The Lunar Technology Foundation is responsible for fostering the development of the Moonwell protocol and its ecosystem. The Moonbeam Foundation, through the passage of Moonbeam Referendum #65, has awarded a grant to the Moonwell community. This report provides transparency and insight into how these grant funds have been used to date.
Moonbeam Foundation Grant
Following weeks of deliberation, Community Grants Committee review, and a seven-day open voting period, the Moonbeam community approved two Level 3 ecosystem grant proposals posted by Moonwell and StellaSwap, as part of the Moonbeam Foundation’s newly established Interim Grants Program. For more information on the grant proposals themselves, please see the Moonwell Artemis Grant Proposal and StellaSwap’s Ecosystem Grant Proposal.
These two grants are intended to work in tandem, with the primary objective of bolstering baseline liquidity in the Moonbeam ecosystem and igniting a flywheel effect of ecosystem development and growth. Increased liquidity leads to strong DeFi primitives (such as decentralized exchanges and lending protocols), which enables new applications to be built and novel use cases to flourish, which in turn brings additional liquidity to the ecosystem and the flywheel builds momentum. With the arrival of the Wormhole bridge in October, liquidity from Ethereum mainnet and other ecosystems could now help create this Moonbeam ecosystem flywheel.
Transparency Report for Level 3 Moonbeam Foundation Grant
The Moonbeam Foundation grant consists of two parts:
- 2.5344m GLMR, which has already been delivered to the Moonwell protocol by the Moonbeam Foundation
- 1.632m GLMR, which will be delivered to the Moonwell protocol in early 2023
Out of the 2.5344m GLMR that has already been delivered to the Moonwell protocol, a total of 987,093.705 GLMR has been scheduled for distribution until January 27th, 2023, which will leave a remainder of 1,547,306.295 GLMR remaining to be distributed.
In the grant application, it was anticipated that liquidity incentives would begin by approximately October 5th, however, the grants governance process took longer than expected and grants were not awarded until late October. Liquidity incentives started on StellaSwap almost immediately at this time. It’s important to note that the Moonwell community has approved an Asset Listing Framework through governance which states: “Sufficient liquidity is required for an asset prior to enabling it as collateral. A cautious test of this is the combined slippage across all liquidity sources to measure how well a given asset can be absorbed into the market (a signal that may change upon asset listing).” This means that liquidity must build up on StellaSwap and other DEXes before the Moonwell community can safely list a new market.
The Moonwell community initated discussion around adding new Wormhole markets to the protocol on November 4th. Due to general market volatility and an outflow of liquidity from all crypto ecosystems, stemming from the collapse of the FTX cryptocurrency exchange, Moonwell contributor Gauntlet Network recommended a very conservative capped launch on November 18th. Gauntlet’s proposed borrow caps and conservative risk parameters would limit the amount borrowed in these new markets in order to reduce risk to the Moonwell protocol.
The Moonwell community proposed and passed Moonwell Improvement Proposal (MIP) 7 on December 3rd, which added support for new Wormhole-wrapped Ethereum, Bitcoin, and USD Coin markets. BUSD was not able to be safely supported at the time of proposal creation due to the lack of a Chainlink oracle price feed on Moonbeam. MIP-7 was followed shortly by the submission and passage of an additional governance proposal, MIP-11, which added liquidity incentives to these newly established markets on Moonwell Artemis.
While the original distribution schedule was anticipated to be 12 weeks long, due to market conditions outside of the Moonwell community’s control that led to a conservative, capped launch of these new markets, at the current rate of distribution, it may take approximately 24 weeks in total to distribute this first 2.5344m part of the grant.
It should be noted that while the rate of distribution is lower than anticipated, due to the capped launch, the Moonwell community intends to distribute 100% of the grant over time, and the only difference is the rate of distribution of the grant being slower than originally anticipated.
Moonwell is an open lending and borrowing DeFi protocol built on Moonbeam and Moonriver. Moonwell is supported by the Lunar Technology Foundation, which is responsible for fostering the development of the Moonwell protocol and its ecosystem.