Applicant Name: Theo Gonella
Project Name: Matcha, 0x
Matcha (https://matcha.xyz/) is a leading DEX aggregator app that offers users the most frictionless experience to find and trade crypto assets, aggregating liquidity over tens of AMMs and PMMs on Arbitrum One. Matcha has facilitated over $1B in trading volume on Arbitrum, being one of its first aggregators. 0x builds the underlying smart order routing technology, offering it to developers through professional-grade APIs.
Team Members and Qualifications:
50-people strong team. For the sake of this application, the primary POCs will be Theo Gonella (Director of Product) and Eric Wong (Product Manager)
TG: mint_cloud, ewokafloka
Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?: Yes
Requested Grant Size: 1M ARB
Grant Matching: While grant matching is not in scope for the application, we reserve the right to advance a matching proposal to the 0x Protocol community - of which we are part of but don’t control the Treasury.
- 600k user gasless trading incentives on Matcha
- 300k Professional Market Maker incentive
- 100k Developer incentives to build swap apps on Arbitrum, in the form of waived 0x API plans
Funding Address: [to be setup, TBD]
Funding Address Characteristics: Multisig with 2/3 signers
Contract Address: n/a
The three programs to be run as part of this grant cover the necessary ingredients to elevate the DEX trading experience on Arbitrum, bringing it on par - and surpassing - what can be achieved on Mainnet.
- Bring Gasless DEX trading to Arbitrum for the first time, and subsidize gas costs: Matcha Auto allows users to trade on Arbitrum without gas, not having to juggle with concepts like blockchain fees, allowance, gas price, slippage, reverts, and trade resubmission. With this grant, we plan to bring the Matcha Auto experience to Arbitrum and use the earmarked funds to subsidize users’ gas and settlement fees. In this way, Arbitrum users will be able to trade with a web2-like experience, with all the advantages of DeFi. Based on the data we’ve been collecting on over 1.5M trades on Matcha, we estimate that the requested amount should be enough to cover the gas for ~3M gasless trades.
- Bring more professional market makers to offer RFQ liquidity to Arbitrum: There’s consensus at this point that while AMMs provide an invaluable ‘always on’ liquidity cushion, it is PMMs who can take the trading experience to the next level, especially on volatile pairs. Today there are 3 Market Makers providing liquidity on Arbitrum VS over 4X more on Mainnet, including the biggest players in DEX RFQ. RFQ is already the 2nd most used liquidity source (meaning, most efficient) in 0x systems (ref). With the requested funds, we will incentivize eligible Market Makers to serve liquidity over RFQ on Arbitrum. Incentives will be allocated pro-rata, based on their performance and price improvements offered to users. This will ultimately improve the pricing of the most important assets such as $ARB, making markets even more efficient as these players typically arbitrage with Centralized Exchanges.
- Offer premium 0x API plans for free to developers building on Arbitrum: 0x offers professional-grade APIs to developers to access Web3 markets. With this program, we plan on subsidizing the usage of such APIs to several selected teams (approximately 15 at full capacity for a year).
It’s worth noting that these 3 programs are extremely synergistic: the more users use Matcha Auto, the more demand gets the way of professional market makers, who are going to be in a better position to offer better than AMMs prices. The more Market Makers are onboarded on Arbitrum, the better the prices offered to all users using 0x apps, including Matcha and all the other apps leveraging premium 0x plans on Arbitrum.
Matcha Auto program
Matcha adoption data on Arbitrum is publicly available here. It will be trivial to monitor the success of the program by looking at the growth of trading activity over time.
Market Maker program
The success of subsidizing Market Makers for their presence and pricing performance can be tracked easily using 0x Explorer. Currently, RFQ market makers constitute the #2 mostly used liquidity source on 0x API apps, second to UniswapV3. Upon inspection of addresses, one can infer that no more than 3 entities are operating on Arbitrum, VS over 10 on Ethereum. Through these grants, we want to measure the increase in the inclusion rate of RFQ and the absolute number of Market Makers onboarded (which reinforces the inclusion rate KPI as well).
