Hashkey Grant Application - Rhombus Protocol

[RhombusIOLabs]

Grant Type

Session 1

Email

rhombus@rhombusprotocol.io

Telegram

https://t.me/RhombusProtocol

X/Twitter Handle

https://x.com/Rhombus_io

Discord/Community

N/A

Previous Application

N/A

Code Audit

https://github.com/rhombusprotocol/rhombus-audits

Project Information

1. Project Description and Objectives
   Rhombus is a decentralized, non-custodial liquidity protocol designed to unlock the untapped potential of assets within the HashKey Network. By enabling users to supply, borrow, and earn interest on crypto assets, Rhombus aims to enhance the capital efficiency of the HashKey ecosystem.

Objectives:
Launch Lending and Borrowing Services: Introduce a decentralized liquidity market that allows users to supply and borrow assets natively on HashKey Network.
Expand Web3 Accessibility: Provide users with seamless opportunities to leverage their assets without selling them, driving liquidity and ecosystem activity.
Develop CDP Stablecoin: Create a decentralized stablecoin that users can mint by collateralizing their assets, enabling diverse applications across the HashKey ecosystem, such as trading, yield farming, and other DeFi opportunities.

2. Success Potential
   Market Demand:
   HashKey Network currently lacks native lending protocols, leaving a gap in capital efficiency for its users. The increasing adoption of blockchain technology and the anticipated influx of users and assets into the Web3 ecosystem position Rhombus to address this unmet demand effectively.

Technical Feasibility:
Rhombus leverages state-of-the-art blockchain architecture to ensure scalability, security, and interoperability within the HashKey ecosystem.

Team Capability:
Our experienced team of blockchain developers and DeFi strategists has a proven track record of delivering secure and innovative decentralized applications.

3. Mission Alignment
   Rhombus Protocol is aligned with HashKey's core goals:

Bridging Web3 and Real-World Economies: Rhombus enables users to utilize blockchain-based assets efficiently, fostering practical financial use cases.
Driving Blockchain Mass Adoption: By introducing user-friendly borrowing and lending services, Rhombus empowers HashKey Network users to explore the potential of decentralized finance.
Creating an Inclusive Financial System: Rhombus makes financial services more accessible to users worldwide, regardless of location or traditional financial barriers.
Comprehensive Web3 Ecosystem: Rhombus enhances the ecosystem by enabling secure, scalable, and interoperable liquidity services directly on HashKey Network.

4. Innovation
   Native Lending Protocol for HashKey Network: Rhombus introduces a groundbreaking lending platform to the HashKey ecosystem, filling a crucial gap.
   CDP Stablecoin: A native stablecoin designed for HashKey users, enabling low-cost borrowing and versatile DeFi applications.
   Effortless Leverage: The upcoming ‘Hook’ feature will allow users to efficiently leverage correlated assets, maximizing returns while maintaining ecosystem liquidity.

5. Is it open source?
   Yes all the codes are and will be verified

6. Free or fee-based for end users?
   There's no fee for supply and borrow but borrowers will need to pay borrow yield while suppliers will earn supply yield derived from borrow yield.

7. Interoperability with HashKey Ecosystem
   Rhombus is built to seamlessly integrate with the HashKey ecosystem:

Native Deployment: Rhombus will operate directly on HashKey's Layer 2 chain, ensuring low latency and high scalability.
Asset Utilization: The protocol will support assets native to HashKey Network, driving utility and liquidity for the ecosystem.
Future Compatibility: Rhombus is designed to work with other applications on HashKey Network, enabling users to engage with DeFi, NFT marketplaces, and beyond.

Market Analysis

1. Competitors and Differentiation
   Competitors:
   Any of existing money market that will launch on HashKey network.

Differentiation:
Native Focus: Rhombus is uniquely tailored for the HashKey ecosystem, offering optimized features and seamless interoperability.
Innovation: The ‘Hook’ feature and CDP stablecoin set Rhombus apart by addressing specific needs within the HashKey ecosystem.
Scalability and Security: Built on HashKey’s secure and open Layer 2 network, Rhombus ensures fast transactions and robust protection for users.

2. Current User Base and Estimation Method
   Current User Base:
   As Rhombus is in the early stages, our user base is limited to geographically and early adopters.

Estimation Method:
HashKey Ecosystem Analysis: Estimate user acquisition potential by analyzing the current user base of HashKey Exchange and ecosystem participants.
Market Trends: Leverage data on blockchain adoption and DeFi growth to forecast user interest and engagement.
Community Involvement: Drive user growth through community campaigns, partnerships, and incentives for early adopters.

Recipient Address

0x871bEd24365A26e4F99926abea41EB86cF2FeD60

Budget and Plan

1. Grant Size and Justification
   Requested Grant Size: $500,000

Justification:

Development and Deployment (40% - $200,000):
Enhance Rhombus' functionality to seamlessly operate on HashKey Chain, including full integration with HashKey infrastructure and scalable smart contract optimization.

Deploy lending and borrowing functionalities to support the HashKey ecosystem.

Liquidity Incentives (30% - $150,000):
Establish initial liquidity pools and reward users for participating in the HashKey lending ecosystem. This will include user onboarding rewards and incentivizing early liquidity providers.

Marketing and User Acquisition (20% - $100,000):
Targeted campaigns to onboard new users from HashKey's ecosystem through airdrops, workshops, and co-branded events.

