RFC | MAGIC Fast Bridging Support

I am posting on behalf of TreasureDAO, a leading, community led gaming ecosystem on Arbitrum. Treasure and Hop Protocol have a good history of alignment, with Hop one of the primary bridging services we recommend our community members to use when bridging MAGIC to Abitrum One. We now look to extend this relationship through a pilot for fast bridging MAGIC between Arbitrum One and Arbitrum Nova.

Summary:

This is a proposal for Hop Protocol to offer fast bridging support for MAGIC to/from Arbitrum Nova and ETH L1.

The Treasure Council has been ratified via to commit seeding liquidity for bonders on ETH L1, Arbitrum One and Arbitrum Nova to facilitate the process via TIP-27 (Snapshot)

Rationale:

Treasure is the largest NFT and gaming protocol by transactions and volume on Arbitrum One, and has been one of the most used dApps on Arbitrum since the rollup first launched.

Treasure originally launched on ETH L1 in September 2021 and migrated all products / services to Arbitrum One from late 2021. Prior to the launch of Arbitrum Nova in mid 2022, there has been no meaningful reason to bridge MAGIC - Treasure’s native token - to another chain. Nova is Arbitrum’s social and gaming centric chain, which is distinct and entirely separate from Arbitrum One. We anticipate growing adoption of Nova - and games using MAGIC on Nova - as our ecosystem scales and infrastructure and tooling matures.

Currently, there exists no direct bridge from Arbitrum One to Arbitrum Nova. Users must bridge MAGIC from Abitrum One via ETH L1 to migrate. Due to the 7 day finality, users bridging from Arbitrum One would be subject to considerable delay and significant user friction. This is in conflict with our core design principles and current Arbitrum One onboarding experience where we are listed on all major CEX, have significant depth on SushiSwap and have direct fiat onramp via Moonpay.

Using Hop to quickly bridge MAGIC between Abitrum One and Arbitrum Nova via ETH L1 would greatly improve UX, and would be the only meaningful bridging solution between these chains. As such, Hop would acquire the majority of bridging volume once MAGIC enabled games go live on Arbitrum Nova. Treasure’s DAO and community is in full support of this initiative, ratifying use of MAGIC and ETH to be used in Hop’s fast bridging bonder.

Specification:

  • Roll out bridging support for MAGIC on Hop to/from Arbitrum Nova, L1 and Arbitrum One
  • Seed bonders on L1, Arbitrum One and Arbitrum Nova with 1M initial MAGIC and ETH from the Treasure Treasury and Liquidity Pools.
    • MAGIC to be split indicatively 500k / 250k / 250k across ETH L1 / One / Nova (final split will be made closer to the point of launch based on current demand)
  • Seed MAGIC / hMAGIC LP on Hop Protocol’s StableSwap AMM on Nova and One
  • Hop Protocol provide ~12k HOP per month across the two pools as incentives to the community to seed hMAGIC<>MAGIC liquidity to bolster the 500k MAGIC injected directly from TreasureDAO
    • The HOP incentives are designed to drive roughly $270k of additional MAGIC liquidity to the AMMs if rates normalize around 8%

Notes:

*The primary ecosystem for Treasure and the MAGIC token is Arbitrum One - having been initially launched and migrated from ETH L1. Arbitrum Nova - a chain designed for social and gaming use cases - is being explored as we anticipate increasing demand for MAGIC on Nova over time. No other chain support will be requested at this time. The timing of the GTM will be aligned with relevant game / product launches

*The amount of MAGIC that will be used for incentives is to be tested and increased incrementally to achieve optimal results in light of bonder liquidity utilization.

3 Likes

This is a really exciting partnership not just for the MAGIC support, but also because I agree that the Abitrum Nova bridge experience is not yet where it needs to be. Hop is uniquely positioned to address this and I believe work has already started on doing so. The support from the TreasureDAO community is also great to see as is the MAGIC earmarked for bonder and LP liquidity.

My only note is that I continue to be skeptical about the benefits to Hop of providing HOP incentives. Not just because I feel like we should expect the market incentives to naturally solve for this (where demand for liquidity will raise the APR and attract more LPs), but also because I think making a habit out of this for each new token added will quickly become a meaningful expense. 15¢ * 12k HOP * 12 months is an annual expense of $21600. This certainly won’t break the bank, but another 3 protocols requesting the same quickly becomes a non-trivial expense for potentially unclear returns.

This all said, I think Hop would benefit greatly from this partnership and I would welcome the addition of MAGIC.

1 Like

I think you bring up a fair point on expenses. Both from the cost item you brought up, but I’d also add ‘fairness’ as more projects join HOP. Is there an outstanding list of currently running HOP token outflows somewhere? If not, it would be a good resource for future decisions on proposals like this.

