[1IP-93] 1inch DAO Aqua Revenue Stream Incubator

Core Program Structure

The 1inch DAO Revenue Stream Incubator Program will deploy a total investment of $400,000 into selected teams that develop 1inch Aqua strategies approved by the Grant Reviewers and the 1inch Core Team.

Each team that submits an Aqua Strategy can receive a maximum of $50,000 in funding to develop revenue-generating Aqua strategies. In exchange, the teams that develop these strategies will share a percentage of their gross revenue with the 1inch DAO for an extended period of time, which will be negotiated on a case-by-case basis, thereby creating sustainable income streams for the treasury. StableLab will serve as the program administrator, utilizing the Forse Platform to ensure professional execution and transparent operations.

Motivation

The 1inch DAO should fund an incubator program for Aqua strategy development because Aqua fundamentally shifts DeFi competition from TVL acquisition to formula and strategy innovation, meaning the protocol with the most sophisticated, specialized trading strategies will capture the most volume and fees.

Aqua's shared liquidity model allows superior strategies to attract liquidity instantly without requiring LPs to migrate capital. By funding teams to develop differentiated strategies — whether constant product AMMs with dynamic fees, concentrated liquidity with inventory-based pricing, or specialized approaches for different asset classes and market conditions — the DAO would create a flywheel where:

• Better strategies attract more LPs
• Deeper liquidity attracts more taker volume through 1inch aggregation
• Increased volume generates fees that can be shared back to the DAO as a return on its initial investment

This revenue share model aligns incentives across all participants while positioning 1inch at the center of a strategy innovation ecosystem rather than competing in the unsustainable race for TVL through token incentives.

Key Terms and Requirements

• Revenue sharing begins from the first dollar earned by funded projects, with no waiting period or threshold requirements.
• All participating teams must complete comprehensive KYC and KYB procedures to ensure the legal enforceability of agreements.
• The program implements milestone-based funding releases, protecting DAO capital by requiring teams to demonstrate progress before receiving subsequent funding tranches.
• After three years of successful operation, teams will have the option to buy out the DAO's revenue share at fair market terms.

Application and Tracking System Support

StableLab will set up a centralized system for proposal submission and team documentation management. This eliminates the scattered approach often seen in DAO programs, ensuring all information remains organized and accessible. Teams benefit from streamlined communication channels that facilitate efficient interaction between funded projects, StableLab, and the DAO community. All relevant documents, agreements, and progress reports are stored in one secure location, creating a comprehensive record of each team's journey through the program.

Disbursement Decision Process

Funding decisions for applicant teams will be determined by a simple majority vote among the delegate reviewers (StableLab, DAOPlomats, and Arana Digital). Each reviewer holds one vote, requiring at least two of three reviewers to approve before any grant disbursement proceeds. In cases where reviewers request revisions or additional information from applicant teams, a subsequent vote will be held once the team addresses the feedback. Milestone-based funding releases follow the same simple majority requirement, ensuring consistent governance throughout the funding lifecycle.

Milestone Management Framework

Clear milestone definitions and tracking mechanisms ensure teams understand exactly what needs to be achieved at each stage of development. StableLab will work to enable systematic progress verification before any funding releases occur, protecting DAO interests while supporting team advancement. StableLab will efficiently review and validate milestone completions. This structured approach maintains accountability while providing teams with clear targets and expectations throughout their development process.

Milestone Funding Structure

To protect DAO capital and ensure accountability, the program implements a strict milestone-based funding release schedule with clear, verifiable criteria. The majority of funds are released only after implementation and demonstrated on-chain activity.

All applicants must understand: if you do not hit the milestone, you do not receive the funding. No exceptions.

Funding will be released according to the following milestone breakdown:

Milestone	Funding %	Description
Idea Verification	5%	Team presents strategy concept and demonstrates product-market fit through research, competitive analysis, or preliminary LP/user interest validation.
Proof of Concept	10%	Team delivers a functional prototype or testnet deployment demonstrating core strategy mechanics.
Working Implementation	35%	Strategy is deployed on mainnet with verified on-chain activity and functional trading operations.
Integration into the 1inch dApp	50%	Strategy is fully integrated into the 1inch dApp interface, accessible to users, and generating measurable volume through the aggregator.

This structure filters for teams serious about delivering and ensures the DAO's capital is deployed only as teams demonstrate tangible progress.

Aqua and swapVM Strategies

The incubator program scope includes both Aqua strategies built with swapVM.

Notably, Aqua strategies built with swapVM are picked up automatically by the aggregator, meaning teams building with swapVM will be routed through the 1inch aggregator without relying on external arbitrage bots for volume.

Before opening applications, the 1inch Core Team will publish a reference list of strategies already in development by the core team and existing contributors. This ensures applicant teams can identify gaps where new strategies would add value and avoid funding duplicate work.

Fee Structure Clarification: The 1inch Labs License Fee specified in the Aqua documentation is separate from and independent of the revenue share that funded teams will remit to the 1inch DAO. Teams participating in this incubator program will be subject to both the standard 1inch Labs License Fee as outlined in protocol documentation and the negotiated revenue share percentage owed to the DAO treasury as a condition of receiving incubator funding.

