VGT2 - Funding request to seed innovative markets on Vega, and immediately commence much-needed marketing activity

🗳️ Governance Proposals Governance Initiated Transfers
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Funding request to seed innovative markets on Vega, and immediately commence much-needed marketing activity

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Introduction

In this proposal I have outlined why I believe it is critically important for direct-to-consumer marketing of Vega to begin as soon as possible. I provide thorough context as to why I believe this proposal is essential in its current form, and also explain why this is one of the only ways to demonstrate the commercial viability of Vega in the short-term.

I believe that my plan and proposal paves the way for Vega to realise its original goal of providing derivatives infrastructure that is useful to a broad range of DeFi applications and beyond.

I have given careful consideration to the timing of this proposal, and I believe now is the right time to move forward with this essential work, given the vast amount of protocol improvements introduced in recent releases.

Furthermore, the market conditions on the Vega network are now better than they have been for a long time, and I believe it’s essential to capitalise on these conditions to build momentum needed for retail adoption. While retail adoption was never intended to be critical for Vega to succeed, I no longer believe that to be the case. Decisions made by the Vega team to postpone development of v2 features such as the smart product language and focus instead on products like perps and improving UX now necessitate retail adoption in order to succeed.

I invite the Vega community to debate the structure of this proposal with me in this forum thread, or otherwise approve of it by voting on chain.

Background

Development on the Vega protocol software began in 2018 when DeFi didn’t even exist. At that time, the only derivatives products available to crypto traders were inverse perpetual swaps on BTCUSD that traded over 90% of their volume on the BitMEX centralised exchange. It was not at all clear that retail and perps would become as critical as they are today, and thus it’s understandable that the goal and focus for Vega has shifted over time.

Fast forward to 2024, and Binance alone offers 20x leverage on over 300 altcoins, CEX perp volumes exceed $100bn per day, and there exists a plethora of competing DEXs doing billions in daily traded volume. To say that the market conditions have changed drastically since 2018 would be an understatement. The competition facing Vega today is vastly greater than it has ever been. To stand out from the crowd in an environment like this is a tall order. If Vega had succeeded in creating the “derivatives infrastructure” of DeFi over the last six years then why did Hyperliquid, Aevo and others choose to build their perpetual protocols on other chains?

The simple truth is that after focussing on perps and pivoting away from the original vision for the protocol, Vega made a choice to depend on retail adoption for its success. The perpetual swap is a popular product among retail traders (albeit poorly designed, though nonetheless popular). Until the time arises that institutions are ready to adopt protocols like Vega, then it may be that retail is all we have to succeed. It’s critically important to acknowledge this reality if we are to navigate a path to success from where we stand today.

Below I share some thoughts about how we move from where we are today to a protocol that provides backbone infrastructure for DeFi. However, for now I hope you’ll agree with me that this is merely an ambition for the future, rather than short-term reality.

Market Structure

Having said all of that, how robust is the argument that “retail” is needed for Vega to succeed? Why is it not the case that Vega can thrive with a small number of sophisticated algo traders and large money managers trading on it? Why is the crypto industry as a whole obsessed with retail flow?

Well, I posit that it’s not specifically a retail thing, but rather a case of seeking out naive flow. Flow that is agnostic to paying fees and spread. Flow that is highly speculative and non-toxic. Historically this has meant retail flow, because naive institutional flows did not exist in crypto. We have seen a shift in this dynamic since the creation of the Bitcoin ETFs. We do see spread-agnostic flow from institutions, but that flow is largely entering the spot market, while punters continue to pile into positions on derivatives with high leverage, frequently being “flushed” out of the market as open interest is wiped out and the market makers and algo traders pick up their free lunch.

The reality persists that derivatives trading is a zero sum game. There must be losers for someone to win. Historically a large portion of retail flow loses money over time, which is necessary for the sharks to feast on their lunch. Not to necessarily say that all retail traders lose money, but they do tend to be less informed than institutions. It is a fallacy to believe that Vega can succeed in the short term without naive flow coming from somewhere. There might be a way to obtain naive flow that does not depend on retail, but I am yet to hear convincing arguments about where that comes from.

I believe that the recent product direction necessitates a focus on retail to keep market makers and algo traders happy. They may be able to trade with each other for a little while, with the smartest firms gleaning a small edge over less informed institutions, but that won’t last forever. Eventually the interest of the losers will dry up, and then the smartest sharks in the pond will leave too. Without a steady flow of so-called “dumb money” trading on the protocol, the protocol cannot survive in its current form.

I shamelessly present the argument in this proposal that the naive flow needs to come from retail. I know that this argument isn’t sexy or consistent with Vega’s longer term ambitions. That said, I acknowledge the need to tackle the big issues head-on and pursue solutions that move the needle on whether Vega ultimately succeeds or fails. I do not deny the ruthless reality of the market, and I hope that I have convinced you of this reality too.

Our Strengths

For Vega to succeed we need to identify our strengths and be aware of our weaknesses. Attracting retail traders to Vega will be an expensive endeavour and it would be a waste of money if the product is not unique or competitive. New users will simply arrive for short-term incentives, and leave when the program attracting them to Vega in the first place ends. I have considered important features of Vega that differentiate it from the competition and shared some thoughts about relying on our strengths to succeed.

Composability:

Vega has demonstrated that it is much more composable with other protocols than similar DEXs. Most recently, the integration with UMA to launch points and market-cap futures demonstrated how innovative thinking and protocol features could be used to launch markets that do not exist anywhere else. Support for L2 EVMs allowed Vega to integrate with Pyth via Gnosis to create efficient perp markets that do not depend on centralised oracles for funding rate calculations.

These examples demonstrate how the protocol can be used to launch decentralised markets that conform to the high standards expected by prospective traders. Composability is important because it taps into the network effects of crypto, creates opportunities for cross-marketing between communities, and creates a robust ecosystem that will stand the test of time in an ever-changing and competitive environment.

