[tBTC] [FINAL] [STIP - Round 1]

DAO Grant Programs Incentive Framework (Round 1)
1

Applicant Name:
Threshold DAO

Project Name:
tBTC

Project Description:
tBTC is a decentralized bridge to bring BTC to DeFi.

Team Members and Qualifications:
Threshold was formed by the first-ever decentralized network “merger” between NuCypher and Keep. The founders of NuCypher are MacLane Wilkison and Mikhail Egorov, who later founded Curve Finance. The founder of Keep is Matt Luongo.

Threshold contributors have a track record of shipping multiple Top 100 projects with meaningful adoption, as referenced above. Other projects built by former or current NuCypher/Keep core team members include Fold, Taho Wallet, Curve Finance, Entropy, and Sunscreen.

Project Links:
Unfortunately, new users are limited to two links per post, so URLs intentionally broken.

threshold(dot)network/

github(dot)com/threshold-network

github(dot)com/keep-network/tbtc-v2

dashboard.threshold(dot)network/tBTC/mint

twitter(dot)com/TheTNetwork

twitter(dot)com/tbtc_project

Contact Information

Twitter:
@TheTNetwork

Email:
hello@threshold(dot)network

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

SECTION 2: GRANT INFORMATION

Requested Grant Size:
750K ARB (Siren)

Grant Matching:
$10000 per month, denominated in Threshold Network Token (T), for a 12 month period, for a total of $120000.

Grant Breakdown:
Bribes on Curve and Balancer via Hidden Hand (and potentially other relevant protocols), to incentivize rapid Bitcoin TVL growth on Arbitrum.

Funding Address:
arb:0x6c2bd894bD166DCF053045a4883Db49EAE3FC01C

Funding Address Characteristics:
Threshold Treasury Guild 5-of-9 multisig on Arbitrum.

Contract Address:
arb:0x6c2bd894bD166DCF053045a4883Db49EAE3FC01C

SECTION 3: GRANT OBJECTIVES AND EXECUTION

Objectives:
Aggressively grow the TVL of decentralized Bitcoin on Arbitrum, to make the Arbitrum DeFi ecosystem more robust and less reliant on centralized WBTC.

Key Performance Indicators (KPIs):
tBTC TVL (currently ~150 BTC) growth to 600 BTC, or $15M.

How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?:
A grant will enable us to incentivize tBTC pools on Arbitrum, via Hidden Hand and encourage tBTC TVL and volume growth on Arbitrum. In turn, this will make tBTC an attractive integration target for additional protocols (e.g. lending, derivatives, etc.).

Justification for the size of the grant:
BTC is the largest crypto asset and most pristine collateral. Currently, the Arbitrum DeFi ecosystem is excessively reliant on WBTC (~10,000 BTC TVL), of which the backing BTC is custodied by a central party. This exposes BTC DeFi on Arbitrum to significant counterparty risk.

A highly liquid, permissionless, censorship-resistant alternative will significantly benefit the Arbitrum ecosystem and reduce counterparty risk of BTC DeFi.

To attain this goal, this application is designed to support a long-term tBTC liquidity incentive program, and continue the growth of tBTC on Arbitrum.

The program will run for 12 months (T incentives persist after ARB is fully distributed), with a target to reach a tBTC TVL of 600 BTC.

Execution Strategy:
Threshold DAO currently incentivizes the following Arbitrum pools via Warden protocol:

Threshold DAO will migrate our Arbitrum bribe program to Hidden Hand, an Arbitrum native protocol. This will require ~$10k of T token to be bridged to Arbitrum per month, which is an opportunity to create a virtuous flywheel of T incentives driving further tBTC volume and adoption.

To capture this potential, we will create a T/tBTC pool on Arbitrum Balancer, as part of the incentives program.

ARB incentives will be allocated as follows:

  • ~35% Balancer tBTC-WETH
  • ~25% Balancer WBTC-tBTC
  • ~25% Curve WBTC-tBTC
  • ~15% Balancer 80T-20tBTC

The grant will be managed by the Threshold Treasury Guild’s Arbitrum multisig.

An Arbitrum grant will enable us to increase the incentives on those pools and potentially expand incentives to other protocols.

