GIP-62: Should GnosisDAO Sponsor Prode Markets?

[fnanni]

GIP-62: Should GnosisDAO Sponsor Prode Markets?

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title: GIP-62: Should GnosisDAO Sponsor Prode markets?
status: Phase-3
type: Funding
created: 2022-08-29

Simple Summary

Prode is a decentralized betting platform built using Reality.eth and Kleros and currently deployed on Gnosis Chain. Unlike other projects like Omen or Azuro where 1-question markets are created and supported by liquidity providers, Prode focuses on betting pools in which users bet on multiple outcomes and compete against each other for the highest prize. This is a very popular type of sports betting scheme that has been played across the world for many decades.

Prode was officially launched 1 month ago after 4 months of intense work and without any external funding. To bootstrap the first markets and kickoff adoption of the platform, the Gnosis DAO could sponsor the most attractive markets in exchange for some of the creator’s fee rights of the markets chosen. Additionally Gnosis DAO could provide funding to the Prode team to support the project’s development and advertising. In exchange for the funds, Prode commits to giving GnosisDAO 100k USD worth of governance tokens once the Prode token is released.

Motivation

1. Increase adoption of Gnosis Chain. We noticed that the onboarding of new users is an issue, because getting xDAI on Gnosis Chain for the first time is confusing and sometimes not very straightforward. There’s also a lot of competition among sidechains and L2s, and Gnosis Chain is not the most popular one.

2. Attract users and market creators to Prode. In the type of prediction markets Prode focuses on, users usually look for markets with potentially big prizes (a bit like a lottery). Initially, this is hard to achieve, because the dapp traffic is low and therefore there are no market creators advertising their market pools, and vice versa. One of the strategies to overcome this is to start creating markets ourselves and fund them with juicy prizes.

Specification

Total requested amount: 200k xDAI:

• 100k for sponsoring markets.

• 50k for the team.

• 50k for marketing.

Funds Allocation Details

Sponsor the following markets (100k xDAI total):

• FIFA World Cup Qatar 2022. 20k xDAI. Creator fees (5%) will be used to incentivize the referral program within this market.

• T20 Cricket World Cup 2022. 5k xDAI. Creator fees (5%) go to UBI Burner to support the UBI price and attract its community and supporters.

• F1 Grand Prix Japan & Brazil. 2.5k xDAI each. Creator fees (5%) go to GnosisDAO. Breakeven*: 50k xDAI each.

• League of Legends World Cup 2022. 5k xDAI. Creator fees (5%) go to GnosisDAO. Breakeven*: 100k xDAI.

• CS:GO BLAST Premier: World Final 2022. 5k xDAI. Creator fees (5%) go to a public good project TBD.

• Upcoming 30 weeks of the NBA. 15k xDAI evenly split into each week matches. Creator fees (5%) go to GnosisDAO. Breakeven*: 10k xDAI per market.

• Upcoming 30 matchdays of the English Premier League. 30k xDAI evenly split into each matchday market. Creator fees (5%) go to each subsequent matchday market.

• Upcoming 20 matchdays of the Argentinian football league. 5k xDAI evenly split into each matchday market. Creator fees (5%) go to UBI Burner to support the UBI price and attract its community and supporters.

• 5k xDAI will be converted to bet vouchers and distributed to active Proof of Humanity users instead of used to directly sponsor a chosen market. This will be important for a couple of reasons. First, it will signal what markets are preferred (at least by an active ethereum community). Second, it will bring activity and promotion to Prode. Last, it will help onboard Ethereum Mainnet users to Gnosis Chain.

• Similarly, 5k xDAI will be converted to bet vouchers and distributed to active bettors of Prode’s competitors, both from Gnosis Chain and other Chains.

*The breakeven point refers to the market pool size needed to recover the funds. It could be lower if significant royalties are generated or if other sponsors fund the market; it could be greater if a lot of users bet in the markets through referral links. A bet placed after entering the market through a referral link will split the creator fees in halves: 50% to creator and 50% to referral.

Team funding (50k xDAI). Although the team has been self-funding the project for the past 5 months and will continue to do so in the short term, this extra funding will allow the team to start working full-time on the project for the next 6 months. Prode is currently being developed by 3 devs from the Kleros community. Additionally, this funding would be enough to hire 2 interns for communication purposes and contract free-lancing design services for the front-end and Prode’s NFTs.

Marketing funding (50k xDAI). Sponsoring markets alone is not enough to attract users to Gnosis Chain and Prode. The 50k USD requested will be used as follows:

• ~15k xDAI will be used to partner with sports influencers/streamers/casters in order to promote Prode and its markets.

• ~15k xDAI will be spent in traditional online advertising services.

• Based on what is learned in the upcoming months, 20k xDAI will be used in 2023 Q1 to (1) sponsor strategic markets and (2) explore markets we haven’t considered yet.