Program Scope

To ensure incubator funding supports novel development that adds value to the 1inch ecosystem, the following scope definitions apply to all applications:

In Scope

• AMMs and DeFi services that utilize Aqua as an accounting and settlement layer, excluding strategies already implemented by the core team (see Out of Scope below)
• swapVM instructions that introduce new functionality and bring additional value to the swapVM ecosystem

Out of Scope

• AMM implementations already developed by the core team, including: constant product (xy=k), concentrated liquidity xy=k, and stable swap curves
• swapVM instructions already implemented, including: existing AMM curve instructions, plain fee mechanisms, and other currently deployed instruction sets
• AMM mathematical formulas or mechanisms that are licensed by third parties

Applicants are encouraged to review the 1inch Aqua documentation, the Aqua whitepaper, and the swapVM documentation before submitting applications. The core team's published list of strategies already in development will also be made available prior to opening applications. Projects that fall within the Out of Scope categories will not be considered for funding. Teams with questions about whether their proposed strategy qualifies should reach out to StableLab for preliminary guidance before submitting a formal application.

Aqua Documentation

• GitHub Repository: https://github.com/1inch/aqua
• Whitepaper: https://1inch.com/assets/1inch-aqua-white-paper.pdf
• Product Page: https://1inch.com/aqua
• Developer Release Blog Post: https://blog.1inch.com/aqua-developer-release/

swapVM Documentation

• GitHub Repository: https://github.com/1inch/swap-vm (includes documentation in the /docs directory)

StableLab's Responsibilities as Incubator Program Steward

StableLab will serve as the Incubator Program Steward with the following responsibilities:

• Manage the end-to-end application pipeline, including intake, documentation, and communication with applicant teams
• Coordinate milestone review sessions with delegate reviewers and facilitate voting procedures
• Verify milestone completion and prepare funding release recommendations for reviewer approval
• Provide ongoing technical troubleshooting assistance and resource guidance to funded teams
• Maintain all program documentation, agreements, and progress records in a centralized, secure system
• Prepare and publish monthly progress reports detailing team achievements, challenges, and upcoming milestones
• Organize quarterly community calls for teams to present progress and engage with DAO members
• Liaise between funded teams, the 1inch Core Team, and the broader DAO community
• Flag at-risk projects early and recommend remediation actions to delegate reviewers

Ongoing Support Services

StableLab provides continuous technical troubleshooting assistance to help teams overcome development challenges. Teams gain access to resource connections and guidance that can accelerate their progress and increase their chances of success. Regular progress monitoring and feedback ensure teams stay on track while identifying potential issues early. When problems arise, StableLab offers direct problem resolution support, leveraging its experience to help teams navigate obstacles and maintain momentum toward their goals.

This proposal only requests $3,000/month for StableLab's Steward support services. StableLab will primarily steward this program as a Program Manager, ensuring that this program runs end-to-end, while other recognized delegates will provide Incubator reviewer services as part of their mandate as a 1inch DAO Delegate.

Budget

Item	Amount
Support Budget	$36,000/year
Total Budget Requested	$436,000

If this proposal is approved, all funds will be paid into and managed through the 1inch DAO Operations Multi-Sig.

Community Visibility and Engagement

StableLab will provide monthly progress reports and provide detailed updates on each team's achievements, challenges, and upcoming milestones. Quarterly community calls create interactive forums where teams can present their work, answer questions, and receive feedback from DAO members. Direct engagement channels ensure community members can communicate with teams and StableLab, fostering a collaborative environment that benefits all participants.

Program Key Performance Indicators

The incubator program will be evaluated against the following KPIs:

1. Revenue Generated for the DAO: Total cumulative revenue share payments received by the 1inch DAO treasury from funded teams, measured monthly and aggregated quarterly.

2. Volume Processed Through Aqua Incubator Graduates: Total swap volume in USD executed through strategies developed by incubator-funded teams, tracked via on-chain analytics and reported monthly.

3. Number of Live Strategies: Count of funded strategies that have launched on mainnet and are actively processing volume.

4. LP Participation: Total value of liquidity provisioned to incubator graduate strategies.

Program Timeline and Review Process

The program operates on a twelve-month timeline from launch to comprehensive review:

Phase	Timeline	Focus
Selection Phase	Months 1–3	Team selection, application review, and legal formalization
Development Phase	Months 4–12	Teams build strategies, achieve milestones, and begin generating revenue
Comprehensive Review	Month 12	Review of program performance, revenue generation, and overall success metrics

The review of applications to join the incubator program will be led by StableLab, supported by DAOPlomats and Arana Digital, as part of their mandate as Recognized Delegates for the 1inch DAO.

Based on this review, the DAO will determine whether to continue the program, potentially with modifications to structure, funding amounts, or management arrangements to optimize future performance.

Creating Sustainable DAO Revenue

This incubator model represents a fundamental shift from traditional grant programs that deplete treasury resources without expectation of return. By structuring funding as revenue-sharing investments rather than one-way grants, the program creates potential for returns that far exceed initial investments. The portfolio approach of funding teams developing Aqua strategies provides natural risk diversification. This sustainable model positions the 1inch DAO as an innovator in decentralized governance while building a permanent portfolio of revenue-generating assets that support long-term treasury health.