SCGP APPLICATION: Infusion Protocol

Seamless Community Grants Program (SCGP)
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Applicant Info

General Project Info

  • Project Name: Infusion Protocol
  • Project Sector/Type (select one): Liquidators | DEX Liquidity | ILMs | Governance Tools | Other
  • If “Other,” please specify: DEX
  • Project Summary:

Infusion Protocol is a new AMM protocol that facilitates deep and stable liquidity on Base. It features a critical time-lock component that allows for liquidity to be utilized as an onchain primitive for other DeFi apps to build on. Similar to other AMMs, Infusion offers various pool types, including stable and volatile, catering to different liquidity needs. Stable swaps are equipped with an efficient pricing model and a liquidity curve formula reminiscent of Curve, ensuring stability in the face of market volatility.

Infusion solidifies onchain liquidity through a novel timelock component called Timefuse. When liquidity is “Timefused”, pools allocate a larger portion of fees to the liquidity providers who lock their liquidity for a set period of time, incentivizing longer term stability. Infusion then merges a user’s LP worth, timelock commitment, and expected LP fee income into a simple onchain primitive for apps that seek verifiable evidence of user asset value. Simply put, liquidity providers who timefuse their liquidity may earn more fees, while also forming a stronger base layer for the DeFi ecosystem.

  • About the Team (+location): Infusion is a community-driven project with contributors and hailing from various DeFi and infrastructure projects. Core contributors have backgrounds from 1inch, Pendle Finance, Harmony, Thorchain, with advisors and part-time contributors from Uniswap and other DeFi protocols.

  • Relevant Links (website, github, discord, twitter, gitbook, explainer decks, etc): Twitter: https://twitter.com/infusionfinance
    Discord: Infusion

  • Market Research (target users, competitors, market potential, pain points):

Liquidity serves as the lifeblood of the DeFi ecosystem, essential for token swaps, transactions, and healthy app ecosystems. However, current DeFi infrastructure grapples with a critical challenge – the instability and unreliability of its base primitives (i.e. liquidity suddenly being removed), leads to precarious liquidity conditions. Long-term liquidity is not incentivized at the base layer since liquidity providers don’t have extra incentives to lock their liquidity. This is problematic because the potential for abruptly vanishing liquidity creates the constant threat of a large-scale Jenga-tower collapse that can tear down the entire DeFi ecosystem.

Additionally, the current landscape of DEXes on Base leaves a lot to be desired. While Aerodrome is the leading DEX on Base, it is not technically Base native as initial token distribution came from Velodrome which is the same team. Maintaining two separate DEXs on two separate chains reduces efficiency and innovation while diverting resources. Besides Aerodrome, there are no Base native DEXes in the Top 10 measured by TVL according to DefiLlama.

Detailed Project Info

  • Goals/Objectives + Relevance to Seamless Protocol/Community:

Infusion’s vision is to empower growth and innovation in DeFi by solidifying on-chain liquidity. By fusing liquidity with time, Infusion Protocol introduces a new standard for the base liquidity layer. By incentivizing liquidity providers to lock their liquidity for higher fees, Infusion ensures a stable and secure liquidity source that allows DeFi apps like Seamless to utilize. This “provable liquidity” is unique from existing AMMs, which allow for the sudden withdrawal of liquidity at any time, creating limitations for apps like Seamless that require liquidity to be present.

Infusion contributors have been paying close attention to pain points for Base DeFi and Seamless, and as mentioned in the third-party analysis of Seamless parameter adjustments, the supply and borrow thresholds of assets on Seamless are limited by the amount of underlying liquidity on dexes. Especially in a nascent chain like Base, it is difficult to determine whether the underlying liquidity is sticky. Infusion tackles this problem with provable liquidity, so markets on Seamless can set parameters based on stabilized liquidity. This would allow Seamless to raise its supply and borrow caps across markets, creating further Seamless Protocol growth and in turn user and community growth. Provable liquidity also incorporates both current LP value and the expected stream of earned fees, enriching a wallet’s financial profile, and potentially setting the groundwork for customized collateral requirements and interest rates.

In summary, the goals/objectives are to solidify onchain liquidity for Base DeFi and enable other DeFi DApps and services to be built on top of this primitive. Impacts to Seamless can be summarized as a new liquidity source for Seamless (and other DApps) to rely on, with stabilized and secure liquidity that can help grow Seamless Markets and therefore grow the Seamless ecosystem, community, and userbase.

  • Roadmap:

Q1 2024:

  • February/March: Audit begins and is completed, Infusion v1 pools goes live for community use.
  • March: Launch of community leaderboard and early supporter NFT collection

Q2 2024:

  • Partner with Base projects and other community avenues to attract more timefused liquidity to Base

Q3 2024:

  • Community initiatives to assist in integrating provable liquidity primitives in other protocols or DeFi services
  • As needed community suggested improvements to Infusion pool and locker structures

Q4 2024 and beyond:

  • Infusion v2

  • More to come

  • Relevant Milestones/Metrics (Now and Future): Q1 2024:

  • February 2024: Infusion goes live; attracts the first $1M of liquidity from blue chip tokens.

  • End of Q1 2024: first 1,000 users/wallets, first $2.5M of liquidity

Q2 2024:

  • Targeting first 4,000 users/wallets
  • Targeting first $10M in total TVL
  • Targeting first $5M in transacted volume
  • Conduct first onchain vote from the user community.

