RFC #1b - Clarification Proposal for Wagmi DAO and Kava Partnership
Hi Frog Nation,
This is Tommy from Kava BD.
I’d like to clarify some points laid out in the previous proposal by @anita for WAGMI to launch on Kava, and address some questions or concerns directly with the community.
First, I will say that I’ve been following Dani’s projects since the last cycle, was a user of Wonderland and consider myself a member of frog nation.
To clarify, this proposal is just for the initial launch of WAGMI, for the project to bootstrap liquidity with the help of Kava Foundation of an initial Kava <> WAGMI LP, and that I believe Daniele and the team do indeed have plans to expand to other chains as they implement successful launches after each initial chain.
To address the discrepancies of the deal regarding price of ICE proposed vs. now, it’s helpful to provide context so the community knows.
I met Georgiy from the WAGMI team at Eth CC in Paris, and shortly thereafter met Daniele, and we engaged in discussions on where they could launch their new project. These conversations have indeed been going on for two months now, and near the late stages of our deal, ICE was around $0.69, Kava was around $0.69, and also with an ICE to WAGMI conversion of 1:69, we agreed that would be a great deal because… well, 3 x 69’s, for the memes lol.
I want to be clear that we agreed to this deal before the ICE price appreciated, and when the token had much lower liquidity than it did now. Soon after that call, ICE appreciated, and the proposal was submitted. We had already been discussing this agreement prior to the appreciation in ICE price. To be fair, once the agreement was made, we would have honored our side of the deal either way. If ICE had depreciated to $0.30 instead of appreciated to $1.50, we would still have honored it, and put up $2M worth of Kava priced at $0.69. It’d be the same if Kava appreciated to $1.50, we would still give the team $2M Kava priced at $0.69. Truthfully the initial proposal probably should have been submitted a bit earlier, at which time the prices were at par. Regardless, at the time, we were certainly taking a risk on our side as well. If you look at any of the partnerships Kava has done in the past, Kava has only value added to projects, either with injecting liquidity, incentives, or marketing support. Kava has no intention to extract value from ecosystem projects.
So to be clear, there is no discount. When this deal was agreed upon, both tokens were trading right around $0.69. Initially we discussed a 1M:1M token swap, and each party would pair that million with another million of their own token, and each put 2M (1M WAGMI/1M KAVA) into the LP. But that would enable Kava Foundation to earn 50% of the APRs through GMI upon launch. Then it was discussed that Kava would just directly token swap 2M Kava for 2M WAGMI, and WAGMI would LP the entire 4M. That way, Daniele and team would instead direct all the APR from the entire GMI share to users upon launch. This is actually better for users, as new users would get significantly higher APRs upon launch as opposed to Kava Foundation keeping a share of GMI. This was done to benefit the community.
Also, I want to be clear that this is a significant deal for us. Even though it’s crypto, we don’t just toss millions of dollars around, especially in the bear. We really want to support this project and make it as successful as possible. We are ready to support from all departments of the organization.
We also have no intention extracting value from the community. We plan to allocate some of the WAGMI in an LP on Kinetix, which is a v3 dex, built by the Quickswap team, to help enable arbitrage and generate fees for GMI holders.
Kava is an up and coming chain with a focus on connecting the Ethereum and Cosmos ecosystems, starting specifically in DeFi. When Dani and team launched on Fantom and Avalanche in the past cycles, it was the same situation. The launch of their past protocols benefitted both the project and the chain. The WAGMI team is masterful at kickstarting DeFi ecosystems. And we (and the WAGMI team) believe that this could happen here as well.
Now, why Kava?
Yes, it may be true that some chains have more money than us, or more transaction volume (I, too, know people spinning up 1000 wallets being airdrop farmooooors) but here are some points on why Kava is the best choice:
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Kava Rise is an on-chain incentive program for DeFi protocols that pays out pro-rata based on TVL on chain. Currently 1M Kava is distributed per month, with rewards set to increase as adoption grows.
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Native Assets
a) Tether recently selected Kava as the main liquidity hub for Native USDT across the Cosmos. What does this mean? It means that if you want the 3rd largest marketcap token anywhere on the Cosmos, you’re going to have to get it through Kava. Tether will not provide USDT anywhere else across the entire Cosmos.
Why is this important? You may not be deep in DeFi, but let me explain. Having “native” assets is crucial for any blockchain because when you don’t have native assets, it means you have a “bridged” asset. For example, assets bridged via Axelar, Multichain, etc. In the worst case scenario, you saw what happened with Multichain, where bridged assets were compromised due to security reasons, and your “USDC” by Multichain suddenly dropped from $1 to $0.09. Bridged assets aren’t “real” assets in this sense because they often incorporate a mint and burn mechanism where funds are locked on one side, and “minted” on the destination chain. That means the original asset is locked in a smart contract held by a bridge provider, that is ripe for hackers to attack, or multisig that might be compromised by the particular people holding it. I believe there’s already been billions in losses in bridge hacks in 2022 and 2023, not to mention what happened with Multichain and Fantom.
By Tether issuing USDT natively on Kava means that there is no bridge risk of USDT. If you take a look at what happened with Multichain and Fantom, their USDC went from $1 to… $0.09 because the locked USDC on origination chains got compromised, and there was no way to redeem those assets on Fantom directly with Circle.
b) Native WBTC integration with Bitgo.
c) WETH integration via Stargate - for which the only other available chain currently supported is Fantom.
d) Because Kava is an EVM built on top of the Cosmos SDK, you can also bring Cosmos assets (like ATOM) natively onto the chain, which you cannot do on other EVMs. WAGMI has the opportunity to connect trading in the Cosmos and Ethereum.
With 2a - 2d, you basically are able to trade the top 3 largest assets in crypto natively on Kava, plus Cosmos assets like ATOM. This is a huge differentiator as other chains proposing do NOT have native stable integrations or asset integrations other than ETH.
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Enabling WAGMI to win - WAGMI’s core revenue driver of APR’s for GMI holders will be arbitrage of assets. Because it is incredibly efficient to trade on Kava (2 Kava gets you on average 10,000 transactions), this will enable WAGMI to better facilitate cross chain arbitrage, enabling a great environment to generate revenues.
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With deep CEX liquidity which, combined with native assets and their integration into CEXs, this can create competitive execution and arbitrage flows for WAGMI pairs, which will generate more revenue for GMI holders.
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Kava today is the 11th largest chain by TVL, and 9th by number of deployed protocols as per DefiLlama. Just as Daniele’s team has been able to kickstart activity when they deployed Wonderland on Avalanche, and Popsicle on Fantom, both those chains were relatively obscure at the time of launch, and we believe they have the potential to do the same for Kava.
I hope this helps shed light onto the original proposal submitted for the community to make an informed decision. We look forward to growing together and working through the challenges to enable WAGMI to achieve sustainable adoption and competitive price execution vs other DEX and CEXs in the industry
Thank you,
Tommy
