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: Oxytocin
Project Name: ParaSwap
Project Description: ParaSwap is a leading DeFi aggregator that unites the liquidity of decentralized exchanges into one comprehensive and secure interface and APIs.
Our mission is to drive DeFi participation to new heights by offering secure, intelligent and optimized trading solutions for individuals and institutional traders to tap effortlessly into the fragmented liquidity pools.
Team Members and Roles:
ParaSwap is a project maintained by different developers, community members and automations helping it improve. The main team members that can be reached out for this application are:
Oxytocin - Head of Governance and Community
Agrosso - Head of Operations and Partnerships
Mouph - Founder
Project Links:
Contact Information
Point of Contact (note: this should be an individualâs name, not the name of the protocol): Profile - Oxytocin - Arbitrum
Point of Contactâs TG handle: @Ox_Ytocin
Twitter: @0x_Ytocin
Email: N/A
Do you acknowledge that your team will be subject to a KYC requirement?: YES
SECTION 2a: Team and Product Information
Provide details on your teamâs 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 productâs long-term growth and sustainability.
Team experience:
With an initial launch date of 2019, ParaSwap is among the original DeFi protocols that are still leading the space to this day. This gives ParaSwap experience in not only aggregation optimisation, but also other important skills needed for the execution of the grant ,such as relevant data reporting, incentive campaigns execution (shown more in a later section), and integration help.
What novelty or innovation does your product bring to Arbitrum?
For integration efficiency , ParaSwap allows ease of liquidity integration through DexLib, a library that facilitates developers to submit new integrations easily: GitHub - paraswap/paraswap-dex-lib: DexLib is a library used by ParaSwap backend to integrate with decentralized exchanges. This library enables external DEX developers to integrate their DEX with ParaSwap by creating pull requests to this repository.
Additionally, the API interface allows projects to use all the advantages of ParaSwap directly on their project, giving people a fast and free interface to interact with the ecosystem: ParaSwap API v5 | Developer Docs
In addition to the ease-of-integration innovations, ParaSwap also provides innovations through its extreme efficiency, which allows it to frequently be chosen by many traders alike. In this field, ParaSwap has announced Augustus V6, a new version of the smart contract which has 14.8% greater efficiency compared to the previous version and improvements over the existing solutions as well: Announcing ParaSwap V6 And The Dawn Of Decentralized Intents | by paraswap | Feb, 2024 | Medium
Is your project composable with other projects on Arbitrum? If so, please explain:
YES.
The main role of ParaSwap is purely to assist with connecting different projects in DeFi and facilitate access to the ecosystem for both developers and users. More explicitly, ParaSwap allows for two kinds of integrations, DEX integrations and developer integrations
Both of these use cases are already live on arbitrum, and allow both for both users to access the best quotes from a single endpoint, as well as for DEXes to easily integrate and receive the volume from these integrations were they to provide the best quotes.
Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
Yes, aggregators are a common presence in the ecosystem. Some examples include 0x, OpenOcean and 1inch
How do you measure and think about retention internally? (metrics, target KPIs)
Some of the important metrics can be seen in our dashboard page: Metabase
Internally, the number of integrations, volume generated and active users are some of our relevant metrics.
Relevant usage metrics - Please refer to the OBL relevant metrics chart 23. For your category (DEX, lending, gaming, etc) please provide a list of all respective metrics as well as all metrics in the general section:
ParaSwap Best Fits on the âDEXsâ category, with the following metrics being useful KPIs in addition to the General Metrics
- Trading Volume
- List of Liquidity Providers
- List of Traders
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?:
The protocol deployed originally on Ethereum Mainnet in ~2019, expanding to different chains later.On what other networks is the protocol deployed?:
As of the time of writing, ParaSwap is available on:
- Ethereum Mainnet
- Optimism
- Base
- Polygon PoS
- Polygon zkEVM
- BSC
- Fantom
- Avalanche
What date did you deploy on Arbitrum mainnet?:
ParaSwap has been live on Arbitrum One mainnet since July of 2022, with the transaction ID of 0x9aae31708e85d0642f062f18cd0ef70bfa58d137b8a92b29bacaa8b9982f72f5
Do you have a native token?:
Yes, PSP is already live and further information on the token and more can be found here: Token Overview | English | ParaSwap User Doc
Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?
With over two years since the DAO since the initial inception of the DAO, multiple proposals have been made for liquidity mining and incentives, which can be found here: Snapshot
Some of the previous quests include Layer 3 for educational quests about the staking , as well as special release quests with partners such as Zeroswap. These past incentives have served to both drive volume to the protocols as well as learn more about the features of the protocol, both of which weâre aiming to replicate with this proposal.
