Delegate Mission Request: Experimental Derivative Markets

[opjulian]

Delegate Mission Request: Experimental Derivative Markets

Application Link

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Experimental Derivative Markets

OP S6: Mission Request

S6 Intent

Intent 3: Grow application devs on the Superchain

Delegate Mission Request Summary:

In order to effectively compete with other chains in derivatives trading, Optimism is in need of long-tail and experimental derivative markets. The most utilized derivative market in Crypto/DeFi is Perpetual Futures, with mass adoption in both DeFi & Centralized markets. Perps traders choose perps products primarily based on three factors: assets available, cost, and open interest available. On Optimism, traders find the latter two but there is often a gap in the long-tail markets available. Adding perps markets for long-tail assets aims to make Optimism the premier venue for trading.

Additionally, we must incentivize new derivative markets on Optimism to capture DeFi Traders who want access to new markets. This includes but is not limited to:

• Long-Tailed Derivative Markets
• Options
• Binary Options
• Sports Markets
• Leveraged Tokens
• Prediction Markets (Elections, Polymarket, etc)
• Lottery / No-Loss Lottery
• Liquidity Markets (integration with Velodrome/Aerodrome)

Proposing Delegate/Citizen:

MasterMojo, Matt Losquadro, and Synthetix Ambassadors

Total Grant Amount

300k OP total is requested for this program. Individual grants are capped at 50,000 OP. This should be enough to support at least 6 applicants, with the expectation that some are below this amount.

Should this Mission be fulfilled by one or multiple applicants: Multiple

How will this Mission Request help accomplish the above Intent?

The primary goal of this initiative is to incentivize the creation and trading of new experimental derivative markets on Optimism.This mission is meant to create an experimental derivative market on Optimism that other chains do not have, with the overarching goal of supporting the experimentation of derivatives on Optimism.

What is required to execute this Mission Request?

The requirements for executing this mission will support various cycles of development, growth, and support of one of the included derivative markets. Refer to the summary to see the list. The list below includes examples of how an applicant can execute this mission request:
Must launch a new derivative market for one of the listed long-tailed derivative markets on Optimism, including plans for launch, and medium to long-term growth.

Ex: Must launch perps markets for long-tailed assets, which are not currently supported on any Superchain dApp

Projects must show how they will handle risk/hedge to protect LPs from exposure to the long/short side of trades. Minimum Liquidity must support at least 250k in liquidity to trade these various derivative products.

Ex:

How should governance participants measure impact upon completion of this Mission?

• Milestones:
  • Creation of short-term launch plan to support minimum liquidity support and MVP of product and design. (upon application)
  • Launch of Product in Beta/Alpha to support initial sets of users with liquidity support
  • Fully Launch Experimental Derivative Market
• Impact/Metrics:
  • Total Volume
  • Total Fees Generated
  • Liquidity of Supported Markets
  • Delta Neutrality for LPs
  • RPGF Focused: Total gas fees
• Impact: Total gas fees

Has anyone other than the proposer contributed to this Mission Request? TBD

This is still in DRAFT Mode.

Which metric will the success of this Mission Request be evaluated against?

The North star metric against which this Mission Request should be evaluated is the total amount of gas fees generated from the grantee’s contracts, because this Mission Request sets out to increase the aggregate demand for blockspace on the Superchain through a larger program. The total gas fees generated from this program act as a healthy indicator of its combined downstream performance. This metric was suggested by the Foundation and approved by the Grants Council.