Covenant Finance LTIPP Council Recommended Proposal

Link to Application

https://forum.arbitrum.foundation/t/covenant-finance-ltipp-application-draft/21821

Council - 3/4 Yes Votes

Feedback

Wintermute Feedback Covenant Finance’s application was decent and they provided a clear vision of how they expect to benefit the Arbitrum ecosystem. Their product is unique and introduces a new primitive to DeFi. Their grant request is not large and their justification is sound. However, we are concerned about their ability to execute given their age and lack of adoption due to Beta and Alpha stages. Their composability with Uniswap V3 is great and the ability for the protocol to work with long-tail and obscure assets is a great added benefit. Given they are deployed on Optimism, we feel it should ultimately be up to the DAO to decide whether or not they want to take a risk in funding a potentially new DeFi primitive that improves Arbitrum’s competitive advantage. We will be supporting this application.

GFX Feedback We found this to be an interesting project, and a grant plan that was simple and clear. Unfortunately, the applicant did not quite meet the cutoff where we recommend a grant be approved. Recommend the applicant resubmit in later grants cycles and focus on improving their score in the security and product usage areas. What would make this grant plan much stronger would be to go live, have some success, identify the levers that were pulled to make that happen, and then tailor a grant to scale or reproduce that initial success.

GMX Feedback

Covenant Finance aims to bring new debt markets to the Arbitrum and Crypto Markets. The product is innovative as it allows for a perpetual debt which is not currently offered on Arbitrum. The project is able to integrate many of the native debt tokens in the ecosystem including Pendle-YT tokens. Although the project is in early stages I feel the level of innovation the project brings may be a net positive for the ecosystem, the grant size is modest and I think worth the risk for the DAO. The KPIs and milestones also seem reasonable and well thought out. We would be supporting the proposal.

404 DAO Feedback Covenant presents a novel DeFi primitive focusing on instantiating liquidity for perpetual debt markets. While they lack usage, we believe this is an interesting use-case for Arbitrum’s DeFi ecosystem. They provided a strong execution plan and KPIs with relatively sound milestones. While this grant ask is a bit high given current usage, this is a project we think it is worth it for the DAO to take a risk on and will be supporting.