SECTION 1: APPLICANT INFORMATION
Applicant Name:
Thetanuts Finance
Project Name:
Thetanuts Finance
Project Description:
Thetanuts Finance is a decentralized options marketplace with a comprehensive range of products for majors and altcoins – enabling users to generate yield on their collateral (current v2), and long / short options (via v3 in Oct 2023).
Our pioneering v3 model will enable permissionless trading between option buyers and sellers through the introduction of AMM and lending market. To find out more about the thinking and mechanics behind Thetanuts v3, please refer to our v3 Summary within ‘Project Links’ below.
In the near future, we plan to innovate on the weekly auction process – enabling anyone to bid on the weekly auctions by interacting with our smart contracts. This would enable us to build a truly decentralized options marketplace.
Team Members and Qualifications:
- Sherwin: Founder
- Darius: Advisor
- Dexter: Protocol Lead
- Pecan: CTO
- Deltanut: Product Manager
- Greg: Frontend Developer
- Brendan: Backend Developer
- Jem: Designer
- Ben: Advisor
- Jeremy: Advisor
- Benjamin: Head of Growth
- Wasabi: Community Manager
Project Links:
- Website: https://www.thetanuts.finance/
- v2 Docs: https://docs.thetanuts.finance/
- v3 Summary: DocSend
Contact Information:
- Discord: Thetanuts Finance
- Twitter: https://twitter.com/ThetanutsFi
- Email: hello@thetanuts.finance
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:
200k ARB
Grant Matching:
We intend to perform a 1:1 matching of the ARB grant received, with this matching amount to be used as Protocol-Owned Liquidity (“POL”) for our Basic Vaults, AMM, and Lending Market. We will acquire these assets (either ARB or ETH) through open market operations.
The initial breakdown of this 1:1 POL will be as follows:
- Basic Vaults (Sell-side): ARB (12.5%) & ETH Call Vaults (22.5%)
- AMM (Buy-side): ARB-Call / ARB Pool (20%), ETH-Call / ETH Pool (30%)
- Lending Market (Short Options): 10%
- Borrowing Market (Long Options): 5%
Grant Breakdown:
- 100% of grant proceeds will be used for the Thetanuts Finance v3 deployment for TVL incentives.
- TVL Incentives are expected to be distributed to LPs in the Basic Vaults, AMM, and Lending Market – in order to bootstrap liquidity and kickstart the v3 flywheel.
- The incentives will be split linearly across 3 months until 31 Jan 2024. Distribution of rewards for the AMM and Lending Market will commence upon deployment at a later date (estimated launch of Oct 2023).
- All incentives from POL will be used for a future incentive program.
Funding Address:
0xc3A48B40b3762924D6fa3af1D957cE78E522497E
Funding Address Characteristics:
(2/3) multisig
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:
- Onboard new on-chain users into the Arbitrum options ecosystem
- Allow anyone to buy/sell options at any time with deep liquidity and efficient execution directly on-chain
- Become the primary avenue for trading altcoin options
- Making DeFi-native structured products readily available for participants of all sizes
- Collaborate with other Arbitrum-native protocols by building altcoin options for their governance tokens.
Key Performance Indicators (KPIs):
- Total Users on Arbitrum
- Monthly Active Users (MAU) on Arbitrum
- Protocol Interactions by number of Arbitrum transactions
- TVL on Arbitrum (Basic Vaults, AMM, and Lending/Borrowing)
- Trading Volume (AMM)
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?
Thetanuts Finance has been looking for a more permanent home to launch our v3 protocol because cheap gas transactions are essential for both retail users and the execution of our new smart contracts.
For the longest time, we have seen Arbitrum as the most competitive ecosystem for onchain options in terms of user base and gas affordability. We have deployed our vaults on Arbitrum since April 2023, while quietly building behind the scenes. With our new v3 model (which we plan to launch in October 2023), we would have solved the buy-side dilemma for onchain options through the introduction of an AMM and lending market.
We will also prioritise seeking partnerships and building integrations with key Arbitrum protocols (e.g. GMX, Radiant, Camelot, Pendle, etc) to build out our option markets.
Here’s a sneak peek of what Thetanuts v3 will look like:
And here’s a look at our new UI:
v3 UX for Trading Platform
v3 UX for Lending Market
We believe that this grant will help shed light on what DeFi options can offer by encouraging users to learn and use Thetanuts while providing a decentralized options marketplace for other protocols to issue options on their own tokens. By abstracting away the complexities of options trading, we will:
- Allow native Arbitrum users and protocol to issue options on any token, allowing for a healthier derivative ecosystem to develop.
