Dragonites, the governance discussion that we’re introducing today is among the most complex and important decisions we’ve asked you to make yet. We ask you to bear with us as we outline each element.
The QuickSwap Foundation is excited about the elements outlined in this proposal and believes they would be beneficial to our community, DEX, and DragonFi ecosystem in the intermediate short and long term. We now need the community to discuss and decide if we should move forward.
- QuickSwap is asking the community to allocate 4.8% of $QUICK’s supply to the Foundation, which we would use for Market Making, audits, transitioning Old $QUICK to New QUICK (including listings on exchanges), and more
- The Foundation will use up to 4% of the token’s total supply to bring on professional Institutional Grade Market Makers (MMs) — they would assist with transitioning Old $QUICK to New QUICK and create a better trading environment for the community, among other value adds
- The Foundation would use the remaining 0.8% to cover the costs of audits for the Perpetual Exchange and possible additional costs to transition to New $QUICK
- QuickSwap is aiming to launch our Decentralised Perpetual Exchange product (QuickPerps — tentative release for mid-May) on relevant Polygon chains including Polygon PoS & Polygon zkEVM, which would come with a variety of unique features, partners, and serve as an additional revenue source and product for users in the DragonFi ecosystem
- After reading the full proposal, please join us in our Reddit forum to further discuss with the team and community: https://www.reddit.com/r/QuickSwap/comments/130cvbm/quickswap_governance_discussion_quickperps_market/
Part 1: 4.8% of QUICK’s Supply to the Foundation
QuickSwap was a fair launch community-run project, and the Foundation was not allocated any portion of the token supply at launch. For this reason, we need to ask the community for funds from the treasury when we need funding for things like audits, exchange listings, Market Makers, or other developments and integrations.
We’d like to ask the community to allocate 4.8% of the token’s total supply to the foundation, which would come from the DAO community treasury.
The QuickSwap Foundation would use these funds in multiple ways:
- Use up to 4% for Market Makers who would facilitate trading, OTC Markets for institutions, and transitioning QUICK from the Old to New token on CEXs, including Tier 1 exchanges we’re in discussions with
- Allocate the remaining 0.8% to pay for audits for our Perpetuals Exchange (discussed in detail below) and possibly use for CEX deposits, trading competitions, and other co-marketing events on CEXs for the New $QUICK transition
- Any remaining funds would be held for the Foundation to sustain into the future. It is likely that the Foundation would use remaining funds to generate yields by deploying $QUICK as Foundation Owned Liquidity on QuickSwap, or other yield generating endeavors which would help to make the Foundation sustainable in the long term. For example, it could take $QUICK and pair it with ETH or MATIC that we would obtain through trading fees from QuickPerps to earn sustainable LP income via our V3 AMM (this would also deepen QUICK liquidity). The Foundation has been extremely limited in our growth by lack of funding through the bear market. We haven’t been able to hire as many developers as we’d like and we also want to hire more specialised members like a dedicated research team, but have held off due to limited funding. Finding ways to earn interest on the remaining funds would be a great step towards sustainability of the Foundation and continued development.
Part 2: Market Making
Market Makers ensure adequate liquidity for price discovery and properly functioning markets. Almost all major projects and even traditional companies in equities use Market Makers. QuickSwap is one of the only large projects in the entire industry which does not use Market Makers. This was fine for a long time as a community-run project, but for us to get institutional adoption and evolve to the next level, the Foundation feels that Market Makers would be a positive evolution for the QuickSwap community.
Unfortunately, the Market Maker(s) that we’re discussing this with don’t want us to publicly discuss their name’s or the details of the deal(s) due to regulatory uncertainty. This is why we had to take this discussion down initially.
The areas we’re looking for assistance from institutional grade Market Makers are the following:
- Traditional Market Making, which includes arbitraging price parity across CEXs and DEXs and between Old and New $QUICK, as well as providing liquidity on CEXs and DEXs to help with spreads and market structure, which many traders look for. We’ve actually had some pairs delisted in the past for not having deep enough liquidity — Market Makers would assist with those situations. We’ve had multiple exchanges warn us that they could delist $QUICK if we didn’t have a Market Maker or deeper and tighter liquidity on pairs
- Facilitating OTC deals with institutions that are not willing to buy on exchanges
- Aiding in the transition from Old $QUICK to New $QUICK
- Potential access to new technology and whitepapers
- Introductions to large funds/partners that may be interested in providing liquidity on QuickSwap V3, trading on QuickSwap, becoming involved in QuickPerps, etc.
