[Router Protocol] LTIPP Application - FINAL

Archive Long Term Incentives Pilot Program (LTIPP)
1

Router Protocol LTIPP Application

SECTION 1: APPLICANT INFORMATION

Applicant Name: Core Team from Router Protocol

Project Name: Router Protocol

Project Description: Router Protocol is a PoS based Layer-1 blockchain that empowers developers to build intent-based modular interoperability solutions within a robust, secure and decentralised environment. Router Nitro, first flagship dApp built on Router Chain, is the most gas-optimised (50-70% cheaper vs Satellite/Squid, Wormhole/Portal & Stargate), highly capital-efficient and fast asset bridge (<20 sec) powered by Router’s innovative reverse-verification flow.

Team Members and Roles: The Router Protocol team consisting of almost 60 members, comprises many industry veterans. The team is led by MIT alumnus Ramani Ramachandran (Founder and CEO).

Profile of Founders and their achievements are shared below:

Ramani Ramachandran: Founder and CEO of Router Labs

Twitter: @CryptoMan_Ram

Shubham Singh (Co-founder & CTO): Full-stack Developer and Technical Architect building in crypto and blockchain since 2016

Twitter: @eth_sensei

Priyeshu Garg (Head of Research and Devrel): Research Lead and developer-relations wing at Router.

Twitter: @priyeshugarg

Abhishek Somani (Head of Product): Head of Product at Router Protocol.

Twitter: @abhisom2912

Mankena Venkatesh (Core Engineer): Core engineer at Router Protocol and Chief architect of the Router Chain; Prev. Blockchain engineer at Polygon and Injective Protocol

Twitter: @mankenavenkates

Project Links: [Enter Any Relevant Project Links (website, demo, github, twitter, etc.)]

Website: https://www.routerprotocol.com/

GitHub: Router Protocol · GitHub

Twitter: https://twitter.com/routerprotocol

Additional Resources:

Audits:

Contact Information

Point of Contact: A_G

Point of Contact’s TG handle: @AG_1000

Twitter: NA

Email: aayush@routerprotocol.com

Do you acknowledge that your team will be subject to a KYC requirement? Yes

SECTION 2a: Team and Product Information

Provide details on your team’s past and current experience. Any details relating to past projects, recent achievements and any past experience utilising incentives. Additionally, please provide further details on the state of your product, audience segments, and how you expect incentives to impact the product’s long-term growth and sustainability.

Team experience (Any relevant experience that may be useful in evaluating ability to ship, or execution with grant incentives. Please provide references knowledgeable about past work, where relevant. If you wish to do so privately, indicate that. [Optional, but recommended]):

The Router Protocol team consisting of almost 60 members, comprises many industry veterans. The team is led by MIT alumnus Ramani Ramachandran (Founder and CEO).

Profile of Founders, core Team Members and their achievements are shared below:

Ramani Ramachandran (Co-founder & CEO)

Ramani Ramachandran (Ram) is the Founder and CEO of Router Labs, which runs Router Protocol. Ram has been in crypto since 2014. Prior to Crypto, Ram was in the financial services industry and spent time across various functions including product management, research, fundraising, and investments across the US, Europe, and Asia.

Shubham Singh (Co-founder & CTO)

Full-stack Developer and Technical Architect building in crypto and blockchain since 2016; Built a crypto-index (108 token) as well as Fordex - the world’s first stablecoin DEX.

Priyeshu Garg (Head of Research and Devrel)

Priyeshu leads the research and developer-relations wing at Router. Past stints include software engineering at Ola, crypto journalism at Cryptoslate and product at Qredo.

Abhishek Somani (Head of Product)

Abhishek is Head of Product at Router Protocol. Abhishek has worked on Product development in several unicorns including Gojek (one of the largest ride-hailing companies in Singapore) and Paytm (largest digital financial services player in India) and Coverfox (one of the largest online insurance marketplaces in India).

Mankena Venkatesh (Blockchain Engineer)

He is a core engineer at Router Protocol and is the Chief architect of the Router Chain. He previously worked as a Blockchain engineer at Matic (now Polygon) and Injective protocol.

About the Product

Router Nitro, first flagship dApp built on Router Chain, is the most gas-optimised (50-70% cheaper vs Satellite/Squid, Wormhole/Portal & Stargate), highly capital-efficient and fast asset bridge (<20 sec) powered by our innovative reverse-verification flow.

Router Nitro product features:

  • Zero-TVL Intent-Based Asset Transfers:

  • Uses Optimistic approach to execute the transaction & a reverse verification module using Router Chain’s Stateful bridging & Contract level integration modules.