Grant Timeline:
ARB incentives will be distributed linearly during the grant period, with a monthly distribution of 250000 ARB for a total of 750000 ARB.

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

Is the Protocol Native to Arbitrum?:
No, although the tBTC contracts deployed on Arbitrum are native/canonical contracts, not wrapped variants.

On what other networks is the protocol deployed?:
Ethereum, Base, Optimism, Polygon, Solana

What date did you deploy on Arbitrum?:
March 31, 2023 arbiscan(dot)io/tx/0x34004f22f4d206717368f941ddb7d389898240d86568f5bc71131136fd123f4a

Protocol Performance:
TVL metrics: dune(dot)com/threshold/tbtc

Volume metrics: dune(dot)com/sensecapital/tbtc-liquidity

Bridge activity: tbtcscan(dot)com

Protocol Roadmap:
tBTC is fully deployed and functional. Future enhancements may include:

  • Migrate to Schnorr signatures, using ROAST/FROST and GJKR RFC 10 (github(dot)com/keep-network/tbtc-v2/pull/601) to avoid the complexities of threshold ECDSA implementations.

  • Whitelist the canonical Arbitrum bridge to the tBTC minter contract (currently only Wormhole is whitelisted).

  • Native tBTC minting and redemption from Arbitrum

Audit History:
threshold(dot)network/about#audits

SECTION 5: Data and Reporting

Is your team prepared to create Dune Dashboards for your incentive program?:
Yes

Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread?
All incentives will happen on-chain, so deployment according to the planned schedule will be verifiable. Progress towards objectives is also verifiable on-chain.

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

6 Likes
2

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

Please note the following rule regarding the expected timeline of the incentives program.

Unfortunately, your 12-month timeline does not meet these requirements.

4 Likes
3

Thanks for the suggestion.

Updated the ARB distribution timeframe and TVL objectives to reflect the requirements.

2 Likes
4

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

3 Likes
5

Bitcoin it’s a market mover. A really ossifed asset, and i think that this proposal it’s very atractive for the ones who are aligned to the Bitcoin values. The only question that i have is if this tBTC it’s going to be redimable 1:1 in the Bitcoin blockchain?
TY =) Congratz for the excellent idea and project.

3 Likes
6

Yes, tBTC is currently permissionlessly redeemable for native BTC via ETH L1. You can see minting and redemption activity here: https://tbtcscan.com/redeems

It may be possible to mint and redeem directly via Arbitrum in the future, but we can’t yet provide any specific ETA for that functionality.

4 Likes
7

Do not approve of including a grant matching that covers 12 months

This is unfair and not transparent at all. There are many protocols that will provide emissions and spend tokens over 12 months that are not accounting as part of a grant matching.

2 Likes
8

Reducing the T incentive commitment to the three month ARB grant period seems strictly worse for Arbitrum. But if this preference is shared with others in the community, we are happy to do so.

3 Likes
9

This pool is not yet implemented?

Could you provide the T token contract in Arbitrum?

Will you provide initial liquidity?

1 Like
10

No, not yet implemented.

0x0945Cae3ae47cb384b2d47BC448Dc6A9dEC21F55

I believe this would be a violation of the “Grantees must not farm their own incentive programs” rule. But if it’s not a violation, we can provide initial liquidity if necessary.

1 Like
11

Hello @ThresholdNetwork ,

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.

12

Please move our proposal to [Final] status @stonecoldpat @cliffton.eth @eli_defi

13

Post has been marked FINAL and locked.

14

First of all, thank you for your proposal. There are currently 10,520 WBTC in the Arbitrum ecosystem, and nearly 40% of it is locked in the GMX Vault. It seems unreasonable for Threshold Network to request such a high grant without having entered into a partnership agreement with GMX. While the grant amount may increase demand for tBTC pools, it primarily benefits Threshold Network. There is also a 15% grant allocated to T, Threshold Network’s token, which again primarily benefits the protocol. Currently, there are 107 tBTC on Arbitrum.

Due to our concerns about the high grant amount and our belief that Threshold Network is not yet ready to use this grant effectively, we vote “Against” this proposal.

1 Like