[OPEN GRANT APPLICATION] GMX <> Gamma

[strategicreserve]

SECTION 1: APPLICANT INFORMATION

Applicant Name or Alias:

strategicreserve

Project Name:

Gamma

Project Description:

Gamma Strategies is a protocol for active liquidity management on concentrated liquidity exchanges such as Uniswap, Camelot, Ramses, SushiSwap, PancakeSwap, and Zyberswap. It’s been live in production since July 2021 and has accrued over $115M in TVL, with most of the liquidity on the Arbitrum Network.

Gamma is currently building GMX v2 Perpetuals Vaults, which will utilize long/short positions on GMX v2 to help mitigate impermanent loss on LP positions.

Team Members and Qualifications:

bp_gamma - Project Lead
strategicreserve - Business Development
bro - Operations
hawkofsky - Smart Contract Engineer
bs - Strategy Engineer
eg - Front End Engineer
piospapios - Data Engineer

Project Links:

Website
Web App
Documents
Twitter
Medium
Discord
Telegram
Github
DeFiLlama
Github
Revenue Dashboard)

Contact Information:

bp: (tg) @bp_gamma (X) @BP_Gamma (email) brian@gammastrategies.org
sr: (tg) @StrategicReserve (X) @sr_eth (email) strategicreserve.eth@gmail.com

SECTION 2: GRANT INFORMATION

Requested Grant Size:

100,000 ARB

Grant Matching:

Gamma will provide for all smart contract, frontend, and backend development. It will also provide for a two-week / two-person audit of the GMX v2 Perpetuals Vault contract with OpenZeppelin.

Grant Breakdown:

25,000 ARB to help fund a Sherlock Audit Contest
75,000 ARB to incentivize the usage of the GMX v2 Perpetuals Vault

Funding Address:

0x8beFf353FCb2E288fdFFbb0b2B61B4c76dc700Df - Gamma Community Treasury Arbitrum

Funding Address Characteristics:

2/3 GnosisSafe multisig with stored keys. Link.

Distribution Contract Address:

0x8beFf353FCb2E288fdFFbb0b2B61B4c76dc700Df - Gamma Community Treasury Arbitrum

Incentivized Contract Addresses:

Incentivized vaults (hypervisors) will be ready when the incentive stage is ready to begin. All contracts, pools, pairs information, incentives rates, and more will be posted on our GMX Dashboard.

GMX v2 Perp Vaults Farms - (currently in unit testing phase awaiting audit from OpenZeppelin)

• BTC-WETH
• ETH-USDC
• ARB-USDC

75,000 $ARB Incentive Distribution Plan:

1. 10% (7,500 $ARB) will be distributed via a quest where users will be incentivized to go through the user flow of creating their own personal vaults that interact with the GMX v2 Perp Vault and providing at least 1,000 USDC directly to the GMX v2 Perp Vault for any LP pair.

2. 90% (67,000 $ARB) will be allocated based on weekly epochs, where a set number of ARB will be allocated per each epoch

3. The time-weighted average liquidity per epoch will be used to calculate proportionate rewards

4. At the end of each epoch, the appropriate amount of $ARB will be airdropped to the users.

SECTION 3: GRANT OBJECTIVES AND EXECUTION

Objectives:

1. Strategically appeal to concentrated liquidity LPs who are looking to hedge against divergence losses. The demand for this product is extremely high in both the Gamma community and the general LP community
2. Enhance safety by contributing to an audit contest on the vault smart contracts. Gamma will be funding the development and the initial audit by OpenZeppelin.
3. Increase perpetual futures trading volume and GMX protocol revenues by incentivizing the usage of the GMX V2 Perpetuals Vault.

Key Performance Indicators (KPIs):

1. Backend smart contracts (currently in unit testing) + audit contest completion
2. Frontend design and engineering - Currently in development
3. TVL accrued in the GMX V2 Perpetuals Vault
4. Number of users who utilize the GMX V2 Perpetuals Vault
5. Various applicable stats (Incentivized Liquidity Rates, Total Txns, etc.)

How will receiving a grant enable you to foster growth or innovation within the GMX ecosystem?:

1. Exposure to LP User Base: The grant will enable Gamma to develop a long/short Perpetuals Vault that will cater to LPs seeking to reduce the divergence costs of providing liquidity on decentralized exchanges.
2. Increased Perpetuals Trading Demand: The ability to reduce divergence costs (or impermanent loss) in LP-ing is one of the most sought-after features by our users, and this demand would increase perpetuals trading volume and revenues for the GMX ecosystem.
3. Enhanced User Safety: The grant will help fund an audit contest to further support smart contract security. Gamma will be funding the initial OpenZeppelin audit.
4. Initial Incentivization: Using incentives to inform users how to use the product (Galxe Quests) and incentivize the liquidity provided to the GMX v2 Perp Vault.

Justification for the size of the grant:

1. Market Opportunity & Size: Gamma is currently the largest liquidity manager on Arbitrum, with over $115M in TVL overall and $37M+ on Arbitrum. Both Camelot and Ramses are expending the majority of their incentives towards Gamma Vaults, so a large market share of LPs on Arbitrum are providing liquidity via Gamma Vault Positions.

2. Arbitrum Alignment: Gamma has bespoke integrations with native Arbitrum DEX’s like Camelot and Ramses, while also supporting Uniswap, PancakeSwap, and SushiSwap.

3. GMX Alignment: Gamma is currently incentivizing WETH-GMX LP on Camelot DEX with its own STIP grant, and is also managing liquidity positions on Uniswap as well.

4. Contributions from Gamma: Gamma will be funding the entirety of the development for smart contract, frontend, backend, and data analytics for the GMX v2 Perp Vaults. It will also be funding a tier one audit by OpenZeppelin. The funds would solely be used towards an audit competition on Sherlock and to incentive early usage of the product.