  • Introduces an entity (forwarder or solver) to front the liquidity on the destination chain.

  • The forwarder then reconciles their funds post verification, referencing the expected transaction on the Router’s middleware contract.

  • Open Network: joining the forwarder network is open and permissionless

  • Fast Transfers: most bridge transfers could be completed under 20 seconds

  • Capital Efficiency: The forwarders need not lock any capital in Router smart contracts and the liquidity could be actively managed.

  • Security: As a layer 1 Proof of Stake (PoS) blockchain, the Router chain is primarily run by a network of independent validators with economic incentives to act honestly.

  • Unparalleled Gas Efficiency: We’ve managed to achieve over 50% gas savings compared to peers like Stargate, Wormhole, and Axelar.

|Protocol|Gas Consumed - Source|Gas Consumed - Destination|Gas Consumed - Total|Gas Consumed - Total (Comparison with Trustless Voyager)|

Protocol Gas Consumed - Source Gas Consumed - Destination Gas Consumed - Total Gas Consumed - Total (Comparison with Trustless Voyager)
Router Nitro 58,702 86,001 144,703
Across 66,137 119,427 185,564 ↓ 22.02%
Multichain 137,435 110,847 248,282 ↓ 41.72%
CBridge 92,428 212,218 304,646 ↓ 52.50%
Hyphen 155,070 214,432 369,502 ↓ 60.84%
Wormhole 95,326 276,891 372,217 ↓ 61.12%
Hop 332,004 142,908 474,912 ↓ 69.53%
Axelar 59,996 437,855 497,851 ↓ 70.93%
Synapse 223,794 290,795 514,589 ↓ 71.88%
Layer0 - Stargate 363,336 172,287 535,623 ↓ 72.98%
Connext 397,503 387,041 784,544 ↓ 81.56%
Squid 363,482 478,338 841,820 ↓ 82.81%

Router Nitro public mainnet went live on 25 January 2024. We have seen an exponential growth in our volumes and transactions in last 2-3 weeks.

Our transaction dashboard can be seen here: Nitro Explorer

What novelty or innovation does your product bring to Arbitrum?

Our novelty lies in providing the fastest and most seamless onboarding to Arbitrum.

  1. Using Router Nitro, users can bridge funds to Arbitrum in 5-20 seconds at a cost which is a fraction of what it would usually take compared to other bridges. Nitro enables this via its zero TVL Intent based transfers where a solver/forwarder sends funds to the user in 5-10 seconds. The risk of settlement, is therefore, completely shifted from users and borne by these active liquidity manager entities called forwarders who later submit a cryptographic proof referencing the completed transaction on the Router’s middleware contract to claim the bridged funds.

  2. Router CCIF is the industry first working and fully implemented cross-chain intents framework that allows applications to onboard users via a single click. Unlike other bridge aggregators or bridges that are dependent upon external partners to enable one-click onboarding, Router’s CCIF framework provides the complete one-click onboarding functionality end-to-end. This is done with its in-house built (and fully audited) intent adapters. Using these adapters, any application on Arbitrum can allow users to invoke actions on its smart contracts via a single-click.

Router CCIF is an Intent based Framework that employs a combination of Router’s Intent Adapter (think smart contracts) that abstract complex actions of multiple Dapps for the user and enable intuitive and efficient workflows that are executed in a click of a button.

As an example, consider a user who who has 123 ETH on a source chain (say Ethereum) and wants to provide ETHx/ETH LP on Uniswap v3 on a destination chain (say Arbitrum). As shown in diagram below, Router CCIF employs Stader Adapter and Uni V3 Pool Adapter that can execute this complex set of actions in a single click.

image
image1084Ă—598 71.2 KB

Router CCIF with its intent adapters enables applications to execute any executable combination of workflows such as:

1) Swap + Bridge (to Arbitrum) + Swap+ Add Liquidity

2) Swap + Bridge (to Arbitrum) + Add Liquidity + Stake

3) Swap + Bridge (to Arbitrum) + Liquid Stake

Another example: Using Router CCIF, an application like Uniswap/Ramses/Camelot can allow users on any chain such as Optimism, Polygon, Scroll, Ethereum to provide an LP in a pool (say ARB-USDC) pool and stake LP tokens with a single click on Arbitrum. This flow is completely trustless and similar to how a user would usually execute this entire process with a difference that this is done by a third party solver/forwarder and the entire ownership of the underlying asset/LP is returned to the user in a single click within seconds. The system therefore carries no security risk since the state is never saved on the middleware and the assets ownership resides with the user.

