[Premia] STIP Addendum

Information about STIP/STIP Backfund

1. Can you provide a link to your previous STIP proposal (round 1 or backfund)?

2. How much, in the previous STIP proposal, did you request in ARB?

  • 900,000 ARB

3. What date did you start the incentive program and what date did it end?

  • Start Date: November 15, 2023
  • End Date: March 5, 2024

4. Could you provide the links to the bi-weekly STIP performance reports and Openblocks Dashboard?

5. Could you provide the KPI(s) that you deem relevant for your protocol, both in absolute terms and percentage change, month over month, for the first of each month starting from October 2023 until April 2024, including the extremes? If you don’t know what KPI might be relevant for you or how to properly define them, please refer to the following document:

  • Our growth KPIs during the STIP distribution increased several times over from where we began;

  • TVL started off at $1.5M on October 1 and peaked at $12M towards the end of the distribution period.
    We ended STIP incentives on March 5th, a month earlier than the majority of other protocols in the STIP. As you can see there is a steep dropoff post the incentive period. In a different environment we do believe we could have captured more sticky tvl. but when the cost of capital is 30-40% in our vaults which produce real yield ± 25% the opportunity cost is hard to beat.

DATE 10.1.23 11.1.23 12.1.23 1.1.24 2.1.24 3.1.24 5.1.24
TVL ($M) 1.5 2.6 5 7.3 9.8 9.6 3
TVL % 0% +73% +92% +46% +34% -3% -68%

Table: Total Value Locked (TVL) for Premia Vaults

  • In the first week of March, we started our orderbook trading system. Trades filled with the orderbook are not included in the aforementioned TVL, but as you can see volume growth has been substantial.
    Premia ended STIP incentives on March 5th. Our volume continued to increase after the STIP incentives ended, and we had our daily volume ATHs after that date. Additionally, post STIP incentives capital did not immediately leave due to compensation from increased trading activity and volatility in the market.

  • There was a substantial acceleration in the cumulative fees paid towards stakers beginning in November.

  • Here is some further data showcasing the algorithmic activity, the blue below is the 30d average transaction count compared to other options protocols on Arbitrum, as of late March. Here you can see Premia doing 50% of all the txns on Arbitrum for the Product Class.

What are our target goals for the KPI if this application is successful?

  1. Increase daily options trading volume on the Arbitrum exclusive Premia Blue exchange by [300%].

  2. Attract [1500] new users to trade options on Premia Blue and Arbitrum through joint marketing campaigns with other Vol or Derivative Products on Arbitrum (Gearbox, Jones, Vertex, etc).

  3. Increase the Total Value Locked (TVL) in Premia Blue.

  • Incentivize LPs to provide [6mm] options liquidity
  1. Grow, educate, and foster the Premia Blue community
  • Growing options adoption through streamlining onboard process with frontend and through the Premia Academy, and fostering and growing a strong community of options traders.
    • Attract [2500] new unique smart wallet accounts users
    • [5000] Additional Premia Academy course completions
    • [1000] New Discord members
    • [1000] New Twitter followers

KPI Tracking

Increase in TVL & Volume

  • Options trading volume
  • Options liquidity provided

User adoption rate

  • Number of smart wallets created

Arbitrum Transaction Volumes

  • Gas Spent with Premia Smart Contracts on Arbitrum One
  • Transactional Count by Premia Smart Contracts on Arbitrum Nova

6. [Optional] Any lessons learned from the previous STIP round?

  • During the STIP, we decided to repurpose 100k set aside for partnerships to extend out the juiced vaults for another month. We were not able to find a proper set of partners that were capable to deploy options liquidity mining given the time constraints and resource requirement from the receiving team. If we had to do it again, we would get some commitment prior to the STIP period to lock-in the partnerships. However, given the amount of new projects moving over with LTIPP, it’s doubtful we will run into that problem again.
    We were also able to develop some new vault types we have not deployed yet as well as a new algo strategy that a few groups are interested in utilizing that should result in some newer exotic options vaults for tokens that do not have a mature spot market yet, which we are excited to deploy soon. We started the cross protocol initiatives to move over liquidity from other chains (SOL) and soon (OP) and with more to come, however the we kind of stink at doing the cross-protocol marketing and end up releasing piecemeal, we could definitely do a better job coordinating between project teams. So if STIP Bridge does get over the line, the items addressed here are what we would course correct this time around to continue to develop our relationships with other projects across the ecosystem.

