SECTION 1: APPLICANT INFORMATION
Applicant Name: Sperax Foundation
Project Name: Sperax
Project Description: Sperax manages two protocols, USDs, a 100% collateralized auto-yield bearing stablecoin protocol, and Demeter, a multi-dex open-access yield farming platform, on Arbitrum Network.
Core Team Members and Roles
- Subh: Lead Product Advisor
-
About 10 years of experience in product development and management. He has been working in the defi space for 5 years. He has done his Bachelor’s and Master’s in economics.
- Yash: Smart Contract Engineering Lead
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About 5 years of experience in smart contract development. He has been working in the defi space for about 3 years. He has done his bachelors in Electrical Engineering and Engineering Sciences.
- Ayush: Frontend Engineering Lead
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About 8 years of experience in frontend development. He has been working in the defi space for about 4 years. He has done his bachelors in Computer Science.
- Shaleen: Operations & Growth Lead
-
About 8 years of experience in operations and growth. Have been working in the defi space for about 3 years. He has done his bachelor’s in Chemical Engineering.
Project Links
- [Sperax Website
- Sperax dAPP
- Demeter dApp
- Github
- Documentation
- X
- Telegram
- Discord
- Substack
- Forum
- Analytics.
Point of Contact: Shaleen
- Forum handle - @Shaleen
- Telegram handle - shaleenpandey
- Twitter - @shaleenpandey91
- Email - shaleen@sperax.io
- Do you acknowledge that your team will be subject to a KYC requirement? Yes
SECTION 2a: Team and Product Information
Team experience
The Sperax team has extensive experience in developing and managing on-chain products. The team has shipped out multiple products on Arbitrum. The team has been running the Spreax ecosystem protocols since its inception in 2020. We have recently launched an upgraded and audited version of the USDs protocol. The USDs code-base is publicly available and open for integration with other protocols. We are soon going to launch Demeter version 2 with improved user experience and functionality.
Sperax ecosystem has a TVL of over $5M and Demeter has a TVL of about $1.5M. Currently, the ecosystem tokens (i.e. USDs and SPA) have been held by over 300K on-chain wallets and have registered about 1.2 million on-chain arbitrum transactions. The ecosystem has generated a revenue of over $500K.
What novelty or innovation does your product bring to Arbitrum?
USDs
USDs is a fully collateralized stablecoin backed by on-chain collateral and generates organic yield for its holders. It auto-compounds and provides gasless and stable rewards to its holders. We want to make USDs a premier trading pair on Arbitrum.
USDs automates the process of earning yield on stablecoins. Yield is generated organically by sending collateral to audited decentralized finance protocols. 50% of yield generated on collateral is used to pay USDs holders Auto-Yield. USD auto-yield rate is adjustable and depends on the actual yield generated by the collaterals. Any yield generated beyond the max Auto-yield rate will be stored in Auto-yield reserves. This novel passive income strategy does not require any action from the user. Users can just hold USDs and see their wallet balance grow, auto-compounding the yield in the process.
Currently, the protocol is accepting USDC.e, USDC, USDC.e, Frax, DAI, USDT, and LUSD as collateral and more tokens might be added to this list in the future. However, USDs tokens are fungible and redeemable in the same way, independent of their underlying minting collateral. It acts as an IOU on the pooled collateral.
A list of yield strategies and the amount of collateral allocated is displayed on the Analytics page of Sperax USD dApp and this data is readily available to the public by querying the smart contracts. Currently deployed strategies are mentioned below.
-
USDC: Compound & Aave
-
USDC.e: Compound & Aave
-
DAI: Aave
-
USDT: Aave & Stargate
-
FRAX: Stargate
-
LUSD: Aave
Key parameters upgradeable via governance
- Collateral types to mint/ redeem USDs.
- Desired collateral composition, oracle used for price feed of the collateral, base Mint Fee, base Redemption Fee, and price floor for each collateral type. Updating the price floor for collateral used
- to mint USDs. Setting the price floors for each collateral will allow the protocol to remain solvent when collaterals depeg. The protocol will not mint USDs with the collateral when the price of the collateral falls below the price floor.
- Yield generation strategies for each collateral type. For example, adding new delta-neutral yield farming strategies based on other decentralized exchanges.
