Executive Summary
Pike, a cross-chain lending protocol developed by NUTs Finance, has demonstrated promising early adoption in just over a month since its launch. With 20,104 unique wallet addresses and 52,116 transactions processed across various chains, including Arbitrum, Base, Ethereum, and Optimism, Pike has rapidly become a significant player in the DeFi space. Notably, the majority of transactions occurred on Arbitrum, underscoring Pike’s traction within this ecosystem.
Pike enables the utility of the ARB token as multichain collateral without needing users to sell, wrap, or bridge it. Utilizing the grant to incentivize users, Pike aims to accelerate ARB deposit TVL to $15 million and facilitate Arbitrum’s transition to native USDC through $20 million in USDC loans, enhancing ARB’s deposit stickiness and capital retention.
Pike’s requested grant of 200-600K ARB will be milestone-based, aligning funding with its TVL performance to ensure prudent resource allocation. The grant is a vital catalyst for Pike’s growth, enabling it to achieve its liquidity targets and solidify its position as a DeFi leader alongside Arbitrum.
SECTION 1: APPLICANT INFORMATION
Applicant Name: Terry Lam
Project Name: Pike
Project Description:
Pike is a natively cross-chain lending protocol. Users can deposit collateral on chain A, and borrow on chain B, eliminating the need for wrapping and asset bridges. Pike is enabled by Wormhole, Circle’s Cross-Chain Transfer Protocol (CCTP), and Pyth. Pike appeals to a large number of users inside and outside of the Arbitrum ecosystem, having reached 20,104 unique wallet addresses and processed 52,116 transactions across Arbitrum, Base, Ethereum, and Optimism within its first month of launch in Feb 2024. Notably, 19,970 transactions were initiated on Arbitrum, representing a majority of Pike transactions. (Source: Pike dashboard)
Team Members and Roles:
- Daniel, Co-founder
- Terry, Co-Founder
- Azat, Partner of Technology
- Frank, Smart Contract Developer
- Sushant, Head of Business Development
- Cq, Product Manager
- Harry, Frontend Engineer
- Axel, Product Designer
- Olivia, Community Management and Operations
- Vincent, Community Management and Operations
Project Links:
- Pike Website
- Pike dApp
- Gitbook Documentation
- Github Repo
- Grafana Multichain Dashboard
- Defillama
Contact Information:
- Point of Contact: CQ
- Forum Handle: nutscq
- Point of Contact’s TG handle: cqlee
- Twitter: @PikeFinance
- Email: cq@nuts.finance
Do you acknowledge that your team will be subject to a KYC requirement?: Yes
SECTION 2a: Team and Product Information
Team Experience:
Pike is developed by NUTS Finance, a blockchain development lab founded in 2018 that specializes in DeFi primitives. NUTS Finance is known for creating ACoconut, Taiga, and Tapio Protocol, and Pike is the first project to secure a co-grant from Wormhole and Circle, showcasing its innovative position in the blockchain space.
What novelty or innovation does your product bring to Arbitrum?
Pike unlocks the multichain utility of ARB by allowing it to be used as collateral without needing to sell, wrap, or bridge it. This preserves ARB’s security on the native Arbitrum chain while enabling users to borrow other assets like ETH, OP, and USDC for various applications across blockchains, increasing the asset’s utility and capital efficiency.
Is your project composable with other projects on Arbitrum? If so, please explain:
Yes. Pike enables capital inflows into Arbitrum, allowing users to tap liquidity from external networks to borrow ARB and USDC on Arbitrum. These assets can then be utilized for diverse financial activities like derivatives trading within the Arbitrum ecosystem.
Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
Radiant, Unitus, Synonym
How do you measure and think about retention internally? (metrics, target KPIs)
On Pike, retention is viewed as unlocking capital efficiency for assets; ARB on Pike can be used for multichain DeFi without needing to sell, wrap, or bridge it.
We measure retention based on increasing market size (total deposits and borrows) across native ecosystems (Arbitrum, Optimism, Ethereum, Base). Our target is month-on-month growth that outpaces ecosystem TVL growth rates (e.g., Arbitrum ~18% MoM, Optimism ~15% MoM, Ethereum ~50% MoM, Base ~6% MoM as of Feb 24).
