SECTION 1: APPLICANT INFORMATION
Applicant Name: Alex
Project Name: Marginly
Project Description: We’ve developed a plug-and-play leverage solution to boost trading on any DEX we integrate with Marginly.
Team Members and Qualifications:
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Alex, CEO & Co-Founder
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Peter, СОО & Co-Founder
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Taylor, Lead BD
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Ernesto, BD
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Veniamin, Lead Dev
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Overseven Solidity Dev
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Rudewalt Solidity Dev
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Alex-nax Front End Dev
Project links:
Contact Information
Point of Contact:
Twitter: @mrly_pete
Email: peter@marginly.com
Do you acknowledge that your team will be subject to a KYC requirement?:
Yes
SECTION 2a: Team and Product Information
We’re passionate about building blockchain-related products and services and the list of our projects may be found here: https://eqlab.io/ Every project we’ve built was an entirely new product, created from the ground up: UI, UX, smart-contracts, backend - everything was built and architectured from scratch.
Here’s some stats (across all products):
- 26 team members
- $31.5m TVL
- $115k transaction per month
- Over 10,000 monthly active users
The Marginly team excels in delivering comprehensive products. Our adeptness lies not only in conceptualizing innovative solutions but also in executing these concepts to fruition.
What novelty or innovation does your product bring to Arbitrum?
We’ve developed a plug-and-play leverage solution to boost trading on any DEX we integrate with Marginly.
- Users employ Marginly pools just like traditional lending protocols: lenders provide capital for borrowers. In Marginly, borrowers then use this capital to trade on multiple connected DEX-es.
- Marginly supports the most popular Arbitrum DEX-es
- TradeJoe
- Uniswap
- Camelot
- DODO
- Ramses
- QuickSwap
- ApeSwap
- Balancer
- SushiSwap
- Third-party protocols and DEX-es use Marginly’s SDK to interact directly with Marginly smart contracts without intermediaries.
- Marginly offers a white-label solution for the front end of the protocol. Any DEX can easily set up a leveraged trading mobile interface and reach out to the mobile audience.
Marginly design features offer a great advantage over traditional lending markets and classical perp trading protocols:
- Great UX: Enjoy mobile and desktop apps that look and work smoothly.
- Fully decentralized: Marginly uses no off-chain information and relies on Uniswap v3 oracles.
- Risk segregation: Each Marginly liquidity pool acts as a side pool to a corresponding Uniswap v3 pool (or any exchange that supports Uni v3 concentrated liquidity architecture), making pool creation permissionless. With this approach, the risk is fully isolated to a single base asset, thus making it more predictable and manageable. Marginly’s risk framework allows the utilization of borrowed capital with maximum efficiency while ensuring strict controls over pool solvency.
- No impermanent loss: LPs provide single-sided liquidity to any pool without any impermanent loss.
- No liquidity locks: There are no LP tokens. Withdraw your liquidity when you want, just like in classical lending protocols.
- Liquidity Infinity Loop: Marginly enables a self-reinforcing cycle in which assets can be reused by the opposite party as leverage for their trades. In other words, longs pay interest to shorts, while shorts pay interest to longs.
- Deleveraging vs. Liquidations: In the case of margin calls, the system automatically nets positions inside the pool instead of liquidating them on the market.
- Order routing: Marginly is designed to execute spot trading across multiple DEX-es, which helps aggregate liquidity and enables long-tail asset trading.
Is your project composable with other projects on Arbitrum? If so, please explain:
Yes, the project developed by Marginly is highly composable with other projects on Arbitrum. The plug-and-play leverage solution seamlessly integrates with various DEX-es, including TradeJoe, Uniswap, Camelot, DODO, Ramses, QuickSwap, Balancer, and SushiSwap. Third-party protocols and DEX-es can interact directly with Marginly’s smart contracts using our SDK, eliminating the need for intermediaries. Marginly also provides a white-label solution for the front end, allowing any DEX to set up a leveraged trading mobile interface easily.
