Moonwell: Ecosystem Grant Draft Proposal [SEEKING FEEDBACK - to be posted to Moonbeam forum as a grant application]
Author: coolhorsegirl, in my capacity as a Moonwell DAO delegate
The Moonwell community presents this Moonbeam Grant Proposal driven by the primary goal of (i) Maintaining and Growing Activity and secondary goal of (ii) Building Connected Contracts Use Cases. Our motivations center around fostering useful liquidity for the wider ecosystem and expanding our influence as a DeFi ambassador for Moonbeam in the Ethereum/L2 space. With Moonwell’s strong roster of contributors, featuring industry-leading teams and experts such as Gauntlet, Halborn, Lunar Labs, Warden Finance, and VectorDAO, and our position as the largest DeFi protocol by TVL in the Dotsama ecosystem, we stand uniquely poised to promote ecosystem liquidity and help accelerate the DeFi flywheel effect by increasing network activity and liquidity.
By leveraging Moonbeam grant funding, we aim to attract new users and grow our community. Grant funds, which will be completely channeled to our liquidity providers on Moonwell’s Moonbeam deployment, will play a vital role in increasing TVL, bolstering onchain activity, and empowering core DeFi primitives. These strategic moves affirm our belief in the vitality of liquidity and the importance of lending and borrowing protocols within our ecosystem. Adding to this, the integration of Moonwell’s mTokens, which are yield bearing versions of GLMR, xcDOT, xcUSDT, Frax, and other tokens, by Moonbeam projects such as ZooDAO and Qoda is a testament to our protocol’s potential to spur ecosystem growth. Their choice to build on top of Moonwell not only brings additional utility and opportunities for the Moonbeam community, but also further validates the effectiveness of our protocol. This cross-project collaboration is paving the way for a more interconnected and robust ecosystem.
Moonwell strongly aligns with Moonbeam’s vision of connected smart contracts with EVM as the base layer (as outlined in MIP-39: Activate Moonwell on Base Mainnet). Our plans to leverage the Wormhole message passing protocol for temporal governance emphasizes our commitment to connected contract use cases, fostering efficient governance mechanisms in managing Moonwell’s deployment on Base from Moonbeam. Simultaneously, the Moonwell community has a strong desire to integrate additional XCM powered XC-20s from across Polkadot, including the likes of Bifrost’s liquid staked xcvDOT and xcvGLMR, and Interlay’s xcIBTC.
As our community expands, we are steadfast in our commitment to making DeFi more accessible to all. We believe in lowering the barriers to entry that have traditionally made DeFi daunting. With this grant proposal, Moonwell demonstrates its dedication not only to innovation but also to creating a more inclusive and approachable DeFi environment. We are eager to simplify and democratize access to these financial tools. Moonwell is leading the charge towards a more dynamic, inclusive, and connected DeFi ecosystem, opening up new possibilities for all users, regardless of their prior blockchain experience.
Moonwell is an open lending and DeFi protocol built on Moonbeam and Moonriver, and is the largest DeFi protocol by TVL in the Dotsama ecosystem.
- App: https://moonwell.fi
- Docs: https://docs.moonwell.fi
- Governance Forum: https://forum.moonwell.fi
- Governance Portal: https://gov.moonwell.fi
- Github: GitHub - moonwell-fi/contracts-open-source: Open Source Moonwell Contracts
- Audits: Audits - Moonwell Artemis
The amount requested to support the project initiatives is 2,000,000 GLMR.
The entirety of the grant funds (GLMR) will be distributed to liquidity providers on Moonwell’s Moonbeam deployment, in an effort to increase both TVL and onchain activity. Engaging with other grant recipients, the Moonwell community will collaboratively promote these incentives, mirroring the successful strategies employed in the recent Moonbeam Ignite campaign.This unified effort will not only spark increased participation, but also foster a sense of unity and shared purpose within our expanding ecosystem.
The proposed Ecosystem Grant Amount of 2,000,000 GLMR will enable Moonwell to continue to bolster liquidity for both bridged and native assets in the ecosystem. Increased liquidity in lending protocols like Moonwell enables borrowers to receive lower interest rates, which makes borrowing for use in other applications and protocols on Moonbeam more attractive, and helps grow TVL and adoption more broadly across the ecosystem. By endorsing this grant, the Moonbeam community is not only backing a proven model of success, but also reaffirming their trust in a project that has demonstrated its transparent and responsible use of prior grant allocations.
