[OPEN GRANTS] D2.Finance


Provide personal or organisational details, including the applicant’s name, contact information, and the name of any associated organisation. This information ensures proper identification and communication throughout the grant process.

Applicant Name or Alias: Luca

Project Name: D2.Finance (formerly known as Dsquared.Finance)

Project Description:
D2.Finance captures the sophistication of a top-tier hedge fund through innovative vault architectures. Our project features a bespoke non-custodial smart contract vault, enabling user capital deposits during specifically timed funding epochs. These epochs are tactically aligned with the current opportunity landscape, setting us apart from the typical offerings in the DeFi vault sector that often rely on static strategies. This dynamic approach positions us to stay ahead, effectively navigating the markets where static strategies ( what other DeFi vault protocols are currently offering) may become less effective over time.

This capital is then actively managed and traded by our adept D2 quant trading team, which boasts extensive experience in multiple top-tier hedge funds, including pag.com. Following each trading epoch, users can withdraw their USDC deposits along with the corresponding profit or loss.

Each of our options-based vaults employs a distinctive trading strategy, meticulously designed to take advantage of diverse market inefficiencies. This approach allows for exposure to varying levels of risk. Additionally, we’re poised to offer customized solutions, such as a-la-carte beta (ETH exposure), coupled with absolute return strategies. This flexibility will be contingent on the prevailing opportunity set, ensuring adaptability and responsiveness to market conditions.

Our approach to quantitative signal generation leverages in-house machine learning and modeling expertise. These signals are then qualitatively refined by human traders, extracting optionality and exposure at a discount by capitalizing on the inelastic behaviors of options end-users (e.g., convenience yield, barriers to entry). This results in a hybrid model that amalgamates quantitative and qualitative inputs, providing a true Quant Hedge Fund experience on-chain.

Team Members and Qualifications:
D2.finance has no employees; it relies on stewardship of BWS Labs until relaunching as a DAO under MIDAO Dual Structure Governance when protocol will be valuable enough not to be easily attacked by “Risk-Free Value Raiders”. BWS Labs may hire and/or engage key contributors according to their areas of expertise.

BWS Labs Team/ Contractors:

  • Head of Trading- Luca ( portfolio manager in volatility strategy for multiple Billions Dollar AUM Hedge Funds. Generated about 21M for investors during 5 years in solely managed strategies in TradFi)
  • Growth - Frank (also Rodeo)
  • Communications/Community - Vate (also Mithical)
  • Solidity Contractors → BowTiedPickle / BowTiedOriole
  • Security Contractor → BowTiedIguana (also Jpeg69) / Renzor
  • Design Contractor → Edis (also Umami)
  • FE Contractor → Greypixel (also Umami) / FarmerCarlon (also Rodeo)
  • Socials → Pauline
  • Graphics / Meme- > Simone

Project Links:

Contact Information:
TG : @lucaBWS (Telegram: Contact @lucaBWS) and/or @HWxFrank Telegram: Contact @HWxFrank)
Twitter : https://twitter.com/Dsquaredfinance
Email : growth@d2.finance


Detail the requested grant size, provide an overview of the budget breakdown, specify the funding and contract addresses, and describe any matching funds if relevant.

Requested Grant Size: 100,000ARB

Grant Matching: We will add the same amount on esDSQ in GMX/DSQ nitro pool (which allows 2 tokens as rewards)

Grant Breakdown:
D2 will utilize the grant incentives to attract liquidity into our managed vaults. The D2.finance vaults utilize these AUM for trading across Arbitrum protocols (with a large focus on GMX), which has a direct correlation between AUM and fees generated for integrated protocols. The primary benefit for GMX, beyond additional fees through notional trading volume, is that D2 implements trading strategies which take advantage of funding rate mismatches which has the effect of balance the funding rates.

Given that we particularly value our official partnerships with both GMX, we are looking to deploy the grant funds in a way that benefits them either directly into a GMX/DSQ pool or indirectly through trading of our Vaults.