We should use the features available in the protocol to create antifragile markets that are unique, performant and interesting to traders. It would be a waste of time to focus our energy on large-cap crypto assets such as BTC and ETH, when there is little-to-no hope that these markets will be competitive with larger players wielding billions of dollars in marketing capital. We need to offer something new and exciting to traders who adopt Vega for the first time to give them a reason to stick around, and we are fortunate to have features in the protocol that enable us to do that.

Robustness of Decentralisation:

In the end, the most successful DEX will be one that is able to offer trading on any asset class and any market in the world. We mustn’t lose sight of the bigger picture, namely that there’s a big world out there with tens of thousands of uncorrelated securities that are interesting to traders. Crypto is still a relatively small and naive marketplace, and if we are constrained to listing only crypto-assets then the limitless potential of Vega will be unrealised forever.

Having said that, it will only be possible to realise this ambition when Vega is sufficiently decentralised such that markets cannot be censored or shut down by regulators. I believe that Vega satisfies some important conditions needed to achieve this:

  • Markets are not created by the team
  • Markets needn’t be incentivised by the team (we can use the CAF)
  • The team do not run nodes on the network (as stated already)
  • The UI is decentralised and hosted on IPFS
  • Marketing will be conducted by the community using the CAF, not by the team

A cursory glance at Pyth shows high quality data feeds for 83 US equities, and yet we still don’t have TSLA, NVDA or AAPL perps on Vega (or any other popular DEX for that matter). Wouldn’t it be cool to deposit crypto as collateral and access the full breadth of opportunity available in the global financial markets, rather than being constrained to trading highly-correlated and highly-manipulatable crypto-assets?

I do not suggest that we create TSLA perps tomorrow, but I do believe we’re nearing a time when it’ll be possible to do so. I do not see this potential on any other DEX. Hyperliquid have publicly stated that their focus is crypto only (no doubt due to regulation, and the fact their chain is quasi-centralised). Other DEXs will face similar challenges, because they have not put the same effort into decentralisation as Vega. The decentralised nature of Vega has introduced significant inertia in the past, but in the long-run I believe it will yield dividends if we continue to launch markets that differentiate from our competitors.

Financial Products:

When the first markets launched on Vega in May 2023, they were dated futures and there was no support for perps. The feedback from the market was resounding – LPs and traders wanted perps and could not understand why they didn’t exist. Nevertheless, Vega has demonstrated that it can support a wide range of different financial products and is more than just another perp DEX. Vega currently supports cash-settled futures, perpetual swaps, spot markets, and it will soon add support for binary options, too. The breadth of products is no doubt a strength unique to Vega. It enabled the creation of points and market-cap futures markets earlier this year, and in the long-run it will enable Vega to provide critical infrastructure needed for widespread adoption of DeFi from retail traders, which I write more about below.

Campaigns

If this proposal is accepted by the Vega community, I intend to run direct-to-consumer marketing campaigns on an ongoing basis. This section outlines the objectives of those campaigns and the strategy that will ensure they are successful.

Objectives:

The campaigns will provide strong incentives for retail traders to download and set up the Vega wallet, deposit funds on Vega, and try out the product by trading on Vega markets for a sustained period of at least two weeks. After joining and trying out Vega, users should know their way around the product well enough to continue trading if they wish to do so, and they should find compelling and interesting markets that are unique to Vega and give them a reason to stay when the incentives have ended.

Rewards:

Users that satisfy the criteria of the “quest” (described below) will be entered into a raffle to win a prize, paid in USDT. The USDT will be paid to their public key on Vega, creating an incentive for winning users to continue trading rather than withdrawing their funds.

The prize pool available in the first quest will be $20,000 and the prizes will be allocated as follows:

  • 1st place will be awarded $12,500
  • 2nd place will be awarded $5,000
  • 3rd place will be awarded $2,500

Rewards will be awarded manually rather than using protocol features because it is nearly impossible to prevent Sybil attacks while using onchain functionality. Significant time will be spent after each quest reviewing the trading patterns of public keys to ensure that Sybils are removed and rewards are only paid to honest users that bring value to the Vega economy.

When we have more data from the first campaign, the reward amounts will be reviewed to determine whether they are optimal for achieving the stated objectives. The incentive structure of the campaigns will also remain under ongoing review.

Markets:

It will be important for Vega to support unique and interesting markets to differentiate from the competition. Alongside these campaigns, I intend to propose a series of non-crypto markets and support them with liquidity as and when sufficient funding becomes available (see Funding section).

The list below provides some ideas, though this is non-exhaustive and a final decision will be made based on market conditions at the time of launching the quests:

  • Dated futures or perps on major FX, such as EURUSD, GBPUSD, USDJPY
  • Dated futures or perps on exotic FX, such as RUBUSD, TRYUSD, KRWUSD
  • Commodity futures or perps, such as Crude Oil, Natural Gas, Gold, Wheat
  • Equity index futures or perps, such as S&P500, FTSE100, CAC40, and others
  • Large-cap equity futures or perps, such as TSLA, AAPL, MSFT, AMZN, NVDA
  • Bespoke equity index futures, where the basket is defined based on regulatory risk tolerance (e.g. using equities listed in less contentious jurisdictions than the US)

Quests:

Each quest will last for a period of two weeks and users will be required to trade on an ongoing basis to qualify for the raffle at the end of the quest. To enter into the raffle, users must meet the following criteria:

  • Download and install the Vega wallet (new users only)
  • Follow Vega on Twitter (new users only)
  • Subscribe to the Vega Marketing DAO’s newsletter (new users only)
  • Deposit at least 200 USDT of collateral over the duration of the quest
  • Trade at least once per day on each day of the quest
  • Trade at least 10,000 USDT of notional volume throughout the quest on qualifying markets (*)
  • Generate a referral code, and refer at least 5 valid new users (**)

(*) qualifying markets will be defined before the quest begins

(**) valid new users are those that deposit at least 200 USDT of collateral to Vega and trade at least 10,000 USDT of notional volume during the quest

Analysis:

Following each quest, thorough analysis of the user trading patterns will be carried out to understand if our objectives are being met. This analysis will attempt to answer the following questions:

  • Do users deposit multiple times? If so, what is the average deposit?
  • What percentage of users trade profitably vs unprofitably?
  • How much risk (i.e. leverage) does the average user take when trading on Vega?
  • Do users trade on markets that are not required to qualify in a given quest?
  • Do users trade more volume than the minimum required to qualify for a given quest?
  • Can we identify any points of friction that inform product design or help improve UX?
  • Can we identify any obvious signs of abuse that would necessitate altering the rules of future quests?

