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

Archive Incentive Framework (Round 1)
49

Vertex product is pretty competitive if you have give it a try
Now arbitrum already has the best oracle-based perp dex - gmx
Seems cool if also has the best orderbook/hybrid perp dex

2 Likes
50

Yes.
No it´s not the same.
One does it now (which props up the stats), the other wants to do it in the future to level the playing field.
Vertex, hyperliquid, HMX volumes are high most likely because of the ponzinomics. Like Vela and Level Finance volume was not too long ago.
And perpetual protocol before them.
They all fade.

Maybe the orderbook dex aspect brings value to an ecosystem but we cannot tell from the stats since they are not a reliable gauge of user demand. More of farmer demand (which will leave once there’s nothing left to be farmed)

3 Likes
51

Hey sir,

We built this Dune dashboard and it shows a very similar story. Hope that helps.

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52

Very good product. Have been using for last 3 Months. TVL is awesome too. I am in favour of the proposal

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53

Hey @Matt_StableLab we updated the proposal per your request to comply with the program’s rules for your review, which also includes some other changes based on forum feedback. Please find the reflected changes in the revised proposal above.

A summary of the major changes includes:

Smart Contract Address:

  • Original: N/A (fee discounts)

  • Amended (Vertex Router): 0xbbee07b3e8121227afcfe1e2b82772246226128e

Incentive Structure Change:

  • Original: Backstop fee discounts

  • Amended: Trading Rewards + Fusion Pool Incentives (i.e., liquidity incentives for LPs via Elixir integration on Vertex).

—

Grant Size Request:

Original: Up to 4.5 million ARB maximum.

Amended: Revised down to the following:

  • Total = 1.8M – 3M ARB total (600K – 1M ARB per epoch).

  • Trading Rewards = 1.35M – 2.55M ARB total (450K – 850K ARB per 28-day epoch).

  • Fusion Pools: Powered by Elixir Protocol (“Elixir”) Liquidity Incentives = Up to 450K ARB total (150K ARB per 28-day epoch).

  • Summary of Elixir’s integration with Vertex + Fusion pools.

—

Grant Breakdown

Original: Summary of grant execution for fee discount incentive model.

Amended:

  1. Incentivize Community-Based Market-Making (Elixir)

  2. Trading Rewards

  3. Sequencer Fee Removal (not included within scope of incentives and done as an additional incentive by Vertex)

Total = 600K - 1M ARB per epoch

If the total Taker Fees over 3 epochs (roughly three months) do not amount to a sum greater than 3M ARB, the remaining balance will be returned to the DAO.

—

Key Performance Indicators (KPIs)

Original: Volume-based metrics based on fee discounts not including amended changes of the structure for liquidity incentives via Elixir + trading incentives structure.

Amended:

  • Elixir LP program KPI details.
  • Trading Reward details for liquidity incentives in lieu of fee discounts.
  • Overall goals remain similar.

—

Justification for the Size of the Grant:

Original: Fee discount execution strategy.

Amended:

  • Trading + Elixir Incentive Summary:

    • Updated section to include volume-based KPI changes for trading incentives + Elixir Fusion Pools within the scope of 2 potential outcomes.

  • Execution Strategy:

    • ARB tokens will be disbursed using tooling already built for Vertex’s internal token program.

    • Elixir’s Fusion Pool incentives will be paid by the Vertex team using Elixir as the agent.

—

Protocol Performance

Original: Included data from Token Terminal on protocol contract gas consumption as a % of fee market.

Amended: Changed Token Terminal data to Dune Analytics dashboard containing a 30-day overview of gas consumed on Arbitrum per protocol.

Let us know if you have any questions ser. Thanks!

2 Likes
54

Few facts:

Exchanges like Binance have always been my preferred trading venue, that stopped since I discovered vertex. Due to Vertex, most my perp trading in the past 4 months have been on Arbitrum. As liquidity continues to grow rapidly, CEXs will only serve as a source of on/off ramp to me

I wished vertex would expand to Base network, they didn’t & instead are implementing cross chain deposits to onboard more users into Arbitrum.

You’d be surprised to learn that the tech is unique & superior to leading trading platforms in the entire defi space. That said, I hope vertex gets all the support they need, not only is it a good product, they are also committed to Arbitrum.

If you would like to see a perp dex on Arbitrum compete with dYdX & eventually surpass it in daily trading volume, vertex is your best bet at ensuring that. It’s highly unlikely to happen with any other dexs on Arbitrum, as vertex design is better suited to achieve that

Ed: my 1st ever post on this forum & im glad it’s for a good cause

2 Likes
55

What is the requested quantity 1.8M or 3M? Could you be more specific?

Although the Vertex meticas are good, I have some doubts that they are really organic. I also think that whether it is 1.8M or 3M the quantity is high.

1 Like
56

It is a range, the requested amount is variable & dependant on Volume for Vertex and TVL for Elixir, the below is taken from the application.

