1. Abstract
The DeFi ecosystem is evolving rapidly, and the role of reliable, decentralized oracle solutions like API3 is becoming increasingly crucial. DWF Labs recognizes the groundbreaking work of API3 in bridging off-chain data with on-chain applications through its innovative Airnode technology and believes that API3’s potential to meet the growing demand for secure and reliable data in decentralized ecosystems.
In comparison to top on-chain oracles’ TVS, API3 may have entered the scene later, but we believe it’s rapidly gaining momentum. In light of this, DWF Labs proposes a strategic partnership that leverages DWF Labs’ expertise in market making, liquidity provision, and ecosystem support to enhance API3’s market presence and utility in the DeFi space.
About DWF Labs
DWF Labs, affiliated with Digital Wave Finance, is a leading cryptocurrency trading firm and market maker. DWF Labs focuses on supporting the growth and development of promising Web3 and DeFi projects and expertise spans across liquidity provision, token design, exchange listings, PR/Marketing, and code and security audits. We have successfully partnered with numerous high-profile projects, bringing enhanced liquidity and market presence.
We’ve partnered with different players from the blockchain ecosystem, including but not limited to Synthetix, TON, Conflux, Theta Labs and Kava.
2. Summary and Objectives
DWF Labs excels in dynamic prop trading, employing varied strategies in both CeFi and DeFi, including liquidity provisioning in DEXs and CEXs, cross-venue arbitrage, and HFT. Both DWF Labs and our venture arm oversee a broad portfolio that includes DeFi, gaming/NFTs, infrastructure, consumer applications, and RWAs.
Hence, DWF Labs would like to support API3’s liquidity and ecosystem by offering volume and liquidity incentives to projects that integrate API3, helping API3 expand its network effect and capture a larger market share.
We have a multitude of DeFi projects that could serve as potential protocol-secured partners for API3. Through collaborative efforts, the goal is to seamlessly integrate API3 into portfolio companies and advocate for its adoption in emerging ecosystems. API3 could gain from early adoption and incentivizing project integration in new ecosystems, where high switching costs emphasise the need for substantial entry incentives.
3. Specification For Strategic Partnership
Enhancing API3 Token Liquidity:
Utilizing DWF Labs’ market-making expertise, DWF Labs aims to increase the liquidity of API3’s native token across multiple exchanges on different CEXs it is listed on (excluding those serving American users). The API3 loan will be 1,000,000 Tokens with a period of 12 months and DWF Labs will be providing a 3% annualized interest payable every 4 weeks with stable coins.
European Call options (expires at end of term):
· 33% of loaned tokens at a strike price of $2.75
· 33% of loaned tokens at a strike price of $3.5
· 33% of loaned tokens at a strike price of $4.25
Ecosystem Support Activities:
- Push trading volume for perp and other DeFi dApps that integrate dAPIs, at a minimum of 15% of protocol trading volume per month.
- Provide $1M TVL for new lending / money market dApps that integrate dAPIs, conditional on both API3’s and DWF’s reasonable standards of successful audits and risk checks (e.g. no permissioned accounts, implementation of time locks , and conservative LTVs).
- Support activities continued for a minimum of 12 months per dApp, or as separately agreed
Ecosystem Support Incentives:
- 0.5% of a dApp’s protocol TVL in API3 tokens, up to $750,000 in equivalent value per dApp (loan, 12 month tenure, strike prices 155%/200%/245% of spot) for dAPI integrations as the protocol’s primary oracle or in a capacity that contributes towards API3’s TVS (as determined by DefiLlama for the purposes of its Oracles subcategory, regardless of dApp type (perps, lending, etc.)), calculated on the day of the dAPI integration, based on dApp TVL reported by DeFiLlama. This would be calculated by taking the 90 day average TVL of the dApp after integration.
- An additional 0.5% of a dApp’s TVL in API3 tokens, up to $500,000 in equivalent value per dApp (loan, 12 month tenure, strike prices 155%/200%/245% of spot) for protocols deploying OEV, This would be calculated by taking the 90 day average TVL of the dApp after integration.
- DWF Labs commits to supporting OEV integrations
- API3 will provide open source searchers for OEV (DWF Labs will not have to develop these)
- The aggregate maximum limit for all support incentives to DWF is $2.5 million value in API3 tokens
There is little downside to the DAO, as the DAO will simply receive the interest amounts and loaned API3 tokens back if the guidelines above have not been met. If the guidelines are met, it would mean that API3 is receiving heavy support across the board with new protocols integrating API3.
API3 DAO Vote
A “FOR” vote would help set up an API3 Ecosystem support and loan + call options defined in the Specification section above. A “AGAINST” vote would prevent the proposal from going through.