The results of this analysis will be shared with the Vega community in a blog post after it has been completed.

Distribution:

It will be important to reach a wide audience of crypto traders to have the best chance of delivering on our objectives. There are some useful low-cost tools that can be used to do this, such as Zealy and Galxe, though the average user of these platforms may not be our typical “target” user.

In the first instance, we plan to explore the use of these platforms while gathering data on user patterns to determine whether more needs to be done to improve distribution. Suppose the results are inadequate with these tools, we will explore broader partnerships with KOLs and crypto marketing agencies to widen the distribution of the quests and increase awareness. Though notably this will increase the costs associated with delivering on the objectives stated above, so the decision to do this will be deferred until more data is available.

My Motives

By now you’re probably wondering who this person is that seems to know so much about the issues holding Vega back from adoption, and purporting to have the solutions to our biggest challenges. Truthfully, my identity does not really matter, and given the nature of the work outlined in this proposal I prefer to masquerade as a “fatman”, than disclose much about my prior involvement with Vega. I hope, though, that I have written convincingly enough to persuade you that I am capable of leading the community effort on marketing and delivering on the promises set out in this proposal. The rest of this section elaborates on my motives for creating this proposal, and I share some exciting ideas for the future that demonstrate my long-term thinking about both Vega and DeFi.

I want you to cast your mind back to the idea that Vega is ultimately intended to provide backbone infrastructure for DeFi, and rather not really intended to be a retail offering that competes in the perps DEX arms race. This is a noble goal, and despite what I wrote above, one that I fully support. Not least because I firmly believe that the perpetual swap is the wrong product architecture for attaining widespread adoption of on-chain trading by retail traders. Perpetual swaps fragment liquidity and they are overly complex for the needs of retail speculators.

When we look at TradFi, the products that retail traders use to access leveraged trading are completely different. Retail traders typically use CFDs to gain synthetic exposure to the market, and in fact these products offer a far better and more diverse experience. Traders are able to take positions on tens of thousands of different markets with extremely competitive prices. This is possible because providing liquidity on an on-demand basis is much more efficient than using an order book. Order books are useful for price discovery, but retail flows are typically inconsequential when determining the price of large-cap or liquid assets. Consequently traders enjoy orders of magnitude more choice than they currently have access to in crypto when they trade with CFDs, and often benefit from better prices than if they were to trade directly on an order book.

CFDs, however, depend on underlying financial infrastructure to function. Typically a broker sits in the middle taking the other side of the retail positions. These brokers then look to hedge the delta in their portfolio in the underlying market, as they benefit from direct access to exchanges. In the blockchain world, Vega is synonymous with the underlying exchange, rather than the retail trading platform. In this sense, Vega is true to its original mission of providing financial infrastructure that will play a critical role in moving TradFi volume on-chain. That said, it is just one piece of the puzzle in a much bigger picture.

I have recently begun development of an on-chain protocol named Taki that mimics the behaviour of CFDs and is optimised for retail traders. I need Vega to offer highly liquid futures markets on equity indices, major FX, commodities, and much, much more for Taki to be successful. Taki will need to be composable with Vega to delta-hedge the exposure it carries from retail positions. Due to the diversity of markets offered by Taki, I see no alternative DEX in crypto that is well-placed to provide the infrastructure I need. As I mobilise the development of Taki and build out my go-to-market strategy, I will rely on Vega to realise my mission. In doing so, I will assist Vega in achieving its original goal of becoming the derivatives infrastructure of DeFi and at the same time create the best retail trading experience available anywhere on-chain.

There are some specific requirements I have of Vega to make this possible, which can be explored alongside this proposal. Furthermore, providing a full technical overview of Taki would be beyond the scope of this (already very long) forum post. However, in the interest of completeness, I have summarised some of the future work required for this collaboration to succeed:

  • I need Vega to support native Multisig wallets. Taki will be a standalone Cosmos chain and its validators need to execute trading instructions directly on Vega.

  • I need Vega to be sufficiently decentralised that futures on liquid regulated markets can be created. In the long run, it will be helpful if futures markets on large-cap equities can be created, such as Apple, Nvidia, Tesla and others. Before this is possible, futures markets on equity indices such as the S&P 500, or sector-specific indices would suffice.

  • I need Vega to grow and thrive over the next 12 to 18 months so that market makers on the platform retain their interest in it and so the protocol is well positioned to provide the infrastructure needed to make Taki possible. For this to happen, I consider it critically important to achieve retail adoption before hedging flows from Taki give market makers a reason to stay.

Funding

There are multiple ways you can support this initiative.

Onchain Vote:

You can simply vote for the proposal on chain ensuring that funds are dispersed from the CAF to commence marketing campaigns as soon as possible. Despite this being a useful fundraising tool, it does introduce inflationary pressure on the VEGA token, as the CAF is entirely funded with VEGA tokens. Therefore, I have outlined an alternative option below, which will be available regardless of whether this proposal passes.

The onchain vote will seek funding from the CAF in the following amounts:

  • One upfront payment of 100,000 VEGA tokens

  • Daily payments on an ongoing basis of 5,000 VEGA tokens

While these amounts seem high relative to the total tokens available in the CAF (ca. 2,000,000 VEGA), I have carefully considered what is needed to deliver on my objectives and the recent price depreciation of the VEGA token necessitates a larger share of the CAF.

