Please describe your proposed solution
Cardano is considerably behind other blockchains in terms of standard industry metrics such as Daily Active Addresses or DEX Volume. It is difficult to determine why that is, but some reasons suggest that ICO Participants don't use the chain or Protocol offerings and Yield opportunities aren't good enough. You can read a full Background report here.
Cardano has always made design choices prioritizing first principles, organic growth and decentralization versus quick growth and catering to the industry’s hottest metrics. In addition, some factors leading to this problem, such as Japanese tax/crypto laws (which is why most ADA ICO participants are hesitant to interact with DeFi), cannot be addressed by the community. However, it is clear Cardano can and should do better to increase the usage of the blockchain. Ultimately, Cardano's security model depends on transaction fees in the long term. Especially with Voltaire coming up and the community having access to the 1.5bn ADA Treasury, projects and community members need to step up, ideate and grow adoption.
This is why we are proposing the Catalyst Funded “Cardano DeFi Onboarding by Minswap”. The aim is to create a framework for a program that is designed to onboard more users to Cardano DeFi. We are starting with a focus on Minswap first, but if successful, the program could in the future be applied to the whole Cardano DeFi ecosystem, with bigger and more attractive incentives.
Such a program should be designed in a way that targets both:
- Current Cardano users and ADA holders who are not using DeFi.
- Wider crypto users familiar with other chains but who have not interacted with Cardano DeFi.
For such a program to be successful, it should be accompanied by a strong Education and a Marketing campaign. However, this proposal focuses exclusively on the program's Incentive campaign.
Our solution involves a comprehensive Incentive program with key objectives and strategies that aim to foster volume and awareness in Cardano DeFi, both in the short and the long run. The program modalities are:
1. Trading Volume Incentives
Our Point System will reward users based on the total volume of trades made within a specified period. Traders can be incentivized to trade different Cardano Tokens available on Minswap, thereby increasing DEX Volumes on Cardano.
2. Liquidity Provision Incentives
Our Point System will encourage users to provide liquidity to Minswap's pools, thereby increasing TVL on Cardano. Users can be rewarded based on the amount of liquidity they provide and the duration of their participation, promoting market stability and depth.
3. Bridging Incentives
During the Avalanche Rush program in 2021, the Avalanche Bridge saw a spike in volume, reaching over US$370mm on August 27th alone, all coming from Ethereum. The bridge maintained high volumes, with a peak of over US$600mm on September 23rd.
Our Point System will reward users who bridge to Cardano from different ecosystems using a bridge such as Wanchain. In this way, we can both increase the daily active addresses on Cardano and attract a wider range of crypto users familiar with other chains but who have not interacted with Cardano DeFi.
This will be done in collaboration with Wanchain. The Wanchain bridge has proved to be one of the top decentralized blockchain interoperability solutions. Responsible for bringing USDC, USDT and DAI to Cardano in the form of bridged assets, Wanchain has deep expertise in Cardano and they have agreed to support the Proposal in 3 ways:
- Marketing of the Incentive campaign and rewards for bridging from other blockchains to Cardano using Wanchain.
- The potential addition of Incentives from Wanchain org themselves to this program.
- Support compiling data of users bridging in according to a ruleset to be provided by the Minswap DAO project members.