- Harvesting incentive.
- The USDs dripping rate from the dripper contract.
- Minimum and maximum APR for distribution of Auto-Yield.
Key functions available to the public
- Harvesting or claiming all kinds of yield tokens from the yield generation strategies. The harvester will be incentivized with a portion of the yield-farmed tokens.
- Purchase harvested yield tokens for market price. We will use the respective oracles for the yield tokens to determine the market price. This experience will be similar to the currently implemented buyback contract.
- Distributing the auto-yield to all addresses eligible to collect it. Rebase will also be triggered when someone Mints or Redeems.
USDs Data since the launch of version 2.0 (15th January 2024)
Apart from that USDs aims to become one of the top liquidity provider tokens for perpetual exchanges. Perp protocols find it difficult to attract liquidity providers without heavily incentivizing it with their governance tokens. USDs could solve that problem through its organic auto-yield.
Demeter
Demeter protocol is a protocol for DAOs to launch and manage decentralized exchange liquidity - without needing to know how to code. Demeter gives users the power to launch incentivized liquidity pools on Uniswap V3 and Camelot V2. Future versions will support custom liquidity shapes on major DEXs such as Balancer, Sushiswap, or anything veSPA holders prefer. Demeter is launched on Arbitrum and will soon be expanded to Optimism, Polygon, and Ethereum. Additional blockchains will be added in future versions.
How Does Demeter Work
Demeter Architecture
We will keep upgrading the Demeter platform to improve user experience and ease of usage. The first step in that direction will be the introduction of the Zapp feature to directly create an LP position with one token.
Is your project composable with other projects on Arbitrum? If so, please explain:
Our projects are composable with other projects on Arbitrum.
- The USDs protocol is open for integration with other protocols that want to utilize the benefit of auto-yield and share the rewards with their user. The contracts are public and available on our GitHub.
- Demeter Protocol is a permissionless protocol. Any project interested in incentivizing concentrated liquidity on Arbitrum can launch their farms using Demeter. With Demeter 2.0, the protocol will be open for integration with Dexes looking for solutions to provide liquidity farming for their partners.
If you have any integrations, please mention them and explain how they have improved outcomes for both projects. Support this with data.
With regards to USDs, after the launch of upgraded version 2.0, the USDs TVL has increased by 25%. USDs takes USDC, USDC.e, USDT, DAI, FRAX, and LUSD as collateral. The collateral is directly deposited in Aave, Compound, and Stargate. Since the launch of version 2, USDs has accrued over $75,000 in yield from strategies with about $5000 available in the yield reserves. We will soon propose on the forum to directly transfer all the yield generated from strategies to the holders, instead of a cap of 10%.
Currently, the demeter protocol is active with about 1.5 M in TVL. The Camelot integration, which was the last DEX integration, helped the protocol to get about 650K in liquidity. With the launch of Demeter 2.0, it will be integrated with Camelot V3 and the contracts will be made publicly available to facilitate integrations with other Dexes.
How do you measure and think about retention internally?
All USDs analytics data is available publicly here. For both, USDs and Demeter, TVL is the basis of measuring the retention. For USDs, our objective is to provide an APR of 10% to all liquid holders. On Demeter, we have emitted close to 100M SPA tokens to bring in new farms and LPs and retain them.
After the launch of USDs 2.0 and the subsequent launch of Demeter 2.0, we are targeting a USDs TVL of $10 Mn and a Demeter TVL of $20 Mn in 12 weeks.
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
Is the protocol native to Arbitrum?
Yes, both USDs and Demeter Protocol are Arbitrum native protocols launched in 2021 and 2022 respectively.
On what other networks is the protocol deployed?
None
What date did you deploy on Arbitrum mainnet?
USDs - 23rd December 2021; Arbitrum Transaction Hash (Txhash) Details | Arbiscan
Demeter - 27th Sep 2022
Do you have a native token?
Yes, we have a native token called SPA. It works as the governance token of the Sperax ecosystem and revenue partner of the USDs protocol.
Please provide the link to the documentation of the tokenomics and the token contract on Arbitrum.
- Tokenomics - SPA Tokenomics - Sperax
- USDs Contract
- SPA Contract
- veSPA Contract
Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable.