Relevant usage metrics - Please refer to the OBL relevant metrics chart.
| Category | List of Metrics |
|---|---|
| General Metrics | Daily Active Users, Daily User Growth, Daily Transaction Count, Daily Protocol Fee, Daily Transaction Fee, Daily ARB Expenditure and User Claims, Incentivized User List & Gini |
| Lending | TVL, Withdrawals, Borrowed Amount, Daily Borrowing Volume, Daily Deposits Volume, List of Depositors, List of Borrowers, Utilization Ratio, Loan Origination Volume, Default/Liquidations |
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? : No
SECTION 2b: PROTOCOL DETAILS
Is the protocol native to Arbitrum?:
Yes, Pike is native to Arbitrum and supports lending and borrowing with Arbitrum native tokens like ARB and USDC. Pike unlocks the multichain utility of the assets on Arbitrum by allowing them to be used as collateral without needing to sell, wrap, or bridge them. Assets on Pike are safeguarded by Arbitrum’s smart contract security and network capabilities.
On what other networks is the protocol deployed?:
Pike is inherently multichain, operating natively on Base, Ethereum, and Optimism.
What date did you deploy on Arbitrum mainnet?:
Pike was deployed on Arbitrum on January 30, 2024.
Arbitrum Transaction Hash (Txhash) Details | Arbiscan
Do you have a native token?: No. Planned.
Past Incentivization:
Pike has achieved a market size of $3.31 million during the capped launch without incentives, indicating strong initial interest and adoption. Data as of February 29, 2024, 23:59:59 GMT+07:00 (Source: Pike Dashboard).
Current Incentivization:
Currently, Pike does not have any incentivization program in place. Users are anticipating potential rewards based on an upcoming points program.
Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem-related program? : No
Protocol Performance:
Pike’s mainnet beta was launched on February 1, 2024. Currently, Pike is undergoing the final stages of audit with Ottersec. Supply limits per wallet for the Capped Launch are set at 0.1 ETH, 100 USDC, 10 OP, and 10 ARB. Hence, unique wallet addresses and transaction activity are more informative metrics than Total Value Locked (TVL) and market size. Nonetheless, TVL and market size data can be found on Defillama dashboards.
As of February 29, 2024, 23:59:59 GMT+07:00, Pike has reached 20,104 unique wallet addresses and processed 52,116 transactions across Arbitrum, Base, Ethereum, and Optimism.
Notably, 19,970 transactions were initiated on Arbitrum, representing a majority of Pike transactions. (Source: Pike dashboard)
Protocol Roadmap:
Pike is in its early launch stages with capped supply limits per wallet. These limits, including 0.1 ETH, 100 USDC, 10 OP, and 10 ARB, will gradually increase in the coming weeks and months. Hence, the Arbitrum grant will primarily benefit new inflows of ARB and Pike users transitioning from other networks into Arbitrum.
The Arbitrum grant is crucial to creating a snowball effect, aiding Pike in reaching critical mass in liquidity depth as a functional money market.
Audit History & Security Vendors:
Pike has completed one initial audit with OtterSec, one of the strongest smart contract auditors in Web3.
Security Incidents: None. Pike prioritizes the safety of our community and user funds and has also set supply caps for the initial mainnet launch. Supply caps will be lifted gradually.
SECTION 3: GRANT INFORMATION
Requested Grant Size: 200,000 to 600,000 ARB
The primary objectives of the grant are to:
- Accelerate Pike and Arbitrum towards a liquidity target of $15 million in ARB deposits, enhancing ARB’s role as multichain collateral for DeFi applications. A range of 100,000 to 400,000 ARB will be allocated to provide ARB holders and depositors with a boosted yield, thereby bootstrapping liquidity on Pike.
- Increase ARB’s deposit stickiness and capital retention through its use as collateral, and accelerate migration to native USDC on Arbitrum through $20 million in USDC loan origination. A range of 100,000 to 200,000 ARB will be dedicated to providing USDC borrowers with a borrowing rate subsidy, enhancing ARB deposit stickiness and capital retention.
Grant Size Justifications and Growth Metrics
| Month End | Supply Cap for ARB deposit | Total unique ARB depositors | Supply cap utilization % for partial deposit | Proportion wallets with max deposit | Total deposit projection (ARB) | Total deposit projection ARB ($USD) |
|---|---|---|---|---|---|---|
| Feb | 10 | 11,455 | 32.0% | 52.4% | 77,456 | $154,912 |
| Mar | 500 | 13,500 | 23.5% | 37.0% | 3,500,025 | $7,000,050 |
| Apr | 1,500 | 15,000 | 12.8% | 13.3% | 5,500,095 | $11,000,190 |
| May | 5,000 | 16,000 | 4.0% | 5.6% | 7,500,068 | $15,000,136 |
| Jun | 7,500 | 18,000 | 3.12% | 5.0% | 10,000,118 | $20,000,235 |
Highlights from Protocol Achievements and Forecast (table above):
- Promising Early User Adoption: Pike’s gradual supply cap raise as a GTM strategy has propelled growth and raised awareness of the protocol, creating a flywheel effect even before token incentivization. As of February 29, 2024, 23:59:59 GMT+07:00, the first month of launch, Pike attracted 11,445 users to Arbitrum, with 77,456 ARB deposited. (Source: Etherscan and Pike dashboard)
- Grant Size Alignment with Growth Trajectory: Assuming a modest 39.7% increase in user base by the end of May 2024 to 16,000 Arbitrum users, with an average user depositing 200 ARB (4% of the supply cap per wallet), and only 2.8% of users making a max deposit of 5,000 ARB, Pike anticipates reaching a $15M TVL by May 2024. Therefore, the grant size aligns appropriately with Pike’s growth trajectory and is crucial for sustaining its momentum.