Router CCIF detailed Whitepaper is shared below for reference:

Please note that we see Router CCIF as an extension of Router Protocol and there is no separate token for the same. It needs to be noted, however, that there are multiple projects that have recently launched on top of Router CCIF framework.

Is your project composable with other projects on Arbitrum? If so, please explain:

Router CCIF is a framework that is application agnostic and can work with any application in the Arbitrum ecosystem including with Arbitrum L3s.

Router Nitro, on other hand, is a bridge that enables users to transfer assets from one chain to another.

Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?

Router Nitro will be closest to bridges like Across, Wormhole and bridge aggregators like Socket and LiFi.

We believe that Router CCIF doesn’t have a parallel or functioning equivalent yet. There are some bridge players like Across who are working on intent based architectures, but in our knowledge, none of them are at a stage where they can be used by users or applications. On other hand, Router CCIF already has applications like StakeEase that can enable users to execute end-to-end liquid staking and restaking on any protocol in Web3 universe at the click of a button.

How do you measure and think about retention internally? (metrics, target KPIs)

  • TVL bridged to Arbitrum

  • Volume of transactions bridging into Arbitrum

  • Number of transactions bridging into Arbitrum

  • Number of unique wallets interacting with applications on Arbitrum

Relevant usage metrics - Please refer to the [OBL relevant metrics chart 26]. For your category (DEX, lending, gaming, etc) please provide a list of all respective metrics as well as all metrics in the general section:

  • Protocol volume in last 30d: $68.5M

  • Protocol volume on Arbitrum last 30d: $11.6M USD (~17% of our volume)

  • Protocol txns in last 30d: 121,139 TXs

  • Protocol txns on Arbitrum in last 30d: 10,161

It must be noted that we launched our product only 4 weeks ago and have seen a huge surge in activity in last 2 weeks post the launch of our marketing and incentivisation programs. In order to accurately reflect our current traction, we are also listing down the current 30d run-rate based on average of the last 1 week.

  • Protocol volume Monthly Run Rate: ~$190M

  • Protocol volume on Arbitrum Monthly Run Rate: ~$30M

  • Protocol txns Monthly Run Rate: ~250k TXs

  • Protocol txns on Arbitrum Monthly Run Rate: ~20k TXs

Analytics Dashboard Link: https://explorer.routernitro.com/analytics

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? [Yes/No, and provide explanation]

Bridges by definition are not native to any chain. We are here to enable chain-abstracted and application agnostic experience to users.

On what other networks is the protocol deployed?: [Yes/No, and provide chains]

16 chains (Ethereum, Arbitrum, Optimism, Polygon, Polygon zkEVM, zkSync, Scroll, Linea, Base, Mantle, Manta, Blast, Avalanche, BSC, Tron and Rootstock)

What date did you deploy on Arbitrum mainnet?: [Date + transaction ID. If not yet live on mainnet, explain why.]

Deployment Transaction: Arbitrum Transaction Hash (Txhash) Details | Arbiscan

Deployment Date and TimeStamp: Jan-05-2024 10:56:18 AM +UTC

We officially launched Router Nitro bridge on multiple chains including Arbitrum on January 25, 2024

Do you have a native token?****: [Yes/No/Planned, link tokenomics docs]

Yes

Tokenomics: Router Community Approves ROUTE 2.0 Tokenomics Proposal Heralding a New-Era of truly native Cross-Chain Dapps | by Router Protocol | Feb, 2024 | Medium

Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?

We ran an extensive incentives program where we allowed users to earn Carrots (equivalent of Points) a couple of weeks ago. We have seen a multi-fold increase in TX volume (33X) and number of transactions (60X) in just 2 weeks post the initiation of the Carrots program.

Dashboard: Nitro Explorer

We intend to use “Carrots” in conjunction with ARB incentives to supercharge transition of users to Arbitrum and reduce friction in onboarding to Arbitrum.

Current Incentivization: How are you currently incentivizing your protocol?

Our v2 product launch happened only a month ago. For the first few weeks, we ran a zero bridge fee+ zero Destination fees offer for our users. Just 2-3 weeks ago, we made our Carrots Module live. Hence, currently our incentives are primarily given in “Carrots” based on user transaction activity. Tangible value of carrots are captured by multiple means:

  1. Evolution of Rabbit NFTs

  2. Expectation of future airdrops by Router ecosystem projects

  3. Tickets to win a lottery pool that is funded by a portion of weekly fees generated by the bridge

Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program? [yes/no, please provide any details around how the funds were allocated and any relevant results/learnings(Note: this does NOT disqualify an applicant)]

No. However, I want to highlight that we got a small 75k USD worth token airdrop of ARB tokens around the launch. Since this was a relatively small amount and there were no specific instructions associated with this amount, this amount was more or less seen a part of our treasury. We believe that we have distributed far more than 75k USD as incentives to users bridging to Arbitrum in our v1 product as well as a part of our currenly ongoing Carrots Compaign.