We have regularly distributed auto yield to USDs holders. The data is available here. With regards to demeter, we have distributed over 150M SPA tokens. The Demeter rewarder contract has been functional since March 2023. All distribution details can be found here - Contract Address 0x432c3bcdf5e26ec010df9c1ddf8603bbe261c188 | Arbiscan
The Complete Demeter User Analytics. Emissions through Demeter are mentioned below
| Time | USD Value | SPA Price Average | Total SPA Distributed |
|---|---|---|---|
| Gauge Emissions | $729,316 | $0.006 | 123,660,993 |
| Prior to Gauge Emissions | $160,993 | $0.00526 | 31,654,436 |
| Token | USD Value | Price Average | Total Distributed |
|---|---|---|---|
| Saddle | 6684.26 | $0.0068305 | 1,089,000 |
| Handle-Fi | 8179.94 | $0.0198498 | 503,225 |
| PLS | 31242.82 | $0.5723285 | 60,304 |
| GMX | 14915.86 | $57.089463 | 220 |
| GNS | 1953.33 | $6.5111294 | 300 |
| NFTE | 2443.94 | $0.0610986 | 20,146 |
| VELA | 2456.66 | $4.4666695 | 550 |
| BFR | 4620.00 | $0.335 | 13,500 |
| ARB | 9079.17 | $1.3450629 | 6,750 |
| ACRE | 4699.93 | $0.0018799 | 2,500,000 |
| USDs | 75.00 | $1 | 75 |
Current Incentivization: How are you currently incentivizing your protocol?
Currently, USDs holders are getting an auto-yield of 10.51%. The details of the distribution are available on our analytics page.
All current Demeter emissions are according to SIP-58.
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)]
Yes, the Sperax Foundation received an ARB grant from the Arbitrum Foundation in the airdrop on the 25th of April 2023.
In addition to the tokens given to the protocols in the airdrop, have they received any other grants from Arbitrum? If so, please detail them.
No
Protocol Performance:
The protocol performance is available here
- USDs TVL - $789K
- USDs Users - 30,484 addresses
- USDs transactions - 500K
- USDs Minted - $43Mn
- USDs Redeemed - $42Mn
- Demeter TVL - $1.1Mn
- Demeter Users - 3500 addresses
- Demeter Transactions - 20000
Protocol Roadmap:
Sperax’s 2024 roadmap outlines a bold plan to expand USDs adoption, introduce a CDP stablecoin, revolutionize DeFi with Demeter 2.0, and achieve complete decentralization. Key highlights include:
- USDs Enhancements: Expanding USDs reach through strategic partnerships, real-world integrations, and an airdrop for holders.
- CDP Stablecoin: A new stablecoin leveraging USDs and offering potential one-click leverage for users.
- Demeter 2.0: Upgrading Sperax’s liquidity farming platform with multi-chain, multi-DEX functionality and concentrated liquidity pools.
- Decentralized Future: A revamped Sperax dApp with open-sourced code and a completely decentralized USDs protocol governed by the community.
- Multi-Chain Expansion: USDs venturing into various blockchain ecosystems for wider user access and liquidity.
This roadmap positions Sperax as a leader in shaping a more accessible and user-centric DeFi future.
The complete roadmap for 2024 is available here.
Audit History & Security Vendors:
All the audit reports of the protocol are publicly available on our GitHub account. The USDs protocol recently got audited in December 2023 by the Quantstamp team. We have launched our bug bounty program for USDs smart contracts. The Demeter contract will go for audits in 3rd week of March. It will be included in the bounty program post-Demeter 2.0 launch.
Security Incidents:
We had a security incident in February 2023. All funds were recovered and we went back live again within 3 days. All details about the incident are available here.
Could you briefly detail the incident, the amount stolen, and any recoveries?
On Feb 3, an attacker manipulated the USDs balance on a multi-sig wallet and changed it to 9.7 billion by exploiting an internal bug in the USDs token contract. Before the Sperax team paused the contract, the attacker exchanged ~309k USDs for assets including USDT, USDC, and WETH.
The Sperax team coordinated with the attacker and recovered all the funds.