We are very grateful to GMX for which we completed a token swap on December 10, 2022.
[Arbitrum Transaction Hash (Txhash) Details | Arbiscan

And where GMX team has been invested in our pre-seed rounds, and they are the top shareholder of the protocol (after recent reorganization)
*Arbitrum Transaction Hash (Txhash) Details | Arbiscan

Funding Address: 0xe7eb925300075E49fc5CAaD5d408A50Dd22f92D6

Funding Address Characteristics:
This is a multisig address requiring 3/5 signatures. The signing wallets are hardware-protected and controlled by BWS team and trusted members of Arbitrum ecosystem bluechip protocols. You can see the esGMX allocation from our token swap in the safe

Distribution Contract Address:

Incentivised Contract Addresses:
ARB++ Vault

  • [ARB++ (ARB++) Token Tracker | Arbiscan]

ETH++ Vault




USDC++ Vault

0x4d823951a8B3a614667e9cabf6948d7D0e73911D | Arbiscan]

GM vault (formerly known as G-apex)


Vault addresses may change upon redeployment


Clearly outline the primary objectives of the project and the Key Performance Indicators (KPIs) used to measure success. This helps reviewers understand what the project aims to achieve and how progress will be assessed.

The primary goals of the grant would be focused on development integration and incentivizing users to utilize our protocol.

Development: A portion of the grant will be utilized to implement GMX V2 features for limit orders, swaps, leverage positions and GM pool liquidity supply. This is the core integration required to give our traders access to utilize our AUM for trading with GMX V2

Incentivization: Coupled with the integration, the major portion of the grant will be utilized to incentive users to deposit liquidity. By incentivizing liquidity in the vaults, we can drive more trading volume and, in turn, will increase the fees generated by our vaults, which will help us sustain our operations and continue to innovate.

Key Performance Indicators (KPIs):
We will measure the success of this grant using the following KPIs:

  • Total value locked (TVL) in our vaults growing steadily toward the 10M scalability goal
  • Number of users of our vaults with more than 10k USDC allocations
  • Fees generated by our vaults in relation to TVL and performance
  • Fees and Volumes generated for GMX

We expect significant growth in all these metrics due to this grant.

Tracking TVL growth is crucial, as it directly correlates with the protocol’s success. Higher TVL translates into increased fees and reflects growing user trust and confidence in our protocol. This will be beneficial not only for our protocol but also for GMX , as it will drive higher liquidity and trading volume for them.

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

Receiving this grant will enable us to foster growth within the GMX ecossytem in 2 key areas:

  1. Attracting liquidity into the actively managed trading vaults
  • greater volume in the trading vaults equates to more active trading volume/fees across the underlying protocols
  1. By showing growth and proof of concept, ART, our sister protocol tailored at institutions, will have measurable back data to help onboard significant institutional funds for trading within the GMX ecosystem via the D2 quant trading vaults.

Justification for the size of the grant: [Enter explanation]:

A 4% boost ( ⅘ of the grant) to create a performance floor can go a long way, especially under these market conditions to attract users.

D2.finance / BWS Lab’s hybrid model leverages the specialist skills of a world-class team with a provable P&L from years of profitable trading in TradFi. Head of Trading, Luca, brings his unique investment philosophy, process, and approach to risk-managed volatility trading. Each vault at D2.finance combines tailored quantitative signals with the expertise of direct, real-time human judgment, all while leveraging the operational infrastructure and technical integrations made possible by DeFi protocols on Arbitrum.

V0 Notional performance:
With TVL driven by internal funds (v0 vaults ranged from 2000 to 20000 USDC) D2 vaults have been able to create already over 1 Million USD+ in notional volumes across the Arbitrum ecosystem (see EOA wallets above)


  • The first epoch of the ETH++ Vault generated 300k of volumes in GMX alone:
  • ETH++ Vault generated ≈3.6% fees of AUM in GMX in 1-2 months epoch, ≈20% if annualized.

If you extrapolate these figures based on TVL growth, the impact to GMX becomes impactful.