Protocol Performance: [Detail the past performance of the protocol and relevance, including any key metrics or achievements, dashboards, etc.]

Dashboard: Nitro Explorer

Overall Nitro Mainnet stats:

175K+ transactions, ~$120M volume, 96K+ users, and ~250+ assets bridged

In just 6 weeks of launch (official launch date was Jan 25, 2024)

Average Daily transaction volume: ~$5M

Average Daily transactions: ~5000

List of chains connected (16):

L1s: Ethereum, Avalanche, BNB, Tron

L2s: Scroll, Arb, Optimism, Base, Polygon (+zkEVM), Linea, Mantle, zkSync, Manta, Blast, Rootstock

Soon to be connected: NEAR (Aurora), Taiko, Mode, Metis, Boba, AlephZero, Solana, Sui

Protocol Roadmap: [Describe relevant roadmap details for your protocol or relevant products to your grant application. Include tangible milestones over the next 12 months.]

We’re just getting started with intents and the broader chain abstraction narrative, and the concomitant ecosystem growth. We can’t wait to see how our community and partners build on top of the interoperability framework (CCIF) we’ve created.

:rocket:Router Nitro — the world’s most gas-optimized, highly capital-efficient and fast asset bridge powered by our innovative reverse-verification flow. With Router Nitro, users can experience lightning-fast ~20 sec bridging and avoid honeypot risk — no TVL lockup required!

Note: Transactions on Router Nitro at 75 %le complete in ~19 seconds at the time of writing. We define bridging time as the time it takes for transactions to confirm on destination side after the transaction is confirmed on source side. The time to completion may differ from chain to chain.

:lock:StakeEase 2.0 coming SOON — ONE click RESTAKING from ANY chain and ANY asset. StakeEase emerges as a restaking aggregator, tapping into the current market meta of Restaking. Mainnet Launch expected before the next LST/LRT cap increase — early Feb. Partnered with protocols like Kelp, SuperMeta, and others. Most of our ecosystem projects will be rewarding the Router community in the future.

:dart:Going BIG on Intents — We recently released our cross-chain intent framework CCIF. It enables users to submit ambiguous intents, like “Stake my USDC,” which are subsequently translated into executable cross-chain workflows optimised for speed, cost-effectiveness, and reliability. Launching 20+ adapters in 1Q24 tapping major protocols — Lending like Aave, DEXs like Uniswap, Liquid Staking like Lido, and others.

:bridge_at_night:Router Chain full public mainnet in 2Q with transition to an L2/rollup.

:rocket:Ecosystem of IDapps BLASTING OFF — Several new Interoperable DApps (IDapps) being built including restaking, lending/borrowing, gamified ordinals, and an NFT marketplace.

Audit History & Security Vendors: [Provide historic audits and audit results. Do you have a bug bounty program? Please provide details around your security implementation including any advisors and vendors.]

Audits:

https://drive.google.com/drive/folders/1Ta11JB7xGMemnzO-LPYzkugMj4-LhJEL?usp=sharing

https://drive.google.com/drive/folders/10BcXJD3CPKvQb-rPplkiAPKWTqHWVlSE?usp=drive_link

We have used 2 auditors for our code audit: Oak Security and Informal Systems. For the sake of complete transparency, there were some issues cited in our initial Audit by Oak. However, the issues cited in the report were extensively worked on and resolved by our tech team in close consultation with Oak. Every piece of code implementation that has gone live on mainnet has been marked as “Resolved” in the Oak reports as well as in the subsequent interactions we have had with the Oak team.

This can be verified in the last reports that we have shared for Oak in Feb 2024 and Mar 2024. We would like the reviewers to check the last section of the March report with status of issues. You will see that all these issues stand “Resolved” now as per the latest report.

Security Incidents: [Has your protocol ever been exploited? If so, please describe what, when and how for ALL incidents as well as the remedies to solve and mitigate for future incidents]

Router Nitro is audited by multiple auditors and is built to protect itself against a range of attacks. The biggest feature of the intents based design is two fold:

  1. The funds of the users are almost never at risk because Router Nitro does not issue wrapped assets and the third party solver/forwarder transfers the funds to the user in 5-20 seconds. Therefore, the risk of settlement is borne by these third-party market-makers/solver entities we call “forwarders” and not by the users.

