[Vela Exchange] [FINAL] [STIP - Round 1]

DAO Grant Programs Incentive Framework (Round 1)
1

SECTION 1: APPLICANT INFORMATION

Applicant Name: Dan Peng, CPO
Project Name: Vela Exchange
Project Description:

Vela Exchange is a decentralized perpetuals trading platform with a vision to compete with the best of TradFi applications by combining the powers of DeFi with the performance of centralized trading desks.

Our platform includes the following features, team composition, and metrics:

  • Delta-neutral LP yield structure (VLP), which offers attractive ‘real yield’ for USDC.e deposits
  • Expansive feature set mirroring the best CEX experiences - ie in-chart trading, complex triggers, advanced notifications, multilingual capabilities, and more
  • Fluid trading across 4 markets and 40+ assets
  • Doxxed team with a professional record of success and innovation within the industry
  • Our cumulative volume since beta launch is $6.2B, and a total of over 50k users (Decentralized Perpetual Exchange for DeFi Traders | Vela)(https://dune.com/purif/vela-exchange-analytics)
Team Members and Qualifications:

Travis Skweres (https://www.linkedin.com/in/travisskweres/):
Founder at Vela Exchange - a crypto veteran with 10+ years of experience in the blockchain space where he has been highly focused on the DeFi landscape, successfully co-founding 3+ decentralized projects. Along with this, he is a senior engineer and architect who has built web and mobile applications for Fortune 500 companies, as well as spearheaded numerous UI and UX-driven projects.

Dan Peng (https://www.linkedin.com/in/thedanielpeng/):

Co-Founder at Vela Exchange. Technology and product management leader with 11+ years experience in product, marketing, blockchain, and finance sectors.

Anthony Oko (https://www.linkedin.com/in/anthony-o-59397783/)

Current COO at Vela with a deep understanding of project engineering, analytics, and trading. Former quant trader with Masters of Science and Engineering, previous Relay Chain Director of Analytics.

Berke Sengel (https://www.linkedin.com/in/berke-sengel-3570a2b5/)

CBO at Vela Exchange with a background in strategic partnerships and a Masters degree in Blockchain and Digital Currencies.

Project Links:
Website: https://www.vela.exchange/
Docs: https://docs.vela.exchange/vela-knowledge-base/
App Link: https://app.vela.exchange/
Medium: Vela – Medium
Twitter: https://twitter.com/vela_exchange
Discord: Vela
Telegram: Telegram: Contact @vela_exchange

Contact Information:

TG: @Vela_Djinn
Twitter: @vela_exchange
Email: dan.peng@vela.exchange
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: 1M [updated amount]

Grant Breakdown:

150k for Multi-Chain / Fiat Onboarding

  • Vela Exchange was among the first projects to POC and launch a multi-chain deposit and LP minting integration with Squid/Axelar
  • We are improving the UX and planning to incentivize users who bridge and trade / provide LP
  • Fiat onboard/offboarding integrations are also being optimized and we wish to add an incentive to utilize our fiat integrations in the form of $ARB tokens

400k for Social Features / Trading Leagues

  • We building a trading league system that will offer $ARB / $esVELA rewards - this system will connect into the other social features of Vela Exchange, including social profiles, profile tracking, etc
  • Our team is also integrating social platforms including Discord, Telegram, Twitter throughout the platform to increase trader retention and build upon the community we have created - we wish to improve on social sharing with small incentives per action
  • Trading leagues will have a cap on incentives based on fees earned to prevent any wash trading → this is further prevented by being focused on PnL, although volume may play a factor

100k for Bot / Automated Trading Incentives

  • We are the 2nd DEX integration with Astrabit and are in the process of integrating up to 4 additional partners in the bot trading space
  • Our team is planning to build internal bot trading capabilities that layer onto partner applications
  • Incentives to trial new bot partnerships and automation will help drive more institutional and retail use of high volume generating strategies using our bots

