[QiDao] [FINAL] [STIP - Round 1]

Archive Incentive Framework (Round 1)
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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: QiDao Protocol

  • Project Name: QiDao Protocol

  • Project Description: QiDao is the most used CDP stablecoin project in crypto, established in 2021.

Team Members and Qualifications:

  • Benjamin.lens: Core team
  • Pablo the Penguin: Core team
  • 0xNacho: Core team
  • Royalaid: Core team
  • Lao Zi: Core team

Project Links:

Contact Information

  • TG: Benjamin891

Twitter:

Email:

Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?: Yes

SECTION 2: 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: 500,000 ARB

  • Grant Matching: QiDao will provide $WETH and $QI incentives

Funding Address: arb: 0x6c56271C688F16F50974Ea0B79D80936af374ae1

Funding Address Characteristics: 2/4 multisig used by QiDao for incentives programs.

SECTION 3: GRANT OBJECTIVES AND EXECUTION

Clearly outline the primary objectives of the project and the Key Performance Indicators (KPIs) used to measure success. This helps reviewers understand what the project aims to achieve and how progress will be assessed.

Objectives:

Leverage QiDao’s products to create more natively minted stablecoins on Arbitrum, building a robust liquidity base with other decentralized stablecoins that is not reliant on centralized actors.

QiDao is the most used CDP stablecoins in crypto, with more active borrowers than other major CDP platforms. MAI is a key part of many DeFi ecosystems, allowing L2 users access to tools previously kept in L1.

This grant will allow QiDao to continue to partner with other protocols on Arbitrum. The protocol is already working with several projects deployed on Arbitrum. Any incentives used by QiDao will be in partnership with other projects, increasing the impact of ARB incentives. Protocols that QiDao is already working with on Arbitrum include Frax, Kyber, Ramses, Chronos, Stargate, Axelar, Gains, and Beefy.

ARB tokens can be used to mint MAI directly on Arbitrum, which provides an important flywheel for the Arbitrum ecosystem. As more ARB tokens are emitted via incentives campaigns, QiDao will seek to attract ARB deposits and prevent dumping.

Key Performance Indicators (KPIs):

KPI KPI Metric Source of Truth
Increase ARB composability MAI minted natively on Arbitrum with ARB tokens QiDao Transparency Dashboard
Increase MAI usage MAI minted natively on Arbitrum QiDao Transparency Dashboard
Increase availability of decentralized stables MAI supply on Arbitrum QiDao Transparency Dashboard
Total value locked Value of collateral assets backing MAI on Arbitrum QiDao Transparency Dashboard

How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?

This grant proposal has two main goals, which aim to increase interoperability between projects on Arbitrum.

The primary goal is to use QiDao’s native-first model to create more stables minted natively on Arbitrum with assets that belong to Arbitrum and the greater Ethereum ecosystem: ARB token, project-specific tokens like gDAI and stETH-ETH Curve LPs, as well as Ethereum LSTs (stETH, rETH, and sfrxETH). This grant, QiDao’s co-incentives, and our partnerships with teams like Lido, Frax, Curve, and others, will attract users to mint stablecoins natively on Arbitrum.

The second goal is to foster interoperability between projects. What makes DeFi better than TradFi is the ability to connect various projects seamlessly. QiDao has already executed major integrations with most of DeFi’s long-standing projects. With Lido, for example, QiDao ran a minting incentives campaign, which accounted for over 50% of Curve’s stETH-ETH liquidity on Optimism at the time. On Arbitrum, QiDao has plans to integrate several projects to increase interoperability. These projects include:

  • Frax: sfrxETH as collateral & joint liquidity for decentralized stables
  • Lido: stETH derivative collaterals
  • Inverse: decentralized stable co-LM
  • Kyber: smart liquidity via Elastic
  • Curve: LPs as collateral
  • Aave: amTokens as collateral. MAI already listed on Aave
  • Gains: gDAI as collateral
  • GMX: GLP as collateral
  • Ramses: Liquidity growth

In addition to these collaborations, QiDao will release sMAI. This token will represent deposits in QiDao’s stability pool. sMAI will be fungible and transferable, allowing for integrations with other projects such as AMMs, lending markets, and other stablecoins. MAI already has a Chainlink oracle, which will facilitate integrations.

Bridging into Arbitrum will be limited to encourage native minting against native assets, and prevent short term farming.

Justification for the size of the grant:

The grant size is optimal for running a conservative and targeted incentives campaign. QiDao currently attracts the largest number of stablecoin minters in DeFi with minimal and focused incentives.