Donation:

You can visit https://taki.trading/vega where you can make a donation to the Vega Marketing DAO smart contract. This contract accepts deposits in USDT, and in return for this contribution you will receive VMD tokens at a rate of 200 tokens per 1 USDT.

VMD tokens will be redeemable 1:1 for TAKI tokens when the Taki network launches, meaning you benefit from the opportunity to buy TAKI tokens at a price of $0.005. The total supply of TAKI tokens will be 1,000,000,000 TAKI, representing an entry valuation of $5,000,000 on a fully-diluted basis.

There is a total allocation of 20,000,000 VMD available, equivalent to 2% of the total supply of TAKI tokens.

Opting to support this initiative in this way will minimise the price impact on the VEGA token, and creates an opportunity to support a broader collaboration between both projects.

Use of Funds:

While this proposal is non-specific about exactly how much will be spent on each activity, I have summarised some of the costs associated with the work outlined above:

  • Subcontracting design work to create engaging media for online promotion of quests
  • Subcontracting data analysis to ensure campaigns are optimised for the stated objectives
  • Funding prize pools for multiple quests
  • Funding for marketing agencies and KOLs who may need to assist with distribution
  • Capital reserves for marketing making to seed innovative and interesting markets

Additional Notes:

Please note the following points when considering this proposal:

  • This proposal requests that funds be transferred to an individually-controlled public key. At a later date a more formal DAO may be established to oversee this work and the use of funds.
  • Funds will be allocated as outlined above in the Campaigns section, though full discretion will be retained to use the funds in the best interest of the Vega community in the event that there are material changes in market conditions or circumstances.
  • Community members should note that any recurring transfers approved by governance can also be cancelled by governance. Therefore, in the event that the community is dissatisfied with the marketing results, the recurring transfer of 5,000 VEGA per day could be cancelled within just a couple of days.
  • The VEGA tokens dispersed from the CAF will be sold algorithmically to raise USDT. The tokens will be disposed of at a rate of 12,500 VEGA per day in the first two weeks, and 5,000 VEGA per day thereafter. In weeks one and two this equates to $4,250 of selling per day, which is less than 3% of the daily traded volume (ca. $200,000) and therefore expected to have minimal price impact.

Closing

I hope you’ll recognise that this proposal is more than just a simple request to spend X dollars on marketing. This proposal forms the basis of an entire strategy for retail adoption and lays the foundation for a collaboration that enables Vega to realise its original mission of becoming derivatives infrastructure for DeFi. While initially the focus is on retail adoption and marketing, this proposal, if approved, will provide the resources and focus needed to supercharge the creation of unique markets and reinvigorate excitement in the Vega community about the possibilities of the software created.

The importance of this work should not be understated. The team will likely never do enough to attract retail traders in the numbers needed for Vega to thrive and achieve its long term goals. The window of opportunity is not long, either. Market makers will eventually lose patience and leave and the ship will have sailed for good. The time to tackle this issue is now, and I hope the community will back this proposal so the work can begin in earnest.

If you made it this far, then thank you for taking the time to read this proposal and give it the consideration it deserves. I look forward to receiving your feedback and answering any questions you have.

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Here is the proposed JSON for the on-chain proposal:

{
  "batchProposalSubmission": {
    "reference": "Vega Marketing DAO - Request for funding to seed innovative markets and much-needed marketing activity",
    "rationale": {
      "title": "Vega Marketing DAO - Request for funding to seed innovative markets and much-needed marketing activity",
      "description": "This proposal creates two transfers as set out in this forum post: https://community.vega.xyz/t/vgt2-funding-request-to-seed-innovative-markets-on-vega-and-immediately-commence-much-needed-marketing-activity. The first is for a one-off payment of 100,000 VEGA tokens and the second creates a recurring daily transfer of 5,000 VEGA tokens."
    },
    "terms": {
      "changes": [
        {
          "enactmentTimestamp": "{ENACTMENT_TIMESTAMP}",
          "newTransfer": {
            "changes": {
              "sourceType": "ACCOUNT_TYPE_NETWORK_TREASURY",
              "transferType": "GOVERNANCE_TRANSFER_TYPE_BEST_EFFORT",
              "amount": "5000000000000000000000",
              "asset": "d1984e3d365faa05bcafbe41f50f90e3663ee7c0da22bb1e24b164e9532691b2",
              "fractionOfBalance": "1",
              "destination": "6a3c8e02f1eb259def56d2378f82cff9ee99a4fa7403fb1f8e7e0b97a5fc692a",
              "destinationType": "ACCOUNT_TYPE_GENERAL",
              "recurring": {
                "startEpoch": "946"
              }
            }
          }
        },
        {
          "enactmentTimestamp": "{ENACTMENT_TIMESTAMP}",
          "newTransfer": {
            "changes": {
              "sourceType": "ACCOUNT_TYPE_NETWORK_TREASURY",
              "transferType": "GOVERNANCE_TRANSFER_TYPE_BEST_EFFORT",
              "amount": "100000000000000000000000",
              "asset": "d1984e3d365faa05bcafbe41f50f90e3663ee7c0da22bb1e24b164e9532691b2",
              "fractionOfBalance": "1",
              "destination": "6a3c8e02f1eb259def56d2378f82cff9ee99a4fa7403fb1f8e7e0b97a5fc692a",
              "destinationType": "ACCOUNT_TYPE_GENERAL",
              "recurring": {
                "startEpoch": "946",
                "endEpoch": "946"
              }
            }
          }
        }
      ],
      "closingTimestamp": "{CLOSING_TIMESTAMP}"
    }
  }
}
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This proposal marks a very exciting new direction for Vega. This is the first major independent piece of work done by a community member and the first time we are aware of independent funding by the community, to the community. The amounts requested are significant, with 100k VEGA currently worth around $33k USD, and an additional monthly funding of 150k VEGA (5k * 30 days). The outlined activities are not cheap to carry out either, with multiple sub-consultants being mentioned. However, this proposal feels similar to MakerDAO’s SubDAOs, which have proven very effective in empowering a small group of dedicated community members to be nimble and adaptive. Taking that same chance in Vega now is not just exciting, but essential.