Current Incentivization: How are you currently incentivizing your protocol?
The only ongoing incentive system is derived from the DAOâs Social Escrowed PSP and staking. By staking PSP on either the single-sided PSP pool or the 80/20 balancer pool, users access a variety of benefits and protocol incentives, such as:
- Voting power and participation in ParaSwap DAO
- Eligibility for gas refund in transactions of up to 95% of the transactionâs value.
- Eligibility for staking rewards in ETH of 80% of ParaSwapâs revenue each epoch
- Boosting of oneâs own stake through trades
Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program?
ParaSwap DAO was among the initial projects to receive an ARB allocation. From the initial allocation, various proposals were funded, such as a proposal to incentivize a developer to improve gas efficiency in Layer 2s and support for community contributors.
After a DAO vote, the remaining ARB of the initial allocation has been allocated to the ParaSwap Foundation .This decision was made following feedback and learnings from many developers who wanted to integrate with ParaSwap, but considered the DAO process too unintuitive to be able to receive the necessary incentivesâŚ
Protocol Performance:
ParaSwap has already processed 3 500 000 000 dollars in volume and over 1 300 000 transactions executed since our deployment on Arbitrum. Of these 3.5 Billion in Volume, over 2.2B has been made over the last year (Source:Dune Analytics) , and over a billion in the last quarter alone. This has allowed ParaSwap to rise to be the second largest Aggregator in Arbitrum by volume generated.
In addition, ParaSwapâs API is also integrated with important protocols on the Arbitrum protocol, such as Camelot, AAVE, ZyberSwap, Chronos, Lido and Ramses Exchange among others. In addition to these sources being integrated as sources of liquidity, ParaSwapâs API partners leverage the advanced routing and
Protocol Roadmap:
In addition to the ongoing partnerships and cumulative protocol improvements (ie. New integrations, more liquidity sources, additional DAO proposals), we have recently released a protocol roadmap in our recent Medium post: Announcing ParaSwap V6 And The Dawn Of Decentralized Intents | by paraswap | Feb, 2024 | Medium
In it , we outline two major developments happening over the next few months: Augustus V6 and Portikus.
Augustus V6 is our most immediate release, and will bring with it greater gas efficiency, easier dex-lib integrations and more trade security checks and consistency. In addition, our sister product, Portikus, concerns the creation of a Decentralised Layer for intents. As the product is not live and in research phase, none of the grant incentives will go towards Portikus or its development.
Audit History & Security Vendors:
ParaSwap has been audited by Solidified: audits/Audit Report - ParaSwap [20.01.2021].pdf at master ¡ solidified-platform/audits ¡ GitHub
Additionally, the ParaSwap DAO has a bug bounty program from Hats.
Security Incidents: The ParaSwap product has never suffered a security incident or exploit.
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: 480,000 ARB
Justification for the size of the grant 23:
The amount requested above is only the ceiling requested, with the actual distribution amount will be based on the trading volume growth, trading tx, and new users acquired. Any unused funds will be returned.
We request up to 40,000 ARB per week for 12 weeks (80000 per distribution season), up to 480,000 in total. This amount requested will depend on the performance of the trading competition and its metrics. More information on this can be found on the âGrant Breakdownâ section.
With over 3 500 000 000 dollars in volume and over 1 300 000 transactions executed since our deployment on Arbitrum, ParaSwap is already playing an important role in the ecosystem to help access the entire liquidity available on Arbitrum Mainnet. However, as one can see in the dashboards we have linked above, we believe that with the correct incentives, ParaSwap can not only bring some of its existing user base onto arbitrum, but also incentivise users to interact with the protocol and share it with others.
Grant Matching: N/A
Grant Breakdown: The entirety of the grant will be spent in our trading and reward seeking competition. However, to ensure an efficient allocation of the rewards, we propose to set specific levels that have to be hit before allowing maximum utilisation of the incentives.
Thus, we would like to set different tranches depending on the performance of the protocol at different levels:
Baseline Amount - 320 000 ARB
This is the initial amount that will be used to distribute the missions. Based on the current price of arb of ~2 USD and our past quarterly volume of 1B volume, or about ~ 0.096% of rewards relative to the volume made.
Partner Activation Incentives - 160 000 ARB
In addition to the baseline amount, we wish to reserve a portion of the requested incentives to partners of the Arbitrum ecosystem that have integrated with ParaSwap.
One of the major objectives of this incentive system is to educate users on key sections of the Arbitrum ecosystem, and as such, we wish to commit this part of the portion to be used only in missions related to partners of the ecosystem.
The current earmarked amount assumes ~ 30% of all missions will be related to partners, however, if more partners decide to join our Missions, more ARB can be allocated from the baseline amount towards partner activation.