- Generate increased on-chain activity on Arbitrum.
- Cement Arbitrum’s position as the Centre of Excellence for DeFi Innovation and Options.
Justification for the size of the grant:
Our v3 is essentially three separate dApps operating under one ecosystem. There are currently (4) avenues where we can divert incentives towards to:
- Basic Vaults (Sell-side)
- AMM (Buy-side)
- Lending Market (Lenders)
- Lending Market (Borrowers)
We plan to distribute 100% of the rewards in a manner that bootstraps liquidity and kickstarts the v3 flywheel.
Execution Strategy:
We believe the best way to achieve in terms of incentive weights is as follows:
- Basic Vaults (Sell-side): ARB (12.5%) & ETH Call Vaults (22.5%)
- AMM (Buy-side): ARB-Call / ARB Pool (20%), ETH-Call / ETH Pool (30%)
- Lending Market (Short Options): 10%
- Borrowing Market (Long Options): 5%
- Note that the Thetanuts Finance team may shift these weights depending on uptake of the various products.
The key to our ecosystem working is having enough liquidity in our AMM because it will allow users to enter/exit their options positions whenever they want, without waiting for the epoch to expire. LP users are, thus, the most important cog in our mechanism.
Basic Vaults are the next pillar because we need to attract market makers to buy options from our vaults. Users with smaller positions may then participate at more cost-efficient premiums. The lending market will also be incentivized but at a smaller rate because interest rates can be adjusted by the protocol .
Funds will be held and distributed through the following multisig address (2/3): 0xc3A48B40b3762924D6fa3af1D957cE78E522497E
Grant Timeline:
As we understand the process, “Successful applicants will receive funding distributions biweekly via Hedgey streams”. We propose that the rewards (200k ARB tokens) be distributed evenly over from the starting date of distribution, until 31 Jan 2024.
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
Milestone Descriptions:
- Milestone #1: Deploy WETH Call Writing Vaults on Arbitrum; note that ARB Call Writing Vaults and IndexUSDC are already deployed on Arbitrum.
- Milestone #2: Deploy Protocol-owned Liquidity (“POL”), per Section 2 above.
- Milestone #3: Deploy Galxe and Layer3 campaigns for uptake of Arbitrum Basic Vaults.
- Milestone #4: Deploy Thetanuts Finance v3 on Arbitrum – comprising of AMM, Lending Market, and revamped UI/UX.
SECTION 4: PROTOCOL DETAILS
Provide details about the Arbitrum protocol requirements relevant to the grant. This information ensures that the applicant is aligned with the technical specifications and commitments of the grant.
Is the Protocol Native to Arbitrum?
Given that Thetanuts Finance supports native altcoin option vaults, Thetanuts Finance is deployed on 9 different mainnet networks. However, Arbitrum will be our main focus outside of Ethereum mainnet.
On what other networks is the protocol deployed?
Ethereum, BNB, Polygon, zkEVM, Fantom, Boba, Cronos, Filecoin, Aurora, and Avalanche.
What date did you deploy on Arbitrum?
April 2023
Protocol Performance:
- TVL: $8mm
- User Stats: >1k 3mo MAU, >5.9k 3mo unique users
- Our dashboards are here: https://analytics.thetanuts.finance/
Protocol Roadmap:
2023 (Q4)
- Completion of v3 audits.
- Launch of Thetanuts Finance v3 on Arbitrum; allowing users to long and short altcoin options.
- Arbitrum integration and launch of $ARB incentives on $ARB and $ETH Basic Vaults.
2024
- $NUTS TGE, targeted public sale, and initial listing.
- Arbitrum-native $NUTS will be enabled on an Arbitrum-native DEX.
- Partnerships to build Convex-like protocols on top of Thetanuts Finance.
- Launch of Thetanuts v4; replacing blind auctions with a permissionless auction to become a fully decentralized protocol on Arbitrum.
- Launch of Thetanuts Academy; to educate retail users on Thetanuts Finance and use of options.
Audit History:
All of our audits can be found here: Security - Thetanuts Finance. We will update this once audits for Thetanuts Finance v3 are available.
SECTION 5: Data and Reporting
Provide details on how your team is equipped to provide data and reporting on grant distribution.
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread?
Yes. We will make reference to our Dune Dashboards and summarize the results on a bi-weekly basis, along with any other relevant protocol updates. We will allocate dedicated resources (an in-house analyst) for this.
Is your team prepared to create Dune Dashboards for your incentive program?
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.