Should the Enzyme Council support this proposal?

Abstract This EFP proposes that Avantgarde Core continue to lead the development of the Enzyme Protocol over the next three years, from October 2022 to September 2025.

Background In March 2019, Enzyme v1 was released and the protocol was decentralized. Several months on, there were were close to zero users. The project was failing because the protocol was very difficult to use and other than trading with DEX’s it was not compatible with other DeFi protocols that had come out by then (eg. Compound, AAVE, etc). With the token price at around $3, few people were willing to build on Enzyme and those that were, were dumping the token quickly to raise funds in a bear market putting additional pressure on the situation. As a result of a depressed token price, the available pool of incentives for builders was incredibly low due to the token price.

Avantgarde Core intervened in Q3 2019, making a proposal to underwrite the cost of development independently over the three years that followed and laid out a roadmap addressing many of the problems the protocol was facing. We applied for a grant of 180,000 MLN/year for three years. At the time, that was worth < $1.5m. Furthermore, we understood the importance of aligning interests and not dumping the tokens on the market to further aggravate the problem. We agreed to accept 75% on a vesting schedule of 2-5 years. The remaining 25% were paid to us quarterly with no vesting conditions, though we have never sold any on the open market.

Needless to say, we were well aware at the time that the actual cost of continuing to grow and maintain a protocol like Enzyme would cost us multiples more than $500,000 / year. However, we were able to work with this budget because of some very high financial risks and sacrifices that a small group of devoted people made at that time. Our motivation was driven by our long-term conviction that if we succeeded, MLN would eventually be worth much more.

The Council supported our proposal at the time. The last 2.5 years has been spent executing on it and transforming Enzyme into a material platform with hundreds of asset managers and thousands of users. AUM kept making new highs for several months after the markets peaked reaching a high of around $230m. Maintaining a degree of roadmap flexibility was a critical part of contributing towards the protocol’s success over the last 2.5 years and has enabled us to be nimble and adapt the roadmap quickly according to new use-cases, market developments and trends.

Some highlights include:

Development achievements, features & integrations

Three major releases v2, v3 and v4 in the space of 28 months. Integrations with some of the biggest and most widely used protocols in DeFi DEX’s: Paraswap, 0x, Kyber, Curve, Uniswap v2, Uniswap v3 & Synthetix. DeFi: Lending and borrowing on AAVE & Compound, Uniswap v2 pools, Uniswap v3 pools, Curve pools, ability to deposit curve pool LP tokens to Convex staking contracts Convex voting, Idle strategies, Yearn strategies and more. A sophisticated set of subgraphs that track all the data being emitted from events on each set of vault smart contracts and enables us to provide an auditable history of events to our users. Over the last two years the subgraphs have been substantially refactored in order to scale faster and perform higher. Maintenance and huge improvements to the entire tech-stack behind our app as well as its performance. A complete UX/UI overhaul with continuous improvements to cope with the added complexity. Helping coordinate activity with each bug bounty and improve processes and transparency with the Enzyme Technical Council. L1 & L2 research and plans

Researched and deployed Enzyme and surrounding tech-stack on Polygon. Continue to explore other L1 & L2 plans with focus on growth possibilities. Growth and usage

More than 1500 vaults More than 3500 investors Normalized AUM growth in ETH terms exceeding peers (below data is after Celsius redemption) More in depth report of marketing activities and results available here As our grant period of three years is coming to an end, we’d like to thank the Enzyme Council and the broader community for trusting us to lead development in this role and propose a renewal of contract for the next three years starting in October 2022.

Motivation We believe we’ve accomplished a lot and we feel that there is still a lot we can do for Enzyme to reach its full potential as the DeFi operating system. We have spent the last few years building what we strongly believe is the basis for many different use cases in asset management. We believe these will underpin the future of DeFi asset management.

Our learnings and current velocity drives our motivation to continue working on Enzyme. We believe that the protocol is uniquely positioned for the following reasons:

It is the only asset management platform that has evolved and grown in a material way over the last few years. It is now at a point where it is harder to compete with Enzyme as an asset management platform in DeFi given its 3.5 year on-chain reputation for reliability, surviving a bear market, the work on integrations, meaningful features and generating momentum that is hard for others to now replicate from scratch. We have identified target user markets and new use cases where we are gaining traction. DAO treasury (FWB DAO, HumanDAO and others in the pipeline) Cross-chain liquidity with Celsius (*note since recent events unfolded this use-case has been unwound until further notice) Collateral management for insurance DAOs (eg. Unslashed) We’re planning to scale up activities related to education and sales to increase the speed at which users decide to open an Enzyme vault and deposit funds Continuous improvement & implementation

As we’ve learnt in the past, laying out a long term roadmap which is not flexible in nature is difficult in such a fast changing environment as DeFi. What we have found works well is presenting quarterly updates to the Council on what we will be working on and then reporting progress back at the end of each quarter. This enables us to be nimble, agile and react quickly to changing business development priorities that we other stakeholders identify.