  • Vaults

    • During the STIP, the vaults had an 80% utilization rate. As you dig deeper the majors tokens of ETH and ARB were constantly at 90% utilization throughout the STIP.
  • Traders

    • During and immediately following the STIP, Premia experienced an exponential growth in volume. This was due to the combination of orderbook liquidity coming online, algorithmic traders integrating into our platform, and deep liquidity in the vaults.

New Plans for STIP Bridge

7. How much are you requesting for this STIP Bridge proposal?

  • 420,000 ARB

8. Do you plan to use the incentives in the same ways as highlighted in Section 3 of the STIP proposal? [Y/N]*

  • No

9. [Only if answered “no” to the previous question] How will the incentive distribution change in terms of mechanisms and products?

  • Learning from the previous period, we plan on keeping the allocation percentages largely similar. However, regarding execution, we plan to incorporate different ecosystem tools to boost engagement and reach parties outside of the de facto Options Community. Note that during the STIP, we decided to repurpose 100k set aside for Options Liquidity Mining partnerships to extend out the juiced vaults for another month, as we were not able to find a proper set of partners that were capable to deploy OLM given the time constraints and resource requirement from the receiving team. Given this, we will only incentivize Vaults and Traders this time around.
  • The new split will focus on incentivizing foundational desired behavior. This will include incentive programs for makers & takers, vault participants, and project archetype users. The breakdown is as follows
    • 280,000 Arbitrum tokens allocated to incentivizing vault participants (6/9 as before)
      • This will allow for more option writing. We will target 6mm in new Liquidity into the vaults
    • 140,000 Arbitrum tokens allocated to incentivize makers and takers (3/9)
      • With the recent success of trading programs by vertex and dydx we plan to replicate a similar program. They have shown a proven path to attract new traders and increase volume in a healthy and manageable manner.
      • Moreover these incentives will help support the soon to launch project archetype. Users will benefit directly from incentivizing takers.
  • Additionally we will be partnering with ecosystem tooling to track engagement and reach parties outside of the de facto options Community.

10. Could you provide the addresses involved in the STIP Bridge initiative (multisig to receive funds, contracts for distribution, and any other relevant contract involved), and highlight if they changed compared to the previous STIP proposal?

11. Could you share any feedback or suggestions on what could be improved in future incentive programs, what were the pain points and what was your general evaluation of the experience?

  • Overall, the experience was very positive and led to a lot of growth in the protocol that we believe can springboard Premia’s further usage.
  • Regarding pain points, we did have some lessons to learn regarding allocating for partnerships, described in more detail in item 6 - and this was something on our end that we’re already prepared to correct.
  • Juiced emissions are nice for legitimacy scoring (TVL) and vanity metrics - foundational incentivization of desired behavior is where we are starting to reap what we sowed. It all plays into the cycle; higher TVL brings more eyes and rapport, and gets you into conversations
  • with participants that can make time and resource investments to make your Defi protocol a success.
  • The ultimate goal we planned on solving with STIP rewards (the cold start problem), was knocked out of the park!

Future Plans for the product

  1. We are currently working on what we call Project Archetype. It will be an AA-first defi platform (that uses Premia under the hood) aimed at growing options adoption and defi more broadly by streamlining opinionated defi experiences. It will feature a first-of-its-kind ‘price protection’ feature utilizing options and smart account wallets for smoother onboarding of new users. We are planning to have this ready during the STIP bridge period this summer, and like Premia will be Arbitrum exclusive.
  2. We are working on a portfolio margin solution. Over the past 6 months the premia team has talked to current users and potential users about the limitations and struggles in the onchain options ecosystem. The universal theme among all conversations has been the need for capital efficiency. Our goal now is to create that capital efficient system with the introduction of portfolio margin. Allowing us to solve the biggest technical and economic limitation in the onchain options ecosystem.

STIP Bridge Addendum

*Credit to @dk3 and @Caesar as well as Lynch from the Premia Parliament for assisting with this STIP Addendum, and to our advisor Atomist from Castle Capital.

2 Likes

Hello @JCDenton ,

Thank you for your application! Your advisor will be Castle Capital @CastleCapital @Atomist.

Please join the LTIPP discord and ping your advisor in the general chat so they can create a new channel and start communicating with you.

2 Likes