LEAP-43: Kwenta Hosting Pilot
This LEAP sets out the terms of a proposal by Kwenta DAO, requesting a pilot period allowing Kwenta DAO to host a front end for the Lyra protocol as part of the Kwenta exchange (kwenta.eth.limo) (Kwenta Interface) for a period of 6 months (Pilot). This Pilot requires Lyra DAO to provide:
- A grant of up to 400,000 LYRA to Kwenta DAO to undertake the Pilot, to be paid linearly in monthly instalments (subject to Lyra DAO review throughout the Pilot); and
- Priority support from Lyra DAO Core Contributors, including weekly meetings, open ended sync communications channels and technical support for disruptions between the Kwenta Interface and the Lyra protocol.
Prior to the end of the Pilot, Kwenta DAO will provide a subsequent LEAP proposing the terms of any ongoing arrangement between Kwenta DAO and Lyra DAO.
This proposal introduces Kwenta DAO as the first third party interface deployer of the Lyra protocol. This will involve Kwenta hosting its own interface (the Kwenta Interface) that provides users with access to trade Lyra protocol sourced options for the Pilot period. Kwenta DAO and Lyra DAO Core Contributors will work together to support the Kwenta Interface connecting to Lyra protocol, with a view to determining longer term commercial arrangements subject to a successful Pilot.
The Lyra protocol provides users with infrastructure to build and trade options. The Lyra DAO is focussed on back end development and support for clients building and hosting interfaces to access the Lyra protocol.
In traditional finance, options trading is typically offered as a component of a suite of spot and derivatives trading tools and access to a broader range of financial instruments. However, the Lyra interface (as currently implemented) only provides a single venue for creating and trading options. There is an opportunity to expand the reach and use of the Lyra protocol by offering access to clients who can build tailored interfaces facilitating access to the Lyra protocol and offer trading activities together with other financial products and services not built on the Lyra protocol.
Kwenta is a project focused on providing a user interface and tool suite to customers for a range of spot and derivatives offerings on Optimism. Kwenta is proposed as the first (pilot) user proposing to build and host an options trading interface.
400k LYRA represents approximately the value of 5%-10% of fees generated by options traders in the previous epoch, and will serve as a replacement for a fee or volume based referral program over the pilot period. Kwenta has a proven track record of use, generating over $4 billion in derirvatives volume as of the dat of this proposal. Payment in LYRA tokens will insure incentive alignment by exposing the Kwenta DAO to upside of the Lyra DAO's native token. Kwenta's grant of 600k OP tokens which are expected to be spent on a user acquisition and retention program in the coming months may also benefit the Lyra DAO by directing attention to the Kwenta frontend where Lyra options are prominently displayed. Although this proposal does not include a mandate for fees or marketing spend, this infomation may help Lyra's community evaluate the pilot proposal.
Providing third parties with access to the Lyra protocol and liquidity to support their product offerings will allow Lyra to maintain its core focus of growing a strong backend system rather than compete against providers that offer a range of financial services and instruments.
During the Pilot:
a) Lyra DAO’s role Lyra DAO will provide Kwenta DAO with:
- Access to the Lyra interface to develop and host its own interface (the Kwenta Interface);
- Access to the Lyra protocol to support the Kwenta Interface;
- A grant of up to 400,000 LYRA to undertake the Pilot, to be paid linearly in monthly instalments (subject to Lyra DAO review throughout the Pilot);
support from Lyra DAO Core Contributors, including weekly meetings, open ended sync communications channels and technical support for disruptions between Kwenta Interface and the Lyra protocol.
b) Kwenta DAO’s role Kwenta DAO will:
- Develop and host the Kwenta Interface to be made available to Kwenta users on the Kwenta exchange (kwenta.eth.limo);
- Kwenta will support app functionality as-is;
- Deploy the Kwenta Interface to provide users with access to Lyra sourced options only;
- Not charge any additional fees to users accessing the Lyra protocol through the Kwenta Interface;
- Not in any way indicate that it can bind Lyra DAO;
- Only deal with the LYRA tokens provided in connection with the Pilot through staking, and will not ‘dump sell’ any LYRA tokens for the 6 month duration of the pilot;
- Prior to the end of the Pilot period, develop a subsequent LEAP proposing the terms of any ongoing commercial arrangement between Kwenta DAO and Lyra DAO with respect to the Kwenta Interface.
c) Other matters This LEAP does not propose to limit any actions that can be taken by Lyra DAO in respect of the Lyra interface or the Lyra protocol.
This arrangement is not intended to be exclusive and Lyra DAO may provide services to other parties providing interfaces with Lyra protocol. This LEAP is only to support a project proposed by Kwenta DAO to develop and operate a Lyra protocol integrated interface.
If engagement during the Pilot indicates that a longer term commercial arrangement with Kwenta DAO is not in the best interests of Lyra DAO, a disengagement plan will be agreed and implemented.
Execution of this LEAP is subject to the Kwenta DAO approving a KIP on substantially similar terms to this LEAP.
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