[Synapse Protocol] [FINAL][STIP - Round 1]

DAO Grant Programs Incentive Framework (Round 1)
1

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: Moses
Project Name: Synapse Protocol
Project Description: Synapse is the most widely used, extensible, secure cross-chain platform.

Team Members and Qualifications:

Aurelius - Core Team Member
Socrates - Core Team Member
Moses - Core Team Member

The team members above are a fraction of the contributors to the protocol but contribute to development, maintenance and growth of Synapse Protocol.

Project Links:

https://twitter.com/SynapseProtocol

GitHub

https://www.synapseprotocol.com/

Contact Information:

TG: @defi_moses
Twitter: @defi_moses
Email: moses@synapseprotocol.com
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:
2,000,000 ARB
Grant Matching:

Synapse will match the grant fully as well as continue to provide liquidity mining rewards on Arbitrum. In the past year, Synapse has supported the Arbitrum ecosystem with 4M+ SYN($3M+).

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

This grant’s aim is to achieve two primary objectives:

  1. Slippage-free bridging - 1.5M ARB will be used to support faster and cheaper bridging. Using Synapse’s concentrated liquidity pools and traditional stableswap pools, Synapse’s aim is for any Arbitrum user to bridge up to $5M slippage-free. Concentrated liquidity bridging is similar to going from Uni V2 to Uni V3, allowing slippage-free bridging. This will massively improve Arbitrum’s UX, lowering costs for users and incentivizing users to bring their assets in from other chains.

  2. Support Arbitrum partners - Synapse is the native bridge partner for many Arbitrum tokens including GMX, FRAX, OHM, VSTA, SDT etc. 500k ARB will be used to support these projects and their users bridging to Arbitrum. Users bridging partner tokens to Arbitrum as well as new tokens launching on Arbitrum will receive gas & fee rebates.

To date, Synapse has facilitated $8B in volume across 700k transactions and 200k wallets on Arbitrum, bringing billions of dollars of stablecoins and other assets to Arbitrum. Additionally, Synapse is the native bridge for over a dozen projects including GMX, FRAX, etc to allow their users to bridge their tokens to Arbitrum.

Funding Address: GnosisSafeProxy | Address 0x1d9Bfc24d9e7EeDa4119Ceca11EaF4c24E622E62 | Arbiscan 3

Funding Address Characteristics:

Funds will be deposited to the Synapse Treasury wallet on Arbitrum.

Contract Address: N/A

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: [Clearly state the primary objectives of the grant and what you intend to achieve]
  • Encourage new $$ into the Arbitrum ecosystem. With concentrated liquidity, Arbitrum will be the only L2 to have slippage-free bridging from any chain. We expect this grant to bring $3B net new dollars into the ecosystem.
  • Support & grow existing Arbitrum projects. Today, Synapse is the native bridge for GMX and dozens of other Arbitrum native projects. By subsidizing gas & fee costs associated with bridging these tokens, more users and developers will be encouraged to join the ecosystem.
  • According to DefiLama, 45% of Synapse TVL is on Ethereum and 40% is on Arbitrum today. We anticipate Arbitrum to dominate Synapse TVL and reach 70%.

Between a large cross-chain user base and innovative cross-chain technology, the goal is to bring new users, assets, and dollars into the Arbitrum ecosystem. This is accomplished through Fast bridging for users up to $5m, Supporting existing Arbitrum Protocols, and Encouraging new users and developers.

Fast bridging through Concentrated Liquidity is a new paradigm that will expedite the bridging process and make bridging more affordable. Success in this initiative includes attracting liquidity, shorter bridge times, and volume through the new pools.

Support for existing Arbitrum protocols is focused around initiatives that encourage users to cross-pollinate protocols on the chain. Gas rebates & fee rebates will support projects and their users.

The objectives here follow the tailwinds of current Synapse efforts in the Arbitrum ecosystem Synapse has already facilitated nearly $8bn of volume, ~200k users and 700k transactions on the L2 and is uniquely positioned to bring new dollars into the Arbitrum ecosystem and direct them to key protocols.

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Key Performance Indicators (KPIs): [Specify the KPIs that will be used to measure success in achieving the grant objectives]

Some milestones are:

  • Improve Bridge Quotes: Slippage free, instant bridging on up to $5m through Concentrated Liquidity
  • Deeper Liquidity Pools: $60m in TVL on synapse stableswap pools
  • Increase assets on Arbitrum, we anticipate this grant will drive $3B of net new volume(based on existing incentives) on Arbitrum

How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?: [Provide details]

Synapse Protocol expects to foster growth and innovation from the grant through two key mechanisms: Making it easier to get assets onto the chain, and improving the cross-chain experience through partnerships in the ecosystem.