One crucial detail worth noting with the funding is that the network treasury for VEGA is currently sitting at “only” 165k VEGA, meaning there’s enough for the initial 100k lot and then 13 days of recurring funding. The values can be checked with:

https://vega-data.nodes.guru:3008/api/v2/accounts?filter.accountTypes=ACCOUNT_TYPE_NETWORK_TREASURY&filter.assetId=d1984e3d365faa05bcafbe41f50f90e3663ee7c0da22bb1e24b164e9532691b2

Some months ago, the CAF was announced with initial funding of 200k VEGA. This implies the community has spent 35k VEGA on various activities since then, unless additional funds have been added in the meantime. The following query doesn’t seem to show that:

https://vega-data.nodes.guru:3008/api/v2/transfers?direction=TRANSFER_DIRECTION_TRANSFER_TO&toAccountType=ACCOUNT_TYPE_NETWORK_TREASURY

The same blog post indicated that additional funding of up to 2m VEGA would be added to the CAF in several chunks. Perhaps now would be a good time to revive those plans?

In addition, there are soon 200 VEGA per day being rewarded to the 1000PEPE perp market and some CAF-funded games which run for another few epochs. Whether there are other activities being funded is unclear. Perhaps someone can help clarify this with a query?

With that being said, this proposal is very intriguing. Perhaps an indicative budget for the initial allocation and the first week of recurring transfers could be shared?

Like many other proposals on the forums, Budgie Smugglers are happy to propose it for governance if VMD (Vega Marketing DAO) doesn’t have the required tokens to propose. We are also inclined to donate USDt to the fund in the realm of $2000.

A minor note on your proposal JSON:

Without being completely certain, perhaps this can be expressed more directly as "oneOff": {}, which implies a singular transfer with immediate delivery.

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Wow finally, thank you @0xfatman

While this is a notable amount of VEGA and does lack more oversight than I’m typically comfortable with, I honestly think this is the last opportunity for Vega to actually get a foothold.

So I am supportive of this.

I agree with your thesis on pretty much everything outlined, however, I would like to emphasise that I think the majority of these funds should be to bootstrap perps and not dated futures. Perps is the largest form of derivative market in crypto and given Vega has yet to see success, I don’t think it makes sense to try to win an uphill battle by forcing dated futures on retail

I think once we can achieve a stable daily set of users and perp volume we can then attempt to push dated futures (although I can see dated futures being better for Indicies like S&P as these are typically a buy-and-hold for users and paying constant funding is not great)

On the market selection note, I think it would be cool to include COIN as a potential market. I also have some concerns about liquidity support for these U.S markets and whether or not they will be supported by Vega’s current market makers

Lastly, I hope other community members support this initiative. It’s been incredibly frustrating being a community member for the past 3-4 years due to Vega’s lack of marketing and adoption

4 Likes
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I’m supportive of this and think this is the way for VEGA to grow.

The only thing is that the 5k VEGA a day from day 1 is a bit much. I don’t have a problem with the 5k itself, but the from day 1 part. I understand the 100k VEGA is needed to start things of, but without some kind of results I would not be comfortable to also spend 5k everyday.

I would like to start the 5k a day for example 10 or 14 epochs after the 100k VEGA, so we can evaluate what we are spending a significant part of the CAF on.

But if the rest of the community thinks differently, I still support the proposal.

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Thanks all for your feedback, kind words, and considerate questions. I have grouped my response to your comments below.

@banks

I really appreciate your endorsement and found the comparison drawn with MakerDAO interesting. I will look into sub DAOs in case any inspiration can be drawn from their success over the coming weeks.

With respect to your question on budget, I chose to be vague deliberately because there are a number of unknown variables that make forecasting difficult, including:

  • The future price of the VEGA token, notably the sell pressure has been relentless lately
  • The cost of distribution for quests/campaigns – it is not known at this point whether significant funds will be needed for KOLs and other such activities
  • The general level of interest from crypto traders based on the proposed reward structure – I suspect it will be attractive given similar campaigns, but validation is key with marketing campaigns like this, so we cannot jump hastily to any conclusions before we have some results to analyse
  • As stated, I intend to provide liquidity on unique and innovative markets on Mainnnet, and the amount of income generated from that (which will be reinvested in supporting the growth of Vega) is currently unknown

Having said all of that, I have set out below my plan for the first campaign and provided a summary of the costs associated with making it successful:

  • 20,000 USDT to be allocated in prizes for the first campaign
  • 5,000 USDT reserved for creative materials and online media content
  • 6,500 USDT reserved to subcontract analysts (to designing campaigns and also evaluating campaign outcomes vs objectives)
  • 20,000 USDT reserved for market making on the first non-crypto market
  • 10,000 USDT allocated to support the VEGA/USDT spot market on Vega, which notably has extremely thin liquidity and is effectively untradeable

Therefore, a total amount of 61,500 USDT will be needed straight out of the gate to support the above initiatives as well as run the first campaign. Thereafter, I would be happy to set out budgets on an ongoing basis as more data becomes available and it’s possible to do so.

@Jubi

Thanks for the feedback on markets, I think COIN is an interesting and complimentary suggestion. I agree that perps are better to begin with from a retail adoption point of view. I was referring to futures when thinking about longer term needs to provide hedging infrastructure for DeFi, where I think futures are better, as you say, because there is no need to pay funding and therefore pricing can be more accurately determined or forecast. With this in mind, any markets proposed will be perps and later we can consider whether we need to migrate any of them to futures based on demand and liquidity at the time.

@Daryll

I note your point about the recurring payment, however due to the low token price you will note that much of the funding proposed is allocated as set out above in response to @banks. Furthermore, I am aware of a large token holder selling significant amounts of VEGA and who still has over 2 million VEGA remaining. I have considered the probability that the token price falls below $0.30 before recovering when the selling ends and as a result of this work, and I think it’s quite high. Taking all of this into account, and with the mindset of wanting to give this work the best chance to succeed, I think the proposal is best kept as outlined in my original post.