Execution Strategy:

1. Complete backend development (Currently in second week of unit testing)
2. Deploy grant-funded audit competition on Sherlock
3. Engage OpenZeppelin after mitigations are completed from the audit competition → Gamma also has a priority pass with OpenZeppelin where they can secure priority access
4. Complete frontend development
5. Deploy GMX v2 vaults live
6. Begin incentive program
7. Bi-weekly reporting (continuous)
8. End incentive program
9. Final report

Grant Timeline:

Action	Date (tentative)
Finalize backend	January 31, 2024
Sherlock Audit Competition (grant-funded)	February 15, 2024
OpenZeppelin Formal Audit (Gamma-funded)	March 7, 2024
Finalize frontend and deploy vaults	March 15, 2024
Begin incentive program	March 15, 2024
End incentive program	May 15, 2024
Final report	June 1, 2024

Fund Streaming:

We accept linear streaming of the grant funds per the operating procedures set by GMX.

SECTION 4: PROTOCOL DETAILS

What date did you build on GMX?:

Development of IL-mitigation strategies using perpetual futures started in November 2022. Originally, the development was focused on GMX v1 integration. In October 2023, we pivoted development to integrate with GMX v2 as we saw that it was the superior product in terms of costs and efficiency.

Protocol Performance:

As of December 3rd, 2023, Gamma currently has $37.5M in TVL on Arbitrum. Gamma’s TVL and protocol revenues are currently at an all-time high.

Gamma supports six different AMMs on Arbitrum. Uniswap, SushiSwap, PancakeSwap, Zyberswap, Ramses, and Camelot. All these AMMs currently have frontend support on Gamma’s application and have already established liquidity incentive programs with Gamma.

Gamma currently manages over all networks about $115M in funds on eighteen networks and nineteen AMMs. We have a diverse management portfolio of volatile and stable assets. We are a leader in our space in fees and revenue produced, AMM/network integrations, supported pools, and Arbitrum TVL,

Gamma has also consistently shown its alignment with the Arbitrum ecosystem by investing its own resources into bespoke integrations with Aribtrum-native DEX’s like Camelot and Ramses We have secured long-term and stable partnerships with many protocols on Arbitrum as well.

Protocol Roadmap:

Gamma is currently in the process of deploying IL-mitigation strategies, a new staking contract, security updates, and a new cross-chain/cross-AMM user interface.

Audit History (if any):

Gamma has major audits from Arbitrary Execution and ConsenSys Diligence. As mentioned previously, our IL-mitigation strategies will be audited by OpenZeppelin. We have engaged independent auditors for our upcoming staking contract as well.

SECTION 5: DATA AND REPORTING

Is your team prepared to create Dune Spells and/or Dashboards for your incentive program?:

Yes. We currently have a Google Doc dashboard for the Arbitrum STIP that we would be duplicating for our efforts here.

Does your team agree to provide bi-weekly program updates on the GMX Forum thread?:

Yes.

Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the program’s funding stream?:

Yes.

[Saurabh]

Thank you for submitting your application to the GMX DAO Grants. We will review your application and get back to you.

[Jonezee]

What level of volume has been generated so far, and could reasonably be expected from these GMX V2 vaults?

[bp_gamma]

Thanks for the response!

So the Perpetual Vault is in the final stages of unit testing, but we can lay out some reasonable projections.

The total volumes that can be generated will depend on a few different factors: (1) lookback period, which will typically be 8-12 days based on our backtesting results (2) whether our strategy indicator will change the signal from long to short (or short to long) at the end of the lookback period, and (3) the total amount of liquidity within our Perpetuals Vaults.

Based off our backtest results, we typically will change signals from long to short or from short to long every 16 days on average. Typically this will result in volumes from closing the previous position and opening the next position.

We think conservatively that 15% of our TVL will end up being hedged on GMX V2, and optimistically an equal amount of our current TVL on Arbitrum would end up on GMX v2. There will also be an option to simply utilize our trading strategy without leveraging the LP, so the amount of liquidity that ends up in our perpetuals vaults is not necessarily going to be tied to the amount of liquidity that we’re managing.

We currently have $38M in TVL on Arbitrum at the moment (https://defillama.com/protocol/gamma), and I think we can expect anywhere from $5M - $10M to accrue thru the incentives here.

So assuming we have $5M in liquidity in these vaults, that would roughly equate to $10M in volumes every 16 days, or roughly $20M in volumes a month.

We are in general pretty optimistic with some of the backtest results we’ve seen. Here is one of our strategies based off a 10-day lookback period. Some of the results are quite good (although we are looking at ways to minimize drawdown in certain periods), so we do think we have the ability to attract TVL sans rewards after the program is over as well.

[CredegarFhristensen]

Hello Gamma Team,

We want to thank you for applying to the GMX grants program. The window for applications has recently closed. In the interest of clarity, and to ensure continued lines of collaboration, we want to notify that your grant did not muster full support from the community to move on to approval. Such developments tied only to the STIP grant program are not the end of GMX working with you all. We understand that the opportunity presented by the grants program might have left you in the middle of some developments - we are more than happy to find other ways outside the grants program to see these developments through to a productive end, or to adjust scope accordingly in the interest of such ends.

[bp_gamma]

No worries at all! Thanks for your consideration, and we look forward to the integration regardless of the grant. We’d of course appreciate any support we can get outside of the STIP grant program to help accelerate or facilitate the completion.

Thanks again for the consideration and let’s stay in touch!

[pegcity]

Looks like a great product, and one I would personally use as I am a current gamma strategy user. Should this deploy and prove to work it will be a massive boost to Gammas popularity, which would help grow both protocols together.

looking forward to keeping an eye on this!