The first goal is to make it easier to bridge assets into the ecosystem, this means cheaper, faster, safer, and more user friendly bridging. Concentrated Liquidity is a novel way to enable slippage-free, fast bridging for anything under $5m. Cheap and fast bridging is crucial for increasing the amount of dollars that enter the ecosystem. Beyond new bridging models and subsidizing liquidity, creative ways to encourage old and new users are from gas airdrops to subsidized fees, which will help to funnel liquidity and users into the Arbitrum Ecosystem.

The second goal is to build deeper integrations and tooling with existing Arbitrum projects. Synapse already has key strategic integrations within the ecosystem: the native bridge for GMX, core integrations with Uniswap, Balancer, Olympus DAO, and Frax. Further tying cross-chain support into decentralized applications, in a way that is intuitive, encourages the use of new applications in the ecosystem.

Justification for the size of the grant: [Enter explanation]

Synapse is eligible for the Pinnacle grant:

  • Has been live on Arbitrum for 22 months
  • Has $40M in TVL on Arbitrum

Deploying shortly after mainnet launched, Synapse was one of the first protocols to arrive on the chain, and to date has facilitated $8bn of volume, ~200k users and 700k transactions.

Synapse also has made a strong effort to create deep integrations with top tier Arbitrum projects, serving as the native bridge partner for GMX, and bespoke integrations with 4 more of the top 10 TVL projects on the chain.

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.]

The execution plan is to deploy liquidity emissions and gas/fee rebates as the streamed ARB comes in.

Smart contracts to stream these funds will be developed by contributors to the Synapse DAO and the contracts will be managed by the Synapse DAO.

Grant Timeline: [Describe the timeline for the grant]

The timeline for the grant is Q4 2023. Deployment of funds into initiatives would begin soon after the grant.

SECTION 5: 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?:
Synapse is deployed to 19 other chains but Arbitrum is where 40% of all Synapse TVL lives(only Ethereum mainnet is bigger).
On what other networks is the protocol deployed?:
Synapse is deployed to 19 chains, the entire list can be found at docs.synapseprotocol.com
What date did you deploy on Arbitrum?: 11/6/2021
Protocol Performance:
Synapse protocol was the first bridge deployed to Arbitrum Mainnet in the fall of 2021.

To date, Synapse Protocol has facilitated over $2.5bn of bridge volume, $8bn of total volume and 170,000 wallets have interacted with the protocol just on Arbitrum. Synapse has also built strong relationships and integrations with top protocols on Arbitrum like GMX, Balancer, and Sushiswap.

Synapse protocol remains the only way to bridge native GMX, and has also made meaningful contributions to the developer ecosystem of Arbitrum by building integrations on top of existing Arb protocols and open source development.

Check out the data here: Synapse Arbitrum Stats - Protochain Research

Protocol Roadmap:
Synapse Labs just announced the Synapse Interchain Network, a new primitive in enabling a cross-chain future. Synapse sees Arbitrum as leading the way for L2’s and the home of many important decentralized applications core to the multi-chain thesis.
Audit History: N/A

SECTION 6: Data and Reporting

Provide details on how your team is equipped to provide data and reporting on grant distribution.

Is your team prepared to create Dune Spells and/or Dashboards for your incentive program?: Yes
If not, how does your team plan to report grant data?:
Synapse has robust analytics and can create on demand reports.
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread?: Yes, see above
Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the programs funding stream?:
Yes
5 Likes
2

Synapse is one of the OG projects on arbitrum. It has achieved a very high amount of bridge volume in the last 3 months and 6 months and is the partner of most local projects. I hope the arb owners accept this offer

2 Likes
3

Will this be in the form of Synapse protocol owned liquidity?

2 Likes
4

Hello @moses thank you for your application! Please make the following changes to your proposal to comply with the program rules.

  1. Grant funds may only be used to incentivize Arbitrum contracts and can not be used for “developer initiatives” as per the following:
  1. Please note that the Funding Tranches piece of the incentives framework has been replaced by funds being streamed biweekly.
1 Like
5

There are already 5 different bridging proposals on this forum, and all of them fail to explain how they generate growth on ARbitrum or actually expand the ecosystem.

Subsidising bridging does not actually bring more innovation to the ecosystem.

People need to have a reason to bridge in the first place… this is why incentives should be used on protocols that are offering unique apps. If there was nothing to use on ARbitrum, then no one would bridge. A bridge is just a middle-man and at the moment is already very cheap and fast.

2 Likes
6

No, this will be funds incentivized by the ARB grant. Think of current bridging as Uni V2 and this grant being used to incentivise LPs in a Uni V3-like concentrated liquidity model. It’ll make quotes much tighter and improve bridging time.

