Basic Information
Volmex Labs is submitting this proposal to integrate our industry-leading volatility indices — BVIV and EVIV — with Hydration, an up-and-coming Polkadot-native decentralized perpetual futures exchange, poised for rapid expansion. Please review this past episode of AAG with Jakub from Hydration discussing the value Volmex’s products would bring the ecosystem, as well as some compelling ideas around how BVIV could be used to diversify and strengthen the Polkadot treasury. You can also view the previous proposal here. Community feedback from the first proposal was very helpful and has been addressed and incorporated in this resubmission.
Thank you all for your support of this valuable piece of Polkadot’s burgeoning DeFi ecosystem!
Volmex recently secured BVIV and EVIV perpetual market integration licensing deals with five of the top fifteen DEXs by volume in DeFi, and we are in the process of integrating BVIV and EVIV indices as tradable products on North America’s largest and most trusted centralized exchange, in addition to a number of major, reputable CEXs. The BVIV and EVIV indices have been live with 99.999% uptime for three years, with fully built-out and optimized best-in-class methodologies.
To power this new Polkadot integration in partnership with Transistor, we are requesting $425,000 USDC to fund a comprehensive three-year initiative covering the initial integration, ongoing maintenance, the integration of our recently launched Prime Rate Indices, legal compliance, and robust go-to-market campaigns. This integration addresses skyrocketing demand for simple, straightforward, powerful risk management and speculation solutions. By introducing Volmex indices to Polkadot, we aim to enhance Polkadot’s overall DeFi capabilities and catalyze a DeFi renaissance in Polkadot’s ecosystem.
Executive Summary
Volmex stands as the first and foremost creator of crypto volatility benchmarks, namely the Bitcoin Volmex Implied Volatility (BVIV) and Ethereum Volmex Implied Volatility (EVIV) Indices. Volmex’s indices provide retail and institutional participants alike with clear, easily tradable products, like BVIV and EVIV perpetuals, that distill bitcoin and ether volatility into a simple long/short framework, abstracting away the complexity that is typically associated with trading crypto derivatives. BTC and ETH are the largest and most widely held assets in crypto by a large margin, and Volmex's BVIV and EVIV perpetuals serve as clean, simple hedging and speculation instruments for BTC and ETH holders, thereby bringing unique value to the Polkadot ecosystem and magnifying Polkadot’s DeFi presence.
Project Scope
In collaboration with Hydration and Transistor, we will first focus on integrating Volmex’s bitcoin and ethereum volatility indices (BVIV, EVIV) into Polkadot, aiming to create smooth perpetual markets for these products. Over time, we also plan to introduce Volmex’s Prime Rate Indices (e.g., BVPR, BLDR, etc.) once the foundation is established. The scope of this proposal includes:
Smart Contract Development and Integration
- Integrate BVIV and EVIV perpetual markets into Polkadot-based exchanges, beginning with Hydration.
- Plan and prepare future expansion for Prime Rate Indices, ensuring our infrastructure can handle interest-rate-based products down the road.
Platform-Specific Adaptations
- Match each DEX’s liquidity design, fee models, and user flows, so that BVIV and EVIV perpetuals function seamlessly from day one.
- Incorporate circuit-breakers and other safeguards to address fast-moving volatility scenarios.
Advanced Liquidity Management
- Launch liquidity pools and incentive programs to encourage robust market depth, limiting slippage and offering reliable price discovery.
- Offer strategic rewards (e.g., trading competitions, yield enhancements) to maintain a steady influx of capital.
Security and Audit Process
- Keep a close eye on performance in real-time, enabling immediate patching if any vulnerabilities emerge.
- Conduct in-depth audits, from initial code checks through testnet deployments, to minimize risk and bolster user confidence.
By rolling out BVIV and EVIV first and later adding Prime Rate Indices, Polkadot traders will enjoy top-tier volatility hedging products while anticipating further rate-oriented tools in the future.
Budget Allocation and Justification
Our $425,000 USDC budget covers the entire three-year lifecycle of this project, encompassing both initial integration and the subsequent operational phases:
Initial Integration | $225,000
- Smart Contract Engineering: Implementing BVIV and EVIV perpetuals on Polkadot, with forward-compatible design for Prime Rate Indices.
- Security & Audits: Multiple checkpoints to ensure secure and reliable contracts.
Maintenance & Technical Support | $100,000
- System Monitoring: Ongoing assessment of liquidity, transaction throughput, and contract stability.
- Performance Optimization: Regular improvements in response to user feedback and shifting market conditions.
Legal & Compliance | $50,000
- Legal Documentation: Drafting and periodically updating contracts, terms of service, and disclaimers.
- Regulatory Horizon Scanning: Engaging counsel across key jurisdictions to ensure future-proof compliance.
Go-to-Market Operations | $50,000
- User Outreach & Education: Development of tutorials, user guides, and marketing content.
- Adoption Campaigns & Partnerships: On-chain incentives, community-driven liquidity events, and brand co-marketing opportunities.