What sets QiDao apart is partnerships. By collaborating with other projects like Balancer, Frax, and other major DeFi projects, QiDao can ensure that there are no APR shocks. Avoiding excessive hikes in incentives, Arbitrum will be able to get the most ROI from these grants.

Excess grant funds will be returned to the Arbitrum DAO Treasury address (0xf3fc178157fb3c87548baa86f9d24ba38e649b58) as the sunset of the grant plan.

Execution Strategy: [Describe the plan for executing including resources, products, use of funds, and risk management. This includes allocations for specific pools, eligible assets, products, etc.]

QiDao has a number of automated processes that will aid it in distributing incentives.

  • Borrow incentives: incentives for minting MAI against ARB and other synergistic assets will have set APRs, allowing the DAO to control the efficiency of incentives. This will also have great effects on demand for ARB as well as other value-add assets like sfrxETH
  • NFT achievements: to focus on interoperability, QiDao has developed a fully onchain achievements platform to track user actions. This will allow incentives to be distributed with much greater precision. This platform is open-source and available to any teams looking to improve their incentives efforts
  • Other incentives distributions will be automatically deployed via partnerships with other stablecoins as well as DEXs

Grant Timeline:

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 4: 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?: Yes, QiDao is native to Arbitrum. MAI is minted directly on Arbitrum against assets that exist on Arbitrum.

On what other networks is the protocol deployed?: QiDao is deployed on multiple chains, which will aid in bringing more gas fee-minded users to Arbitrum. These chains are: Polygon, Ethereum, Fantom, Moonbeam, zkEVM, BNB, Optimism, Avalanche, Base, Metis, and Gnosis.

What date did you deploy on Arbitrum?: QiDao launched native MAI on Arbitrum on April 2022

Protocol Performance:

  • Usage: QiDao is the most used CDP stablecoin project, with over 10k active minters. In comparison with other major stablecoins like MakerDAO and Liquity, which have 2,300 and 1,100 active lending respectively.
  • Integrations of MAI: QiDao has integrated its stablecoin into most major DeFi platforms. A few of these platforms are Aave, Curve, Balancer, Layer Zero, Axelar, and Kyber.
  • Integrations within QiDao: the protocol has built added lego blocks from most major DeFi plafforms. A few of these integrations include Curve LPs, Aave aTokens, Axelar axlTokens, and Gains’s gDAI.
  • Long-term builders: MAI is one of the few stablecoins deployed natively outside of Ethereum that has existed for several years. While many stablecoins from Ethereum have continued to exist with few issues, most of the stablecoins launched outside of Ethereum no longer exist. This has been due to teams leaving as well as hacks.

Protocol Roadmap:

  • Cross Chain Protocol (CCP): QiDao’s open-source module on Safe for protocols to automate operations and voting across several chains. As one of the first crosschain DAOs, QiDao has continued to innovate in this space. CCP is slated to be released at SmartCon in October.
  • sMAI: QiDao’s stability pool will allow MAI holders to benefit from liquidation activity. Being fungible, sMAI will provide native yield for projects integrating MAI.
  • QiDao V3: the next iteration of QiDao is coming to Arbitrum. This version takes years of experience at QiDao and will make Arbitrum a hub for stablecoin innovation. More details will be released in the coming weeks.
  • Native Native Native: MAI is minted directly on Arbitrum, which increases its benefits to the ecosystem. This is in contrast with stablecoins that are merely bridged to Arbitrum.
  • Aave Guardians: QiDao has adopted the Aave Guardians standard to secure its smart contracts: Snapshot

Audit History:

  • QiDao has been live for almost 3 years, and has been audited 3 times. It has also been reviewed by several peer teams.

SECTION 5: Data and Reporting

Is your team prepared to create Dune Dashboards for your incentive program?: Yes, or an alternative dashboard with the same information.

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

13 Likes
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Hello @Benjamin.lens thank you for your application! Could you please add more details regarding your proposed timeline for distributing the ARB as well as provide the contract addresses you plan on incentivizing?

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Hey @Benjamin.lens
Is a pleasure to talk to you

Do you want to develop this aspect a little more? amount/manner of distribution that will be used for these matching incentives

Benjamin you must check the size of your request
Corresponds to the category: Lighthouse Grants* (up to 2 million ARB)
You must meet one of the following criteria:
.> Arbitrum Network TVL of 15 million dollars.
.> Accumulated volume of $100M 30D.