1 Like
7

Thanks for the reply @0xfatman. We’re satisfied and believe this chance needs to be taken.

As inspiration for how reporting is done in MakerDAO, the Spark SubDAO posts recurring updates on use of funding, marketing activities, adoption and such. Some is done monthly, some weekly. This SubDAO is quite “old” now so updates are less frequent. They also run an excellent X/Twitter account with updates on governance, features and market opportunities. Few of these updates generate any interaction with the community, but they are prerequisite for having any informed discussion and providing the needed transparency to support ongoing funding.

We are happy to make the proposal if need be. Like mentioned above, Budgie Smugglers will donate to the VMD:

  • $1000 USDT when the proposal has earned enough YES votes to expect to pass
  • $1400 USDT added if Budgie Smugglers becomes a Consensus Validator before the proposal passes. You can delegate here to Budgie Smugglers Vega Validator
8

I’m reposting the timestamps from Discord here:

Closing: 1718802000
Enactment: 1718805600

This means the voting will close at 13:00 UTC on Wednesday next week and the proposal will enact at 14:00 UTC.

I believe Wednesday will be epoch 950, so the starting epoch for the recurring transfer should be 951.

9

The proposal is now live on governance:

VGT-2 - Vega Marketing DAO - Request for funding

10

howdy y’all!

Trading on big FANG companies on Vega mainnet might be an interestin’ move, +1 to that! I also like the idea of COIN; no PERP DEX currently allows that, right? @Jubi, nice suggestion!

Much obliged, @0xfatman, for sharin’ this. This here is a great proposal, and I stand by it. I can see there’s a lot of motivation and thought behind it all. I just got a few questions from a fellow community member: The current marketing strategy usin’ the mentioned tools might not be as effective. It’d be great to collaborate with KOLs and agencies from the get-go to successfully distribute the whole program. If you ain’t usin’ KOLs or other marketing ways, how’re you gonna make sure it gets enough distribution? Can you expand on your reasoning here? With all this funding, how many campaigns can y’all run? Who knows how the bull market might unfold, but it’d be good to have some powder ready when altcoins start movin’!

Got any track record of successful activities under yer belt? How would runnin’ these campaigns ensure folks stick to usin’ Vega? Not against it, just tryin’ to stir up some conversation here. You’re requestin’ the full funds, so it’d be good to get more details around it all. It’d be helpful to get a list of projects or agencies that’ll help support your initiatives here!

Thanks to the community for this discussion and @0xfatman for makin’ this and sparkin’ conversation! There’s been a lot of gripin’ on Discord lately, but no one took action. Thanks a heap.

3 Likes
11

Not a direct answer to this question, but the explorer recently got a treasury page:

12

Hi all,

I said I would write on this thread with my plan for the next couple of weeks, so here goes…

I will need a little bit of time to liquidate VEGA for USDT to avoid impacting the price of the token unnecessarily. I have begun selling tokens on Gate, and will continue to do so over the next couple of weeks.

At the same time, I have been speaking to the Discord user “alright” who also submitted a research proposal requesting funding from the CAF. They wanted to spend time investigating techniques that would lead to adoption of Vega. They have agreed to work with me to ensure the first campaigns are well design and able to reach a wide audience that leads to adoption of Vega by our target users. We will begin working together from this week and they will be paid directly on the Vega chain using VEGA tokens transferred from the CAF to my public key included in the original proposal.

I’ve separately reached out to a designer that I know and who I highly respect. He has agreed to create digital assets that will be used online to promote trading quests on Vega. I think it will be important to have engaging content that captures the user’s attention to ensure they read on about how to partake in the competitions. This work has already begun and will be ready soon.

We will plan for the first quest to go live on the 5th of July, as “alright” is unavailable between 23rd and 29th of June. I am also unavailable from 26th June to 1st July.

In the meantime, I intend to deploy liquidity to the VEGA/USDT spot market on Vega as discussed here. I also plan to launch some new non-crypto markets on Vega (probably EURUSD and Gold perps in the first instance) as discussed in this thread. I will deploy liquidity to these markets too, and it will be important for these markets to be live before any campaigns start.

If it’s a little quiet in the run up to the 5th of July, that’s expected and normal, as we will be busy ensuring everything is in place for a successful first campaign.

Let me know if you have any questions or feedback - thanks.

1 Like
13

Holding up our promise, Budgie Smugglers has donated $2,400 USDt: Ethereum Transaction Hash (Txhash) Details | Etherscan

3 Likes
14

You are doing something that no one else took charge of so I decided to donate to you as well, $1000 Ethereum Transaction Hash (Txhash) Details | Etherscan

Keep up pushing this one forward, product is really interesting but no one knows about it

2 Likes
15

Did the first reward complete?

16

There has been some discussion in the past week about cancelling the recurring transfer created in VGT-2 because some community members say they are dissatisfied with the results delivered by the first trading campaign that ran from 15th to 28th of July. This debate has culminated in a governance vote being created, which can be seen here.

While I disagree with the conclusion that cancelling the recurring transfer is an appropriate response to these concerns, I am sympathetic with some of the arguments made for taking this action.

In particular, I understand that the amount of tokens allocated is a large share of the CAF, and for some community members this is alarming. However, the CAF has been underfunded by the Vega team compared with original statements of intent to deposit 2,000,000 VEGA, and the resources available in the CAF are significantly diminished due to the token price declining by 80% in the last 3 months.

Furthermore, I am intrigued by arguments that have been made about the need to radically overhaul the tokenomics of VEGA and issue new tokens to dilute passive holders that do not contribute meaningfully to the success of the protocol going forward. With 66% of the supply issued to VCs and insiders, and only 5% of tokens unissued, I believe it will be very hard to achieve the levels of adoption that community members expect to see without a dilution event occurring.

None of these challenges, in my view, justify cancelling the VGT-2 transfer, which was created after outlining a medium term plan to bring new users to Vega. I was extremely clear in the original proposal about the fact it would take multiple successive campaigns to identify the best way to bring in new users, and I think the expectation of some users that better results should have been delivered by now are overly optimistic.