**Execution Strategy:
Vault Incentives (3/5 of grant) will be distributed gradually based on the performance of the quant trading vaults, and distribution will be ramped up based on successful KPIs

DSQ/GMX V2 Liquidity Pair (1/5 of grant) will be distributed proportionally over a 3 month period to the Vault Incentives in order to accommodate the expected need for DSQ liquidity

Integration (1/5 of grant) will be utilized to fund a developer to create the GMX V2 smart contract integrations

A conservative estimate is that if our Vaults achieve 10M TVL / AUM we will generate north of 1M dollars of fees in the ecosystem annually.

Grant Timeline:
Initial grant deposit upon approval (1/5)

The remaining funds to be distributed as incentives will be streamed linearly over the 3-month grant program duration.

This funding structure ensures that resources are allocated efficiently and in line with the protocol’s performance. It also incentivizes us to achieve sustained growth and success by linking the release of funds to specific, quantifiable milestones.

Fund Streaming: Yes


Provide details about the protocol requirements relevant to the grant. This information ensures that the applicant is aligned with the technical specifications and commitments of the grant.

What date did you build on GMX?:
Nov 21, 2022 (GMX V1)

  • [Arbitrum Transaction Hash (Txhash) 0xc0bd66cbb12013d274cc514eb125dbb02770f896a7110f63a5d10d0139e23b3a)

Protocol Performance:
BWS Labs provided performance updates regarding the vault initially hosted on the legacy protocol of dsquared.finance.

Please note that past performance is not indicative of future results.

GLP++ 86% APR (5 epochs) https://twitter.com/BondiWealthSec/status/1645687589637328896?s=20

ARB++ 33% APR (1 epoch) https://twitter.com/BondiWealthSec/status/1663034922611937281?s=20

ETH++ 31% APR (1 epoch) https://twitter.com/BondiWealthSec/status/1630469337453821952?s=20

Protocol Roadmap:

  • Currently Private Fund ETH++ Vault trading
  • Dec 2023 - Open ETH++ Vaults for public deposit
  • V3 vault cross chain deposit and additional partner integrations to facilitate seamless liquidity from other chains and additional tools for trading and leveraging GMX.

In the spirit of stress-testing our security, we will invite hackers to attempt to breach our system, and if successful, they will be rewarded with 100% of the hack, similar to the approach taken by Yearn Finance in the past.

With a successful phased rollout of the vaults (on-going), we will accept funds into the vaults for active quant trading.

Audit History (if any):
Paladin Sec Audit: D2 Audit - Paladin

SECTION 5: Data and Reporting

Provide details on how your team is equipped to provide data and reporting on the grant distribution.

Is your team prepared to create Dune Spells and/or Dashboards for your incentive program?:
Yes, our team will create a Dune dashboard to report incentive program data and key KPI indicators. We have created a Dune dashboard to report the DSQ token sale details and will implement it similarly.

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

We agree to provide bi-weekly updates on the GMX Forum thread, including the use of the Dune dashboard as a key reporting metric. We are committed to transparent communication of the KPI status and progress of grant incentives. We have committed to weekly updates on our discord to maintain transparency and accountability to our community.

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


Thanks for submitting a grant application. The Grants Committee has started its review process.

1 Like

Thanks @Jonezee

We look forward to working with the GMX team to further our partnership and pave the way for wider institutional adoption through D2

Please feel free to reach out at anytime for further discussions

Hi @D2.Finance team, thank you for your proposal, have a few questions,

  1. How are you aiming to create “GMX V2 Smart contract integrations”?
  2. For the DSQ/GMX Liquidity pair, is this a LP on a particular DEX, how are you accomodating liquidity for this pair?
  3. Are the vaults for V2 on D2 going to be actively managed? If so, what metrics will make you decide to enter and exit one pool from another?
1 Like

hi D2 team,

would you be able to expand more on the security of your smart contracts?

as i understand, users deposit funds into a smart contract which your team of quants manages.

in that case, what permissions does the team have exactly to users funds?

also, is the smart contract code open-sourced?