The Moonwell community was honored to receive one of the first grants available to ecosystem projects in the Fall of 2022. This grant funding enabled the Moonwell community to launch and build liquidity in new money markets for Wormhole wrapped assets, as well as native Dotsama assets such as xcUSDT (cross-chain Tether).
It was challenging for the Moonbeam ecosystem to rebuild liquidity on a new bridge, but the community decision to select Wormhole as the preferred bridge provider has born fruit as Wormhole has swiftly evolved into an integral component of the Moonbeam ecosystem, evident in their support for the recently unveiled MRL (Moonbeam Routed Liquidity). Also, other top DeFi protocols, such as Uniswap, have selected Wormhole as their cross chain message passing protocol of choice for multichain governance, and the security of that solution has improved remarkably in the last year.
The Moonbeam grant last fall enabled the Moonwell community to launch the following new markets:
- Wormhole wrapped ETH, WBTC, USDC, and BUSD
- Polkadot native xcUSDT (cross-chain Tether)
On December 4, 2022, MIP-11 was executed, adding grant GLMR incentives to these new markets on Moonwell Artemis. TVL at that time was $23.72m. By February 21, TVL had reached an annual high of $48.61m (Source: DefiLlama).
The liquidity growth in these markets would not have been possible without the previous round of grant funding and support from the Moonbeam community. We hope to continue this positive trend through this current round of funding.
- TVL growth of Wormhole wrapped assets on Moonwell
- TVL growth of xcUSDT on Moonwell
In March 2022, the Lunar Technology Foundation successfully secured approximately $26M via a combination of a private fundraising round and a public sale of the WELL token, giving it a financial runway of more than four years at the current rate of expenditure. Furthermore, Moonwell holds the distinction of being the inaugural project funded by Arrington Capital’s $100M Moonbeam Ecosystem Fund. The founding contributors to the Moonwell ecosystem are a distinguished ensemble comprising industry leaders in technology, web3, DeFi, smart contracts, and staking. Among them is Luke Youngblood, who, during his tenure as a tech lead at Coinbase, spearheaded the launch of Staking Rewards, a globally used product boasting a multi-billion dollar TVL and millions of users.
Moonwell boasts a dynamic and diverse set of contributing teams, whom hold demonstrated expertise in DeFi operations management, front-end and smart contract development, UI/UX design, and risk management. This impressive roster features industry leaders such as Gauntlet, Halborn, Lunar Labs, Warden Finance, and VectorDAO. The Moonwell DAO also possesses a robust grants program that offers support for projects looking to grow the Moonwell ecosystem.
The Moonwell community will have successfully deployed 100% of the original 4.166M GLMR grant funding received last Fall, by August 2023. As a community, we are proud of the fact that 100% of the grant funds went to liquidity providers in the Moonwell protocol, and no grant funding was used for other expenses. To ensure utmost transparency, a grant transparency report was published, which communicated the updated rate of incentive distribution. A grant transparency dashboard is available here, which the community can follow to understand how the grants are distributed on a month by moth basis. All grants are distributed through community governance, as the contributing teams have no direct access to grant funds. Here is an example of a successful governance proposal that distributes grant funding. You can see that Moonwell contributors have worked hard to ensure that the community is informed and all changes to distribution are visible and easily accessible.
It is anticipated that the grant funds from Tranche 2 would be distributed from early August 2023, to February 2024, at a rate of approximately 400K GLMR per 4 week reward interval. In total, a grant of 2M GLMR has been requested. Should the final allocation fall short of this request, our utilization blueprint will remain unchanged. However, please note that a reduction in the granted amount would proportionally diminish both the distribution rates and the potency of these incentives, impacting their ability to achieve the intended objectives outlined above.
After receiving last year’s Level 3 Ecosystem Grant, the Moonwell community helped to create and lead the Moonbeam Ignite liquidity campaign. These efforts included holding multiple AMAs, detailed Twitter thread updates, an A.I. art contest, and culminated in a GALXE NFT campaign. This NFT campaign saw ~10,000 participants perform onchain actions across the Moonbeam ecosystem in order to mint ~50,000 NFTs. The Moonwell community spearheaded many of these events and utilized non-grants resources to commission all NFTs and campaign graphics. The Moonwell community will once again team up with grant recipients to collaboratively promote these incentives.
The Moonwell community’s vision of success extends beyond simply deploying the Ecosystem Grant to boost platform volume and liquidity. We aspire to distribute the funds strategically to cater to user expectations and needs, fostering an exceptional DeFi experience.