SECTION 3: GRANT INFORMATION
Requested Grant Size:
250,500 ARBs
Justification for the size of the grant:
The ARB grant will be used to boost the TVL for Demeter and USDs. The ARB tokens will be distributed to liquidity providers on Demeter farms with USDs or SPA at a steady APR. Using Demeter, any protocol would be able to create deep liquidity for their token in a permissionless manner. More details on how the steady APR farms will work can be found here.
Our target is to start the incentivization plan with the launch of Demeter 2.0 after the end of the current STIP emissions.
We are targeting
- USDs TVL of $10Mn,
- Demeter TVL of $20Mn
USDs TVL and Demeter TVL are interrelated as USDs liquidity on Demeter will be incentivized with ARB tokens.
Grant Matching:
We will match the emissions of ARB tokens in USD terms for emissions to USDs and SPA-based liquidity farms. For every 1 USD worth of ARB used to incentivise a USDs farm, we will emit 1 USD worth of SPA tokens in the form of xSPA. One-third of the xSPA tokens will be distributed as additional rewards for providing locked liquidity.
Grant Breakdown:
All ARB tokens will be emitted through Demeter. We plan to achieve the target TVL of $20Mn through Demeter in 12 weeks. The target is divided into 3 cycles. The details regarding the TVL targets and emission plans for each cycle are mentioned below. The emissions are projected based on the current prices of the tokens and may change in the future.
| Month | Target TVL (USD) | SPA rewards | Arb Rewards | Rewards in SPA tokens ($0.02) | Extra Rewards in ARB tokens ($2) |
|---|---|---|---|---|---|
| 1 | 3,750,000 | 60000 | 60000 | 3000000 | 30000 |
| 2 | 9,000,000 | 136000 | 136000 | 6800000 | 68000 |
| 3 | 20,000,000 | 305000 | 305000 | 15250000 | 152500 |
Funding Address: arb1:0x8898A38Eb8E3104f7c98622b55260E014B3a0217
Funding Address Characteristics: It’s a 2/4 multisig.
Treasury Address: Treasury addresses and their SPA holdings
| Treasury | Staking | Arbitrum | 0x3702E3e2DB2b5d037c1dbB23Ab7A51d0Cc90BD0e | 481,082,245 |
|---|---|---|---|---|
| Treasury | Treasury | Arbitrum | 0xBA6ca0B9e7333f5e667816b85704c024AB250C9D | 1,250,000,000 |
| Treasury | Bootstrap | Ethereum | 0x8B65CE3b4Eaa8958346096C3a9303b73f2012aCc | 7,027,923 |
| Treasury | Bootstrap | Arbitrum | 0xAF64e027D42bAc1C14277fd295De9Ae318eEF17E | 72,083,332 |
| Treasury | Rewarder | Arbitrum | 0x432c3BcdF5E26Ec010dF9C1ddf8603bbe261c188 | 3,258,568 |
| Treasury | veSPA rewarder | Arbitrum | 0xC9869e40e36A18546Df54A941B28aF21674aE512 | 1,107,327 |
Contract Address: 0xAF64e027D42bAc1C14277fd295De9Ae318eEF17E
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]
Primary objective:
Increase the TVL of Demeter and USDs, improve the liquidity of USDs in Camelot and Uniswap v3, and help other protocol tokens in acquiring liquidity in the process. Increase TVL and trading volume for USDs tokens to become eligible for a Chainlink oracle.
TVL target for USDs: $10Mn
TVL target for Demter: $20Mn
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.]
Permissionless distribution of tokens through Demeter rewarder contracts. Tokens will be distributed at a steady rate based on the underlying token’s TVL.
Initially, the pools, set on Camelot v3, will be incentivized via Demeter by the Sperax team with ARB tokens.
APR will initially be set to 25% in ARB and 25% SPA for the following farms
- USDC/USDs
- USDC.e/USDs
- USDT/USDs
- ETH/USDs
- ARB/USDs
- wBTC/USDs
- SPA/USDs*
As the TVL of the farm increases, the APR will be adjusted in the following manner.
| Min Farm TVL | Max Farm TVL | ARB APR | xSPA APR |
|---|---|---|---|
| 0 | 1,000,000 | 25% | 25% |
| 1,000,000 | 2,000,000 | 22.5% | 22.5% |
| 2,000,000 | 3,000,000 | 20% | 20% |
| 3,000,000 | 4,000,000 | 17.5% | 17.5% |
| 4,000,000 | 5,000,000 | 15.0% | 15.0% |
*The SPA/USDs will be will get three times the emissions in SPA as stated in the table above.