350k for VLP Vault Rewards

  • Hyper VLP is a liquidity program that helped bootstrap our VLP vaults, but we intend on adding another layer for new liquidity
  • $ARB as well as $esVELA will be distributed to VLP vault providers that contribute and keep their USDC in the vaults over several epochs
Funding Address: arb1:0x678c29a2DA4Ae423457db591FF78bE8C9c63378C
Funding Address Characteristics: 2 out of 4 gnosis multisig with private keys securely stored
Contract Address: 0xDB15AA13d01834B114Bd57a115ec17330698fe5A (Op Lvl 3)

SECTION 3: GRANT OBJECTIVES AND EXECUTION

Objectives: DeFi ecosystems require an ongoing flow of new users, liquidity, and relevant feature sets in order to maintain relevance and to be sustainable. Vela Exchange is not only developing a trading platform that boasts advanced features like triggered orders and account abstraction, but also a social platform with achievements, gamification, and monetization potential.

Our aim is to:

  • Increase TVL, empowered by multichain deposits
  • Increase overall trading activity
  • Promote bot building onboarding incentives on Vela Exchange
  • Encourage ecosystem collaboration and power the technical frontier on Arbitrum

Key Performance Indicators (KPIs):

Success is measured by Unique Active Wallets (UAW), Total Volume, Total Value Locked (TVL), and the performance of our liquidity provider token, VLP. We also consider Google Analytics site performance, and the reach of our social communities and accounts in order to gauge our market share and interest.

Specifically for each initiative:

Multi-Chain / Fiat Onboarding: Overall multi-chain transfers, fiat transfers in volume

Socialfi: User retainment, trades per user, time in-app

Bot / Automated Trading: User onboarding into each bot partner, volume traded through bots

VLP Rewards: New VLP minted

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

We chose Arbitrum as our home because we viewed the network as a place where competition can thrive and projects constantly innovate to stay ahead of the curve.

Through the initial grant allocation, we will be able to aggressively pursue bringing new liquidity and traders from across the DeFi landscape. We also believe that pushing the frontiers of tech requires incentivization for participants to take the risk on the newest tech (like multi-chain collateral / LP minting).

The Vela Exchange has partnered with a growing number of highly regarded, powerhouse teams (including but not limited to Camelot, Seashell, Astrabit, Vaultka). We believe our collaborative nature and reliability makes us the perfect team to invest into for maximum network effect and growth for Arbitrum.

Justification for the size of the grant:

Vela Exchange has fostered substantial interest and growth on Arbitrum, which led to some of the largest trade volumes on the network to date. Our doxxed team is highly qualified and motivated to position the exchange amongst industry leaders in the perpetuals ecosystem, and we believe that our vision of creating the next generation of trading experiences on Arbitrum will increase the competitive atmosphere and push forward innovation.

Our vision is set and the requested grant will make our go-to-market more possible. Innovation and adoption requires a slight push for users to adopt the unknown or novel, and we believe that the allocation requested is perfect to get the ball rolling for some of the newest features at Vela Exchange.

Execution Strategy:
Our execution strategy will differ across the different feature / incentive allocations, generally following the schedule below:

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Grant Timeline:

Our efforts should span all of Q4 with result turnaround biweekly to review progress of each initiative. Data should give us insights to adjust / improve any of the processes and proposed adjustments will be shared with the DAO.

Funding Tranches:

Oct 2023 - 400k $ARB, biweekly distribution ~200k

Nov 2023 - 175k $ARB, biweekly distribution ~87.5k

Dec 2023 - 175k $ARB, biweekly distribution ~87.5k

Milestone Descriptions:
Milestone #1 - Incentives Kickoff

Early Q4 2023 will see overhauls of Fiat Onboarding/Offboarding and Multi-Chain Deposit along with the launch of Trading Leagues.

With the launch of each of these initiatives, Vela Exchange will start allocating $ARB as well as esVELA into each bucket based on the ratios proposed above in the Grant Information section.