Metrics of success are multi-faceted. While quantifying user growth is straightforward, predicting the rate of user base expansion can be complex, contingent on variables within and beyond our control. These include the platform’s performance and functionality, network stability, market sentiment, competition, media exposure, and organic community growth.
As a point of reference, we will consider our current user base and rate of new user acquisition, alongside TVL, volume, and transaction count, to gauge the effectiveness of our strategies. Steady quarter-over-quarter growth is anticipated as we distribute the GLMR grants and progress with protocol development and expansion
The grand vision for Moonwell over the next 2 to 5 years is rooted in the sustainability and growth of the protocol beyond the grant period. Our aim is to build a self-sustaining DeFi hub on Moonbeam that thrives on the constant activity of its users, driving robust volume and liquidity. We strive to be a key player in the Dotsama ecosystem and beyond (demonstrated by our upcoming integration with Base), simplifying the lending and borrowing experience for all, irrespective of ones familiarity with blockchain technology. By focusing on continuous innovation and user-centric development, we aim to evolve into a resilient and intuitive DeFi protocol that shapes the future of finance in the web3 world.
This Ecosystem Grant holds tremendous potential for adding value to the Moonbeam Ecosystem, advancing both of its primary goals: Maintaining and Growing Activity and Building Connected Contracts Use Cases.
The Moonwell community’s strategy to distribute the grant to liquidity providers on its Moonbeam deployment will catalyze user activity and also directly contribute to growing TVL, an essential metric of success in the DeFi space. The injection of grant funds will not only stimulate participation but also galvanize the overall liquidity of the protocol. This, in turn, solidifies Moonwell’s standing as a critical node in the Dotsama ecosystem, serving as a compelling reason for users to participate and stay engaged.
This proposed liquidity plan will function similarly to the one made possible by Moonwell’s previous Level 3 Ecosystem grant, which powered the Moonbeam Ignite campaign. During Moonbeam Ignite, the Moonbeam ecosystem saw a substantial increase in not only ecosystem TVL, but also the creation of unique ecosystem addresses.
In line with the second goal, Moonwell seeks to leverage interconnected use cases through the Wormhole message passing protocol. This will advance the objective of building connected contracts use cases, facilitating the governance of Moonwell’s deployment on Base from Moonbeam. The Moonwell community also has a strong desire to integrate additional XCM powered XC-20s from across Polkadot, including the likes of Bifrost’s liquid staked vDOT and vGLMR, and Interlay’s xcIBTC. Grant funds could be used to incentivize these new markets, attracting new users from across the Polkadot ecosystem.
By bolstering Moonwell’s capability to be a DeFi hub for Polkadot, this grant aids in increasing ecosystem liquidity and activity, as well as advancing Moonbeam’s vision of interconnected smart contracts, both of which are integral to the evolution of the ecosystem. Consequently, supporting this Ecosystem Grant provides a direct pathway to realizing Moonbeam’s broader goals and fostering a more connected, dynamic, and active DeFi landscape.
Estimated Dates: August 2023 - February 2024
- Grant Request: 2,000,000 GLMR
- Rate of Distribution: Approx. 100K GLMR/week
- Incentivized Markets: xcUSDT, xcDOT, GLMR, FRAX, BTC.wh, ETH.wh, USDC.wh
Grant funds will be transferred to the Moonwell Artemis Comptroller contract, afterwhich they will be distributed as rewards to those supplying on Moonwell. To which markets these rewards are directed to, and the rate at which they are distributed, is ultimately decided by the Moonwell community through the governance process. Every four weeks, governance proposals are submitted that have the ability to alter reward speeds (emissions) on Moonwell money markets. Moonwell contributors have created open source tooling that enables the community to dynamically adjust the grant emissions to the various markets supported on the Moonwell protocol based on TVL. This enables the Moonwell protocol to adapt to changing liquidity and TVL in a dynamic manner, and ensures that as liquidity grows over time, the liquidity incentives can adjust to keep lending rates attractive for liquidity providers.
Community governance also enables the Moonwell community to express their opinion about which assets should be incentivized more than others, for example, the community may choose to support native Moonbeam and XCM assets more than bridged assets, to further grow adoption of projects that have chosen the Dotsama ecosystem as their home.
We at Moonwell would like to express our deepest gratitude to the Moonbeam community for the invaluable support and grant funding we have received in the past year. Your continued belief in our vision and your commitment to fostering innovation have truly made a difference. We are extremely proud to be part of this vibrant community and the groundbreaking work it encourages. We look forward to many more years ahead.