However, some of the items this grant proposes to cover are as follows:

Continuing to fund the core Enzyme team of what now consists of 14 developers,1 Project Manager, 1 Product Manager, 1 Biz Dev, 1 Operations and 1 UX/UI designer. Creating and maintaining a user-centric roadmap where new features and potential architectures are researched and prioritized based on the AUM they can bring to the Enzyme protocol and tied to concrete business outcomes Researching and implementing new major release(s) based on user feedback over the course of the next three years. These release(s) will include features prioritized and driven by direct input from the business dev team and should link to concrete AUM growth opportunities Deploying to other non-Ethereum networks (added to the roadmap with the same focus on potential AUM growth and concrete business outcomes) Continuing to maintain a front-end for all releases Filtering and addressing bug reports, managing Immunefi inflow of reports, user trouble-shooting and maintenance for integrations upon upgrades/3rd party bugs, etc Community management across all public channels (helping maintain the community Telegram, Discord, Twitter etc) Making Enzyme visible in a governance capacity by actively participating in other DeFi governance conversations and proposals in a way that benefits Enzyme. Managing a marketing strategy and growing our current efforts such that they are on par with our peers Maintaining financials and publishing quarterly Council reports to improve transparency. Improving documentation for 3rd-party developers and SDK tooling for plug-in managers. Facilitating the Enzyme Council to operate independently in the future utilizing SOP’s, DAO tooling etc. Integrations to make Enzyme more visible and composable (eg. building out API for Etherscan, Cryptocompare, Metamask), negotiating custody agreements for vault tokens, wallet partnerships, helping other teams build on Enzyme, etc Proposing a new framework for asset universe maintenance Note that we have not included 3rd party protocol integrations in this quote but we will work on that outside of the scope of this proposal. Funding Requirements

Part I Given the appreciation in the MLN price since the last time we brought forward a proposal, we propose reducing our ask from 180k to 90k MLN/ year + 100,000 USDC paid in four installments at the end of each quarter of 22.5k MLN + 25,000 USDC per quarter, based on today’s 90day VWAP price of $32.4. *Note today’s date at time of writing is July 5th, 2022.

In order to protect the robustness of our contribution during a downward move in the market, we would like the option to adjust this amount to 30k MLN/quarter if 90 day VWAP drops below $30, and 40k MLN/quarter if 90 day VWAP drops below $20 for those respective quarters.

To align interests we propose that 60% of the tokens are granted to us in liquid form and paid quarterly, and 40% are vested and split into quarterly payments, each payment vesting over 2 years.

We’ve modeled a few scenarios on what this total compensation package would look like. Note that for simplicity we show the total amount of MLN but in reality a large portion of these tokens would be vested over 2 years. Once again Avantgarde will have to take some market risk because of the vesting nature of this proposal but commits to underwriting this period as long as still engaged by the council.

Reference: https://docs.google.com/spreadsheets/d/1xfTNkT8nR67AsqtmuASruYR22VM1aUeM7KgbfXy7tj0/edit#gid=0

Part II We would like to propose a variable component to the funding which is directly linked to growing AUM in order to incentivize our marketing, business development and sales efforts as we build those out further.

The idea behind this part of the compensation is:

Incentivizing the team with upside on their AUM growth (measured in ETH terms) as well as development More closely linking and aligning Avantgarde performance with Enzyme success Deriving a model which is reusable with other 3rd parties and will help us scale Enzyme usa-cases and AUM The council has shown interest in rolling out a referral program in the past. We propose formalizing this program so that ourselves and others can participate in it. We are happy to initiate and moderate the discussion around this.

Milestones & Check-ins We propose to continue the regular informal check-ins with the council at the bi-weekly council meetings and to keep the council aware of changing priorities and work being implemented. We also propose more formal quarterly updates on progress and proposed roadmap for the subsequent quarter presented in writing. The council (which is also composed of user-representatives) can always challenge and reject our suggestions if they feel there is something more pressing. We will do our best to accommodate these feature requests in a timely manner.

Team Most of the work is outsourced contractually to the Avantgarde Finance whose team can be found here https://avantgarde.finance/company

Contact information: For more information please contact core@avantgarde.finance