Requested Grant Size:

  • Trading Rewards = 1.35M – 2.55M ARB total (450K – 850K ARB per 28-day epoch)
  • Fusion Pools: Powered by Elixir Protocol (“Elixir”) Liquidity Incentives = Up to 450K ARB total (150K ARB per 28-day epoch)
  • Total = 1.8M – 3M ARB (600K – 1M ARB per epoch)

The higher end is achieved if:

  • Vertex averages in excess of 140M USD volume daily.
  • Elixir onboards > average 10M USD TVL.
  • Elixir currently has >5M in stablecoin liquidity demand for Vertex Fusion pools.
1 Like
57

While numbers and metrics give us a look or an idea into what’s happening now, it’s really the potential that is even more important here. Vertex isn’t just another DEX : they’ve got spot trading, perps, and money markets, all in one place and cross-margin possibility. That’s huge but not all. Vertex is a hybrid of orderbook and AMM - that is never seen before. And the speed they went from 0 to the top is astonishing.? On top of that other protocols like Elixir protocol build upon vertex. That’s some heavy backing right there. Vertex isn’t just aiming to join the race; they want to lead it. So instead of getting caught up in the current stats, I’d say let’s keep an eye on what Vertex is setting up for the future.

58

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

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59

Fusion pools are not live? How can you request 400k for something that isn’t live?

What limits are in place to prevent wash trading for the trading rewards?

Thanks

1 Like
60

Hello @Vertex_Protocol ,

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:

Once you change your proposal title 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.

Once marked as [Final], your application post will be locked by moderators and you will no longer be able to edit your proposal.

1 Like
61

Vertex has grown to one of the top perpetual dex’s in this space, many say this is because of the airdrop hunters but when you take a proper look under the hood you see a hard-working team that ships quickly.

They don’t just ship quickly, they deliver quality products, they take in feedback from the community & improve their product constantly.

I’m for the proposal, there is simply no competition currently that can compete with vertex.

3 Likes
62

I have seen, as a VC investor, and used, as a DeFi degen, a number of on-chain exchanges. I believe Vertex has one of the best, if not the best, mixes of commercial and exchange experience across the team, command over product UI/UX for both DeFi native and institutional traders, and market efficiency with fees and rewards designed to attract additional liquidity and reduce slippage.

A few reasons I am in support of this proposal, and believe that Vertex will be a cornerstone in the Arbitrum ecosystem for years to come:

  • Vertex’s low fees are a feature, not a bug. If we expect institutions to trade on-chain, they will not want to deal with the complexities of crypto if markets are not mostly frictionless.
  • Vertex is supported by a number of large institutional trading firms such as Wintermute, Hudson River Trading, etc that straddle both traditional markets and crypto markets. They will likely help bring best practices to Vertex as investors and help increase the chances that Vertex will be one of the preferred venues of choice for the large inflow of institutional capital on-chain.
  • Vertex is an Arbitrum-native exchange. They build the protocol from the ground up on top of Arbitrum after evaluating other potential L1’s and L2’s, likely due to the architecture of Arbitrum’s fraud proofs and how it would work with Vertex’s off-chain order matching engine. This allows Vertex to be lightning fast, but have the same level of security as if it were built on Mainnet, a feature that was uniquely in production on Arbitrum.
  • Vertex’s announced partnership with Elixir Protocol should help bring additional liquidity and democratize access to market making rewards for the Arbitrum ecosystem as a whole. Historically, market making rewards have only been available to a few centralized firms, and Vertex’s integration with Elixir Protocol, soon to go live, is bringing a new primitive for liquidity providers looking for alternative sources of yield on Arbitrum first.
63

Hello @Vertex_Protocol ,

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.

1 Like
64

Firstly, thank you for your proposal and for contributing to the Arbitrum ecosystem.

Introduction and Rationale

Vertex Protocol is seeking a 3M ARB grant to incentivize Community-Based Market-Making, Trading Rewards, and Sequencer Fee Removal. That amounts to 6% of the total 50M ARB available in the grant program. Having launched on Arbitrum in Q2 2023, Vertex has quickly made its presence felt as a one-stop-shop for trading spot markets, derivatives, and money markets. They’ve attracted an impressive user base and consistently rank high in gas consumption on the network. However, while we appreciate Vertex’s innovative approach and potential to stimulate trading on Arbitrum, we have concerns about the proposed size of the grant in relation to its time on the platform and its collaborative impact on the overall ecosystem.

Major Concerns

Concern Regarding Organic Growth and User Onboarding

  • Volumes on Vertex are highly incentivized, making it tough to gauge genuine engagement
  • The high allocation of 37% of the token supply for incentives may lead to speculation over organic growth

Concern About Ecosystem Synergy

  • The grant seems more self-serving than beneficial to the broader Arbitrum ecosystem
  • The protocol is relatively new to the chain in comparison to some other protocols (this year)

Recommendation

  • Lower the grant request, given the protocol’s relatively short time on Arbitrum

Summary

Castle Capital is supportive of Vertex’s innovative contributions to the Arbitrum ecosystem. However, we believe the grant request needs to be aligned more closely with the protocol’s time on the platform and its wider contribution to the Arbitrum community.