- Major Catalysts from March to June: The grant is a crucial catalyst to propel Pike’s growth and solidify its position within the Arbitrum ecosystem. Several major catalysts are on the horizon including the gradual increase of supply caps, the implementation of the PIU Program, PIKE token sale, and the Wormhole airdrop.
| Amount of ARB Deposited on Pike ($USD) | Incentive Yield (12 weeks) | Incentive per $1,000 deposit (12 weeks) | APR | Actual Grant Size | Grant vs TVL | Projection |
|---|---|---|---|---|---|---|
| $3,000,000 | 6.46% | $65 | 28.00% | 96,930 | 7% | |
| $5,000,000 | 6.46% | $65 | 28.00% | 161,550 | 7% | |
| $7,000,000 | 6.46% | $65 | 28.00% | 226,170 | 7% | March |
| $10,000,000 | 6.46% | $65 | 28.00% | 323,100 | 7% | |
| $11,000,000 | 6.46% | $65 | 28.00% | 355,410 | 7% | April |
| $15,000,000 | 5.33% | $53 | 21.33% | 400,000 | 5% | May |
| $20,000,000 | 4.00% | $40 | 16.00% | 400,000 | 4% | Jun |
| $25,000,000 | 3.20% | $32 | 12.80% | 400,000 | 3% | |
| $30,000,000 | 2.67% | $27 | 10.67% | 400,000 | 3% | |
| $40,000,000 | 2.00% | $20 | 8.00% | 400,000 | 2% |
Highlights for ARB borrow incentives (table above):
- Grant Size Determination: Pike’s requested grant size ranges from 100,000 ARB to 400,000 ARB, contingent upon ARB supply TVL progression. The actual grant utilization will hinge on Pike’s capacity to attract new users to the protocol.
- Summary of Deposit Incentives: Pike aims to attract $15M in ARB supply to bootstrap liquidity. Achieving this goal would enable users to earn a 5.33% yield over 12 weeks (21.3% APR). For every $1,000 of ARB deposited, users would receive up to $53 in incentives.
- No over-incentivization: If Pike falls short of the $15M target and only attracts $11M or lower in liquidity, the incentive yield for each user will be capped at 6.46% over 12 weeks (28% APR). For every $1,000 of ARB deposited, users would receive a maximum of $65 in incentives.
| Amount of USDC Borrowed on Pike | Borrow Rate (APR) | Subsidy Yield (12 weeks) | Subisidy per $1,000 borrowed (12 weeks) | Subsidised Borrow Rate (APR) | Actual Grant Size | Projection |
|---|---|---|---|---|---|---|
| $5,000,000 | 17% | 1.82% | $18 | 9.12% | 90,909 | |
| $7,000,000 | 17% | 1.82% | $18 | 9.12% | 127,273 | March |
| $10,000,000 | 17% | 1.82% | $18 | 9.12% | 181,818 | |
| $11,000,000 | 17% | 1.82% | $18 | 9.12% | 200,000 | April |
| $15,000,000 | 17% | 1.33% | $13 | 11.67% | 200,000 | May |
| $20,000,000 | 17% | 1.00% | $10 | 12.67% | 200,000 | Jun |
| $30,000,000 | 17% | 0.67% | $7 | 14.11% | 200,000 |
Highlights for USDC borrow subsidies (table above):
- Grant Size Determination: Pike’s requested grant size ranges from 100,000 ARB to 200,000 ARB, contingent upon USDC borrow demand. The actual grant utilization will depend on Pike’s ability to attract new USDC loan origination on the protocol. As of February 29, 2024, 23:59:59 GMT+08:00, 306,581 USDC was borrowed on Pike despite the capped launch. (Source: Pike dashboard)
- Capital Retention: Pike aims to attract $20M in USDC borrows, motivating users to initiate loans instead of leaving ARB collateral idle. This strategy enhances ARB deposit stickiness and capital retention.
