Summary:
We appreciate the feedback received from the LTIPP. Based on the insights received we have refined our proposal to better align with the council’s expectations.
Summary of feedback received from the council:
- Wintermute: Reservations regarding protocol’s adoption relative to the grant size
- GFX: Rebate Incentive Bucket does not align with the DAO’s objectives
- Karel: Suggested testing of rebate mechanism outside of the LTIPP, more details around upcoming social features and sybil/wash trading prevention. Recommends re-submitting the proposal with a reduced task demonstrating lower traction.
The original proposal can be found here:
https://forum.arbitrum.foundation/t/buffer-ltipp-application-final/21918/4?u=feyman101
The updated comments/changes per the council’s feedback can be found here:
https://forum.arbitrum.foundation/t/buffer-ltipp-application-final/21918/8?u=feyman101
Responses and Updates:
We have reduced the grant request to 56,624 ARB, a 74.8% reduction from the original ask of 224,735 ARB.
Grant Breakdown:
- Eliminate the Trading Fee Rebate Component from the proposed Incentive Buckets
As advised by the council, we will test the trading fee rebate program outside of the LTIPP process. The new requested grant size of 70K ARB will be distributed across 3 incentive buckets:
- Grow Buffer Liquidity Pool (BLP) TVL via LP Yield Boost Vaults: 26,900 ARB
Justification:
Execution:
LPs lock liquidity into uBLP market-making pools to revive LP boost NFTs. These LP NFT will have yield-bearing properties. They can be locked for a period of time (2 days to 90 days) to increase % of LP rewards.
Every LP NFT will have its own unique spec like amount and lockup period. The yield boosting pools are the final destination where LPs can stake their LP positions (aka. LP NFTs) to receive ARB rewards.
Milestone:
- Grow Trading activity via League Based Competitions: 19,816 ARB
Justification:
Execution:
Competition participants will be divided into five leagues - Bronze, Silver, Gold, Platinum, and Diamond - according to their trading volume from the previous week. In each league, the daily ranking will recognize the top 30 traders with the highest absolute PnL and 10 traders with the lowest absolute PnL, awarding points based on their ranking.
Based on the total accumulated points with each day’s weight, a weekly rank is derived. The allocation of the total ARB incentives is distributed based on the weight of the accumulated points.
Milestone:
- Randomized reinforcement to increase trading frequency per trader (Jackpots): 10,000 ARB
The user qualifies for the jackpot if the position size is equal to or exceeds the minimum trade size. As soon as the trade is placed, an additional random number is received from the vrf (if the user qualifies for a jackpot),based on the vrf value a fixed payout is made to the trader.
Distribution:
Milestone:
- Addressing councils reservations around Protocol Performance:
Since launching Buffer on Arbitrum in September 2022, the protocol has demonstrated significant market fit, initially generating an average of 5,000 USDC in fees daily. Buffer employs an AMM-based model similar to GMX, where the Buffer Liquidity Pool (BLP) facilitates market-making for exotic options trading. Buffer runs on a similar AMM based model as GMX - where the BLP (Buffer Liquidity Pool) provides market-making liquidity for exotic options trading.
Following our September 2023 launch of Buffer v2.5, we implemented stringent risk management strategies—including tighter open interest caps and spreads—to maintain positive expectancy for the AMMs and safeguard LP interests (a trajectory similar to that of GMX and GMX v2). During this time, due to market fluctuations and competitor activities influenced our trading volume and performance, leading to weeks of lower averages post-launch.
Recently, we initiated the Bull vs Bear Trading Competition, which, coupled with a relaxation of our conservative risk management policies, has reignited interest and activity within the protocol. Currently, the daily volume averages over 16,000 USDC.
Bull vs Bear Competition Summary (the campaign is still ongoing, we are 3 weeks into it):
All competition related metrics can be found here:
https://app.buffer.finance/#/leaderboard/galxe
Dashboard shows a significant uptick in trading volume as well as returning users: https://app.buffer.finance/#/dashboard || https://stats.buffer.finance/
- Measures to prevent Wash Trading:
Buffer’s League based competition makes gaming the system incredibly difficult. The competition is designed to reward consistent, ongoing performance instead of a single one-time score.
Pending rewards are accumulated based on rank on the leaderboard. Total rewards for each rank are calculated based on a geometric sequence - to ensure that each position on the leaderboard earns more than the place below it, rather than grouping leaderboard standings into equal reward buckets.
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.
- Accountability and Implementation:
On top of our Dashboard and Stats page, we set up Dune Dashboards for tracking metrics around the initiatives. We will commit to regular updates around the protocol performance, especially around metrics including:
-
BLP TVL
-
Trading Volume
-
Trading Fee Generated
-
User growth and retention
-
Effective prevention of wash trading around competitions.
-
Details on Social Features:
As the new incentive layer unfolds on Buffer, we will introduce several features to increase stickiness and drive trading activity:
-
Revamped Optopi Collection: Optopi is a collection of 8,888 unique PFP friendly NFTs on Arbitrum offering key utilities to traders. We plan to revamp the Optopi utility to offer exclusive features including: exclusive access to trading leagues (higher tier in trading leagues), discounts while buying payout boosts.
-
Chatting rooms: allowing users to engage directly with other users on the platform who are interested in that community or page.
-
Trading Challenges: allowing traders to engage into battle royale-styled PvP challenges to facilitate user onboarding and community building.
-
Low risk PVP trading: play tokens or virtual tokens that allow traders to trade risk free on Buffer.
-
Social Trading: enable social trading, allowing users to follow and replicate top performing traders on Buffer.