1 Like

Great questions, sir!


Yes, all vault + trader contracts architecture is open-sourced and features live matching by Paladin as above.

The project involves a fully non-custodial smart contract vault system. Users can deposit capital, which is then managed by a trading team. While the traders can interact with compatible DeFi applications and operate within on-chain and off-chain risk limits using this capital, they cannot withdraw it.

The vaults are owned by an external multi-sig, which includes signatures from D2 Rangers (top project stakers) and D2 Guardians (such as GMX, Camelot, among others, with more trusted external parties to be added progressively). They can only perform emergency functions. In the case of “big-tickets”, the custodial solution of the institution’s choice is directly the owner (as many of our contacts are not equipped to manage private keys themselves).

For institutional investors interested in allocating to digital assets, understanding the unique features of these custody solutions, and how they differ from traditional asset custody solutions, is a major challenge. Our solution is designed as a plug-in that can be used with any custody solution or for self-custody.

1 Like

I totally support this application because:

  • D2 is actually generating volume and fees into the Arbitrum ecosystem specially in GMX so this grant will benefit a lot of players
  • D2 aims to bring tradFi quality hedge fund to Arbitrum
  • D2 aims to bring institutional money into Arbitrum

To sumarise it, if the grant gets approved it will benefit the ecosystem by helping mature the hedge fund DeFi ecosystem while reinforcing Arbitrum as the leading blockchain for DeFi

1 Like

Addressing GMX Feedback

1. Reallocation of Funds to Vault Incentives

Strategy Update: We are redirecting 100% of the funds towards incentivizing the launch of our new vaults: ARB++, ETH++, and the upcoming GRAIL++ (set to launch for Camelot’s anniversary). This shift aims to bolster vault operations and sustainable growth.

Allocation Plan: An initial allocation of 12.5k will be made to each of the ARB++ and ETH++ vaults, starting trading on December 22nd and concluding on January 19th. Successful operations in these vaults will lead to an additional 25k allocated to each new vault (GRAIL++ currently in testing is focusing on advanced LP v3 strategies, hedging the delta primarily in GMX V2).

Long-Term Incentive Mechanism: A multiplier will be introduced for investors who maintain their capital investment across both epochs, rewarding long-term commitment and discouraging short-term speculative behavior. The exact figure will be adjusted according to the vault’s demands.

2. GMX V2 Smart Contract Integrations

Project Overview: Leveraging our successful integration with GMX v1 ( which is currently LIVE with 60k TVL), we are poised to extend this capability to GMX V2. Our approach is supported by Paladin audit (link above)

Implementation Strategy: Utilizing our audited adapters as a base, we will ensure seamless compatibility with GMX V2’s architecture. Collaboration with partners like Dolomite, Rodeo (whose CTO is actively involved in the D2 project), and GMX will facilitate an efficient integration process.

Expected Advantages: This upgrade is anticipated to significantly enhance our platform’s operational efficiency and security, increasing Total Value Locked (TVL) and, consequently, trading volumes on GMX, which currently accounts for about 30% of the allocations in our live vaults.

3. Detailed Timeline and Sybil Attack Prevention


ASAP to December 15th: Integration and partner audits.
December 15th to 22nd: Internal testing.
December 22nd to January 19th: ETH++ / ARB++ capped epochs.
January 19th to February 16th: ETH++ / ARB++ / GRAIL++ 5x CAP epochs.

Sybil Attack Prevention: The two-month commitment period should deter quick-profit-seeking yield farmers. Additionally, the competitive performance of the vaults is expected to attract genuine investment interest, even without the added incentives, though incentives will naturally amplify TVL and volume allocations on GMX.


Our revised strategy, focusing on vault incentives and a clear roadmap for GMX V2 integration, reflects our dedication to project success and innovation in the market. By emphasizing long-term investment and robust security measures, we aim to cultivate a stable and progressive ecosystem. We are confident that these initiatives, coupled with our track record and strategic alliances, will ensure the effective and impactful use of the grant.