- Summary of Subsidies: Assuming a 17% APR borrow rate for USDC, achieving this $20M goal would subsidize user borrow rates to 12.67% APR (4.33% reduction) through ARB incentives. For every $1,000 of USDC borrowed, users would receive $10 in incentives.
Grant Matching: Not applicable
Grant Breakdown:
Funding Address: 0x2e7992677ac2C018938999716cC2F747B2F43e7c
Funding Address Characteristics: The multisig must be able to accept and interact with ERC-721s in order to accept the funding stream.
| Wallet Address | Description |
|---|---|
| 0x2e7992677ac2C018938999716cC2F747B2F43e7c | Team’s 2/3 Multisig on Arbitrum |
Treasury Address:
| Wallet Address | Description |
|---|---|
| 0x679824d755B054a2a50358008472a6F400740319 | Pike treasury on Ethereum |
| 0x4D014D49418be6D918c45651EBfd26e47CeeA957 | Pike treasury on Base |
Contract Address:
| Contract Address | Description |
|---|---|
| 0x1e65e48532f6cf9747774777f3f1f6dc6cf0d81b | Arbitrum Spoke Contract |
| 0x2e7992677ac2C018938999716cC2F747B2F43e7c | ARB Inventive Distributor Address |
SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES
Objectives:
-
Accelerate Pike and Arbitrum towards liquidity targets of $15 million in ARB deposits, enhancing ARB’s role as multichain collateral for DeFi applications.
-
Accelerate migration to native USDC on Arbitrum through $20 million in USDC loans, increase ARB’s deposit stickiness and capital retention through its use as collateral.
Execution Strategy:
Boosted ARB deposits (100,000 ARB to 400,000 ARB)
- Pike’s execution strategy will be milestone-based to align funding with its progress and performance. This approach offers several benefits: ensuring accountability and transparency by tying funds to actual achievements, providing incremental funding to support sustainable growth, mitigating risks for Pike and Arbitrum Foundation through phased allocation, and incentivizing ongoing growth and innovation within the protocol.
- Pike’s receipt and utilization of the grant will depend on its ability to attract new users to the protocol, aiming to reach a $15M target in ARB deposits to bootstrap liquidity.
- As Pike progresses towards the $15M target, the incentive yield for each user will be capped at 6.46% over 12 weeks (28% APR). For every $1,000 of ARB deposited, users can receive up to $65 in incentives. Surplus funds will be returned to Arbitrum.
Boosted Native USDC borrows (100,000 ARB to 200,000 ARB)
- Subsidized USDC borrow rates will incentivize USDC borrowing on Pike, motivating users to initiate loans instead of leaving ARB collateral idle, thus enhancing ARB deposit stickiness and capital retention. Pike’s grant utilization is contingent upon USDC borrow demand, depending on its ability to attract new USDC loan origination to the protocol.
- Assuming a 17% APR borrow rate for USDC, achieving the $20M goal would subsidize user borrow rates to 12.67% APR (4.33% reduction) through ARB incentives. For every $1,000 of USDC borrowed, users can receive up to $10 in incentives.
Further details are in the milestones below.
What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric?
- USDC Loan Origination: Up to 200,000 ARB will incentivize USDC borrowing on Pike, motivating users to initiate loans instead of leaving ARB collateral idle. This strategy enhances ARB deposit stickiness and capital retention.
- User Education on Capital Efficiency: We will launch user education campaigns on our Mirror blog and Twitter platforms to inform users about the capital efficiency advantages of retaining ARB as collateral on Pike. As a lending market, Pike empowers users to borrow against their ARB holdings, enabling them to retain their ARB assets while accessing additional liquidity.
- Pike Points Campaign: During the incentive period, we will introduce the Pike Points campaign to reward users. This campaign will align with increased borrowing activity, fostering stickiness within the Pike ecosystem.
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.