  2. Router Nitro’s security model is built to minimise loss in case there is a hack. This is because at any point in time, the system has minimal locked TVL that sits in EOAs of active market-makers/solvers called forwarders. Because of our capital efficient design based on intents, Router Nitro is able to support run-rate of $180M monthly volumes with just $1M in TVL!! Our competitors which operate with volumes that are 1X-5X of Router Nitro require extremely high TVL (20X-1000X) locked in the bridges putting a lot of LP and user funds at risk in the event of a hack.

While there hasn’t been a direct hack on Router bridge yet, there have been 2 events of coincidental damage on our v1 bridge where a hack to another bridge have caused financial loss to us. First such hack was the hack of native Harmony bridge and second was the hack of Multichain bridge. Both these events caused a minor financial damage to Router (100k-300k USD) which was completely borne by Router Treasury. We like to believe that we are amongst a few bridges that have largely remained insulated from any kinds of bridge hacks or security vulnerabilities. However, our secret sauce does not lie in just minimising the probability of hack but it lies in extremely low possible loss in worst hacks possible, including 51% attack on connecting chains (this is all thanks to our low TVL intents based design that provides extremely swift transaction processing capability without the need to lock significant capital in smart contracts or bridges)

Remedy to combat previous attacks: In order to further combat the situation where a specific chain undergoes a 51% attack or the native or related bridge of the chain itself gets hacked, we have also introduced a feature called “Community Glass Switch”. In this feature, any community member can pause the bridge by adding native tokens of the chain as a bond to make a claim that the specific chain in question should be paused to protect damage to Router bridge. Based on this bonding and community pause, the bridge is paused. If it is later noted that the user indeed paused the bridge and this resulted in loss aversion to the bridge, the user is rewarded with 2X the bonding amount while if the bridge pause is found to be unnecessary or malicious in nature, user’s deposit is slashed.

Here is the code for Community Pause: AssetForwarder | Address 0xef300fb4243a0ff3b90c8ccfa1264d78182adaa4 | Arbiscan

# 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: 720k ARB tokens

Justification for the size of the grant 32: [Enter explanation. More details are better, including how you arrived at the required funding for individual categories of expenses covered by your grant plan]

We want to start an exclusive program for Router Nitro users who want to bridge funds to Arbitrum by offering them dual benefits. First benefit would be ~90% rebate in bridging gas fees for transactions with Arbitrum chain as destination. Second benefit would be incentivisation in Router carrots which would further sweeten the deal for these users. While it is difficult to ascribe exact financial value to carrots given the nature of incentives, we believe that these dual benefits would literally take away any existing friction users might have when they intend to transfer funds from Ethereum or any L2 to Arbitrum.

Calculation Methodology and Assumptions:

Our current analytics page is here:

https://explorer.routernitro.com/analytics

Assumptions we are making:

  1. As you will see from analytics page, we are currently doing ~$5M of daily volume as per the analytics Dashboard and roughly 20% of this comes from Arbitrum (which is roughly $1M volume bridging into Arbitrum daily).

  2. Once the ARB fee rebates go live, we expect our bridge volumes on Arbitrum to increase to $3M USD in volume on average. This assumes roughly a +200% increase in bridigng volumes into Arbitrum.

Explanation for the presumed increase: Thanks to our extremely fast bridging experience on Router Nitro, Arbitrum already accounts for the largest bridge volumes today for Router Nitro (~20%). We are confident of achieving a 2X increase in volumes ($1M/day to $3M/day) bridging into Arbitrum post the incentivisation program. How?

  • To summarise, there are 2 parts to our growth estimate:
    (A) TX Volume Growth from our own frontend/website -------> $0.8M increase or 40% contribution
    (B) TX Volume Growth due to Aggregator integrations -------> $1.2M increase or 60% contribution

Out of $2M increase in volumes expected to be achieved by the end of 12 weeks, we expect 60% of the incremental growth (+$1.2M increase in TX volume) to come from aggregator integrations while the remaining 40% of the incremental growth (+$0.8M increase in TX volume) is expected to accrue directly from users on our Router Nitro website.