- Provide liquidity to QuickSwap V3
- Potential grants for QuickPerps from partners could be a part of the Market Making deal(s) we’re working on. It’s very unfortunate that we cannot explain every detail, and we hope that someday, institutions discussing and negotiating with DAOs publicly will become common practice, but at this time, many institutions will not discuss or negotiate directly with a DAO or publicly — so until then, the Foundation can act on the DAO’s behalf if the DAO so chooses.
Part 3: Should We Launch the QuickPerps DeFi Perpetuals Product?
A Perpetual Exchange is a futures platform that allows users to long or short assets with leverage. Many centralised Perpetual Exchanges exist today and make up the majority of the crypto industry’s trading volume. More broadly, most of the world’s global trade is done using derivatives (as opposed to spot trading). Institutions and high net worth individuals prefer the flexibility, optionality, and leverage provided by derivatives. In traditional finance, derivatives account for 90–95% of all global trade — in CEXs it’s around 90% and DeFi it’s around 30–50%, but growing rapidly. The QuickSwap community would like to launch its own decentralised Perpetuals Exchange.
QuickPerps has a great product-market fit in the current environment for many institutions who want to reduce counterparty risk associated with using centralised perpetuals and options platforms. This is a key point at a moment in time where trust in CEXs is at all time lows because of the collapses of FTX, Celsius, Voyager, Silvergate Bank, Alameda, and so many others. Similarly many traditional financial institutions, traders, and high net worth individuals are also looking to crypto for self custody options because of uncertainty in the traditional banking system globally. We recently saw serious risks of insolvency in traditional banks like Silicon Valley Bank, Credit Suisse, and other decades and centuries old banks. The world needs decentralised finance and self custody more than ever, and this may be why DeFi projects like QuickSwap, Uniswap, and GMX have all seen increases in volume since the above mentioned collapses. QuickPerps could strongly benefit from this transition.
Let’s outline some of the benefits and key differentiating factors of QuickPerps:
- Perpetual futures trading with up to 50x leverage on Polygon chains like zkEVM and POS
- Spot trading with market swaps and improved user controls (limit, stop-loss, take profit orders)
- Intuitive UI and design for a seamless trading experience, including live decentralised charts
- Cross-usable assets when entering/exiting positions
- No slippage and zero-impact trades
- No hidden spread
- Reduced liquidation risks — no “scam wicks”
- Safer liquidations and better price execution
- More efficient keeper bots and faster price updates
- Wide range of products being built around the product (i.e. Delta-neutral strategies)
Highlighted blue: Average GMX volume
If the community votes in favor of launching QuickPerps, revenue would be split as follows:
- 70% of the revenue would go to LPs (Liquidity Providers)
- The remaining 30% (After deducting operational costs) would be split as follows:
- 15% would go to the community in one of three ways. A) Buy back and burn QUICK tokens B) Buy QUICK and distribute to stakers through the Dragon’s Lair or C) half burn, half Dragon’s Lair. We will conduct this concurrently as part 2 of this vote. The community will decide as always.
- 5% would go to the QuickSwap Foundation
- 7% would go to Gravity Finance — our partner who built the product alongside the QuickSwap team (details on this in the section below titled “partners”)
- 3% would be used for marketing, liquidity campaigns, volume campaigns like trading competitions, user acquisition strategies, influencers, on-chain and social campaigns, and potential future investments and partnerships with those who would help QuickPerps succeed. For example, we could give some portion of this revenue to an institution who agrees to put a large amount of QLP liquidity for a long period of time to help bootstrap the early growth. The Foundation would choose where to use this revenue best for the future of QuickPerps and the QuickSwap DragonFi community.
- QuickPerps Operational Costs — This includes any infrastructure costs to run QuickPerps and the Keeper Bots. These costs will be relatively cheap on Polygon POS, but will be more expensive in the early days of zkEVM as the chain scales up. These costs will be covered by the 30% bucket of revenue. In the beginning before the platform is generating sufficient revenue, any deficit in costs will be covered 50% by The QuickSwap Foundation and 50% by Gravity Finance and reimbursed later when the platform is generating sufficient revenue.
