DeFi For All Enters Final Phase With $15 Million for Polygon Native DApps

The core development team is launching a $15 million campaign spread out over the next 6 months for decentralized applications (dApps) building solely on Polygon. The program will support specific liquidity mining (LM) and protocol development efforts and will reward projects based on on-chain metrics.

The key measure, although not the sole one, is total value locked (TVL) as calculated based on a time-weighted average price (TWAP). Below is a preliminary list of parameters to determine how projects qualify for LM and the corresponding amounts.

Some important things to note:

  • Only protocol teams that have never received LM incentives from Polygon can apply.
  • TVL must stay above the specified TWAP for a period of 1 month to get the rewards. 
  • All dAPPs that qualify can apply if the teams can provide a publicly-verifiable address (preferably a multi-sig) and a DeFiLlama link to track TVL.
  • The Polygon grants team has to approve the application before qualified teams can get the rewards.
  • Snapshots will be taken daily and weekly of DeFiLlama and the eligibility list will be updated on a weekly basis.
  • If at any point, the TVL goes below the given tier requirement, the team gets rewards of the lower tier. 
  • If the one-month TWAP falls below $5M, rewards will be paused until the TVL comes back up.
  • Similarly, a protocol would qualify for higher rewards if TVL increases.
  • Check Polygon Ecosystem DAO forum for more upcoming details on how to apply.

Aave Case Study

The #DeFiForAll program kicked off last March when Aave deployed on Polygon PoS as fees on Ethereum soared to $50-$100 per swap transaction. Liquidity mining campaigns served as a bootstrapping mechanism to more organic activity. The LM thesis is that a DeFi ecosystem needs a solid money market where more risk-averse participants pool their funds to generate more modest returns, while more risk-hungry users can borrow from lending pools at lesser rates and generate superior returns.

Polygon set aside about $40 million, or 1% of MATIC tokens, for Aave’s LM program last April to generate a healthy supply of assets on the lending pools. In just a month, the TVL on Aave-Polygon grew 100-fold to about $5 billion and stayed in that range since. The Polygon money market accounts for half of the revenue contribution to Aave from its various multichain deployments. As that program winds up, emissions will be lowered every two weeks starting Jan. 25.

Uniswap V3 Campaign

The DeFi ecosystem marked a major milestone late last year when Uniswap v3, one of the most cutting-edge protocols due its extremely high capital efficiency, deployed on Polygon. Cumulative trading volumes topped $2 billion since its launch on Dec. 22. 

Polygon is moving forward with a $15 million 12-month LM campaign on Uniswap v3. The primarily eligible pairs will be ETH, BTC, MATIC and major stablecoins like USDT, USDC, DAI, FRAX, UST and miMATIC. Certain portions of the rewards would also be devoted to in-demand assets for the month and native stablecoin projects.

This campaign will serve as a catalyst for adoption, allowing users to experience the full glory of Uniswap in a nearly gasless environment for the first time. It will also coincide with a number of dApps going live on the platform as early as this quarter, including Charm Finance, Perpetual Protocol v2 and Popsicle Finance.

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