  • Currently a bridge aggregator (Bungee/Socket) has an incentive program where they reimburse roughly 90% of gas costs to the user in ARB tokens resulting in many users using those bridges despite relatively larger bridge times and suboptimal bridge experience. As such, users who bridge from Ethereum to Arbitrum are using Nitro today are only using it because of the speed of the transaction which is <15 seconds for Arbitrum (~19 seconds on average for all L2s). However, once we have the ARB incentives go live, we will be at par with the subsidised rates offered by the alternatives while being faster than them in terms of bridging speed as well as overall bridging experience. With the right incentive structure that is at par with other bridges, we believe that Router Nitro will stand out as the most optimal bridging experience for any user. Incentivised Router Nitro bridge would remove any practical friction that exist for users today to bridge funds into Arbitrum.

  • Router Nitro was launched on Jan 25, as such we are still working on some of our partner integrations. One of those partner integrations with an aggregator called Rango (https://rango.exchange/) is expected to go live in April. With this integration going live in April, we expect a significant ramp up in volumes. While difficult to forecast quantitatively, we expect an increase of atleast +120% in volumes to accrue in a period of 2-2.5 months from this integration alone.

  • The growth we have witnessed for Router Nitro TX volume since launch of our platform on Jan 25 is achieved solely from volumes from Router Nitro app website (https://app.routernitro.com) and indigenous growth campaigns (Carrots and Rabbit NFTs compaign). Based on historical growth numbers from the launch on Jan 25 to March 2nd week where we grew >30X in just 1 month, we believe that achieving 80% TX volume growth for traffic from our own frontend/website ($1M to $1.8M) in 12 weeks is a pretty conservative estimate. With planned spends on performance marketing, user awareness campaigns, new chain launches and accelerated Carrot rewards for Arbitrum users (more details in following para), we believe we can even surpass the estimates provided above.

Drivers for +80% volume growth on Router Nitro website (B2C)

  • We are planning to provide “Carrots” Boost for users bridging to Arbitrum as destination in conjunction with the ARB incentives to further increase awareness about the new incentives program.

  • We will also accelerate marketing for the cheapest and fastest way to bridge to L2s in the coming weeks with special emphasis on ARB incentives program. We believe that our marketing coupled with incentives will bring a lot of awareness and new users to Arbitrum who might otherwise refrain from sending funds from L1 to L2 due to lack of convenience and high gas fees.

  • We are planning to launch Router Nitro on multiple chains such as NEAR (Aurora), Taiko, Metis, Boba and others in coming months. We believe that availability of an instant settlement bridge like Nitro would boost incoming volume on Arbitrum from these new chains (note that the ARB incentives will be provided only to incoming TVL on Arbitrum)

Grant Amount Calculation: As you can see from your analytics dashboard, currently, 20% of our bridge volumes are on account of Arbitrum. At current run-rate of $5M/day (which we expect to reach $10M-$15M/day in coming months), we estimate that Arbitrum is going to account for $2-$3M daily volume (in roughly 2000-3000 daily transactions) at the end of 12 week incentive period. Based on our current bridge volume data, 20% of transaction volume to Arbitrum today comes from Ethereum as source chain. Assuming that this proportion remains constant, we forecast that 20% of these transactions with Arbitrum as destination will come from Ethereum (roughly 400-600 transactions daily). We model the transaction volume with Arbitrum as destination chain to increase linearly from current rate of $1M/day to $3M/day at the end of our 12 week incentive program. Assuming a bridge fees (4 bps of transaction amount) + Arbitrum destination gas fees ($1-$2/TX) + source gas fees (~$25/TX on average for Ethereum and ~$1/TX for L2s), we estimate that we will need roughly $15.6K daily in gas fees incentives. Given that we want to run this program for 12 weeks, we are looking at $1.3M USD or ~720k ARB tokens (assuming 1 ARB= 1.8$).

Total Router Nitro Daily Transaction Volume (post incentives)= $15M

Final Daily Transaction Volume Bridging into Arbitrum (post incentives)= 20%* $15M = $3M

Average Daily Daily Transaction Volume Bridging into Arbitrum during 12 week period (assuming a linear increase in TX volume from $1M/day to $3M/day) = $2M

Total Number of Transactions on Arbitrum during 12 week period= 2000 (Assume average transaction size of $1000)

Number of transactions on Arbitrum with source as Ethereum = 20%*2000 = 400 TXs

Number of transactions on Arbitrum with source as other chains = 2000-400 = 1600 TXs

Average Daily gas fees paid by users on source= (400*$25)+(1600*1)= $10000+$1600 = $11600

Average Daily gas fees paid by users on destination (Arbitrum) = $2*2000 = $4000

Average Daily bridging fees paid to forwarders = 4bps*$2M = $800

Average Daily incentives paid to users= 90%($11600+$4000)+ (0$1200) = $15,600

Incentives for 12 weeks= $15,600127= $1.31M

Round down to $1.3M or 720k ARB tokens (assuming ARB price of $1.8/USD)

Note: We have deliberately kept “0” bridge fee reimbursement to users (and only refunding 90% gas fees to users) to avoid farming of incentives by forwarders or MMs as well as users.