Q3 2024:

  • Target first partner to integrate provable liquidity primitives in another protocol
  • Target first proposal-wide upgrade

Q4 2024:

  • Become largest Base native AMM and top 3 on Base by DApp TVL

  • More to come

  • Funding Request + Budget Breakdown: Total: $25,000
    80% for Development (developers and audits)
    20% for Operations & Marketing

Suggested grant schedule is half upfront + half after the first $1m in liquidity.

Initial funding request takes into close consideration the maturity of the SCGP pilot program and total budget size of $100k for this initial wave. Infusion costs will likely exceed the requested amount quickly, but the contributors hope to continue BUIDLing and growing and may consider re-applying to future grant programs if permitted.

Other Info

  • Please link to any previous work that showcases your expertise: As mentioned above, core contributors and advisors have previously contributed to 1inch, Harmony, Pendle, Thorchain, and more.

  • Anything else we should know (e.g. existing partnerships, early adopters/community)?

Outreach conversations have already begun with other Base projects and dex aggregators. Core contributors are excited for the future potential of Base (e.g., mass retail adoption). The project hopes to raise the standard on what being Base-native and building for the Base community means.

  • Where did you hear about the Seamless grants program?
    Seamless Protocol Discourse and Seamless Official Twitter

  • Have you received any other funding (vc/institutional, angel and/or other DAO/grant funding)?

  • No.
  • Wallet Address that can accept ERC-20 Tokens on Base (this will be directly verified again prior to funding):
  • Will provide once contributors have time for the administrative setup of a proper wallet.
5 Likes
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hmm seems pretty cool

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Thank you for your submission! It’s thorough (in a good way), so it may take some time to review, but will get back to you if there are any additional questions / clarifications needed.

Upon first read through, the targeted pain point is spot on, and Infusion’s innovations seem like it would help. More thoughts to come, but confirming the council has received your application. Thanks!

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Nicee!! Let the council know we are waiting as community member :grin::+1:

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@Verstappen, Thank you for sharing your vision and ambitions, nice submission!

This seems like a great project, and I have a few additional questions that I would like to ask to better understand

  1. Can the team members provide verifiable links to their past contributions in the DeFi? This can help confirm their experience and expertise :pray:

  2. Audit Details: Which third-party auditors will be conducting the audits?

  3. Risk Management: What specific risk management practices will be implemented from market manipulation / smart contract-contracts vulnerabilities?

  4. Competitive Analysis: Could you kindly elaborate on how Infusion differentiates itself from competitors, specifically in terms of features?

I noticed the innovative approach to long-term liquidity lock-in(that’s super great), which reminds me somewhat of mechanisms employed by PancakeSwap. I would appreciate it if you could clarify how Infusion’s implementation of this idea may differ or improve upon existing models, Thanks!

1 Like
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Hey @Verstappen! Thanks for awesome application, it is really great to have a native BASE Dex to be interested in building with Seamless.

In addition to @Smailov great questions, I would like to ask how u are going to attract liquidity. For example,

February 2024: Infusion goes live; attracts the first $1M of liquidity from blue chip tokens.

Do u have any agreements with VCs liquidity providers that are ready to provide initial liquidity? understand that u might have a non-disclosure agreement, so if u cannot answer it is ok

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Thank you for your feedback so far. Apologies for the delay, as we’ve been heads down building, but we appreciate your diligence.

Given the stage of the project, there are a few questions that we are unable to answer at this time, but we’re adding a little more color below.

  1. Audit & Risk Management: An audit has already begun with Peckshield, and we will be closely monitoring and remediating any vulnerabilities discovered from their expert review.

  2. Competitive Analysis & Strategy: Infusion’s key differentiating strategy is its ability for users to timefuse their LP positions for set amounts of time. When liquidity is “Timefused”, pools allocate a larger portion of fees to the liquidity providers with liquidity locked for a set period of time, incentivizing the longer term stability that DeFi needs.This establishes a new paradigm of LP stability for other parts of DeFi to build on, such as the markets on Seamless. Furthermore, the LP value, expected earned fees, and time of lock are all fused together to create a new primitive called “provable liquidity,” which can be used for reputation, credit, loyalty, and more. For Seamless’s use case, perhaps a high provable liquidity score can lead to cheaper borrow rates, given there’s proof that the wallet has the assets to pay back the loan.

  3. Attracting Liquidity: As experienced builders in DeFi, we understand the importance of having initial liquidity upon launch. We are confident that we will be able to hit our goals through just our and the Base DeFi community. There is a clear need for a Base native DEX that has proper incentives for liquidity providers and users and the momentum on Base is just getting started. That said, among our network we have liquidity providers ready in case an initial jump start is needed.

Thanks again for exploring our proposal. We understand that there are many DEXes for users to choose from, but they all have the fundamental issue with LP liquidity that can be withdrawn at any time. We believe the innovative timefusing, along with a distribution of fees accordingly, would help us build a more compelling solution.

3 Likes
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Thank you @Verstappen for applying to the SCGP with Infusion Protocol. You’ve been accepted as one of the first recipients of the SCGP – Let’s BUIDL this out! Thanks for laying out how Infusion Protocol will work to bring deeper longer liquidity to DeFi.

1 Like
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The full award details can be found on Discord: Discord

Congratulations, once again!

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@Verstappen We’ve reviewed activity and congratulate you on passing $1M TVL, which was the milestone needed for the full grant (details on Discord).

Can you reply with the designated Base wallet address to receive the esSEAM grant?

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0x8d99169Bb17e48323E57034c36d95a056DD636Bf