Additionally Marginly is composable with routers and aggregators enabling cross-chain deposits and transactions. Smart contract wallets that offer swaps and trading to their users are also compatible via Marginly Widget.
Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
Gearbox, InfinityPools, Particle, Openleverage are the examples that are most closely related to Marginly
How do you measure and think about retention internally? (metrics, target KPIs)
Marginly was conceived as a DeFi protocol that brings unique and innovative use cases to the table in order to stand out from the crowd. Our strategy since inception has been to look for mutually beneficial strategic partnerships which is why we launched on Arbitrum with its vibrant DeFi ecosystem.
Ultimately retention for us comes down to being able to offer profitable strategies to users. This means that we need:
- Enough TVL in order for traders to have capital to use as leverage
- Solid trading volume for LPs to receive revenue on the assets they provide
- Volumes generated by Marginly for partners (DEXs)
Third point implies a certain number of partnerships. Therefore we will introduce a dashboard on Dune that tracks how much volume Marginly has been able to generate for Arbitrum DEXs.
To introduce additional retention mechanisms, Marginly has developed a points system, where users and DEXs alike may farm points by interacting with Marginly. Here’s the list of incentivized user activities:
- LP - users get points for depositing liquidity into the protocol
- Trade - users get points for generating trading volume
- Referral - users receive a bonus for inviting others to participate
- Activity boost - rewards based on leverage and duration of positions being kept open
DEXs that integrate Marginly widget are incentivized by the following:
- Marginly LP points - 100% of LP points earned on own liquidity will be distributed back to DEXs
- Trading fees - DEXs get 50% fee rebate on all trades done via Marginly widget
- Trade volume - DEXs earn points for trading volume going through Marginly widget at the same rate as retail traders do (1 to 1 matching).
notion page outlining Marginly Points System
Relevant usage metrics:
Daily Active Users: A time series metric representing the daily count of unique addresses interacting with the protocol’s contracts.
Daily User Growth: A time series metric representing the daily user growth (in addresses) interacting with the protocol’s contracts.
Daily Transaction Count: A time series metric representing the daily number of transactions interacting with the protocol’s contracts.
Daily Protocol Fee: A time series data representing the daily total protocol fee generated. For example, swap fees, borrowing fees, etc., comprising all economic value generated through the protocol, contracts, apps, etc., by users.
Daily Transaction Fee: A time series, daily total transaction fees generated daily by interactions with the protocol’s contracts.
For each asset/trading pair:
TVL: A daily time series expressed in USD.
Trading Volume: A daily time series, also measured in USD.
Open Interest: A daily time series presented in USD.
List of Traders: A comprehensive record of individuals or entities that have engaged in trading activities. This list should include trader addresses and the volume of trades executed.
Fees: A daily time series of vault or other relevant fees.
Daily Borrowing Volume: A daily time series measured in USD for each asset and in total.
Daily Deposits Volume: A daily time series, presented in USD for each asset and in total.
Default/Liquidations: Minimize the rate of defaults to ensure platform trust and financial health.
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
Is the protocol native to Arbitrum?:
Yes
On what other networks is the protocol deployed?:
None
What date did you deploy on Arbitrum mainnet?:
23-Oct-2023
txHash: 0x65ee5631e9b30ca7bda08af3a52c69b9293fd6a1de9f72886236a1f0e678f92c
Do you have a native token?:
Planned
Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?
We ran a liquidity bootstrap program offering 33% to liquidity providers. The idea was to gear up for the mainnet launch on Arbitrum. The return was guaranteed by supplementing organic revenue generated by the protocol with Marginly native tokens.