Launching new markets, securing marketing partners, and attracting users takes a lot of work. It involves many private conversations that are difficult to commit to when the community can remove the funding at any time. The way the debate on Discord was conducted sets an awful precedent for governance within the Vega community, and regardless of any other opinions about this initiative, it would not be helpful if it were cancelled on the basis of this behaviour.

In this update I write about my expectations for the first campaign, as well as future plans for upcoming campaigns. I will also share an update on the funds so far allocated to different activities and analyse data from the Vega chain that demonstrates the modest success of my work to date. You will see that the funding allocated in VGT-2 has delivered good results when compared with adoption on other Vega markets. You will hopefully appreciate therefore that it makes sense to continue with this work and avoid overreacting and listening to voices in the community that have already decided to end this work without looking at the data in detail.

Onchain Data

The screenshots below show the success of the Gold perp market that I created after receiving funding for VGT-2, whereby this market had the highest open interest and highest daily trade volume on Vega (at the time of the snapshot). These screenshots were taken at ~11:50 on 31 July 2024.

image_2024-07-31_11-51-54
image_2024-07-31_11-51-541259×293 43.6 KB

image_2024-07-31_11-51-33
image_2024-07-31_11-51-331259×336 50.5 KB

Furthermore, a cursory glance at the price chart for the Gold market shows a substantial uptick in trading activity after engaging KOLs to circulate the campaign on Twitter/X, which happened on the 16th and 17th of July. The trade volume on the Gold market began to increase shortly after these tweets were published on the 22nd of July.

image_2024-07-31_11-53-29
image_2024-07-31_11-53-291305×641 78.7 KB

However, to properly understand this data and interpret the success of the campaign, we need to dig a little deeper and compare the trading activity to that on other markets on Vega. The second most popular market on Vega by volume tends to be the SOL perp, which traded roughly the same amount of 24-hour volume as the Gold market on 31 July.

Looking at the data below you can see that the Gold market is responsible for far more new users than any other Vega market since 15 July 2024. While 13 new users is a small number, it is clearly a step in the right direction. DYDX, for example, achieved a multi-billion dollar valuation with only 2,000 users. The success that Vega can achieve with a similar amount of users should not be understated. It will take time to build momentum in adoption, but it is my hope that my medium term plan for marketing can provide a playbook to take forward and continue bringing new users onboard in increasing numbers.

Name Total Trades Unique Traders Total Volume Avg. Trade Size New Traders (after 15 July)
Lido 616 5 $578,501 $939 1
Synthetix 301 3 $310,059 $1,030 1
Celestia 2,480 8 $215,176 $86 0
Injective 377 7 $736,363 $1,953 1
Solana 3,154 11 $1,921,270 $609 2
Sui 4,166 4 $75,274 $18 1
Arbitrum 670 8 $86,004 $128 2
Bitcoin 1,089 15 $410,652 $377 5
Ethereum 6,459 12 $363,428 $56 2
PEPE 5 3 $12 $2 1
Gold 798 18 $448,568 $562 13

I have also analysed the referral stats on Vega to see if any users trading the Gold market during the first campaign qualify for rewards in the USDT prize draw. There is only one key that has referred enough users to qualify, as the terms of the campaign stated a need to refer 5 new users. This key belongs to the referral set with ID d523cd5116ff591e8c89462cf19e25f31d96960a369af1c7489f740e13e97ed6, and I will explain how rewards will be allocated under these circumstances at the end of this post.

Notably, for the entire time that a referral program has existed on Vega, only 31 users have been referred, meaning 16% of all referred users came from my first campaign. While this is a modest amount of referrals it demonstrates that more has been done in the last month to bring users to Vega than any other month since trading went live on Mainnet. I do think that the requirement to refer new users may have been off-putting, and dissuaded some users from taking part in the campaign. Nevertheless, it has undeniably created an incentive for at least one user to refer friends or acquaintances to Vega, and for that reason alone it was a worthwhile endeavour.

Some comments have been made about the amount of VEGA allocated to VGT-2, and questions raised about whether it is a good use of funds based on the adoption statistics. It will always be expensive in the beginning, but as we build momentum the cost per acquisition ought to come down. Allocating $60,000 to this initiative so far is a small price to pay when compared with the hundreds of thousands of dollars that have been spent in on-chain rewards since May 2023. Despite spending all of this money trying to acquire crypto traders on BTC, ETH and altcoin perps, many of these markets are now barely competitive with the volume seen on the Gold market after just one marketing campaign. I believe this is an important perspective for all community members to consider when deciding if it’s worthwhile to continue with this work.

KPIs and Funding Update

I have been asked about the KPIs for the first campaign and also to provide an update on how the funds from the CAF have been allocated. I have summarised this update below.

The goal for the first campaign was always to use a new market to adopt new users and learn how effective different tools are in doing that job. We can see from the data in this post that modest adoption of the Gold market has been achieved by outreach on Twitter and leveraging KOLs. Clearly more money will need to be spent to reach wider audiences and I originally intended to launch a Galxe quest in the first campaign, too. However, to create new Galxe quests you need to use a Twitter account with more than 200 followers. The 0xfatman account is a new account and therefore does not have enough followers. In the next campaign I intend to use Galxe to reach wider audiences and I will use the Vega community Twitter account to do that, and I now possess the login credentials for that account.

To be clear, the goal of the first campaign was always to deliver modest adoption of the Gold market, to attract a small number of new users to Vega, to build relationships with KOLs, and to learn more about the techniques and tools needed to bootstrap adoption. All of these KOLs have been achieved in one way or another. Future campaigns will be optimised to deliver higher numbers of users and refine incentives so the campaigns are more attractive going forward (for example by removing the requirement to refer new users as discussed).