Our recommendations can be summarized as follows:

  • Lower the grant size to be more in line with its time on Arbitrum

We hope our feedback will be taken as constructive suggestions for aligning your laudable goals more closely with the broader needs and dynamics of the Arbitrum ecosystem.

3 Likes
65

sad when people can’t differentiate between incentives and “ponzinomics”

emissions != ponzi

the truth is Vertex and the like are bringing actual price discovery, liquidity by new parties such as MMs and trading firms or prop shops which all add to the diverse composition of the Arbitrum ecosystem

otherwise, the ecosystem would be left with just p2p casino LP-based dexes who are on their way to obsolescence given their meager LP yields and inevitable reliance on DAO incentives to sustain their own ponzi model, such as is happening in gmx and gains

1 Like
66

bro how is your recommendation to vertex and most proposals (other than GMX) to lower the grant request, especially when Vertex does more volume than GMX and is asking for less than a quarter of GMX?

what does “time on the platform” have to do with this round of proposals? shouldn’t it be forward-looking?

it’s painfully obvious how many blueberries are making some of these suggestions smh

again i’ve used gmx, gains, cap, vertex, hyperliquid etc. no bias to vertex nor gmx but chiming in as it seems very unfair for the broader ecosystem for gmx maxis to crap on all other proposals out there

objectively, vertex ui/ux is amazing, and the product has tight liquidity and good markets. it’s brought new market makers and traders onto Arbitrum who never would’ve used gmx before for obvious reasons. it’s bringing projects like elixir onto arbitrum, and shouldn’t a project be more rewarded for achieving so much in a short amount of time?

again i just want the best for the arbitrum ecosystem, and no hate to gmx for what it did in the past; it’s time to look ahead and welcome other strong projects and frankly vertex shines among its peers

3 Likes
67

Thanks for your reply.

Ultimately, we need to be extremely cautious not to over-allocate in this STIP. There are 50M ARB and the 8 largest proposals make up ~48M.

The governing values we used to assess eligibility for grants are:

  1. Protocol effectiveness = High (capital efficient DEX)
  2. Arbitrum Native (taking into account length of time and impact) = Medium
  3. Innovation = High (first successful CLOB on arb)
  4. Collaboration = Low (mainly focus on themselves than others)
    Along with whether the grant focuses internally or externally (Vertex = internal)

Due to these factors, we believe a lower grant than the requested 3M is appropriate.

Please point out where we have ‘crap’ on other proposals.

Governance is subjective and we are open to discussing all views. Obviously, our governing values will not be held by every delegate or ARB holder.

2 Likes
68

Thanks for the feedback.

In answer to some of your points:

I will address the ones labelled not ‘high’

Arbitrum Native
I would say that given our dedication to building on arbitrum (over 16 months) we are more Arbitrum Native than others who have simply forked code from other ecosystems and contributed no major intellectual additions to the space. (I leave you to assess who those are) But your metric seems to punish us for taking the time to build our protocol from scratch.

Collabarative
Collabaration wise we spend a lot of time focusing on integrations with Vertex and are currently working on integrations with:

  • Elixir - added to proposal
  • Pear Protocol
  • RGV - Spot/Perp Vaults

And many others - all of whom would benefit from the trading incentives we are proposing. (this is why we are incentivising taker fees and community based market making. It aids the community and every day users without over-favouring the trading firms and professionals who use Vertex as a venue of choice.

Overall
At the very least I would assess Vertex to be High/Medium on all of your metrics and high overall. Even with your rubric I would estimate our impact as somewhere between medium and high.

Unconsidered Points
Vertex is an orderbook dex with the capacity to scale to many billions of dollars a day in volume. Currently there are few or no venues that can do this for spot and perp trading on-chain. IF defi is ever to be truly decentralized then the need for such venues for price discovery and self-custodied trading will be extremely high. Vertex is innovating in this space, it is Arbitrum native and has achieved much with little support up to this point.

This grant request which is smaller than all other derivatives DEXs on Arbitrum, and aimed at the only oderbook DEX could represent a huge endorsement from the community for bringing a currently underserved portion of users into defi and specifically into Arbitrum.

On the general discussion above -
Obviously don’t condone high spirits etc. on the forums - a number of community members all round have been more tribal than expected. I suspect @fimax is feeling rather defensive of us after reading some of the more unreasonable comments, but I apologise for any defensiveness on behalf of the community. On a personal level I actually appreciate the meaningful engagement which has not been a huge feature of this process and will hopefully improve as the DAO finds its feet with these programs.

3 Likes