1 Like

I support this proposal. If it successfully gains traction and attention among degens and institutions alike, it could provide significant liquidity into the Arbitrum Ecosystem with GMX being one of the primary beneficiaries. Although the team is strong and appears to have gathered the support of key projects within the Arbitrum ecosystem, to include GMX, the sophisticated strategies being proposed are also in line with emerging narratives for the next cycle. The vaults appear to provide extreme custodial flexibility to institutions, while simultaneously providing a means of participating in Decentralized Finance. Also the use of machine learning and modeling with qualitative refinement by human traders offers some potential insights into how AI could be used in crypto for hedge fund like constructs in the future. This at a time when institutional interest is expected to gradually increase and explore possibilities of both technologies throughout 2024.

1 Like

Thanks ser!

the updated book (ARB++ , ETH++, USDC++ also below:


Updated Proposal to Address GMX Grant Committee’s Concerns

Proposal Overview

We appreciate the committee’s interest in our project and recognize the importance of aligning our strategies with the goals of GMX. In response to your concerns and suggestions, we propose the following revised plan:

1. Past performance

  • Past Performance: In the current epoch, we achieved a trading volume of approximately 300k in perpetual contracts on a TVL of 60k, with 20k allocated to GM and GLP. This demonstrates a leverage of 5x TVL in Perp trading and a 30% commitment to GM/GLP.
  • Strategy Adaptability: Our hedging strategies are responsive to market conditions as we cannot be guaranteed a national we commit to using GMX V2 as far there is liquidity/funding rates are competitive.
  • Market Liquidity Contribution: Our approach often positions us against the general market flow, thus contributing to liquidity and balance in the ecosystem. This role will be particularly beneficial with the introduction of GMX V2 adapting funding rates.

2. Priority in Using GMX

  • Hedging Policy: We commit to using GMX as the key platform for our hedging strategies.

3. Grant Request and Performance-Based Funding

  • Reduced Grant Request: In line with your suggestion, we are open to modify the size to be linked to results

  • Performance-Based Unlocking of Funds: We propose a conditional funding structure, where only 25k are initially committed where additional funds (up to a total of 75k) can be unlocked based on our contribution is judged in line with other protocols that received the full 100k allocation. This approach ensures our interests are closely aligned with GMX’s goals.

  • Transparency and Monitoring: We suggest using Dune Analytics, managed by a trusted third party like Shogun, to provide transparent and regular updates on our performance and its impact on GMX.


We are confident that this revised proposal aligns well with GMX’s interests and objectives. Our commitment to contributing to the GMX ecosystem, combined with a flexible and market-responsive approach, positions us to deliver significant value. We believe this performance-based, transparent structure of the grant will foster a mutually beneficial relationship, ensuring our strategies effectively support and enhance the GMX ecosystem.

Updated agreed milestone

Milestone 1 - Dec 22nd - Launch of Vaults for Public :: 12.5K ARB

Milestone 2 - Jan 15th - Target TVL 40k , Target Volume 200K in GMX for the period (22 Dec 19Th January):: 12.5k ARB

Milestone 3 - Feb 15th - Target TVL 1M, Target Volume 3M in GMX for the period ( 19th January / 16th February):: 75K ARB

1 Like

Frank will submit it in the proper format.

Leaving just as a note for now:

Milestone 1 - Dec 22nd - Launch of Vaults for Public :: 12.5K ARB :white_check_mark:

Milestone 2 - Jan 15th - Target TVL 40k , Target Volume 200K in GMX for the period (22 Dec 19Th January):: 12.5k ARB :white_check_mark:

On track to meet 200k in GMX for the period (22 Dec 19Th January) → traded over 10k average daily (relative to Vaults
DeBank | The Web3 Messenger & Best Web3 Portfolio Tracker)

On track to meet 40k in GM (7K already allocated directly ARB and SOL pair, balance 33k ready to allocate as soon Rodeo opens its AUDITED implementation) (relative to Vaults DeBank | The Web3 Messenger & Best Web3 Portfolio Tracker)