This period will include analytics infrastructure to track each of the initiatives and provide reporting to the DAO.

Milestone #2 - Optimization Round 1

Towards the middle/end of Q4 2024, we will review both user feedback, hard metrics, and adjust / enhance the experience and incentives as needed. We are big proponents of a test and learn methodology and expect strategy changes to best utilize the grant funds.

Milestone #3 - Optimization Round 2

In early Q1 2024, we will facilitate our last round of user experience / incentives performance review for any remaining changes required to ensure program success.

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?:

Yes, Vela Exchange initially deployed on Arbitrum network during our beta and later followed by the official launch. Our team has been building on Arbitrum since early 2022.

On what other networks is the protocol deployed?

Since September 2023, we are now also deployed on the BASE chain, with full support between the two supported chains in-app.

What date did you deploy on Arbitrum?:

Beta on Mainnet began on January 31st, 2023 and led to the official launch on June 26th, 2023.

Protocol Performance:

After an explosive launch, Vela Exchange is currently rank #6 for TVL among derivative exchanges on Arbitrum with a total $10M USDC in our vault. At our height, TVL was one of the largest USDC vaults in DeFi, with 53M+ USDC liquidity provided.

Our all time volume since June 26th official launch is $680M, with a daily average volume of $5.3M (Decentralized Perpetual Exchange for DeFi Traders | Vela)

All milestone KPI data is tracked via 3rd party analytics through monitoring our smart contracts, Google Analytics, Defillama and other social media platform analytics (ie Twitter)

Protocol Roadmap:

Q4 2023

  • Optimized multi-chain deposit experience, completely overhaul UI
  • Launch incentives strategy for multi-chain deposit
  • Open bot partner integration program
  • Open trading leagues, integrate with existing social profiles
  • Notifications Center upgrade - increase granularity of notification controls and types of alerts within application
  • Price feed infrastructure improvements
  • NFT Forge [Tentative]

Q1 2024

  • Rollout Spot Aggregation
  • Launch account abstraction upgrades
  • Trading league trophies / badge system
Audit History:

Smart Contracts Audit #1 (Jan 2023; completed, but now deprecated and replaced with below)

Smart Contracts Audit #2 (June 2023; completed) Vela_Exchange_Audit_Official_Launch.pdf - Google Drive

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 Dashboards according to program requirements for your incentive program?:

Yes. We currently have a 3rd party analytics page on our site and are developing in house APIs to ensure uniformity and accuracy of data. We will hook up our latest APIs to Dune to provide industry standard tracking in accordance with the reporting standards outlined.

Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread?:**

Yes - Absolutely

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

11 Likes
2

Vela is the perfect example of an Arbitrum native project, bringing activity and liquidity to the chain. There is a thriving and organic community that has grown around this exchange. Vela’s trading platform is second to none, with very advanced features never before seen on a dex.

8 Likes
3

Lively Aribitrum rooted project with a professional, doxxed team and working product with utilization. I can see this proposal boosting reach and adoption.

7 Likes
4

Hi, I’m Logan from the Vela Ops team.

I’ve been working with the team nearly 8 months and I have the utmost confidence in the leadership and project vision. Most of the Arbitrum community is aware of our beta arrival- and abrupt end, but the building and innovating has continued very much beyond that. It’s really an exciting experience to be at the forefront of the perpetuals trading space, innovating alongside talented professionals with such a supportive and feedback driven community. You’ll often find Dan, the author of this post and co-founder, either in general chat helping users, or on the convention floor at Eth or Consensus shaking hands and growing our partnerships. Same for Travis. We’re here for you, to offer an advanced trading experience on chain and to support that experience wherever and whenever needed.

6 Likes
5

The VELA team is incredibly strong, fast paced, and great at community building especially here on Arbitrum. Awesome to see their rise within the Arbitrum ecosystem and very deserving for this grant program

6 Likes
6

I’ve had the privilege of getting to know the Vela team by way of a partnership with Ramses and appreciate their professionalism, Arbitrum native roots, and experience.