Tvl according to Defillama: 1.15M (26-09)

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With all due respect… it is not a secret that MAI is severely under-collaterized currently. Clearly the team won’t ever have enough treasury or resources to match any significant amounts to the point where its a positive-sum gain for the ecosystem. Those funds, simply not exist since you are in debt. There isn’t even liquidity of Qi in Arbitrum.

It’s pretty obvious most of the grant purpose will be absorbed to help re-peg a depegged unbacked stablecoin.

I have a lot of more reserved thoughts about MAI as a whole but it isn’t necessary to go that deeply. I disagree that this situation can end up with anything positive for arbitrum ecosystem other than helping MAI recover their underwater treasury.

Respectfully, I sincerely hope you can make best of your situation regardless – just don’t think Arbitrum holders should be at cost for it.

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Hi ser,

Incentives will be distributed linearly to selected pools and vaults (from where MAI is minted). Incentives will be distributed to these pools via their respective reward mechanisms.

Pools

  • MAI-USDC on Kyber: 0xcb7786db5cac89622712e3068c20dd64807e8ef9
  • MAI-FRAX on Ramses: 0x3f6253767208aaf70071d563403c8023809d52ff
  • MAI-FRAX and MAI-sfrxETH LPs: [contract TBD pending governance respective arbitrum DAO proposals passing]

Vaults

rewards here distributed on a weekly basis via airdrops to eligible wallets. More collaterals could be added in partnership with projects deployed on Arbitrum such as Aave, GMX, Frax, and Rocketpool.

  • Gains Network DAI vault: 0xd371281896f2F5f7A2C65F49d23A2B6ecfd594f3
  • KNC vault: 0xe47ca047Cb7E6A9AdE9405Ca68077d63424F34eC
  • stETH-ETH Curve LP vault: 0xa864956ff961ce62c266a8563b46577d3573372e
  • ARB vault: 0x950eceee9e7d7366a24fc9d2ed4c0c37d17a0fa9

Let us know if this covers what you were hoping to see. Happy to answer any other questions!

7 Likes
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Great proposal! Seems like an obvious win-win for the Arbitrum ecosystem. Won’t hesitate to support :+1:

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Hi ser, always good to see SEED Latam folks!

QiDao will be using 50% of its revenue, denominated in $WETH, every week to support incentives on Arbitrum. Additionally, QI tokens will be used to incentivize liquidity on Kyber. These QI incentives will be ip to $4,000 / week. Increased may be assessed via QiDao DAO proposals. Both of these token incentives will be distributed in the same manner as the ARB incentives, via the respective reward mechanism of chosen DEXs as well as via airdrops in the case of borrow incentives.

In terms of the suggested categories, we looked through other proposals to see what the community of projects had in mind. It looks to be that many peer projects are not in agreement with these suggested categories. This is reflected in grant proposals not matching these categories. Personally, I would propose having a stronger emphasis on amount of users rather than TVL and volume, as these metrics are often gamed by projects via 1 or 2 whales. This does not benefit the greater ecosystem in the long term.

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hey ser, appreciate the feedback. There definitely needs to be a lot of scrutiny for all proposals, which I see you agree with. That being said, there are a few points that are not correct from what you mentioned in your comments.

Firstly, MAI is not “severely under-collaterized”. It should also be noted that MAI has a Chain Risk strategy that prevents too much MAI from entering certain chains. If you have any concerns about QiDao’s deployments on other chains, then this should help ease those. You can read more about that here: Chain Risk - Mai Finance. Arbitrum has currently reached its limit for new MAI being bridged into it. As such it’s in a sort of isolated state from other chains. If it were to alleviate your concerns, QiDao could look to isolate its Arbitrum deployment similarly to how it did with Base. You can see on Defillama and Aerodrome the great success QiDao has achieved there.

The use of the grant, as outlined above, is to promote the native minting of stablecoins on Arbitrum with assets that are value-add to the ecosystem, such as ARB, gDAI, LP tokens, and various LSTs. This is incredibly important for Arbitrum so that the community isnt just farmed from the outside by bridged stablecoins.

If you have reserved thoughts / biases towards MAI, that should be disclosed. Impartiality in DAO decisions is incredibly important.

When it comes to Arbitrum as an ecosystem, QiDao has been a strong partner of most projects. From the bluechip projects like Balancer, Kyber, and Curve, to newer projects like Chronos, and Ramses, QiDao has played at active role in the ecosystem. This is an important fact that should not be forgotten.