PRODE Token

The Prode protocol generates fees from each market. The team is in the process of designing a governance token that will allow holders to manage the DAO’s funds and control some protocol parameters. Once the token is released, GnosisDAO will receive 100k USD worth of PRODE tokens. The price taken into account to calculate the distribution will be equal to the cheapest price the tokens were sold at.

Rationale

Prode markets tackle a prediction market niche that is currently unattended in the blockchain industry. On the other hand, most decentralized prediction markets platforms, which focus on single-event predictions, struggle to sufficiently incentivize liquidity providers. Prode markets don’t have this problem, because the prize pool is bootstrapped from bettors themselves. However, until Prode gets more popular and its market creator-bettor ecosystem consolidates, sponsoring key markets could help adoption greatly.

A bettor who is not familiar with Gnosis Chain and Prode might not be attracted to the platform if the prize pools are low. If attractive markets such as the FIFA World Cup market gets a 25k USD funding, this would be a huge incentive for new users to join the network.

2022 Q4 will be a time of very popular sport events. This is a huge opportunity to gain traction. Some examples:

• According to FIFA ~150 bn USD worth of bets were made during the World Cup 2018 held in Russia. We should try to capture some of this for the World Cup 2022.

• Cricket is a very popular sport in Australia, India, Pakistan and England, which constitute very big and diverse markets. In october the cricket world cup will happen.

• Esports have experienced a huge growth in the last decade and so have prizes and bets around its tournaments. People following esports - usually young, techy gamers - are a good fit for crypto/online bets, because they will deal better with the UX friction dapps have. There are some big tournaments coming and we should make the most of them.

• While big events attract a lot of users, they happen only a few times a year at most. It’s also important to incentivize smaller markets that can be played on a regular basis and thus create engagement in the long run. Football leagues are a good opportunity to test this out.

Implementation

Once this GIP gets approved, the ownership of the creator contracts of the markets mentioned above will be transferred to the GnosisDAO address on Gnosis Chain. Afterwards, either Prode’s team can administer the market funding on behalf of GnosisDAO or the GnosisDAO can fund the markets directly by calling fundMarket(“”){value: sponsoredValue} in each market. These operational details will be discussed with the Karpatkey DAO team.

5% of the pools’ xDAI, including the funds sponsored, will be rewarded to the creator address when the market closes. Additionally, if bets positions get traded in a secondary market that supports royalties, the creator address (GnosisDAO or UBI Burner) will receive 1.5% of trades as royalties.

The 100k USD requested for development and marketing will be sent to the Prode’s multisig, which will administer the funds, on Gnosis Chain: 0x0029ec18568F96AFE25Ea289Dac6c4703868924d.

Relevant links

• App: https://prode.eth.limo
• prodeapp · GitHub
• Twitter: https://twitter.com/prode_eth

Poll: Snapshot

[clesaege]

First of all I think the work done is cool and that Gnosis was created as a prediction market project so should be funding predictions markets. Maybe application specific ones (like Prode) may be the ones which would be the most successful.

Here are the few modifications I would like to see

@fnanni

Sponsor the following markets (100k xDAI total):

It may be a bit tedious for GnosisDAO to have to sponsor individual markets, so I would propose to give this money to a multisig to be managed on behalf of the DAO with the DAO having the possibility of withdrawing at any possible (when funds are not in markets) time.

@fnanni

• 50k for the team.
• 50k for marketing.

A funding of 100k$ isn’t much, but here it’s just asked as a pure grant. The DAO should be able to get something out of it. I don’t know the specific of the Prode business model but the DAO should get some of it. For example, if there is a token to be created, Prode could give some to the DAO.
It could start with a first 100k$ funding rounding round and then ask for more while giving more (tokens?) to GnosisDAO.

[DefiFoodie]

Hi, the 100k USD could be paid in any of the following stablecoins? XDAI, USDC, USDT

[fnanni]

Thanks a lot for the comment and sorry for the late reply!

@clesaege

It may be a bit tedious for GnosisDAO to have to sponsor individual markets, so I would propose to give this money to a multisig to be managed on behalf of the DAO with the DAO having the possibility of withdrawing at any possible (when funds are not in markets) time.

I’m not sure if you mean a multisig managed by trusted members of GnosisDAO or a multisig managed by Prode. Can you clarify? Either way, I agree with you.

@clesaege

with the DAO having the possibility of withdrawing at any possible (when funds are not in markets) time.

Withdrawing trustlessly? What tool can we use for that?

@clesaege

A funding of 100k$ isn’t much, but here it’s just asked as a pure grant. The DAO should be able to get something out of it. I don’t know the specific of the Prode business model but the DAO should get some of it. For example, if there is a token to be created, Prode could give some to the DAO.
It could start with a first 100k$ funding rounding round and then ask for more while giving more (tokens?) to GnosisDAO.