What they are building is not easy and I am both supportive and excited by the proposed use of ARB to incentivize fiat onboarding and bridging (with other great partners like Axelar/Squid Router), trading competitions and more.

This reads to me as an innovative builder focused proposal by builders I respect and support.

9 Likes
7

Vela exchange has been one of the most explosive projects released on Arbitrum. Even with the slowdown of market conditions the team continues to add great additions to the platform and have no plans to slow down. They are greatly experienced and understand how to use the opportunities given to them. I believe they will continue to grow and soon again reach the height they were at.

4 Likes
8

Team Vela Exchange embodies unwavering dedication and an unyielding commitment to their users and investors. Their recent act of refunding $50 million, prompted by the discovery of a bug, exemplifies their core values of trust and transparency. This exceptional display of integrity has solidified their reputation as a trusted team in the cryptocurrency industry.

What truly sets Vela Exchange apart is their genuine openness to community input and improvements to their platform. They actively seek and value feedback from their user base, creating a collaborative environment where the community’s voice is heard. This approach not only fosters trust but also ensures that the platform evolves in ways that benefit its users.

In addition to their steadfast commitment to the community, Vela Exchange maintains a culture of innovation. They consistently push the boundaries of what’s possible in the cryptocurrency world, providing users with a cutting-edge and ever-evolving platform. Their dedication to staying at the forefront of the industry ensures that investors can look forward to continued growth and innovation.

In summary, team Vela tireless work ethic, integrity, openness to community involvement, and commitment to innovation make them a standout force in the cryptocurrency space. Their actions: such as the $50 million refund, demonstrate their unwavering commitment to the trust and satisfaction of their users and investors, ensuring a bright future for the platform.

4 Likes
9

Vela’s a great team composed of experienced and innovative people. Their plans to make it easier for fiat currencies to be included in the Arbitrum Perp DEX ecosystem will have a disruptive effect, and Vaultka is supporting Vela’s developments all the way. With the additional 300k ARB allocation to multi-chain incentives, Vela will be the one-stop trading hub for all Perp DEX users across chains, further strengthening the status of Arbitrum.

3 Likes
10

reasonable amount compared to other PERP DEXs but unsure about the distribution

there should be no ARB going to fund development (the trading bot stuff), and also the on-ramping stuff is a bit strange

i would have rather seen the arb go to your VLP pool or something along those lines

the positive

2 Likes
11

Thanks for your feedback, adjusted the language so it’s more focused towards bot integration usage vs funding development.

Also adjusted our requested amount slightly given our overall performance since Beta.

2 Likes
12

I have been watching Vela for a few months. I really like the team and have been LPing with them.
I personally think they are the best in terms of UX among the on-chain perps.
However, I’m not super excited about the proposed developments, especially if the bear market stays longer.
Much of the proposed work sounds like UX and web2 improvements for the existing core web3 functionalities, which should work well in attracting more users in bull markets but won’t be able to improve the fundamentals in this bear market.

  • Fiat onboarding is a much larger problem that won’t be solved by 300k ARB. Seasoned Defi users won’t pay 2% credit card fee to onboard fiat while Defi noobs won’t know/use an on-chain perp dex.
  • All the social and gamefi stuff is useful for attracting normies when everyone is talking about their crypto doubled over night. Really not sure how effective this will be these days with the widely spreading negative sentiment about crypto.