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Sure, MAI is clearly not undercollaterized, that’s why it’s price is $0.89 on every chain where the collateral losses has spread (including Arbitrum), and its borrowing has been stopped in AAVE and most lending markets to prevent further unwinding.

I’m not sure what helps your cause to keep repeating that it is not undercollaterized. In fact, the price is much higher than its current backing in the chains that aren’t isolated.

Your proposal is to match ARB grants with $WETH and $QI incentives.

  1. Qi, particularly, doesn’t have any liquidity in Arbitrum, despite this token has been used as bribes in some protocols in Arbitrum, which can’t be sold. How are you going to build liquidity for this token? – it’s not very liquid in any chain either.

  2. WETH revenue would come supposedly from minting, vault creation and borrowing revenue. This is the only mechanism that MAI has to start improving the debt.

Anyway, I think the point is very simple to understand. It’s hard to sell the idea that a stablecoin suffering bad debt will use the grants as a public service to benefit everyone in the ecosystem instead of themselves for recovery. Of course I remain skeptical.

Nonetheless wish you best of luck if people truly think otherwise.

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This is perfect thank you! Your submission now meets all requirements to be considered for a snapshot vote.

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While I appreciate the effort that QiDao is putting into its goals, I believe that it is heading in the wrong direction. Sometimes I feel QiDao and some of its partners relentlessly chase after grants, with no guarantee that they won’t abandon Arbitrum once the grant has been drained, as seen with Solana, Fantom, Harmony, and Metis… Their community has been begging for the effort to regain the $MAI peg and improve their risk management, which is poor, centralized, and non-transparent. Their business model is no longer relevant in this bear market, where building and nurturing innovation should be the main focus. Arbitrum DAO is the latest community effort to change this forever, and it should not provide too much financial support to this model.
However, given QiDao is DeFi OG in this space and is one of the earliest Arbitrum adopters, I feel more comfortable with a 200K ARB grant with the following commitments: $MAI isolation on Arbitrum and incentives only for leverage on Arbitrum native assets and non-Lido ETH derivatives.

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@tnorm could you clarify what parts of the catergory suggestions are mandatory? I see a few large grant proposals that dont quite meet the suggested categories.

For context, QiDao has been live on Arbitrum for 18 months. Would it qualify for the 1M ARB tier?

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I realize being anon affords you the freedom to say what you want. But at least keep it professional.

QiDao is one of the only major stables built outside of Ethereum who’s team has continued building from the bull through the bear. Most have rage quit, rugged, been hacked, or are in some tax haven with their users’ money. Meanwhile QiDao has continued building for the largest userbase of any CDP in crypto, including the top dogs in Ethereum like Liquity and MakerDAO. So calling QiDao “money-grubbers” is completely out of line.

As for the grant-specific feedback, isolating Arbitrum is totally doable, as is keeping incentives to Arbitrum native assets. Curious why Lido is singled out vs rETH or sfrxETH. We’ve pinged the arbitrum team to get clarity on grant amount requirements.

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You can refer to the Eligibility Requirements and Evaluation Guidelines in the original proposal here:

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“Protocols can submit grant applications for amounts they feel appropriate. While there’s no ARB limit, delegates and voters will assess each grant individually.”

Ig it’s just up to voters then?

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Supply and demand maybe next bull run

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@Jadmat @Matt_StableLab

Based on feedback and given the large amount of fellow awesome projects applying for grants, our team has lowered the grant request by 50% (from 1M ARB to 500k ARB)

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Hey Benjamin,
It’s a good decision,
Are you willing for the parallel subsidy to be entirely in WETH? By reducing the request by half, the amount of WETH would be the same, right?
QI has no liquidity in Arbitrum.
I see that the only negative point of your proposal, which can be worked on, is this.

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Hey ser,

The reason there’s no QI liquidity rn is that QiDao is currently migrating its token (like right now). Should be all done this week. As soon as that’s done we should see some liquidity start on Ramses or another DEX.

In terms of the WETH, we can definitely supplement it at the start. The idea here is to set up a sustainable model that will live beyond this grant, using revenue as a means to incentivize new usage.

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I love to see a Qidao proposal here. This team has been building tirelessly from years, and became one of the most used decentralized stablecoins, and gained the trust of not only thousands of MAI holders, but also partnered with the most important protocols in the space like Maker, Aave, and Beefy. The ask seems reasonable, and it makes me much more comfortable knowing they will match incentives.

2 Likes