2 Likes
7

Thanks for the reply Matt, appreciate the clarity on #2. That’s great to know. A bit confused on #1, where is this grant proposal currently specified in use for operational costs?

1 Like
8

Hello @moses @Socrates thanks for the response! I think I am still unclear on what Arbitrum contracts you will be incentivizing. Can you please clarify the following:

  1. Please provide the addresses of the contracts you plan to incentivize and a spending plan for how you will incentivize them as per
  1. Additionally the incentive grants can not be used for your own grants program.
1 Like
9

Generally agree here.

Additionally, all bridges seem to be asking for large amounts that are essentially used to rent liquidity or encourage sybil behaviour.

1 Like
10

It’s nice that Synapse is prepared to create Dune Spells and Dashboards for the incentive program, ensuring transparency and data reporting.

You mentioned supporting existing Arbitrum partners like GMX, FRAX, and OHM. Could you elaborate on the specific initiatives or incentives you plan to provide to these partners and their users?

1 Like
11

supb we are in right way … keep support Arbi - Eco -Sys :+1:

12

Can you elaborate on this, what contracts will you select and what will be the dynamics of reward distribution?

I think this is outside the scope of this grant, as it does not cover the funding of integrations.

The same applies to this point

13

Correct me if I’m wrong, but I understand that you also want to subcite Arbitrum’s withdrawals? is that correct?

14

Regarding the grant breakdown, could you provide some further clarity.

“500k ARB will be used to support these projects and their users bridging to and from Arbitrum. Gas rebates, fee rebates and other incentives will reward these partners and give their users additional incentives to use the Arbitrum ecosystem.”

  1. Is there a % in mind for these rebates?

I don’t understand the value of (3) in the grant breakdown. “Loyalty” can be gamed by creating a new address? What type of grants will be given for new tokens/projects? Some more info here would be helpful.

15

Hey Matt,

  1. Incentivized contracts will include but are not limited to

Other contracts will include those of external swap pools specifically on GMX, Uniswap, and Velodrome. Immediate scope will look at stableswap pairs (USDC/USDT/USDC.e/DAI).

The spending plan for the above is 800k/2m will go towards Synapse contracts (100k to the bridge/300k to the minichef and 400k to the concentrated liquidity pool). All rewards will be distributed evenly from the day of distribution to 6 months later.

  1. Grants is a mischaracterization on my part here. Synapse Protocol works with many partner projects who need liquidity incentives for their tokens to be bridgeable. This program seeks to relieve those specific pressures.
1 Like
16

Rebates for bridge transactions are better as a fraction of the total fee + slippage. The goal of this is to decrease the delta between what a user deposits and what they withdraw.

With regards to your concerns around (3) the general idea is to encourage loyal users to continue to be power users and not churn/ leave the ecosystem. Creating new addresses does not game the system because things like the age of the address / methods to determine how organic an address is are helpful.

In terms of “grants” for new tokens and projects I briefly address this in my response to Matt above but outside of liquidity incentives for different tokens, incentivizing liquidity for external stableswaps/routers is mutually beneficial.

1 Like
17

Subsidize may be the wrong term – the goal is to encourage Liquidity provision to improve prices.

1 Like
18

Currently we support these protocols in a few ways. First, we are the primary bridge partner for all of these projects. both GMX and gOHM can only be bridged through Synapse, and Synapse is one of Frax’s limited bridge partners. Bridge volume for these tokens is > $500m to date for these tokens.

Furthermore, there are also smart contract integrations that enable swaps on these protocols to happen before and after bridging events. This increases touchpoints for protocols and improves the user experience Imagine not only receiving the desired output token (any token you want) but also discovering reliable protocols when first onboarding into the ecosystem. Here is an example of this in action: Arbitrum Transaction Hash (Txhash) Details | Arbiscan

2 Likes
19

@moses Thank you for these changes! Your submission now meets all requirements to be considered for a snapshot vote.

20

Hello @moses ,

Now that your application has been marked eligible, please be advised of the remaining steps in the application process to be completed prior to the Review Period Deadline:

Please complete the following steps required for your application to proceed to Snapshot:

To change your proposal to final, please tag an Arbitrum Foundation Forum Moderator (@ stonecoldpat @ cliffton.eth @ eli_defi) by the Review Period deadline to notify them of your proposal’s readiness to proceed from [Draft] to [Final] status.

Once notified, the Arbitrum Foundation Forum Moderator will adjust your title from [Draft] to [Final] status. Once marked as [FInal], your application post will be locked by moderators and you will no longer be able to edit your proposal.