Start date: November 29th 2023
Pools: ETH/USDC, BTC/ETH, ARB/USDC
Targets: $200k per pool or $600k total
Rewards: 33% if deposited beforre December 31st and 16.5% after
This allowed us to bootstrap ETH/USDC and ARB/USDC pools for the mainnet launch. WBTC/ETH pool failed to reach its goal and was later launched with lower liquidity figures. Here is the current liquidity distribution within Marginly pools on Arbitrum One mainnet:
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ETH/USDC: $235k
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ARB/USDC: $219k
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ETH/USDC.e: $57.31k
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ARB/USDC.e: $27.68k
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WBTC/ETH: $111.97k
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GMX/ETH: $16.15K
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Pendle/ETH: $16.32k
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RDNT/ETH: $16.1k
Current Incentivization: How are you currently incentivizing your protocol?
Marginly has an early support liquidity program offering LPers up to 33% APR. These rewards will come from a combination of protocol fees and Marginly native tokens - refer to the previous question for a breakdown.
Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program? [yes/no, please provide any details around how the funds were allocated and any relevant results/learnings(Note: this does NOT disqualify an applicant)
Yes, we’ve received a grant from Arbitrum foundation for $50K. The grant involves 2 milestones and spans until June 1st 2024. We’ve achieved the 1st milestone and already received $30K. We plan to use these funds to incentivise joint trading competitions with Arbitrum based DEX-es and AMMs to grow our retail user base, as well as spend them on marketing activities. We need to achieve the 2nd milestone by June 1st 2024 to receive the remaining $20K. The second milestone requires us to achieve $5M in TVL and $50M in trading volume.
Protocol Performance:
Here’s some key metrics:
If we look at the charts we see a clear and obvious correlation of DAU / MAU as MAU is an aggregate of DAU. The month to month decline over the past 3 months is attributed to the fact that we haven’t yet implemented a coherent token / point system strategy which would keep user attention and retention in Marginly. Launching a points system and executing a native token airdrop should help us both bootstrap pools with long tail assets and increase the number of tokens we offer users for trading. We also didn’t do any contests in February compared to January when we did a trading contest with the Ramses exchange and have seen an increase in MAU/DAU metrics as a result.
Please refer to our Dune dashboard for more information.
Protocol Roadmap:
- Launch the initial set of pools and bootstrap liquidity.
- Launch the Marginly dApp.
- Integrate with all major Arbitrum DEXes/AMMs
- Launch contests with integrated DEX-es and token incentivization mechanics.
- Partner with native token launchers and RWA issuers to create Marginly pools and bootstrap liquidity
- Integrate with wallets and UI providers.
- Launch native token in Q2 2024
- Create v2 of the protocol with no liquidations/hedging of pools’ net positions.
- Launch new products in Q3 - Q4:
- LP management,
- Portfolio trading,
- Social trading (via TG and Discord),
- Account abstraction
Audit History & Security Vendors:
No bug bounty program.
Security Incidents:
None
SECTION 3: GRANT INFORMATION
Requested Grant Size: 133,732 ARB
- 33,732 ARB for LP incentives
- 50,000 ARB for incentivizing niche usecases
- 50,000 ARB for incentivizing Marginly Widget LaaS product
Justification for the size of the grant:
We expect to achieve organic growth of the user base and an exponential increase in trading activity and fees, which we plan to utilize to incentivize traders and liquidity providers further to stay competitive.
We aim to attract over 5x TVL and trading volume with the amount provided over 12 weeks, as a result of the LTIPP. This corresponds to $3.44M TVL and $29.3M trading volume in dollar terms.
We estimate the required APRs for liquidity providers to be in the 25-35% range. Given the existing incentive of 16.5% APR and taking the more conservative 25% figure we can estimate ARB requirement (assuming ARB=$2):
Weekly USD requirement = (8.5%*3.44mln/52) = 5,623
Weekly ARB requirement = 2,811
Total ARB requirement = 33,732
The 5x TVL and trading volume figures are educated guesses we made after assessing several contributing factors:
- The higher we aim, the higher the chances we eventually succeed. We aim for explosive growth with LTIPP incentives as there is little benefit in spending such an opportunity on increasing TVL from say $700k to $1m. An experimental figure of 5x TVL has been selected.