I would urge the team also consider to build new core web3 functionalities, and use the ARB grant to support them. Examples:

  • Unified VLP vault to support trading on multiple chains. There is really no reason for the OI limit on base being 1/10 of that on arbitrum, except for initial deployment risks. Winning trade on a chain without sufficient VLP can get an IOU token, which can then be bridged to another chain to redeem USDC. A major competitor already does some version of this. This functionality would enable quick deployment on new chains and attract liquidity more broadly. Also imagine enabling USDC vault on etherium with 15% apr despite the chain is not suitable for trading.
  • List innovative pairs that are not listed on any competitors’ platforms. Of course these pairs should not introduce significant new risk to VLP. Examples are ETH/BTC and Alt/ETH pairs. Pro-traders can already mimic the performance of these pairs but if offered direct access, it would help with their capital efficiency.
  • Bootstrap the VLP apr by generating yield with USDC in the vault. The USDC really only does one thing now that is to assure the traders that if they make a winner trade, the platform can pay them for the profit. However, since traders lose on average, these USDC have extremely low utilization. Spot trading in GMX v1 is making their LP’s assets doing some work and generating extra fees. Another competitor put x% of their LP’s assets in GLP to bootstrap their apr. Of course there is no risk free yield in the world of defi, but carefully deploying something along the line can make the platform much more attractive to LP providers.
13

I think incentives should be always focusing on the chore mechanics of each project that bootstrap onchain activity and participation. Giving solely passive dump tokens to VLPers would work until it doesn’t. Classic rented mercenary liquidity that just leaves as soon as its over. So in that light, im very pleased to see an interesting approach to achieving a more integrated approach by also incentivizing traders instead. Naturally, if volume and revenue increases through incentivization, VLPers will earn more regardless. I believe this is the correct approach.

Nonetheless, agreeing with @meyaf320219, the trading bot and on-ramping incentives sound a bit “creative” let’s say. The information is a bit vague about them, so its hard for me to judge if they really make sense or would build enough value for participants that is a positive-sum for the ecosystem. Is there any more info on this?

Lastly, judging grant size, I believe in isolation seems reasonable given the very competitive landscape in perps in Arbitrum. One of the biggest problems for perps dexes is that those left behind grants would be at huge disadvantage which isn’t fair. But, sadly, there’s a lot of grantees and applicants, so that doesn’t help.

Once those topics are clarified, I would incline myself on supporting VELA, maybe with a reviewed amount (or not), depending on the final grant landscape.

Best of luck!

2 Likes
14

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

  1. The Funding Tranches piece of the incentives framework has been replaced by funds being streamed biweekly. Please alter your proposal to include this timeline instead of funding tranches
  1. Please clarify how you will use incentives for your “Bot Building Program.” Please note grant funds may only be used to incentivize Arbitrum contracts and can not be used for development or integration.
15

Thanks Matt, adjusted the content to reflect your comments.

16

I have been a close follower and an active community member in Vela Exchange since last November. I truly believe Vela has high potential to be a major player among the perpetuals trading platforms in the Arbitrum network. Competition against the first-movers is not easy and development of unique features is needed for Vela to stand out. In my opinion the planned actions funded by the grant will help new, less experienced users to onboard DeFi in Arbitrum network or move from other networks to Arbitrum. Social experience is likely to increase interest towards trading and integration of bots will bring new users who do not have time or skills to trade manually. At the same time, close co-innovation with partner protocols will benefit them too and naturally, increase the attractiveness of the Arbitrum network as a whole.

2 Likes
17

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

3 Likes
18

A stellar example of how a project should be managed, marketed and presented.
low fees, fast executing and pleasing UI
the best of the best.

1 Like
19

Vela adheres to compliance and regulation. They are one of the few doxxed teams and have proven through stress test they can be trusted they refunded 50 million USD in under 48 hours when they ended the BETA early this is a incredible task and shows their character in the crypto space filled with so many unscrupulous actors . They have one of the best teams in the entire arb ecosystem and their innovation is so good that competitors are constantly trying to mimic or steal their ideas/designs which is the biggest compliment you can give a team. The grant request is beyond reasonable compared to some of the peers in this space asking for ludicrous amounts as a large ARB holder I certainly support their future growth it will most likely be the leading player in this space years in the years to come.

4 Likes
20

Strongly in favor - hope this will go to vote!

2 Likes