FABRIC SRM GRANT PROPOSAL

Hi all, Bodie & 0xDEADBEEF here from FABRIC with a Serum Grant Proposal. Before starting, we want to thank the Serum team for all of their hard work. The CLOB and open-sourced DEX GUI implemented by Serum have allowed FABRIC and many small-cap projects to thrive when otherwise impossible.

Given that we’re not yet as well established as some of the other grant proposal applicants, the below few paragraphs will serve as an introduction to FABRIC. we’ll keep this brief whilst trying to give the most accurate picture of what FABRIC is, our journey so far and the ideology that underpins our actions.

FABRIC is a synthetic asset issuance protocol built on Solana. Through the FABRIC dApp, users will be able to gain exposure to all of the most popular crypto’s, fiat currencies, stocks, commodities and inverse assets with infinite liquidity, zero slippage and no risk of front-running, all through the use of synthetic assets. In addition to our main offering, the wider FABRIC ecosystem consists of the FABRIC yield farms, FAB PUNK NFTs and our upcoming intelligent order aggregator.

After seeing the success of derivatives platforms on other L1’s, it was clear that there was a strong appetite for synthetic asset trading despite the multitude of pain points commonly experienced with the current protocols. Identifying issues such as high gas fees, losses due to front-running and extremely long confirmation times is what led us to develop FABRIC. After setting up the FAB DEX through the utilisation of the SERUM GUI, we airdropped 8% of our total supply (40,000,000 FAB) to COPE holders and we had officially begun. However, without any clear incentives to hold FAB or stake it in a Raydium permission-less pool, our liquidity quickly began to dry up.

To remedy this situation, we built out a yield farming protocol and launched the FAB-USDC LP staking pool. Our pool allowed FAB liquidity providers to stake their LP tokens and receive FAB rewards. Incentivising users to stake their FAB and USDC by rewarding them with a yield harvest opportunity proved to be a powerful way to bootstrap liquidity, causing our TVL to go from $3K to over $100k within three days of going live and is currently sat at over $4.9m.

We then went on to open up our LP pools to other small-cap protocols that weren’t able to get listed with Raydium, Orca etc and needed a way to incentivise liquidity. We’ve since helped them to build deep liquidity without charging USD fees. Instead, we asked for an allocation of their native tokens which we then redistributed to FAB Liquidity Providers via our FAB USDC LP pool as a way of saying thank you to the community for supporting us. Additionally, this allowed us to build Solana’s first triple yield pool. Despite not being our main offering, we’ve seen that our pools are a vital part of the Solana ecosystem as they help to support, nurture and grow the more overlooked small-cap protocols that would otherwise be left for dead.

By incentivising users to stake their LP tokens from Raydium, we are directly adding useful liquidity to the Serum markets.

With our background sufficiently covered, we propose a total of 250,000 of the 5,000,000 SRM tokens available given to FABRIC. With these additional tokens, we will be able to massively grow TVL on Serum through the increased onboarding of small-cap protocols that will not only bring new liquidity to the Serum Dex but also provide a lifeline to small-cap projects that aren’t currently being supported. Additionally, the grant will speed up the development of, and bring significant attention to the FABRIC core offering, our synthetic asset issuance protocol (synth dApp). This is noteworthy as FABRIC plans to facilitate the use of Serum as one of the primary forms of collateral that underpin the synth dApp. Given that the current collateral in Synthetix (the closest equivalent to FABRIC on Ethereum) exceeds $690m dollars, having this additional long-term utility for the Serum token is an extremely exciting value prop.

Putting Tokenomics aside for a second to focus on a more holistic view of the Solana ecosystem, as mentioned above the grant would also bring increased attention to the Synth dApp. The lions share of Defi users are currently on ETH; but with expensive gas fees, sub-par performance and composability issues as a result of L2 scaling solutions, Defi users are set to look for faster, cheaper and more frictionless alternatives to their Defi protocols of choice. FABRIC looks to take a significant portion of the Defi derivatives market share coming from ETH. Given our deep integration with Serum through the use of the DEX GUI and our staking protocol, we see FABRIC’s growth as enormously beneficial for the Serum ecosystem.

In addition to our main synthetic asset offering, we have two other upcoming features on our roadmap which would contribute useful TVL to the Serum ecosystem:

  1. AMMs/liquidity pools - we are developing our own AMMs paired with LPs, including stable coin focused pools.

  2. Intelligent order router - a swap aggregator with an intelligent order router breaking down large orders into multi-venue minimal slippage orders (with one venue being Serum markets) which would contribute to volume on Serum (not TVL).

Additionally, FABRIC has a strong relationship with the Solana NFT community. It’s not widely realised how little crossover there is between the Solana NFT community and the Solana Defi community. However, given the success of our recent generative art NFT launch, Fabric is in an extremely fortunate position as we’re able to tap into a pool of Defi unsullied Solana natives that can be guided through the FABRIC customer acquisition funnel and onboarded onto our Defi offerings. This represents an untapped market of users that Serum may not have access to through their current Defi offerings and presents a significant opportunity.

FABRIC is a fair launch project that has received no official funding, grants or external support and has had to work tirelessly to build, innovate and thrive within the ecosystem. The Serum grant, whilst not essential, would create the alignment necessary for FABRIC to continue creating long-term value for the Serum and Solana ecosystem.

TLDR
We plan to implement:

  1. Multi-yield pools to incentivise Raydium AMM LP staking

  2. fSRM, synthetic SRM (utilising SRM in a SRM-fSRM LP pool, enabling direct swaps)

  3. Support for SRM and MSRM as collateral on the FABRIC synth dApp

We would run a liquidity mining schedule for various small-cap and large-cap pairs. Pools hosted by Fabric for liquidity mining would emit the base token (i.e. FAB from a FAB-USDC LP pool) and SRM. We envisage hosting 4 to 6 pools with a total of 250,000 SRM, starting with the highest volume LPs. This will enable small projects to bootstrap useful TVL.