- Proposed incentives would allow for significant product lineup expansion which in turn is expected to bring utilization in line with industry leaders (100-150% range) thus allowing Marginly to reach the trading volume target.
- We’ve studied openblocklabs stats for STIP Round 1 and STIP backfund and concluded that newer projects with smaller initial numbers have a higher potential to grow faster than established, older projects. It is not unreasonable to expect 5-10x growth in trading volume and TVL for projects of Marginly’s size. We’ve taken the more ‘conservative’ 5x estimate for incentives calculations.
- Use-cases like leveraged farming of LSTs, LRTs and others can potentially spin up a buying frenzy for those who chase the high staking yield, boosting our TVL and Volume figures significantly. Integrations with the likes of USDV, FRAX, DOLA, Pendle, tBTC and some other RWA-related projects that tokenize t-bill yield can help reach Marginly’s goals.
We are involved in discussions with a number of projects deployed on Arbitrum that offer niche use cases by integrating Marginly. We propose 50,000 ARB to be distributed as 6-month vested rewards for incentives for these use-cases. For example, we are in advanced talks regarding USDV, FRAX, DOLA, Pendle and tBTC integrations among others. For USDV, FRAX and DOLA we’re seeking to bootstrap pools against USDC to allow for leveraged yield farming, while for tBTC we’re looking to bootstrap pools against USDC or any other stablecoin to allow for leveraged trading of the tBTC token to further promote its penetration into the Arbitrum ecosystem.
We believe that by integrating yield-bearing assets, such as sDOLA and rRETH, we can draw a lot of attention and encourage trading. sDOLA, for example, is currently yielding 15% and by offering a leverage market, users would be able to multiply that yield by up to 20x. Similarly, we are working with several LSTs, such as rETH and sFRAX ETH, to create leveraged offerings on their assets, which would enable users to obtain leveraged yield.
When it comes to strategic partnerships, Marginly encourages DEXs and wallets to partner by either integrating a widget or deploying a subdomain page on Marginly. We propose $50,000 ARB be given out as incentives to DEXs and wallets that choose to integrate Marginly’s LaaS product (Leverage as a service). These incentives will be distributed by rewarding those partners whose widgets/subdomain pages see the most demand to reward their users for interacting with the Widget.
Here is a demonstration of Marginly Widget. At its core it’s a toggle that adds leverage trading functionality to the interface of spot DEXs. Example with Uniswap
Grant Matching:
We have implemented a points system in order to incentivize user engagement and desired outcomes. Here is how it works in a nutshell:
- Partner DEXs who integrate the Marginly widget receive a portion of the ARB allocation from the 50,000 ARB dedicated towards the LaaS product to reward their users for interacting with the Widget.
- ARB allocation will be distributed pro-rata volumes generated by each DEX using the Marginly widget.
- Marginly will distribute Points as well as ARB to traders. Points will be converted to a Marginly token Airdrop conducted after TGE.
- Rebates: 50% of the trading fees generated in Marginly pools will be distributed to DEXs that facilitate these trades.
This allows traders to benefit by accumulating points that will be converted to an airdrop while partnered DEXs benefit from protocol fee share boosted by increased trading activity.
The grant will be further matched with Marginly points. These will be converted into Marginly tokens and distributed as an airdrop due to the fact that the native token isn’t live yet and TGE is expected to happen during the LTIPP incentivization period.
Grant Breakdown:
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33,732 ARB - incentives for liquidity providers to bootstrap Marginly pools for 12 weeks.
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50,000 ARB - incentives for bootstrapping niche use cases
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50,000 ARB - user incentives for utilizing Marginly Widget on partnered DEXs and wallets
Funding Address: 0x21D4693e811ed5E63BCF3A3EC93D85271A8d4f64
Funding Address Characteristics:
The provided address corresponds to a 3/4 Multisignature wallet, with its private keys securely safeguarded.