Grant Breakdown: [Please provide a high-level overview of the budget breakdown and planned use of funds]

High level budget allocation

90% gas rebates on users bridging to Arbitrum = $15.6K daily

For 12 weeks, this translates to ~1.3M dollars or 720k ARB tokens.

Funding Address: [Enter the specific address where funds will be sent for grant recipients]

0x1Df7F64939E34b310cb90c3224853f7C1a46eA03

Funding Address Characteristics: [Enter details on the status of the address; the eligible address must be a 2/3, 3/5 or similar setup multisig with unique signers and private keys securely stored (or an equivalent custody setup that is clearly stated). The multisig must be able to accept and interact with ERC-721s in order to accept the funding stream.

2/3 Multisig (Gnosis Safe)

Treasury Address: [Please list out ALL DAO wallets that hold ANY DAO funds]

Not disclosed (We would like to refrain from disclosing our address in public forum but are happy to share it with the Arbitrum Grant Reviewer and other members of Arbitrum team associated with the grant process)

Contract Address: [Enter any specific address that will be used to disburse funds for grant recipients]

The SC will be setup before the beginning of incentives period

# 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: [Clearly state the primary objectives of the grant and what you intend to achieve]

  • Incentive users to bridge funds to Arbitrum

  • Increase TVL on Arbitrum ecosystem

  • Enable applications to use Router CCIF adapters for smooth onboarding and enable one-click DeFi interactions for Arbitrum applications from any chain

Execution Strategy: [Describe the plan for executing including token distribution method (e.g. farming, staking, bonds, referral program, etc), what you are incentivizing, resources, products, use of funds, and risk management. This includes allocations for specific pools, eligible assets, products, etc.]

Execution Strategy:

When the user goes to Router Nitro UI (app.routernitro.com) and chooses Arbitrum as the destination chain, he will see the approximate number of ARB tokens (and associated dollar value) that will be reimbursed to him once he bridges his funds to Arbitrum. For any successful transaction, our incentive distribution contract will maintain a state of ARB incentive rewards for all eligible users based on their destination Arbitrum addresses. The smart contract will distribute the relevant ARB tokens to the user’s wallet every 24 hours.

  • Users who bridge any token to Arbitrum using Router Nitro will be eligible to claim ARB tokens

What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric? [Provide relevant design and implementation details]

  • We are only refunding 90% of gas costs to the users in ARB tokens. This mechanism ensures that on a per transaction basis, a user still has to bear a cost from his pocket and therefore, any user bridging on Arbitrum is a genuine user who is interested in carrying out some economic activity in the Arbitrum ecosystem.

  • We have deliberately kept “0” bridge fee reimbursement to users (and only refunding 90% gas fees to users) to avoid farming of incentives by forwarders or MMs.

  • Alongside subsiding costs for users to onboard on Arbitrum, we also plan to improve the experience of users interacting with DeFi applications on Arbitrum. An example of this would be; A user on Ethereum/Optimism who intends to provide liquidity on a specific Uniswap/Curve pool on Arbitrum or a user who wants to provide liquidity on Restaking protocol like Kelp on Ethereum but receive his LRT on Arbitrum. We can enable all these complex operations (Bridge-Swap+Stake) for the end user in a single click using Router CCIF

  • One of the use cases we enable is to allow users to bridge LRTs directly to Arbitrum; We believe users who bridge these LRTs to Arbitrum will tend to stick within the ecosystem as long as there is enough liquidity for LRTs on the ecosystem. Based on our initial conversations and public announcements by restaking protocols like KelpDAO and Renzo, we believe that Arbitrum will have ample amount of liquidity for Restaked ETH derivatives on DEXs and hence stickiness of users onboarding into the ecosystem via Router CCIF will be high

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.]

  • Volume of Transactions with Arbitrum as destination chain

  • Number of transactions with Arbitrum as destination chain

  • Net volume/TVL entering Arbitrum ecosystem via Router Nitro

The KPIs that we have shared are the KPIs that most accurately reflect the value Arbitrum will get from the incentives allocated to Router Protocol. Please note that we are specifically incentivising transactions with the final destination chain as Arbitrum (inbound on Arbitrum). Therefore, the success of our program will be based on volume of transactions, number of transactions and TVL flowing into Arbitrum.