As for funding, the funds obtained from the CAF have so far been allocated as follows:

  • $20,000 for market making on the Gold market (inc. $10k for hedging)
  • $3,000 on Twitter KOLs
  • $2,000 contracting a designer
  • $15,000 reserved for rewards for campaign 1, though $12,500 of this will remain unspent (per the information below)

What’s Next

Assuming the vote to cancel VGT-2 fails, I will continue promoting trading on the Gold market on Vega according to pre-existing plans, which I have outlined below. In the event that this proposal passes, I will review these plans and consider the best way forward given the signalling from the community to end this marketing work.

  • Rewards will be distributed to qualifying winners from the prize draw in campaign 1. Given there is only one qualifying user, it would be against the spirit of the campaign to pay out the entire $15,000 prize pool. Therefore, this user will receive the third place prize of $2,500 and the leftover funds will be used to boost the prize pool in future campaigns making them more attractive to participants.
  • The second trading campaign will launch, with slightly altered rules aimed at making it more attractive to new users. Specifically, it will no longer be a requirement to refer new users, as I want to see if this boosts the amount of people that sign up to Vega for the first time to trade. This campaign will have a total prize pool of $25,000.
  • The second campaign will be promoted on Galxe as stated above, using the Vega community Twitter account to create the new quest.
  • Ongoing discussions with marketing agencies will continue, and significantly more money will be spent on KOLs when the best partners are identified. I have already spoken with Twitter KOLs that have more than 100,000 followers, and I am considering the possibility of pushing out a series of tweet threads for the next campaign instead of only quote tweets.
  • Specifically, the first campaign relied on coordinated quote tweets to boost awareness as this is a lower cost option. For instance, where a quote tweet may cost $500, a tweet thread could be $2,000 (or more for high follower accounts).
  • Lastly, when YouTube influencers have been identified that are both good value and willing to work with me on the Vega campaigns, they will be used to reach a wider audience and boost adoption in future campaigns.

I hope you found this update helpful, and I will try to provide updates more frequently going forward to avoid the situation that occurred earlier this week on Discord from happening again.

5 Likes
17

Looking at the new keys in a little more detail, here’s what we find:

Lido / Tether USD (Perpetual)
cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45

Synthetix / Tether USD (Perpetual)
cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45

Injective / Tether USD (Perpetual)
cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45

Solana / Tether USD (Perpetual)
c36f8e6abd6f48b7d979596cc11607eeb606cec80b08521e7ea88e336d166eb5
cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45

Sui / Tether USD (Perpetual)
cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45

Arbitrum / Tether USD (Perpetual)
c36f8e6abd6f48b7d979596cc11607eeb606cec80b08521e7ea88e336d166eb5
cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45

Bitcoin / Tether USD (Perpetual)
c36f8e6abd6f48b7d979596cc11607eeb606cec80b08521e7ea88e336d166eb5
cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45
a2d6a3c53db8c14d94f2a676434abcd6e2ede620d641c59642a33f7bce86b1c8
c1caf7dc77d3104c3f3ce964f8cac5ab0f1284897d3273ac34a302150aeeb464
807ce4a98fbde39269d23bca3b19356eeadc4cbcb11db9f33280b0b40687a9d6

Ethereum / Tether USD (Perpetual)
c36f8e6abd6f48b7d979596cc11607eeb606cec80b08521e7ea88e336d166eb5
cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45

1000 PEPE / Tether USD (Perpetual)
c36f8e6abd6f48b7d979596cc11607eeb606cec80b08521e7ea88e336d166eb5

Gold / Tether USD (Perpetual)
d7027bb64e83f4fe42b0649ed55029e4c79e5e317bb9d1a56f95e3770535d72b
a29757f1190a54c2e4750712b474e5c8f103c95520284f288474c0048defd1b3
ae404227dcef5d337103ce67c7fbcb3827991a7f9b2b552d30a924b15775782c
51a5a7e703c3a2a2501e1c8237597ef09543481efb2862c7707cd5ca722e0c6f
8c416c32dce1478090585b154d24de70d990e2fee0e62892fdfde77ed29ab565
20b7cef267406d3592a4dddea6e1bf1628b751189b0daa95320034d068421a24
dc12018420810336eb322fd2b6131ca206c5e3ab7f5717702034f4e6f84543c7
cad805d1c85869a85b6b0bd45e87ceeb9e33fc6b0194c44528079b2ff4a8b01e
cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45
dc2bc99219cac770223b26a2e1d919153c0026de0fadb5b9928c1a34414faa3c
e90ff6a6e60e65a6060a7faf0a8ca2a57599cfcfc089d87223bb984b157e36bd
e634baca350c1c467e68ffb6f5e69c4847fc123eaea6dffec433a3bef2193d9b
b3d96ae37b661b46957aba926aa765c6bf9ed1c47fcf66f7e369f743463518f9

We notice from this data that there are actually only two new users across all markets when we exclude the Gold and Bitcoin markets. These users are:

  • c36f8e6abd6f48b7d979596cc11607eeb606cec80b08521e7ea88e336d166eb5
  • cbfe5792300515e617f5e97c61c8b9aa050b2dd3de7fe19f7879aa25d0d65e45

These keys are likely to belong to taker bots that are farming some kind of on-chain reward.

Conversely, the three additional users that we see on the Bitcoin market are listed below:

  • a2d6a3c53db8c14d94f2a676434abcd6e2ede620d641c59642a33f7bce86b1c8
  • c1caf7dc77d3104c3f3ce964f8cac5ab0f1284897d3273ac34a302150aeeb464
  • 807ce4a98fbde39269d23bca3b19356eeadc4cbcb11db9f33280b0b40687a9d6

It is worth noting that the first key listed above is also present in the list of new users that traded the Gold perp market, and therefore the Gold market has played a role in bringing users to other markets, too.

2 Likes
18

Great update and I did not expect users to go to thousands right away. Will you share the transaction for the payment of the reward so that we can follow it?

19

Agree with this, well all of it, including what @0xfatman wrote.
Also think it would be good to share the tx when it has been done, it is a start of something new and 2500 is kind of a low price for this info.

20

@0xfatman I think it is time for an update