This budget distribution is structured to ensure a robust and secure launch, followed by thorough support and sustained growth throughout the Polkadot DeFi ecosystem.
Implementation Timeline and Methodology
Our plan spans nine months for the initial rollout, with the remainder of the three years dedicated to continuous upgrades and expansions:
Months 0–3: Foundation & Infrastructure
- Deploy BVIV and EVIV contracts in a Polkadot test environment.
- Begin initial audits and ready the system for mainnet integration.
Months 3–6: Parallel Integration
- Fine-tune perpetual markets on Hydration, applying a second wave of audits.
- Test real-world simulations before moving to full mainnet release.
Months 6–9: Public Launch & Optimization
- Officially roll out BVIV and EVIV perpetuals on mainnet, accompanied by user incentives and educational materials.
- Gather feedback, refine liquidity incentives, and monitor any unforeseen edge cases.
Year 1–Year 3: Maintenance & Feature Expansion
- Provide ongoing patching, upgrades, and performance reviews.
- Launch Prime Rate Indices when the community and market conditions signal readiness, potentially expanding to additional Polkadot parachains.
Team Expertise and Implementation Strategy
Volmex Labs
- Creators of BVIV and EVIV, recognized as the leading on-chain volatility indices.
- Track record of stable, well-audited integrations across multiple blockchains.
- The Volmex Team includes top-tier talent from traditional finance, crypto quant groups, and software powerhouses. The Volmex Labs team is composed of world-class talent from various crypto and traditional financial industry companies, including IMC Trading, Staked (acq. by Kraken), and more.
Transistor
- Specialized in Polkadot ecosystem development, with proven results integrating high-impact applications.
- Experience fostering collaboration among various parachains and ecosystem teams.
Both teams will coordinate closely to ensure an effective rollout, prioritizing user experience, security, and reliability.
Performance Metrics and Success Criteria
Technical Metrics
- Transaction Speed: <2 seconds finality across integrated parachains.
- System Uptime: Target 99.9% or better, with immediate alerts for any downtime events.
- Security Incidents: A strict zero-breach objective, with an emergency shutdown plan for contingencies.
Adoption Metrics
- Monthly Active Users (MAUs): Grow user-base steadily through targeted education and marketing.
- Liquidity Depth: Ensure deep liquidity and tight spreads through well-structured incentives and consistent user engagement.
- Cross-Chain Volume: Monitor flows between Hydration and other parachains, aiming to increase usage of volatility and prime rate instruments ecosystem-wide.
Risk Management Framework
We employ a layered risk management approach:
Technical Safeguards
- Comprehensive, iterative audits and code reviews at each deployment phase.
- Rapid-response protocol for any detected vulnerabilities.
Market Distribution
- Encourage stable liquidity inflows via phased incentives, avoiding sudden capital shifts that could destabilize markets.
- Aggressively support Hydration with the BVIV and EVIV perpetuals integration to ensure a frictionless launch process. Post-integration, actively monitor the integration and provide continued development support.
Regulatory Compliance
- Dedicated legal counsel examining multi-jurisdictional requirements.
- Ongoing dialogue with regulators and industry experts to preempt potential friction.
Reporting and Transparency Mechanisms
Prioritizing openness and accountability:
Scheduled Progress Updates
- Shared at major milestones, detailing development achievements, any notable issues, and next-phase plans.
Incident and Resolution Protocols
- Provide immediate notifications if security or technical issues appear, paired with a clear plan to mitigate the impact.
Financial Transparency
- Clear documentation of grant usage and allocations, available for community review, reinforcing trust with stakeholders.
Future Development Roadmap
Following the successful launch of BVIV and EVIV perpetuals, we intend to build further:
Prime Rate Indices Rollout
- Introduce interest-rate-based perpetuals (e.g., BVPR, BLDR) once the foundation of liquidity and user activity has matured.
- Employ a similar, audit-driven approach, ensuring security and usability remain paramount.
Factor ETF Indices
- Explore factor-based indices to provide more granular market exposures for advanced traders.
- Combine these new products with existing volatility instruments, creating an expansive, layered trading ecosystem.
Ongoing Volatility Index Methodology Enhancements
- Continue iterating on BVIV and EVIV products in response to market trends and community governance proposals.
- Explore expansions to additional Polkadot parachains to further decentralize liquidity and broaden user reach.
Contact and Support Infrastructure
For inquiries, feedback, or support:
- Engineering Inquiries
- General & Business Queries
- Community Channels
We remain committed to keeping lines of communication open and directly engaging with Polkadot stakeholders and end-users alike.
Supporting Documentation
Official Volmex Pages
Key Volmex Volatility Indices on TradingView
Prime Rate Indices
Announcements on X
Partnerships
Developer Resources
Hello,
Thx for this detailed proposal.
Could you indicate Transistor’s commission amount if there is any please?
It’s part of the expected transparency.
Could you explain the 50k $USD increase, what justified is compared to the previous proposal.
Thx in advance.