Initially, the pools, set on Camelot v3, will be incentivized via Demeter by the Sperax team with ARB tokens.
A protocol interested in incentivizing their tokens would be able to launch a farm on Demeter in a permissionless manner and request an ARB emission on Sperax governance via the forum.
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]
Users will be incentivized to lock their liquidity. One-third of xSPA emissions mentioned in the execution strategy will be for locked liquidity.
Greater liquidity for USDs can help the USDs token acquire a Chainlink oracle which will make it suitable as an asset for various perpetual protocols to be used as an LP token. Increased liquidity and TVL for USDs will lead to a higher staking yield for SPA stakers. Greater staking yield will encourage users to stake their xSPA tokens to gain a share of potentially larger future yields and participate in governance.
Apart from that the Sperax protocol is also working on the designs of a CDP stablecoin. In future users who would acquire ARB tokens can be potentially converted into minters of the CDP token through incentives like fee rebates.
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.]
Major KPIs
- TVL of the pools incentivized through the grant program
- Fee income for pools incentivized through the grant program
An increase in the TVL of the pools to which incentives will be distributed is the key matrix to measure the success of the grant program. Apart from TVL, we would also look at the Fees collected in the pools, greater fees would mean greater organic economic activity.
We would use the Graph protocol to create subgraphs for all the Demeter rewarder contracts. Anyone could verify the distribution of the rewards and the resulting KPIs.
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.]
The target date for the launch of the grant program is 15th April 2024 along with the launch of Demeter 2.0. The ideal milestone for Demeter TVL is mentioned below.
| Month | Target TVL (USD) | SPA rewards | Arb Rewards | Rewards in SPA tokens ($0.02) | Extra Rewards in ARB tokens ($2) |
|---|---|---|---|---|---|
| 1 | 3,750,000 | 60000 | 60000 | 3000000 | 30000 |
| 2 | 9,000,000 | 136000 | 136000 | 6800000 | 68000 |
| 3 | 20,000,000 | 305000 | 305000 | 15250000 | 152500 |
The monthly target users during the program are mentioned below:
| Month | Target Active Users |
|---|---|
| 1 | 2,500 |
| 2 | 6,000 |
| 3 | 13,000 |
The monthly target of transactions are mentioned below:
| Month | Target Transactions |
|---|---|
| 1 | 13,300 |
| 2 | 32,000 |
| 3 | 70,000 |
Taking one Demeter farm for example i.e. USDC.e/USDs. We are targeting a TVL of $2.5Mn in this farm by the end of the program or during the 3rd cycle of the program. The current TVL is $374,029.
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]
USDs is a simple DeFi product that has the potential to bring in retail users through organic auto-yield. New users would then be willing to explore other DeFi products which are part of the ecosystem.
Incentives through Demeter would foster deeper concentrated liquidity for other tokens apart from Sperax tokens.
Since Demeter is permissionless, other protocols can also create proposals to ask for incentives on their farms. This would solve the problem of initial liquidity for protocols launching on Arbitrum.
Arbitrum is the chain of choice for several perpetual protocols. Increased USDs TVL and trading activity would help USDs acquire a Chainlink oracle. Once USDs has a chainlink oracle it would be possible for perp protocols to add USDs as a liquidity pool token. This would reduce the reliance on perp protocols on inorganic emissions.
With the launch of Demeter - we attracted about 10K users directly to the sperax ecosystem in the first five months with about $2Mn in TVL while the ecosystem users crossed over 250K.
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
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, we are capable of complying with OBL’s data requirements for the entirety of the program and 3 months following and then handoff to the Arbitrum DAO. We do not have any special requests or considerations.
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that references your OBL dashboard? [Please describe your strategy and capabilities for data/reporting]
Yes, we agree. We provide live data of all things happening within the USDs protocol on our analytics page.
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