Prode gets a small fee out of each market pool, currently set at 1.5%. That’s the main expected income, although we are working on features that might bring extra revenue to market creators and to the protocol. Minting a governance token that among other things gives access to Prode’s protocol revenue is something that is being discussed and might or might not happen in the near future. Therefore, we can’t offer right now any tokens to GnosisDAO, but we would be happy to prioritize GnosisDAO when that happens.

Note that the 50k xDAI requested for marketing will be used to attract users to Gnosis Chain and in particular to the markets that GnosisDAO will own.

[fnanni]

@DefiFoodie

Hi, the 100k USD could be paid in any of the following stablecoins? XDAI, USDC, USDT

xDAI preferably, but USDC, USDT or ETH equivalent is ok too.

What’s the address of gnosis DAO/treasury on Gnosis Chain? If GnosisDAO is going to sponsor some markets we need to assign the fees receiver to that address.

[sisedieltan]

@fnanni

Withdrawing trustlessly? What tool can we use for that?

smart contract?

On the other hand I don’t see why Gnosis should spend 200k on a new venture?

Protocols should take their own risk to establish themselves first, and then maybe ask for money for incentives etc. I don’t see why Gnosis should pay the team for the work they done when the team has actually built the protocol on their own terms. Gnosis DAO has not contracted any team to build this and therefore has no responsibility for it.

Protocols should first take on their own risk and try to grow first. If DAO sees potential, then it may make sense to help. Otherwise everyone can keep building or forking projects and come here to take 200k$ and then move on to the next chapter. I am against sponsoring this project before it proves it fills a void and draws attention to be a relevant betting platform.

[kokialgo]

Thank you for the feedback, we appreciate it.

As it was mentioned in the motivation section, after the launch of the protocol the biggest stopper that we have found is the on-boarding of users to Gnosis Chain. Besides it’s know that for non-crypto users that learning about wallets, blockchain, transactions etc it’s hard, but in top of that we’ve found since the launch a month ago, that for some crypto users that only have used Ethereum (or another blockchain), bridging to gnosis and learn the basics (that uses xdai, etc) it’s not straight forward, even a lot of users have no idea that gnosis chain exists, this is just an example.

In my experience doing tutorials and dashboards for other protocols, it’s quite important this on-boarding and educate the users of the importance of the decentralization, how the things are connected, and helping them in the first steps. I’m pretty confident that in the GnosisDAO have this same concern, if not this chain should have more attraction with the benefits that has. We are asking this grant to work on those topics. 100 k are going directly to fund markets, to attract users to Prode of course, but also to bring more users to the GnosisChain. 50 k are going to be used as marketing, where 20k are going to be used as funding of markets, again to attract users to the chain and keep them using it, and 30 k for advertising (gnosisChain win with this funds too). The 50k that the team is asking for, is to keep working in the product development and improving the UX of users, to bring new products and keep attracting users into the chain.

We consider that the GnosisDAO can win a lot giving this grant to Prode. With what we have built we are showing that we are here to create a great product, following the ethics of decentralization that gnosis pursue. We can help in the onboarding of new users, keep integrating other protocols (we are using right now Kleros, Reality and UBIBurner). We are going to integrate bridges to improve the UX of the users and doing smooth their transition to use the gnosis chain. We can set the fees of markets to help public good projects (as is used ubiburner right now).

This grant will help to increase the amount of users that the chain has, and this will improve all the ecosystem of the gnosis chain

[fnanni]

Because of the feedback received and after some thought, the team decided to improve some parts of the proposal. TL,DR:

• GnosisDAO will receive 100k USD worth of PRODE tokens once it is released.
• Minor changes to the way some markets are going to be sponsored and promoted.

[fnanni]

The proposal can now be voted Snapshot.

[fnanni]

Hi everyone! Although this proposal didn’t gain enough traction, I’d like to share a brief update on Prode with you.

Prode has been live for 4 months now. During this time, we’ve experimented with different types of markets (esports, F1, football leagues, world cup and even DAO politics, to name a few). Check for example this world cup market that is currently being resolved and where 78 bettors are contesting the highest prize.

We’ve been working on a few features too. Previously, there was a 7-day challenge period before winners could claim their prizes. Now, they can claim them immediately. Also, new betting modes are coming soon ;). Prode has also been experimenting with blockchain-based advertising models (read more here).

Our community has been growing and we even had the chance to onboard users IRL to Prode and Gnosis Chain at two events that we co-hosted with Kleros, one in Lisbon and another one in Buenos Aires.

At the moment, Prode has a couple of world cup markets open to bets. I’d like to invite you to try them out and join our community. There are also a few days left until this world cup raffle ends. Make sure to participate :).