This page provides in-depth information about two upcoming grants of $450,000, which will be allocated via Conditional Funding Markets (CFMs) to lending projects expected to produce the highest TVL for Unichain.
We recommend using this page to understand:
The UF will shortly be requesting a new round of funding from Uniswap Governance. Conditional on that proposal passing, $900,000 of funds are earmarked as grants to be used in growing lending protocol TVL on Unichain.
Two projects, selected via Butter’s Conditional Funding Market (CFM), will be allocated $450,000 each. An additional $100,000 will be used as subsidies to encourage liquidity providers and forecasters to participate in the CFMs, which are similar in principle to Uniswap v2 pools.
A 101-guide to Futarchy (this is an excellent overview for those not yet familiar with the concept)
The general idea of CFMs is that you set an objective (let's say "increase lending protocol TVL on Unichain"), and a budget (let's say 450,000 USDC).
A set of projects would apply for funding and, in their application, describe how, given 450,000 USDC, they would increase lending protocol TVL on Unichain over time period T.
Conditional Funding Markets would be spun up for each team, each of which is asking the market "If this team gets 450,000 USDC, how much do you think they'll increase lending protocol TVL over time period T"
The markets would trade freely for a pre-determined amount of time. Market participants (let’s call them forecasters) would express their views with dollars. More concretely, let's say Team A was trading at 10 (which implies that, given 450,000 USDC, Team A would increase lending protocol TVL on Unichain by $10m over time T), but a forecaster believed Team A would increase lending protocol TVL on Unichain by $20m under those conditions. That forecaster would buy Team A tokens at 10 because they believe they will be able to redeem them for 20 at time T.
After the predetermined amount of time (it'll probably be a week after the markets launch in our first live experiment this month), the markets would reach the Decision point. If 5 teams applied and their prices at the Decision point were 10, 20, 30, 40, and 50, the market has determined that, given an influx of 450,000 USDC to do the work, the teams whose prices are 40 (let’s say Team A) and 50 (let’s say Team B) are most likely to produce the best outcome. In our example, they both are granted 450,000 USDC and the CFMs for the three other teams would be closed.
Those teams would then take the 450,000 USDC and use it at their discretion until time T to increase their protocol’s TVL on Unichain. At time T, the market would resolve, and during that, CFMs for those projects continue to trade. Let's say that Team B began increasing TVL by $50m, that markets would reflect that, and Forecasters who bought Team B's tokens below 50 could redeem their tokens for a profit. Holders of Team B who bought them above 50 would redeem them for a loss.
For a deep dive on how CFMs work, please reference Butter’s documentation.
Unlike previous grants, this grant will be allocated via CFMs as described above. As such, the process is unique. We recommend lending protocols familiarize themselves with CFMs generally, and this process specifically. We encourage you to ask us any questions you have to confirm a detailed understanding. Kristen’s contact email is below.