Proposal: DAO DeFi Grant Program

Proposals
22

Thanks for the explanation. Considering the foundations efforts are not included in the budget, the 10% (200k) for the review part seem like a high ratio. It’s better to have a high review standard, though, so I understand the calculation there. Look forward to seeing the proposal progressing.

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23

I am referring to assessing the effectiveness of the grant program; I am proposing that the DAO consider running a selection program for service providers who could assess the Grant Program.

24

Got it, thanks for clarifying @Kene_StableLab. That will be done separately at a later stage (given the program is 6 months long). There’s also a chance the Foundation manages this as a Foundation RFP vs a DAO one to maximize coordination

25

Just a heads-up, everyone:

The proposal description has been updated. (Originally planned for the March 1 voting cycle, it has been moved forward by one month to align with the April 1 voting cycle.)

26

Hi all. Just want to flag that we may postpone trying to get this to vote for at least one more voting cycle (if not more). Between a slight change in thinking on the Labs side from a strategy perspective (we’ll share more soon), seeing things like ZkSync’s Ignite program getting put on pause , and few delegates expressing concerns both directly to the gov team and in previous conversations, we want to re-assess if this is the best approach to help Scroll grow and success this year.

We’ll discuss this a bit this week during the first gov call on Wed. We will also provide some updates from the Labs side next week.

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27

Hey everyone,

Thanks @eugene for the heads up, we’ve been rethinking this proposal through in this same lane so just dropping some thoughts regarding the proposal and wanted to share some insights before next week’s conversation. First and foremost, we believe that it’s the right call to pause the DeFi Grant Program proposal based on the current market situation and Scroll’s performance in particular.

The situation is worrying and showcased with low adoption, liquidity and overall activity, accompanied with the current market state. Just to be clear, we are fully in favour of supporting new builders and finding ways to push the protocol forward. Nonetheless, we think that the situation demands for an optimized resource usage and a strategic approach when allocating them. In that sense, looking to foster a set of MVPs necessarily requires some prior steps that drive those projects to success: a solid infrastructure, deep on-chain liquidity and a strong performing token.

For having a better grasp here are some key aspects to consider:

  • Treasury: At current price, the treasury has 35M USD (100M SCR) a significantly lower amount in comparison to the STIP y LTIPP programs in Arbitrum. And when comparing to other L2s treasuries the amount also reflects as low: Arbitrum: 990M USD; Optimism: 1,7B USD; Mantle: 2,3B USD

    Although the program represents 3,53% of the treasury, the allocation needs to be highly strategic in order to ensure the program’s success.

  • Token liquidity: In its current state, on-chain liquidity is worrying and it particularly reflects on two of Scroll’s main DEXs

    Ambient:

    SynSwap:

    Despite being listed in 10 CEXs, the lack of deep on-chain liquidity is a risk. Users could sell their tokens in a CEX in detriment of the Scroll chain. Also, DEX sales could likely produce abrupt and unwanted price changes. Currently, there are no clear incentives for users to keep their SCRs.

  • DeFi Ecosystem in Scroll: Although Scroll’s ecosystem is growing, with around 113 protocols, the liquidity and daily volume are really low. Also the stablecoins market is around 25M, which severely limits the chain’s activity. Of course this stands as a known dilemma between growth and liquidity but we believe it’s key to support existing protocols and strategically support liquidity in strategic pairs and stablecoins in order to create a more attractive environment for builders and users.

  • Selling pressure: Currently there are no solid reasons for users to keep SCR, which generates subsequent problems: teams building new protocols will have to sell SCR in order to operate and users receiving SCR rewards will likely sell the token, increasing the sell pressure.

In conclusion, we consider that the focus right now should be in generating on-chain liquidity initiatives and strategies alongside different mechanisms and protocols in order to set the ground for what could be a grants program in the long term. Therefore we again support the decision and look forward to the upcoming conversations on which we’d be more than happy to contribute.

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