As mentioned above, we need funds to pay for audits of our Decentralised Perpetuals Exchange product to ensure the highest level of security and safety for our users — these audits will cost somewhere between $300k-$600K, which is part of why we’ve asked for an additional 0.8% from the treasury. Additionally, QuickSwap may use any remainder for CEX deposits to transition Old $QUICK to New $QUICK or other marketing campaigns with CEXs including trading competitions, social giveaways, airdrops etc. Our new Market Maker(s) will assist in negotiating with exchanges and trying to ask them to remove the need for deposits, as now we’ll have professional MMs who will support the transition, giving top tier CEXs more confidence in the transition. If we cannot get the deposits, fees, etc. removed, we could use the remainder of the above 0.8% for this.
Similar to the situation where MMs don’t want us to reveal their name’s during deal negotiations, Tier 1 CEXs have also asked us not to reveal details like their requirements for deposits or their names. This is unfortunate — we don’t make the rules, but we have to play by their rules if we want their support. One of the exchanges which is ready to transition to new QUICK, but wants a deposit is one of the largest exchanges in the world and does a lot of the overall QUICK volume.
As Polygon’s premiere native DEX, QuickSwap has always had a close relationship with the chain we were built on. Sandeep Nailwal — Polygon’s co-founder — is an official advisor of QuickSwap, and has been an incredibly valuable ally. Polygon has recently seen GMX Product Market Fit & growth on Arbitrum, and there is no doubt that they’d like to see the same or better massive perpetual’s growth on Polygon PoS and Polygon zkEVM as well.
With the launch of our Perpetual Exchange, Polygon intends to support QuickSwap by providing a grant of MATIC incentives for growth campaigns. They will also extend their large network to enable co-marketing, and have already introduced us to countless very valuable partners for QuickPerps that we’ve been working to secure over the last few months including funds and projects which want to build on top of the QuickPerps platform.
As explained above, while we cannot discuss the exact name’s of potential MMs, they would help with Market Making, OTC with institutions and whales, transitioning Old $QUICK to New $QUICK, and introducing QuickSwap and QuickPerps to other large funds/partners who would be interested in utilising QuickSwap’s many features at an institutional level.
QuickPerps would list Lido assets stMATIC and stETH. In exchange, Lido has offered co-marketing and to provide LP mining rewards for QuickPerps. We are still in discussions on exact details.
QuickPerps will list FRAX stablecoin. In exchange, Frax would offer co-marketing support and provide liquidity mining via gauges on Frax’s own website. This is pending community vote on their end of course as they are community governed like QuickSwap.
Gravity Finance built this product in conjunction with QuickSwap’s team — they have a dedicated developer team that will work on this product and collaborate with the QuickSwap team. The dedicated developer team will continue to aid in maintaining the product and provide research into upgrades and new technology — they will also be building a strategy hub that will use all of QuickSwap’s products. Further versions are already in discussions.
Gravity will be responsible for maintaining and operating the keeper bots of QuickPerps — they will be held liable for this responsibility.
For their role in this partnership, Gravity would receive 7% of the revenue generated from the Perpetual Exchange. The QuickSwap Foundation would also receive 32.5 million $GFI tokens as we’ll be supporting Gravity Finances growth moving forward.
These tokens will be distributed to QuickSwap Foundation under the following conditions:
In the context of their partnership, the Parties agree to set three milestones related to the realisation of certain distributions. Gravity shall pay a certain amount of $GFI Tokens (in total 32.5 million $GFI) for the achievement of the following milestones:
1. In case of realisation of the platform generating a monthly net profit, Gravity shall transfer to Quickswap 10.83 million $GFI tokens
2. In case of realisation of $189,000 in fees after the deduction of the operational costs agreed in this Agreement (the “Aggregated Net Profit”), Gravity shall transfer to QuickSwap 10.83 million $GFI tokens
3. In case of realisation of $630,000 Aggregated Net Profit, Gravity shall transfer to QuickSwap 10.83 million $GFI tokens
In the event that the QuickSwap Foundation wishes to dispose of any part of the 32.5m $GFI tokens supplied by Gravity, Gravity Finance should be offered to buy the tokens themselves and QuickSwap should give adequate time (7 days) for Gravity to respond prior to any disposal taking place.
As this is an intricate proposal, we would like to take the time to discuss it in detail with the community. We’ll be re-launching the discussion on our Subreddit. We’ll answer any questions and dive deeper into the subject matter over the coming days. Please feel free to come by our social media channels anytime to discuss with the team and community.
When we feel that everyone is ready, and the community has come to a general consensus via Reddit discussion thread, we will announce further details about the pending vote.
In the meantime, please join us online to discuss the matters further with the team and community.