2018 and as a research analyst for a PoS validator service company afterwards.
We have two additional team members, which we can share privately.
What novelty or innovation does your product bring to Arbitrum?
Although there are other (fixed rate) lending protocols on Arbitrum, we are the first P2P fixed rate lending protocol.
Our USPs are:
- Peer to Peer Lending
- Fixed rate returns
- Buy back and burn the Lumin token
- Buy back and distribute the Lumin token
- Loan vehicle is an NFT, creating a secondary market for loans
- Fractionalised lending
- Flexible lending criteria
- Incentivised borrowing
- Platform fees shared - Staker, Borrower, Protocol, Burn - creates deflationary supply
- Multi asset collateral and interest options
- Yield bearing assets as collateral
- Flash loans
- Initial lender incentives
Is your project composable with other projects on Arbitrum? If so, please explain:
It is. Users can utilize several other protocol tokens as collateral and as lending options. As long as these assets have a Chainlink or DIA oracle we can (and will) offer these on our platform. Additionally we will utilize Yearn v3 vaults and allow positions(Yield-Bearing Assets) within these as collateral in our protocol.
Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
Naturally all other lending protocols. Not all of them have a strong focus on incentivizing borrowers like we do. Additionally there aren’t any P2P lending protocols on Arbitrum.
How do you measure and think about retention internally?
We believe the borrower is the most crucial user for a lending protocol. Lenders supplying capital is great for TVL, but unused capital is not helping the lender. By incentivising the borrower, we believe a great percentage of loans will be taken and retention will be stronger.
The Lumin protocol has both inbuilt and additional incentives for borrowers. Inbuilt through the Buy-back and Distribute mechanism (borrowers receive 25% of platform fees) and 20% of the Lumin supply, available as daily rewards shared by active borrowers.
Lenders main incentive is Fixed Rates. As discussed above, these give the lender the amount of interest they request for the capital they lend, along with certainty, that enables them to plan with confidence.
However we will incentivise lenders at launch and for the first three months with our native $Lumin token, based on all loans taken in this period. There will be a pot of Lumin which will be shared proportionately between the lenders based on size and duration of the loan.
Additionally, we offer lenders the opportunity to allow their unused collateral to be used in vault strategies, which gives this unused capital a return whilst waiting for the loan to be accepted. This will happen seamlessly in the background. When the loan is taken the protocol switches the capital out of the vault and converts to the active loan.
We believe the above mechanisms and additional incentives will make our user retention stronger.
We are targeting 80% of utilisation for each lending market on the protocol.
As our fixed-interest loan has a specific characteristic, the interest must be paid in full before the collateral is unlocked, this makes our borrowers a long-term player (usually it will stay until the end of the duration of the loan). So the % of offers accepted (in volume), is a retention metric.
Relevant usage metrics - Please refer to the OBL relevant metrics chart . For your category (DEX, lending, gaming, etc) please provide a list of all respective metrics as well as all metrics in the general section:
As we have no historical data yet (We are live since today), we can only list our important metrics for the future and especially during the 12 week program:
Lending :
TVL
Borrowed Amount
Utilization Ratio
Loan Origination Volume
General :
Daily Active Users
Incentivized User List & Gini
However we will create a Dune dashboard to show current Lending metrics as required by the OBL Data Reporting.
Do you agree to remove team-controlled wallets from all milestone metrics AND exclude team-controlled wallets from any incentives included in your plan: Yes
Did you utilize a grants consultant or other third party not named as a grantee to draft this proposal? If so, please disclose the details of that arrangement here, including conflicts of interest (Note: this does NOT disqualify an applicant): No
SECTION 2b: PROTOCOL DETAILS
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, although multi-chain lending is on the roadmap
On what other networks is the protocol deployed?: N/A
What date did you deploy on Arbitrum mainnet?:
17:03.2024
Do you have a native token?: Yes.
Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?
N/A
Current Incentivization: How are you currently incentivizing your protocol?