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FYI - For those of you who have not bought into and held onto a Solana Small Cap protocol then this is my story and it might give you an insight into how much of a struggle it is at the other end of the spectrum.

I got into SOL, SRM and FTT week 1 of 2021 and still hold long term. I was there day 1 of Raydium and got Raypool also on the day from Bonfida and still hold. I got some MER and OXY from FTX IEO and picked up COPE mainly on the basis of what Cyril represents and brings to the ecosystem.

I’m coming from tradfi background and have 25 years investment experience. I had no intention of EVER getting back into small caps after getting burnt on the pink sheets during the DOT COM bubble. Then COPE comes along and airdrops some FAB tokens to me. So that is the ONLY reason I stepped away from Solana large caps to small caps.

This space is hard for lower cap teams. The FABRIC story is amazing IMHO…no VC, airdrop to Cope holders & ran out of liquidity twice where there was nothing at all on the Bid. The community rallied round and bought some off the ask. Then gradually more and more people came. The team tried to get solana teams to help them with liquidity but FABRIC were unknown, too small & everyone was busy. So the team built their own pool…I watched the developer debug it live when it launched.

The FABRIC / USDC stake pool emits rewards based on a Raydium permissionless pool token and it served to bootstrapp FABRIC liquidity almost overnight. Liquidity went from 3k to 100k within a few days and now stands at circa 5 million. All lower Cap Solana projects face similar struggles so Fabric team subsequently offered their LP stake pool to APEX, SAIL and CHeems teams which proved to be a big help to these projects but more importantly added & bootstrapped liquidity. FABRIC did not charge these teams for access to their LP pool, but simply emitted some of their tokens to the current FABRIC community via their LP stake pool to create the first Triple yield pool on Solana.

Now things are better…The team launched FAB Punks and dropped them free to everyone in their Discord who helped build liquidity by staking in their pool. This also helped generate circa 2.4 mil usdc for the FABRIC treasury to allow the team make critical new hires to develop and fast track their new Synth dApp coming this Quarter on Devnet

NOTE: It appears from the outside looking in that the liquidity on the FABRIC LP pool is as a result of the Raydium pool. This is absolutely not accurate. The 5mil TVL currently in the pool is there due to the FABRIC LP stake pool, as when this was just a Raydium permissionless pool the liquidity was only 3k!! Fabric liquidity dried up twice - there was no bidders at all so project nearly died. The harsh reality is that Raydium cannot offer LP staking pools to all solana protocols. This is a niche that FABRIC has filled for APEX / SAIL and now CHEEMS. So these pools are in fact growing serum TVL. And this offering is perhaps a very important one to help solana small caps survive and I personally do not think that is an understatement. Especially, if a bunch of them grow into projects that bring 100s of millions TVL to serum / solana or at least give them a shot at that!!

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Agree 100% with @MEPIGME that the Fabric pools have been essential to some small-cap SOL projects that have seen liquidity dry up very quickly, but want to emphasize that the Fabric team merely created those out of necessity as part of a broader product development roadmap for their own project. If you look at their synthetics dapp launching in Q1, this will add more liquidity to the Serum ecosystem and will also add utility to the SRM token by supporting it as collateral for the synthetic assets. I know there is a lengthy tokenomics discussion going on right now in @solsearching thread, and I think supporting other protocols that add new utility to SRM itself should be a core component of our tokenomics strategy.

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I think this programme needs a pause for now, and a template for submission created where submissions that directly benefit serum are categorised differently to those that benefit a raydium pool

Hi MJP, thanks for the response!

The continued growth of FABRIC would be beneficial for SERUM for a number of reasons. I’ll highlight three of the main reasons below:

  1. Driving liquidity to permissionless pools on Raydium that aren’t being incentivised. This benefits Serum as the liquidity here is newly created and is composable with Serum since this liquidity is on the CLOB (users will be buying ‘X’ token on the Serum dex so they can enter these pools and farm).

  2. Support for SRM and MSRM as collateral on the FABRIC synth dApp (as well as enabling direct swaps between fSRM and SRM through a SRM-fSRM LP pool)

  3. Create additional utility and fairer distribution of SRM. As a long-time Serum holder, I definitely appreciate some of the concern the SRM community have raised in the tokenomics thread. Having an additional way to use SRM tokens as collateral to mint Synthetic assets would be an extremely attractive value prop. Especially given the potential for collateral in the FAB dApp to far exceed $700m. Additionally, having SRM tokens to emit to the Defi community is a (small) step towards a more decentralised and fair token distribution.

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Thanks for the proposal @FABRIC, and apologies for the delay. We are responding now because we realized that this is now a DAO vote expiring tomorrow: Governance | Solana

We are voting ‘No’ at this time. We’re super excited about new projects building on Serum. However we feel that

  1. most of the stated benefits of FABRIC are for features yet to be built, so it would be good to build the core product before proposing emissions;
  2. regarding the farms for smallcap-related Raydium LP tokens (FAB, APEX, SAIL/GSAIL, CHEEMS), while it is clear that emissions would benefit these tokens by creating utility for them, it’s not clear that it would benefit Serum.

We’re excited about new projects being built in the Serum ecosystem, and we’re excited to see FABRIC grow and add value to users (the synthetic assets effort sounds interesting). We just don’t feel that this SRM grant to the project in its current state is beneficial to Serum.

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