Treasury Address:
N/A as we don’t yet have a DAO
Contract Address:
0x21D4693e811ed5E63BCF3A3EC93D85271A8d4f64
SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES
Objectives:
Marginly will have a total of 4 primary objectives as a participant of the LTIPP:
- Increase TVL dynamics for incentivized pools
- Within a few months of launching on Arbitrum, we have attracted over $600k TVL. Considering our early stage of development, we plan to further accelerate user acquisition and engagement through the implementation of LTIPP.
- As a result of the LTIPP, we plan to grow this by approximately 5x to $3.44M within 12 weeks.
- Increase Trading Volume
- Thus far, we have conducted nearly $6M worth of trading volume. As we continue to increase our TVL, we will be able to onboard larger traders within our pipeline.
- As a result of the LTIPP, we plan to grow this number by about 5x within 12 weeks, thus reaching total volumes of over $29M.
- Increase Fees
- Marginly earns roughly 10bps per trade and therefore has accumulated about $6k in fees thus far. The increased TVL and volume will subsequently increase our generated fees.
- The LTIPP will enable us to increase this number by roughly 5x, resulting in over $29,000 of generated fees - thus rewarding our future token holders.
- Generate volumes for partners
- Includes both DEXs and wallets that choose to either integrate Marginly Widget or launch a subdomain page.
- The goal is to have 50% of all trading volume routed through integrated partners by the end of 12-week incentivization period.
Execution Strategy:
Liquidity provider incentives:
- 33,732 ARB split equally into ~2811 ARB incentives over 12 weeks.
- Distribution is based on the weighted average liquidity provided to the incentivized pool.
- Rewards will be sent directly to qualifying wallets.
- Marginly will monitor and report distribution stats.
Bootstrapping new use cases:
- 50,000 ARB split equally into ~4,166 ARB over 12 weeks.
- Distribution is based on the weighted average liquidity provided to the incentivized pool.
- Rewards will be sent directly to qualifying wallets.
- Marginly will monitor and report distribution stats.
Widget Utilization Rewards:
- 50,000 ARB split equally into ~4,166 ARB over 12 weeks
- Rewards will be sent to partnered DEXs pro rata trading volume generated via widget to be distributed to users.
- Marginly will monitor and report distribution stats.
What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric?
Another key strategic partnership we are looking to finalize is a cross chain solution to allow for single click cross-chain deposits into Marginly which will improve UX immensely. This partnership enables
cross-chain zapping in one tx via swap widget with integrated leverage:
- transfer WETH from Ethereum into Arbitrum
- deposit WETH into Marginly pool
- buy more WETH by borrowing from Marginly
- swap one token for another with ease
- gives users a choice on which DEX to perform a leveraged trade/swap
- users can do everything with leveraged positions opened through Marginly
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.
Key Performance Indicators (KPIs):
- TVL dynamics for incentivized pools
- Trading Volume
- Fees
- Volumes generated by Marginly for partner DEXs
All of these will be available on Dune dashboards. We also provide our own internal dashboards for risk metrics and volumes: Risk dashboard
Marginly Dune dasboard is the source of truth for these KPIs.
Grant Timeline and Milestones:
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?
Our protocol allows Arbitrum-based AMMs and spot DEX-es to use our SDK and integrate with our smart contracts directly to offer their respective user bases Leverage as a Service (LaaS). Leveraged trading increases volumes on those DEX-es and directly affects user engagement and transaction numbers.
Through collaborations with projects on the Arbitrum network, Marginly is exploring integrating niche use cases and discussing potential partnerships with projects like USDV, FRAX, DOLA, tBTC, Pendle. The goal is to bootstrap pools against these coins for leveraged yield farming and trading to enhance the adoption of these tokens on Arbitrum. Additionally, the integration of yield-bearing assets like sDOLA, sfrxETH, rETH is expected to generate interest and promote trading. Leveraged offerings on these assets would enable users to access leveraged yield opportunities.
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
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?
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