Summary - Manifold Trading would like to provide liquidity for the API3 community, and support the API3 ecosystem by providing volume and liquidity to projects integrating API3.
Abstract - Manifold has a strong prop trading desk with multiple strategies that spans both CeFi and DeFi. Manifold runs liquidity provisioning strategies across several perp DEXs, CEXs, and lend/borrow protocols, cross-venue arbitrage, and HFT. On the venture side, Manifold has portfolio companies across DeFi, infrastructure, consumer applications, RWAs, gaming/NFTs, and more. Through this collaboration, Manifold could push more portfolio companies to integrate API3, and new ecosystems to adopt API3, while adding more liquidity to API3 itself.
Motivation - API3 could benefit from being early in new ecosystems and having additional incentives for new projects to make the integration. It is clear that once in integration is in place with an oracle, switching costs are extremely high for projects. The most important part is to incentivize enough to get a foot in the door with these protocols. Manifold can help with the incentivization mechanics as outlined below, which would be difficult to do without a third-party firm like ours.
Specification:
Float: 1,000,000 tokens
Term: 12 months
Interest: No interest
Call options (expires at end of term):
33% of loaned tokens at a strike price of $2.5
33% of loaned tokens at a strike price of $3.0
33% of loaned tokens at a strike price of $3.5
Ecosystem support activities:
Push taker volume for new perp dApps that integrate dAPIs, at a minimum of 10% of protocol TVL per month → x1.5 if the protocol deploys OEV
Provide a minimum of 10% of TVL or $1M in loan liquidity (whichever is lower) for new lending / money market dApps that integrate dAPIs → x1.5 if the protocol deploys OEV, conditional on successful audits and risk checks (e.g. no permissioned accounts, implementation of timelocks, and conservative LTVs).
Support activities continued for a minimum of 12 months per dApp, or as separately agreed
All support activities contingent on dApp passing due diligence by both Manifold and API3
Ecosystem support commissions:
0.75% of protocol TVL up to $750k in API3 (maxes out at 100M TVL per dApp) for dAPI integrations as the protocol’s primary oracle or in a capacity that contributes towards API3’s TVS, 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 30 day average TVL of the dApp upon signing.
An additional .5% (combined for a total 1.25%) of TVL (up to an additional $500k in API3) for protocols deploying OEV, up to $500k in API3, calculated on the day of OEV deployment, based on dApp TVL reported by DeFiLlama
Manifold commits to supporting OEV integrations by deploying and running OEV searchers for a minimum of 12 months from the start of the integration
API3 will provide open source searchers for OEV (so Manifold will not have to develop these)
OEV deployments for commission require explicit signoff by API3 to ensure the dApp has potential to produce OEV (and thus benefits from the deployment)
Both commissions combined up to an aggregate maximum total of $2.5M in API3
Commissions paid after year 1 of a successful dAPI integration, or whenever the priorly agreed-upon term of support activities has ended.
Benefits - There is little downside to the DAO, as the DAO will simply receive the 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, and receiving additional liquidity for the API3 token.
Drawbacks - Highlight any drawbacks from implementing the proposal and points to consider.
Vote - A “FOR” vote would help set up an API3 loan + call options defined in the Specification section above. A “AGAINST” vote would prevent the proposal from going through.
Great to see a partnership of this nature being proposed. Given the current spot price is near an all time low, and we are entering the early stages of a bull market, the proposed strike prices feel too low (e.g. the first strike price is less than 100% over the current spot).
I’d like to propose the Call option strike prices are adjusted to encourage Manifold to introduce API3 to new protocols which result in a significant upside to the API3 project profile. New strike prices below:
Strike 1: $3 (100% increase on current spot)
Strike 2: $4.5 (200% increase)
Strike 3: $5 (300% increase)
Exciting proposal and one that should really help in drawing TVS for API3 through its ecosystem support activities. Also, with our token’s current MM liquidity being only around 1% of circulating supply, the additional market making support should come in useful. Finally, really appreciate the focus on OEV and am quite excited to see such a highly regarded actor take the lead in supporting its g2m.
In other words: I’m in support.
P.S. Might be cool to explore synergies between this and the @3pochLabs proposal that was passed recently. Suspect such quantifiable benefits for integrating dAPIs should provide strong support for future BD activities.
thanks for the proposal. Really like what i’m seeing, just some suggestions here and there for the sake of misunderstandings and protection of DAO funds.
When will the amount be determined? Upon signing?
If so i’d appreciate an addition here that the 30 day average TVL of the dApp at signing date will be considered, just to prevent depositing 100M into it to max out the reward.
Not that i’m trying to suggest you’d do that, but just want to be explicit about the method of calculation in order to protect all parties.
In terms of aligning incentives, having strike prices too far away from spot price caps our upside quite a bit. It also makes it seem like the path to profitability is less probable, and would be harder to justify allocating a lot of firm resources toward API3. Keeping the current strikes already heavily incentivizes us to help API3 perform well. The higher it goes, the larger the spread we can also make from the relationship. It also encourages us to provide deeper liquidity on the books.
We believe that we are trying to add more value to the API3 ecosystem than other liquidity providers. With the ecosystem support activities we are offering, we should be deserve better or even terms on the liquidity provisioning side. We also noticed that the API3 token has performed well since the posting of our proposal. Price moves that occurred after the proposal was submitted should hopefully not be considered.
Stoked to see you guys from Manifold in this Forum.
As a DAO member, I can say that I have rarely seen a team build as hard as API3 does.
The great work that has been put into everything deserves good partners, and with you I see this very positively. All the best
Valid points, but I do think the proposal comprises of 2 components that each have their own distinct incentives. The ecosystem element that you mentioned already has its own incentives, which I think are fairly reasonable so far.
When it comes to the market making bit, it makes sense to adhere to historical strike prices mainly because of the fact that prices are near all time lows - which is why I’m in favour of at least the first strike being moved up to the level @Hammer mentioned. The amount of tokens being provided (2x the normal amount) already performs the function of being the bonus you seek for opening up the doors for bringing value to the ecosystem in my eyes. I agree though that price movements following your proposal being put up shouldn’t be taken into consideration.