We mainly incentivize borrowers. There is an emission of 500 $LUMIN tokens distributed to borrowers daily. Also borrowers receive $LUMIN tokens from a buy back & distribute mechanism (25% of the collected protocol fees).
Additionally Stakers receive a share of the collected fees.
Early lender incentives :
Additionally for the first 12 weeks after launch, lenders will receive extra rewards for using the protocol. Lenders can claim a percentage share of a pot of 28,000 $LUMIN.
To qualify, loans need to be a minimum of $1000 and to have been accepted by a borrower in this period.
Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program?
No
Protocol Performance:
None, as we just went live.
Protocol Roadmap:
Audit History & Security Vendors:
We completed our first audit with Pashov, the full audit can be found here:
Our commented results can be found here:
https://medium.com/@lumin.finance/lumin-finance-smart-contract-audit-commented-results-e17c9b0fa1ea
Lumin uses so-called “price feed proxies” for reading asset values, with which loans and collateral valuation is determined. Lenders define which price feed proxies they accept for a given asset, borrowers choose one price feed proxy for each asset upon creating the loan.
We use Chainlink & DIA oracles.
We will have a second audit completed for our v2 release.
Security Incidents: No
SECTION 3: GRANT INFORMATION
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:
50k ARB
Justification for the size of the grant
We request 25k ARB for the first 6 weeks of the program and another 25k ARB if we manage to reach our first milestone.
With these 25k ARB we will be able to compete in terms of APR % with other lending protocols which already incentivize borrowers and are part of the Arbitrum STIP1 grant program (for example Silo Finance).
We are currently incentivizing borrowers with an emission of 500 $LUMIN/day (200$ at current market price). Active borrowers share these emissions according to their interest to be paid on a daily calculation. The maximum borrowers can receive is 100% of their interest.
Our calculation for the grant assumes a total borrowing amount over the 6 weeks which exactly make the loans “interest free” (1:1 ratio of incentives to interest) for the borrowers.
At current market price, the borrowers share a pool of 8400$ in 6 weeks :
500 $LUMIN x 0.4$ x 42 days = 8400$
As you will see in section 4, we aim for 1M$ deposits into our protocol in the first 6 weeks.
For our calculation we divide these 1M$ into 500k$ on the supply side(lenders) and 500k$ on the collateral side (borrowers).
To exactly hit a 1:1 ratio of incentives(8400$) to interest with a borrowed amount of 500k$, the loans need to be taken with 1.68% interest :
1.68% x 500k$ = 8400$
We split the 25k ARB into the following buckets :
With ARB price of 1.75$
Borrowers : 8k ARB → 14k$
Lenders : 8k ARB → 14k$
Bridge and deposit : 5k ARB → 8.75k$
APY boost ecosystem tokens (GMX,PENDLE,GRAIL) : 4k ARB → 7k$
With our intended use of the 25k ARB, we have the following APRs for each bucket :
Borrowers :
Borrowers $LUMIN rewards for 6 weeks : 1.68% → 14,55% APR
Borrowers ARB rewards fors 6 weeks : 2,8% → 24.26% APR (14k$/500k$)
Overall : 38.81% APR
Lenders :
Lenders interest for 6 weeks : 1.68% → 14,55% APR
Lenders ARB rewards fors 6 weeks : 2,8% → 24.26% APR (14k$/500k$)
Overall : 38.81% APR
Bridge and deposit into Arbitrum and Lumin Finance :
First 500k$ which are bridged to Arbitrum and deposited into Lumin Finance, share a pool of 8.75k$.
8.75k$ / 500k$ = 1.75% for 6 weeks → 15.16% APR
APY boost of ecosystem tokens (GMX, GRAIL, Pendle) :
First 200k$ $GMX, $GRAIL, $PENDLE tokens used as collateral share a pool of 7k$.
7k$ / 200k$ = 3.5% for 6 weeks → 30% APR
Some of the above buckets can be combined. For example Using $GRAIL token as collateral and borrow, which would give the user 38.81% APR + 30% APR = 68.81% APR.