0x Fee rebates
Even in this case, the tracking will be easy to be produced. Each team that apply and get accepted will be tracked in their API usage and onchain transaction activity. This will make it possible to directly measure the impact of their applications in terms of transaction volumes, transactions and wallets involved. To quality, we will ask teams to accept to pass a ‘0x Explorer Tag’ onchain, to be tracked directly in the public leaderboard
We believe we have the track record to run these programs efficiently, as we have pioneered them over time in the last few years. We are the first team to introduce Gasless trading in Matcha in 2022, later adopted by teams like Robinhood and Coinbase. We have worked with tens of professional Market Makers since 2020 and today offer the most mature RFQ solution in DeFi. We have recently launched 0x plans, helping over 400 teams build in Web3. We have the know-how and guardrails to expand these technologies and programs to the Arbitrum ecosystem.
With this grant, we will bring Gasless trading to Arbitrum for the first time. This not only has shown it greatly improves users’ UX but also makes it easier to run a gas rebates program, arguably the most efficient type of DEX rewards program seen to date to build loyal user bases (as it’s less subject to reward farming).
Multiplying the number of Market Makers on Arbitrum will allow bringing price parity with the most liquidity venues, including Centralized Exchanges.
The gas rebate program size is proportional to the number of trades we want to support, which is roughly 3M. On 0x systems, the monthly number of trades is around 70k (about 1/4 of Mainnet, BSC, 1/2 of Polygon). We are calibrating the program around a 6-12 month program, aiming for a 3-5X increase in number of trades.
The allocation of the Market Makers incentive is calibrated to onboard 2-3X the number of current Market Makers, improving their pricing quality to the extent of making them the most-used liquidity source on the trading pairs where they provide liquidity.
The grant for developers should cover about 50 teams to use premium 0x APIs plans for a period of at least 3 months, or a reduced number of teams at capacity for a year. There will be an application put in place by 0x to grant the free API plans, and we will monitor their performance over time to focus on teams getting started with 0x API on Arbitrum.
Matcha Auto program
- The Matcha team will first expand Matcha Auto to Arbitrum. That comes with an upgrade and expansion of 0x infrastructure.
- The program will be announced over our social channels (Twitter, Blog, Discord).
- The funds will be directly deployed to Matcha transaction workers, which take care of the transaction execution (including paying the gas) de facto providing a gas rebate experience to the users.
- Users will be able to use Matcha Auto with zero blockchain and settlement fees.
- While there’s no real incentive for a malicious actor other than system grieving (which is prevented via Matcha’s CDN anyway), the team will constantly monitor the performance and adoption of the feature.
- Adoption will be publicly visible on 0x Explorer, or Dune dashboards can be facilitated.
- The program will be over once all the funds are exhausted.
Market Maker program
0x will approach the market makers providing liquidity on Mainnet and Polygon, inviting them to provide liquidity over Arbitrum too, assisting them in the process.
Market Makers already providing liquidity on Arbitrum will equally benefit from the incentives. We are planning to offer incentives proportional to their inclusion rate and to the amount of price improvement over AMMs offered to Arbitrum users. 0x already utilizes similar data-driven programs in today’s operations with Market Makers, so these incentives can be seamlessly introduced to accelerate their adoption and improve their pricing.
Subject the timelines set for STIP Round 2, we are planning to kick-off the programs between late Q4 and Q1 2024.
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
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, it’s deployed here [arb1: 0xdef1c0ded9bec7f1a1670819833240f027b25eff]
On what other networks is the protocol deployed?: Ethereum mainnet, Polygon, BNB Chain, Optimism, Base, Avalanche, Fantom, Celo
What date did you deploy on Arbitrum?: December 23rd, 2021 (txn)
Protocol Performance: 0x has facilitated over $200B in trading volume since its inception. It is one of the first DEX protocols to launch, active since 2017. [Detail the past performance of the protocol and relevance, including any key metrics or achievements, dashboards, etc.]
Protocol Roadmap: 0x Protocol and 0x APIs are constantly evolving according to users and developers’ needs. The team recently launched gasless trading on Matcha Auto and 0x plans, among other things.
Provide details on how your team is equipped to provide data and reporting on grant distribution.
Is your team prepared to create Dune Dashboards for your incentive program?:
Yes, we have a DS team with extensive expertise in building Dune dashboards. At the same time, we have launched 0x Explorer over a year ago to allow tracking of usage of 0x apps on Arbitrum.
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread? [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]