All metrics will be calculated using on-chain data and reported on a custom dashboard on Grafana.
| Metrics | Objective | Definition | Calculation Method |
|---|---|---|---|
| New users from other networks | User Acquisition | Existing users of Pike also deposit ARB on Arbitrum. | Growth of wallets that deposited ARB who are existing Pike users > 10% |
| New Pike Users on Arbitrum | User Acquisition | Increased number of wallets depositing on Arbitrum | 12-week growth of ARB depositors > Arbitrum 12-week address growth |
| Retained new users from other networks | User Retention | Users maintain ARB deposit 14 days after the incentive period | Number of wallets with ARB deposits < 40% decrease after 14 days |
| Increased ARB Liquidity | TVL Acquisition | Increase in ARB total deposits | Week on Week deposits > 10% and ARB deposits at $15m before the end of the incentive period |
| Retained ARB Liquidity | TVL Retention | Increase in ARB total deposits 14 days after the incentive period | < 40% decrease in ARB deposits and stays above 5m after the incentive period. |
Grant Distribution Milestones:
Initial Phase with ARB TVL <$3M and USDC Borrows <$5M:
- ARB Supply: Pike will receive bi-weekly grant installments totaling 100K ARB. Over six installments, Pike will receive 16.7K ARB per installment, amounting to 100K ARB by the grant’s end. The incentive yield is capped at 6.46% and gradually reduced as TVL grows.
- USDC Borrows: Pike will receive bi-weekly grant installments totaling 100K ARB. Over six installments, Pike will receive 16.7K ARB per installment, totaling 100K ARB by the grant’s end. The incentive yield is capped at 1.82% and gradually reduced.
Milestone 1: ARB TVL < $7M and USDC Borrows < $7M:
- ARB Supply: Upon crossing the $3M ARB TVL threshold, Pike will receive bi-weekly grant installments totaling 245K ARB. If Pike has received one installment of 16.7K ARB, the remaining five installments will be 45.6K ARB each, reaching a total of 245K ARB by the grant’s end.
- USDC Borrows: Upon reaching $5M in USDC loans, Pike will receive bi-weekly grant installments totaling 130K ARB.
Milestone 2: TVL Threshold < $15M and USDC Borrows < $20M:
- ARB Supply: Upon crossing the $7M TVL threshold, Pike will receive bi-weekly grant installments totaling 400K ARB. If Pike has received one installment of 16.7K ARB, the remaining five installments will be 76.7K ARB each, reaching a total of 400K ARB by the grant’s end.
- USDC Borrows: Upon reaching the $7M TVL threshold in USDC loans, Pike will receive bi-weekly grant installments totaling 200K ARB.
Milestone 3: ARB TVL surpasses $15M and USDC Borrows above $20M:
- This milestone marks Pike’s significant presence in the Arbitrum DeFi landscape, with substantial liquidity and user engagement. Pike will conduct final reporting on market growth, analyze trends, and implement optimizations based on assessment findings.
- Pike will manage the distribution of incentives, capping the APR at predefined levels to prevent over-incentivization. Any surplus funds will be returned to the Arbitrum Foundation.
The grant will foster growth and innovation within Arbitrum in the following ways:
-
Benefiting ARB holders: Boosted yields on ARB deposits serve as a rewarding incentive for existing ARB holders and those considering adding ARB to their portfolio. This aligns well with Arbitrum stakeholders, incentivizing individuals seeking exposure to ARB.
-
Migration to Native USDC: Subsidizing the borrowing of USDC will increase liquidity on Arbitrum and accelerate efforts to replace the current bridged version of USDC originating from Ethereum.
-
Unlocking ARB cross-chain utility and capital efficiency: Pike facilitates lending and borrowing using native assets directly on their respective blockchains, eliminating the need for wrapping and cross-chain transfers. Users can deposit ARB tokens as collateral on the native Arbitrum
-
Increased Liquidity on Pike: The grant will attract more users and liquidity to Pike. As of February 29, 2024, 23:59:59 GMT+07:00, Pike has achieved a market size of $3.31 million during the capped launch, without incentives. ARB deposits were approximately $184k (Source: Pike Dashboard). With the grant, we aim to increase ARB deposits to $15 million with an incentivized APR of 34.32%, 12 weeks into the program.
-
Increasing Arbitrum Accessibility from Other Networks: Enhanced liquidity and economic activity of ARB will make Arbitrum more accessible within the multichain ecosystem. This increased liquidity will fuel further growth and innovation, leading to the exploration of new DeFi applications. ARB can be utilized for liquidity pairs, perpetual DEXes, and other protocols using liquidity from Pike, fostering new use cases and a vibrant DeFi ecosystem on Arbitrum.
-
Composability of pARB on Base Network: pARB are minted on the Base Network when ARB is supplied and withdrawn from Pike, allowing composability with other DeFi protocols. For example, Yearn’s vaults heavily utilize cTokens in their strategies, leveraging Compound’s liquidity. Compound reached a peak of $12.3 billion in TVL during the 2021 DeFi summer, while Yearn boasted over $6.9 billion in Assets Under Management (AUM) at its peak.
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. Pike has developed a dashboard specifically tailored for multi-chain metrics reporting, allowing us to provide live data reporting. We will assign a project manager to report the biweekly data.
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