We additionally have a Yearnv3 USDC&USDT vault which currently yields ~11.5% APR. Users can deposit their USDT&USDC, receive a yield bearing token, which they can again use as collateral to borrow while continue receiving yield.
Grant Matching:
Our current incentives are 500 $LUMIN per day. At current prices this amounts to 16800$ for 12 weeks…
Grant Breakdown:
We split the 50k requested ARB into 2x 25k ARB. The first 25k ARB will be distributed to users in the first 6 weeks. If we hit our KPIs after 6 weeks, the second 25k ARB will be distributed in the same way.
We will allocate the 25k ARB :
Borrowers : 8k ARB
Lenders : 8k ARB
Bridge to Arbitrum and deposit into Lumin Finance : 5k ARB
APY boost of ecosystem tokens ($GMX, $GRAIL, $PENDLE) : 4k ARB
Funding Address: 0xa489B76786AE756691744A240c1bB1349810773C
Funding Address Characteristics:
Gnosis multisig 2/3 with following team members as multisig owners:
-dAlchemis
-Manuel
-jmcadg
Treasury Address:
Arbitrum: 0xa489B76786AE756691744A240c1bB1349810773C
Ethereum: 0x4fb2Ae5D5942e3Ce0D5151d94B1532BCf10C1a2A
BSC: 0x35BCdF0E83791cceA5eaCCbEcA0Ed013c4F23FCc
Contract Address: TBD
SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES
Clearly outline the primary objectives of the program and the Key Performance Indicators (KPIs), execution strategy, and milestones used to measure success. This helps reviewers understand what the program aims to achieve and how progress will be assessed.
Objectives:
Our primary objectives are:
- Offering a novel, FIXED rate P2P lending platform with fractional loans generating new defi strategies exclusively on arbitrum at launch
- Offering collateralisation options for arbitrum native tokens such as gmx to bring value to the existing ecosystem, unlock idle TVL and generate additional volume and value on the arbitrum chain
These objectives will be achieved through :
-The introduction of a borrower incentives focused P2P lending protocol and its advantages (see section 2) to the Arbitrum users.
-Inflow of capital thanks to incentivizing bridging to Arbitrum (500k$)
-Introduce our first two YearnV3 vaults (USDT&USDC) to Arbitrum and let people collateralize the yield bearing assets of these vaults.
As YearnV3 vault infrastructure let’s you create your own yield bearing strategies, we have a strong focus on introducing more of these vaults in the coming weeks, as we think using creative yield bearing assets/strategies as collateral to borrow money, is missing on Arbitrum.
Execution Strategy:
We will incentivize every aspect of our Protocol in 2x6 weeks timeframe, with each :
Borrowers share a pool of 8k ARB
Lenders share a pool: 8k ARB
Bridge to Arbitrum and deposit into Lumin Finance : 5k ARB
APY boost of ecosystem tokens ($GMX, $GRAIL, $PENDLE) : 4k ARB
All of our currently supported assets are eligible.
A list of our supported borrowing options can be found here:
A list of our supported collateral options can be found here:
The users will be rewarded with ARB after every epoch (1 week).
What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric?
We currently have three mechanics to increase stickiness :
-
Our borrower rewards of our native token is automatically staked. These tokens will be staked for 6 months and the users can claim a share of our generated fees on a weekly basis
-
If a borrower decides to repay his loan earlier than the agreed duration of the loan, he still needs to pay the full interest, which incentivizes borrowers to carry the loan until the end as he would pay a (way) higher borrowing APR.
-
Introduction and utilization of YearnV3 vaults to Arbitrum : With the collateralization of these Yearn v3 vault positions (yield bearing assets), we want to show the users the possibilities of these :
Collateralize your yield bearing assets you want to hodl to borrow other assets and participate in the market without losing your yield. As we don’t charge any extra fees for the strategies provided by Yearn, we hope to retain users acquired during the grant program. People only have upside (utilization) to use these vaults on our platform instead of directly on Yearn.