Funding Address: 0xd5d9D130Af398b8c8948FAF9ebc4c3Ca416b6378
Funding Address Characteristics: Safe Multisig with distinct signers. The address is a multisig currently used by the ParaSwap foundation. If necessary, at least one signer of the wallet is able to complete KYC checks.
Treasury Address:
The following is a list of addresses of safes deployed on our different chains for treasury and DAO operations:
0x5A61D9214adEFD7669428a03A4e8734A00E9F464
0x619BBf92Fd6bA59893327676B2685A3762a49a33
0xf93A7F819F83DBfDbC307d4D4f0FE5a208C50318
0xB8313Eaf73AED8fEa1D9930dF199B3c1Bdb67b47
0x8c1a1D0b6286F35d47a676aB78482f1cf3D749dC
0xABF832105D7D19E5DEC28D014d5a12579dfa1097
0xfe98240ddAEDF78E278C28F1EdD690ee1a774e66
0x7dA82E75BE36Ab9625B1dd40A5aE5181b43473f3
0xAFFdeC0FE0B5BBfd725642D87D14c465d25F8dE8
Contract Address: The current proposed incentives will rely on execution from the multisig provided. Relevant transactions to the incentives will be shared along with the biweekly reports.
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:
- Incentivise volume on ParaSwap-Arbitrum from both:
a. New users
b. Existing ParaSwap users on other chains
- Activate our existing community and reward them for engaging with the ecosystem
- Educate users on key sections of the Arbitrum ecosystem through the themes of the quests, such as notable tokens and Decentralised Exchanges.
Execution Strategy:
For the duration of the program reward allocation phase (12 weeks), a trading and reward-seeking competition will be added to the ParaSwap page, in which users are set to âfindâ the rewards in the ParaSwap-Arbitrum trading ecosystem. This format aims to provide a gamified approach for users to engage both with ParaSwap, and read and discover more about Arbitrum.
Every distribution period (2 weeks), users are assigned a Mission that determines what kind of trades are eligible for the competition. The hints of these missions will be shared through both our social media pages, as well as on whatever trading partners are going to be engaging with our quests.
Whenever a user makes an eligible trade, each part of their volume counts as a âticketâ (up to a volume cap, to avoid the top users having the most entries). For each ticket a user receives, they are entered once into a raffle to receive ARB tokens.
Mission Categories
To avoid users knowing ahead of time the missions, they are not going to be listed on this proposal. However, the following are some of the actions that could make a user eligible for a ticket:
- Token trading: For every X amount of dollars traded in USD of any pair of a specific token in Arbitrum, receive a ticket for the raffle.
- Partner spotlight: Trades that are being made through a specific partner on Arbitrum will be awarded a ticket for the raffle.
- Partners that are exclusive to Arbitrum will receive priority for these quests.
- Referral Quest: Using ParaSwapâs referral system, two special set of missions can be made to give an exciting opportunity both for users to use the referral code, as well as sharing it:
- Users will receive tickets by generating volume using someoneâs referral code. No referral codes will be shared by ParaSwap.
- For users generating referral codes, a separate prize pool will be created. They will receive tickets based on the amount of volume generated from their referral codes.
The missions during each distribution period will be designed to ensure that once somebody interacts with the correct token or ecosystem, that is sufficient for eligibility. This means, for example, that trading on specific pools or token pairs will be excluded to avoid frustration over mission specificity.
Incentivisation Criteria
Unlike other incentivisation criteria, the effectiveness of a raffle system relies deeply on the amount of participants in the missions, and as such, it is difficult to estimate a strict criteria for the entire 12 week period.
To estimate the amount of users participating in the LTIP, an initial raffle budget of 20 000 (or half the streamed amount) will be set aside for the first mission, setting a price of 100 ARB for 200 users. These numbers are estimated from approximately ~ 10% of the estimated number of Active Users on ParaSwap ( As seen in the âActive usersâ section here on paraswap.io/dashboard )
From this initial distribution, future mission draws and amounts will be adjusted to bring the probability of the average participant to receive a reward somewhere between 5 to 10%, as we believe any number below that would not encourage people to participate. If the probability falls above the 10% threshold while still not exceeding the per-mission limit of 40 000 ARB, the amount of prizes up for distribution will be reduced, with each one of them having higher amounts on average to encourage further participation.
Finally, to ensure both power users and the average user receive a fair chance of a prize, the top 20th percentile of user wallets will be allocated 50% of the ARB allocation, while the remaining 80th the other half. This way, users are encouraged to participate as much as possible in the competition, while still ensuring the final prize distribution is not limited to top scorers only.