Otherwise, to comment on the main RFC. I am not really familiar with Treasure, but from the description in the Rationale section and other members of HOP’s comments, I would be for it. I am all for adding tokens as opportunities arise.

1 Like

I would vote for adding MAGIC but from a HOP bridging volume perspective, should we not be prioritizing DAI or ETH first or at least in parallel? Perhaps our new Arbitrum ambassadors can look into the viability of this.

It’s a good point but I don’t think up to the ambassadors as much as the core team and broader community. Nova supports ETH and — from what I could tell on their bridge — DAI, so it seems like the process for this would be a Snapshot if support isn’t already being planned.

Adding fast bridging support for MAGIC would be a great step towards contributing to Hop bridging volume, but like @max-andrew pointed out, the expense from the Hop side is difficult to justify, and it is becoming increasingly difficult to do this for every token we add support for.

I propose designing a methodology to determine which cases it would be worth it for the Hop DAO to provide Hop Incentives. Long term, this current practice would not be sustainable.

For the next steps, I believe we should support MAGIC, but hold off on adding Hop Incentives for any asset without designing a methodology.

3 Likes

Given Hop support for Nova has passed already a while back (Snapshot), we could launch ETH in parallel with MAGIC. It would be good to launch with some HOP incentives for the ETH AMM on Nova though since no one is seeding that pool though but that needs a new proposal.

@max-andrew @Bob-Rossi @Kene_StableLab and others, given the discussion around HOP incentives on the community call, do you have any thoughts on how this should proceed to Snapshot?

No new thoughts and after the discussion I’m happy to support it as is. Let me know if there’s anything I can help do to help bring this to a vote @Gaarp

I came in at the back-half of the call, I may have missed parts of the discussion in the beginning… but I caught the discussion on HOP incentives at the end.

Specific to this RFC - I support as stands, but if others push to adjust the HOP incentives (reduce / eliminate / set an end date too) I would vote ‘For’ in that case as well. I think realistically the main goal should be to get projects on the HOP protocol, so I’m not going to blow up this type of value add over should we provide X or Y HOP. I also do think credit is due to MAGIC for bringing their own incentives to the table as well, and I’ve been more ready to show support for projects that do this in general. If I’m not mistaken the 12k HOP per month is the same rate as rETH (who also brought their own capital to the project), so it’s not an unreasonable amount given that was passed.

Forward-thinking, I do believe that some type of methodology for HOP incentives is a great idea. So I look forward to discussion on what that looks like. I think this and the rETH bridge will be a good starting basis for the discussions.

I do acknowledge that idea is being born out of this specific RFC. So I don’t necessarily want to ‘punish’ them for happening to be the protocol that triggered the discussion. Hench why I’m open to support as presented. One of my thoughts is if these incentives should have a time limit, as I think the long term goal is use these subsidies early but ween off them as HOP matures. But with the rETH bridge already passed without one I’d hate to create that ideological split among two similiar HIPs and tack that on to this Snapshot.

1 Like

Well then, no time to waste: Snapshot is up for voting. This RFC is now HIP-29.

I have a few open questions, but none that get in the way of me voting yes to the proposal in its current form: I think this is the first token to not explicitly support all possible chains through Hop? Are there any implications to this we should consider? What is the timeline of Nova support from the previous general vote of that chain? Otherwise, I like the recent trend of communities with similar values coming to Hop for support like this.

1 Like

I am not familiar with MAGIC or TreasureDAO so I can’t speak as to the value of this proposal.

But why should HOP take on this expense? Are we supposed to spend incentives for every new token/bridge we add?

This does not sound scalable.

At the moment I do not think I can vote positively here.

But everyone else seem to vote positevely so what am I missing?

There was some discussion around the formation of an incentives committee to help evaluate these decisions on the last community call.

In strictly my own opinion and speaking generally, incentives make sense when bootstrapping new markets or in immature markets where incentives can help grow or maintain marketshare until the market matures. There are many cases of this working well but also many cases of it not and an incentive management committee could help manage where to draw the line.

I also wanted to flag an added benefit of further decentralizing the HOP token supply and expanding the HOP token holder base. Treasure is one the largest if not the largest L2 NFT communities. Getting some HOP into the hands of MAGIC holders that provide liquidity for the bridge could help further align the two communities on top of the existing common incentive to drive L2 adoption.

Hope this provides some context but encourage anyone that wants to make a case for the other side to chime in here too.

Thank you Chris for chiming in.

As for me I am still not convinced and since I am not really knowledgeable about the protocol I will abstain to signal lack of ability to reach an informed decision in the alloted time but still not wanting to block it.

I voted For to this proposal, in the spirit of promoting and advancing cooperation between Hop and TreasureDAO.