Specify the KPIs that will be used to measure success in achieving the grant objectives and designate a source of truth for governance to use to verify accuracy.
First 6 weeks :
- 1M$ deposited into our protocol
- 500k TVL (deposits - borrowed amount)
- 500k$ Borrowed Amount
- 200k$ in $GMX, $GRAIL, $PENDLE in Collateral volume
- 500k$ bridged to Arbitrum & deposited into our protocol
End of the program :
- 2M$ deposited into our protocol
- 1M$ TVL (deposits - borrowed amount)
- 1M$ Borrowed Amount
- 400k$ $GMX, $GRAIL, $PENDLE in Collateral Volume
- 1M$ bridged to Arbitrum & deposited into our protocol
Grant Timeline and Milestones:
50k ARB divided into two 25k batches. The first 25k ARB will be received at the beginning of the program and be distributed over the first 6 weeks.
Milestone 1 after 6 weeks:
- 1M$ deposited into our protocol
- 500k TVL (deposits - borrowed amount)
- 500k$ borrowed amount
- 200k$ in $GMX, $GRAIL, $PENDLE in collateral volume
- 500k$ bridged to Arbitrum & deposited into our protocol
If Milestone 1 is achieved, the second 25k ARB will be received and be distributed over the last 6 weeks of the program to target the second milestone.
Milestone 2 at the end of the program:
- 2M$ deposited into our protocol
- 1M$ TVL (deposits - borrowed amount)
- 1M$ borrowed amount
- 400k$ $GMX, $GRAIL, $PENDLE in collateral volume
- 1M$ bridged to Arbitrum & deposited into our protocol
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?
We are the sole protocol focusing on P2P lending and the grant will help us to achieve a greater TVL & Borrowed Amount with a more diverse option of interest rates and loan duration.
It is important to notice that tokens from native Arbitrum protocols like GMX, Camelot & Pendle are between the enabled collateral, which increases their utility. So we are opening more markets (stablecoins or other assets) for their token holders, fostering growth on Arbitrum.
As shown in the application, we will introduce YearnV3 vaults to further support the fast growing importance of utilizing (in our case : collateralizing) yield bearing assets.
Our first two YearnV3 vaults utilize the AaveV3, Stargate & Compound strategies of Yearn.
The strong focus on Arbitrum native protocols and the utilization of the mentioned YearnV3 vaults will already show network effects with neighboring protocols. With the success of the grant program we have a chance to showcase these second-order benefits and we will develop and add more (exotic) YearnV3 strategies to further support the utilization of these.
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
SECTION 5: Data and Reporting
OpenBlock Labs has developed a comprehensive data and reporting checklist for tracking essential metrics across participating protocols. Teams must adhere to the specifications outlined in the provided link here: Onboarding Checklist from OBL . Along with this list, please answer the following:
Is your team prepared to comply with OBL’s data requirements for the entire life of the program and three months following and then handoff to the Arbitrum DAO? Are there any special requests/considerations that should be considered?
Yes
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that reference your OBL dashboard?
Yes
First Offense: *In the event that a project does not provide a bi-weekly update, they will be reminded by an involved party (council, advisor, or program manager). Upon this reminder, the project is given 72 hours to complete the requirement or their funding will be halted.
Second Offense: Discussion with an involved party (advisor, pm, council member) that will lead to understanding if funds should keep flowing or not.
Third Offense: Funding is halted permanently
Does your team agree to provide a final closeout report not later than two weeks from the ending date of your program? This report should include summaries of work completed, final cost structure, whether any funds were returned, and any lessons the grantee feels came out of this grant. Where applicable, be sure to include final estimates of acquisition costs of any users, developers, or assets onboarded to Arbitrum chains. (NOTE: No future grants from this program can be given until a closeout report is provided.)
Yes
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
