This proposal is a substitute for a previous Puzzle Funding Proposal (forum link).
In short, I suggest to substitute the previous “Puzzle funding proposal” (unlimited vesting 0.1W per block) for the new “Puzzle on L2” proposal (0.2W vesting with a cap for 6 months) in order to launch Puzzle Swap and ROME stablecoin on the upcoming Units Network. Waves DAO will get the new U-Puzzle token for it.
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Dear Waves DAO governors!
On behalf of the Puzzle Network project, I’m grateful for the support of Waves DAO for the past 6 months. We achieved multiple giant goals together, important for the development of Waves as a whole, which includes the development of the most used dApp on Waves - trading aggregator, the launch of Puzzle Lend, protected against whalish manipulations, and release of innovative DeFi - stablecoin ROME backed by LPs.
After reflecting about the next big steps for Puzzle and Waves, I came to a conclusion that the most effective thing we can do next is to launch the core services of Puzzle on upcoming Waves L2 (Units Network).
While Waves DAO has a huge bet on the success of Units Network, there was still no steps done to popularize its usage. As simple as that, we don’t know of any dApps which will be launched on it. I suggest to change it by planning the L2 transition of one of the essential apps of Waves L1 - Puzzle Swap.
In addition to current Puzzle developments on L1, I want to proceed with launching Puzzle megapools with liquidity mining, aggregator and ROME stablecoin on L2. To read more detailed thoughts about the idea itself, proceed to my post in the Puzzle group: Telegram link.
To implement this, I apply to change the current Puzzle funding with the new one: 0.2 WAVES per block for 6 months, totalling 51840 WAVES. In exchange, Waves DAO will receive the 10% share of Unit Puzzle on L2.
Roadmap for L2 launch
To estimate the roadmap for L2 launch, we assume that the Units Network first chain will be launched on Mainnet in February 2024.
- Jan 24: Testnet experiments
- Feb 24: The first megapool launch on L2
- Mar 24: Global launch of megapools on L2 with a target to get 15 megapools in the first month
- Apr 24: Launching Puzzle Aggregator on L2
- May 24: Liquidity mining for LPs in megapools
- June 24: ROME stablecoin launch on L2
As a result of this roadmap, we target to have at least 500k USD worth of liquidity on L2 after 6 months. One of the biggest liquidity drivers will be, for sure, the U-Puzzle token.
U-Puzzle tokenomics
U-Puzzle (Units Puzzle) is inspired by L2MP and pre-mining concept. Instead of using the same PUZZLE token for Puzzle Swap on Units Network, we want to launch a new one with same mechanics and pre-mining option, in order to:
- stimulate early liquidity provision to megapools and immediately get a share of the market,
- raise demand on the PUZZLE token in a short term by introducing a huge APY for pre-mining U-Puzzle.
To make this model work, U-Puzzle will have enough utility, similar to its parent PUZZLE token, which includes staking for earning protocol fees, buyback and deflation while creating megapools. Simply put, U-Puzzle is a token with small supply which sometimes gets burned and can be staked to earn organic fees for megapools and swaps on L2.
The distribution of U-Puzzle is supposed to benefit 3 main actors and goes as following:
- 50% to L1 Puzzle participants, pre-mining for PUZZLE holders, ultrastaking NFTs, megapools owners, and others, during 12 months.
- 40% to liquidity providers in the megapools on L2 during 12 months.
- 10% to the Waves DAO without the lock.
The listing price for U-Puzzle will lead to a market cap of 770k Waves, while Waves DAO’s share will be worth 77k Waves, which leads to an immediate upside of more than 50%. Which the initial market cap (1.8 mln USD), U-Puzzle still has a huge upside potential, if we compare it to the market cap of Units Network itself (100 mln USD) and competitive projects (TraderJoe, Balancer, etc), which are counted in hundreds of millions.
Budget breakdown
Launching Puzzle on L2 gets much easier and cheaper because of re-using the existing algorithms and frontend bootstrapping, but still remains an expensive activity, which led me to an idea to apply with this proposal. With the updated budget of 0.2W per block, we will be able to proceed with both: updates on L1 and development on L2.
The first half, 0.1W per block, will be spent to develop updates on L1, similar to what it costs now, which will first of all include the development of proper web page for ROME, aggregator updates, app support and smaller bounties, such as community-built Telegram bots and tools.
Meanwhile the second half of the vesting will be spent on L2 development with the following spendings:
- 8000w Solidity development (megapools, aggregator SC, liquidity mining and ROME)
- 3000w frontend transition to EVM
- 3000w aggregator transition to EVM
- 3000w ROME web app and daemon on EVM
- 2000w EVM-compatible backend for megapools
- 1000w branding & redesign
- 5000w initial market making for U-Puzzle and megapools
Pros and Cons
To give a more detailed perspective for Waves DAO, let me list the advantages and disadvantages of this proposal as I see them.
Pros
- simple solution to get an essential dApp launched on L2,
- U-Puzzle will push demand on PUZZLE token, hence benefit the treasury,
- getting rid of the previous unlimited Puzzle vesting proposal.
Cons
- “all eggs in one basket”: with this step DAO raises its bet on L2 success,
- busier vesting schedule in short-term, if we raise it from 0.1w to 0.2w.
Most importantly, I think this proposal has a huge ecosystemic value and will help to drive the success of Units Network.
Outro
I’m happy to present my proposal for the future and ambitious steps for Puzzle and Waves L2. Looking forward to your feedback, ideas and questions. Probably the best place to discuss is this forum post but I am also happy about discussions in Telegram.
Thank you!
Vladimir