Grant Timeline and Milestones: [Describe the timeline for the grant, including ideal milestones with respective KPIs. Include at least one milestone that shows progress en route to a final outcome. Please justify the feasibility of these milestones.]

Timeline: The program will likely start around late April/early May and the incentives will run for 12 weeks.

  • Gross Volume bridged to Arbitrum >$165M in 12 weeks (we have assumed a consistent ramp up of volume from $1M daily to $3M over a period of 12 weeks leading to an average daily volume of ~$2M/day )*

  • Number of Transactions on Arbitrum >165k transactions in 12 weeks (Assuming average transaction value of ~$1000)

  • Net volume/TVL entering Arbitrum ecosystem via Router Nitro > $120M in 12 weeks (Assume only 30% volume in Arbitrum moves out of Arbitrum. This number has been extracted from historical outflows from Arbitrum from bridge statistics available for Router Nitro for last 30 days. It’s difficult to forecast since the outflows to other chains are often dependent on aggressive TVL or airdrop farming campaigns by other ecosystems; For instance Scroll and Blast are running aggressive airdrop farming campaigns at the moment)

These numbers assume a growth trajectory post the application of incentives. We believe these numbers are possible to be achieved once incentives kick in. The explanation for the same has been discussed in great detail in Section 3

Please note that the calculation for the grant has bee made assuming a linear ramp-up in TX volume during the duration of 12 weeks ($1M/day to $3M/day by end of 12 weeks). Further, more than expected % of volume from Ethereum as source can lead to higher than expected costs than assumed for the grant amount calculation.

Assuming the incentive campaigns start on April 30th, we state our milestone trajectory as follows:
Milestone 1 (4 weeks): Reach run-rate of 1.4M/day TX volume bridged into Arbitrum (~$34M TX volume in 4 weeks)

Milestone 2 (8 weeks): Reach run-rate of 2M/day TX volume bridged into Arbitrum (~$82M TX volume in 8 weeks)

Milestone 3 (12 weeks): Reach run-rate of 3M/day TX volume bridged into Arbitrum (~$165M TX volume in 12 weeks)

  • Please note that we have assumed the distribution of these milestones to be slightly back-end loaded as impact of marketing for some of these incentives and actual use by users may be associated with a time lag. Further, new launches and aggregator integrations are likely to have a larger impact towards the 2nd half of 12 week period.
  • Also note that assumption of uniform linear distribution (instead of back-end loaded distribution) for calculation of grant amount has minimal impact on the grant ask amount. Also, the small delta arising from the difference in assumed distributions would serve as a cushion to incentivise users if the user turnout is higher than our initial estimates)

How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem? [Clearly explain how the inputs of your program justify the expected benefits to the DAO. Be very clear and tangible, and you must back up your claims with data]

  • We believe that with a grant from Arbitrum DAO, not only do we bring the experience of fastest (5-20 sec) and cheapest bridging experience of Router Nitro to Arbitrum users, but we also eliminate the friction of costly onboarding for users on L1s and other L2s due to elevated gas fees in the current market conditions.

  • Further, we are not limiting ourselves to casual bridge transfers. We will also enable applications to use Router CCIF adapters for smooth onboarding and enable one-click DeFi interactions for Arbitrum applications from any chain. This includes use-cases such as bringing LRTs like rsETH from Kelp directly on Arbitrum and providing LP on Arbitrum DEXs in a single click

  • We expect that with these incentives, Arbitrum ecosystem will witness an increase in the number/volume of transactions as well as an increase in TVL

  • As discussed in the previous question, we expect >$165M of volume/TVL to onboard Arbitrum and >150k transactions on Arbitrum in 12 weeks via Nitro bridge (and supplemented via Router CCIF)

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/No]

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 5. 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; No special requests

Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that reference your OBL dashboard?

Yes. We have our explorer https://explorer.routernitro.com/ that will be used to report metrics

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

1 Like
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Hello @A_G

Thank you for your application! We can confirm your application has been submitted and you will be assigned an advisor shortly.

3

Hello @A_G ,

Thank you for your application! Your advisor will be SeedLatam Gov @SEEDGov

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.

1 Like
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@A_G Arbitrum LTIPP

5

Thanks @Matt_StableLab @SEEDGov
I have already joined the Discord and formed a private channel for communication. Looking forward to work with you guys for improving our application and implementing necessary feedbacks.

6

Hey @cliffton.eth and @raam
Can you please change the title (and status) of our application from “DRAFT” to “FINAL”

7

Looks like the title has been changed already! Thanks guys!