SIPS Name: SIPS-040
Author: Define Logic Labs
Discussion: Proposal for Community Pool Funding of SOMM to Define Logic Labs
Posted: April 25, 2023
This proposal requests a grant of 1M (“One Million”) SOMM tokens to establish Define Logic Labs as a strategic partner for the development and maintenance of a series of innovative vaults on the Sommelier Protocol. This collaboration aims to drive adoption by institutional users, with the grant supporting the creation and maintenance of a minimum of 8 governance-approved vaults over a 12-month period.
We propose a grant of 1M (“One Million”) SOMM tokens to seed Define Logic Labs as a strategic development partner dedicated to creating an appealing portfolio of vaults on the Sommelier Protocol. This grant will facilitate 12 months of vault development and maintenance.
Sommelier’s platform will greatly benefit from a diverse range of Vaults and Strategy Providers. We are confident that establishing strategic development teams for the express purpose of crafting Vaults on Sommelier is a valuable bootstrapping measure during the platform’s early stages. As the Sommelier ecosystem matures, prospective Vault development teams will be in a stronger position to secure external funding.
Providing Vault Strategists with SOMM tokens fosters an alignment of interests between the strategist and the platform, as it incentivizes the strategist to contribute to the overall success of the Sommelier platform in addition to managing their own strategies.
Define Logic Labs is one of the teams behind the recently launched ‘Real Yield ETH’ vault. RYETH has achieved over $3M in TVL, making it the fastest-growing vault in Sommelier’s history.
Define Logic Labs is a web3 data analytics firm specializing in strategy development, digital asset economics, sophisticated modeling, and risk management in Decentralized Finance (DeFi). Our team offers services to hedge funds, DAOs, DeFi protocols, market makers, and blockchain foundations to deliver the analytics necessary for optimizing their operations. With a combined 30 years of experience in both traditional finance and web3, our team is well-equipped to be a Sommelier Strategist.
We design customized analytic solutions for growth in DeFi ventures and yield optimization. Our proprietary risk assessment tools are employed to assess protocols, yields, and strategies diligently. Additionally, we design, model, and evaluate token economics for our partners and develop logic for quantitatively robust analysis of both automated and actively managed ERC-4326 Vaults.
- Thoroughly backtest and model all strategies before proposing them to Sommelier governance.
- Write up detailed reports and articles on the strategies before proposing to Sommelier governance.
- Ensure all contracts are audited before being made available to the public.
- Prioritize risk management of strategies with code reviews, risk assessments, and code refactors when deemed necessary.
- Continuous monitoring of vault performance and active ongoing parameter changes when necessary.
- Minimum of 8 governance-approved vault strategies for 1 year, beginning from funds distribution.
- Ongoing maintenance and delivery of strategies created by Define Logic Labs to Sommelier validator set. Maintenance includes continued active parameter adjustment of live vaults and updating strategies when necessary (e.g. when the strategy is no longer producing the target yields).
Total amount: 1M (“One Million”) SOMM tokens
Funding Address: somm1u5yxshd3fy0zxx5s7r4kgc69s6xaxerc9yhaam
New Strategy Development
Funds will be used for the initial development of 8 vaults / strategies, including:
- Salaries for team members for the start-up phase of the vaults
- Maintenance costs associated with running analysis, backtesting, and real-time monitoring
- Testing strategies live before proposing to Governance
Ongoing Strategy Execution
Fund will be used primarily for costs associated with continued operations of live Vaults such as:
- Cloud infrastructure for deploying strategies
- Training and running algorithmic models and live analysis and execution of strategies
Additionally, funding of SOMM tokens advances incentive alignment of the Strategy Provider team and the Sommelier platform to foster long-term cooperation.