Monitoring Leaderboard
A leaderboard of the final distribution on each mission will be shared publicly, to allow anyone to compare and analyse the results of the final draw and maximise transparency. Additionally, we believe the presence of a leaderboard will assist with the gamification of the system.
What mechanisms within the incentive design will you implement to incentivize âstickinessâ whether it be users, liquidity or some other targeted metric?
We believe that this campaign can be beneficial both for ParaSwap and Arbitrum because:
- It will create direct and clear incentives to bring trading volume from users of ParaSwap of other chains onto Arbitrum. Currently, for every dollar of volume on ParaSwap, there are four others being generated on other chains, showing high potential for user onboarding.
- In addition, these aforementioned users will bridge and trade with assets previously not on Arbitrum to receive these rewards.
- The spotlight of partners in specific missions will familiarise users with key players in the ecosystem, which is a clear necessity for someone to be onboarded to a new ecosystem.
- The highlight of features such as the referral or OTC system will create a level of stickiness for users looking to use it again in the future, which might have previously been unaware of it.
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. [Please also justify why these specific KPIs will indicate that the grant has met its objective. Distribution of the grant itself should not be one of the KPIs.]
The proposed incentive framework is a novel one for ParaSwap, and as such, other than the usual KPIs for ParaSwapâs success it is difficult to ascertain direct measures of success from the incentive system. The following is a list of KPIs that will be monitored as measures of the programmeâs effectiveness:
- % of volume of ParaSwap driven through Arbitrum compared to other chains: An increase of ParaSwapâs volume compared to other chains would show more establishment in the Arbitrum ecosystem compared to before the incentives.
- Referral system usage: As the referral system has not been advertised or capitalised on much before, the number of users following referral links as well as volume generated through these would be a strong indicator of the incentives performance.
- ParaSwap Users entering Arbitrum: If an existing ParaSwap user did not use ParaSwap on Arbitrum ~a month prior to these incentives, but now bridged and begun trading on ParaSwap and other Arbitrum protocols, this will be a strong sign of users moving from one chain to another thanks to the incentives.
The following list of KPIs is a non-exhaustive list, as it was written by the author (Oxytocin) who does not handle the ParaSwap analytics. Further analytics can be included on the future depending on the kind of data that can be read and analysed from the incentives systemâs setupâŚ
Grant Timeline and Milestones:
Assuming the proposal passes, the following is a rough timeline of steps that have to be accomplished for this proposal to come to fruition:
Prerequisites:
- Onboarding and selection of -at least- 4 partners onto the Arbitrum quest.
- Development of a UI for the Incentives and Mission.
- Development of quest performance metrics, both for OBL reporting but also internal tracking (eg. leaderboards, ticket amount tracking and calculation)
Once the prerequisites have been made, the next phase of the timeline will involve each of the missions being presented during each of the streaming periods of two weeks, which all share similar characteristics:
Mission Creation and Design
- Reward setting: With the exception of the first mission, rewards will have to be adjusted to bring the numbers closer to the aforementioned 5 to 10% chances.
- Mission design: Design the mission steps based on the categories mentioned above
- Creation of communication materials relevant to the mission
- Partner onboarding: If the mission requires a partner, assist them in creation of similar material and communications
- Creation of spotlight social media highlights (eg. discord town halls, twitter spaces) with partners for promotion of incentives
- Once concluded, distribution of ARB for this mission will take place
The milestones of these quests are relative to the timely design, deployment and communication of these missions. If all missions are delivered in their expected fortnightly period and then function and execute properly, the proposal will be on-track.
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?
In addition to expecting a significant increase in volume on Arbitrum thanks to these incentives, we believe that the grant can bring significant benefits to both ParaSwap and Arbitrum at large which will remain in the longer term.
Some of these benefits will come from the familiarisation of protocols, leading for more cross-user pollination and growth. After the end of the grant, we believe these incentives could help kickstart similar cooperations with partners to also assist further collaborations in the future.
Thanks to the increased awareness of some lesser known features of ParaSwap (eg. API integration, limit orders, referrals, OTC), we believe these grants will also not only increase usage of these features, but also lead to some developers to begin building on top of it thanks to the newfound awareness of these.
Finally, as mentioned in the former section on user stickiness, we believe that these grants will lead to a percentage of the already large ParaSwap userbase to onboard onto the Arbitrum ecosystem.
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 19. Along with this list, please answer the following:
Is your team prepared to comply with OBLâs 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, we are, and with no additional considerations
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that reference your OBL dashboard?
Our team already has an internal data analytics dashboard, some of them can be found here: Metabase
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.)
Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the programâs funding stream?: Yes