Operations and Audits (10% - $50,000):
Cover operational costs, including rigorous third-party audits to ensure the security and reliability of the Rhombus platform on HashKey Chain.

2. Project Execution Plan (Roadmap)

Phase 1: Integration and Deployment (0-3 Months)

Integrate Rhombus Protocol with HashKey Chain.
Conduct internal testing and finalize smart contract deployment.
Deploy a liquidity incentive program targeting HashKey Chain users.

Phase 2: User Onboarding and Ecosystem Growth (3-6 Months)

Launch Rhombus' lending and borrowing platform on HashKey Chain Mainnet.
Initiate marketing campaigns including trading competitions, airdrops, and educational workshops.
Establish partnerships with key HashKey ecosystem projects.

Phase 3: Scaling and Adoption (6-12 Months)

Expand liquidity pools to include more assets supported by the HashKey ecosystem.
Launch advanced features, such as collateral swapping (Switch) and the Hook leverage vault.
Begin development of the Rhombus CDP stablecoin to enhance ecosystem utility and user adoption.

3. Token Distribution (Percentages and Initiatives)

Liquidity Rewards (60%):
Incentivize early adopters and liquidity providers on HashKey Chain.

Development and Ecosystem Growth (20%):
Fund partnerships, platform development, and HashKey ecosystem integrations.

Marketing and User Acquisition (10%):
Support user onboarding initiatives, including educational campaigns and community engagement activities.

Reserve Fund (10%):
Ensure long-term sustainability and address unforeseen challenges.

4. Token Distribution Timeline

Q3 2025:
Distribute 25% of tokens to support initial liquidity rewards and marketing efforts.

Q3 2025 - Q3 2028:
Gradual distribution of 40% of tokens for ecosystem partnerships, user acquisition, and platform enhancements.

Q4 2025+:
Remaining 35% allocated to ongoing rewards, platform scaling, and community-driven initiatives.

5. Post-Incentive Sustainability
   Rhombus aims to ensure sustainability beyond initial incentives through:

Revenue Streams:
Proportional fees from borrow - supply yield margin:
including Hook leverage vaults.

Value-Added Features:
CDP stablecoin minting with low borrowing costs.
Switch feature for direct token or collateral swaps within HashKey's ecosystem.

Partnership-Driven Growth:
Collaborations with HashKey Chain projects to drive adoption and liquidity.

Staking and Governance:
Introduce staking rewards to encourage long-term token holding and governance participation.

6. Additional Accountability Info

Smart Contract Addresses:
Rhombus will ensure transparency by sharing all deployed smart contract addresses and audit reports on HashKey Chain.

Wallet Addresses:
All associated wallets will be disclosed for tracking liquidity rewards and operational funds.

Audit Transparency:
Engage third-party auditors for rigorous smart contract audits and publish reports for community review.

Hashkey Relationship

1. Problem Solved for HashKey

Enhancing Capital Efficiency
Rhombus addresses the lack of a native lending and borrowing protocol on the HashKey network, solving the inefficiencies in utilizing idle digital assets. By introducing Rhombus, users can leverage their holdings instead of letting them remain dormant, thereby unlocking liquidity and maximizing asset productivity.

Bridging DeFi Use Cases
HashKey currently lacks robust DeFi tools for leveraging assets, leading to limited financial use cases. Rhombus solves this by enabling over-collateralized borrowing, introducing innovative DeFi mechanisms like hooks for correlated assets, and paving the way for stablecoin integrations.

Driving On-Chain Activity
The absence of a lending platform on HashKey results in fewer on-chain activities. Rhombus brings highly demanded DeFi functionalities that will generate consistent transaction volume, increase TVL (Total Value Locked), and stimulate ecosystem engagement.

2. Value Proposition

For HashKey Ecosystem:

Asset Liquidity: Rhombus activates idle capital within the HashKey ecosystem by allowing assets to be borrowed and lent seamlessly.

Ecosystem Utility Expansion: Introducing a DeFi protocol improves HashKey’s usability and incentivizes both individual users and institutions to join the network.

Enhanced Token Utility: Users of Rhombus can leverage HashKey tokens within the lending and borrowing ecosystem, driving their utility and demand.

For Users:

Permissionless Lending: Users can access a non-custodial, transparent lending platform, enabling them to unlock the potential of their assets.

Lower Borrowing Costs: Rhombus offers competitive borrowing rates, encouraging participation in its lending pools.

Future Stablecoin Integration: Rhombus aims to introduce a CDP (Collateralized Debt Position) stablecoin, giving HashKey users a powerful tool for leveraging their assets within the ecosystem.

3. Growth Potential for HashKey

Increased TVL: The introduction of lending and borrowing will significantly boost TVL by providing incentives for users to deposit assets into the HashKey ecosystem.

Expanded User Base: Rhombus will attract DeFi users from other chains seeking a competitive and feature-rich lending platform, driving adoption.

Institutional Use Cases: By supporting CDP stablecoins and advanced financial products, Rhombus positions HashKey as a leader in institutional-grade DeFi tools.

Ecosystem Engagement: Lending pools and hooks for correlated assets will increase on-chain activity, catalyzing further network effects.

Sustainable Adoption: With low fees and innovative financial tools, Rhombus aligns with HashKey's vision of providing scalable and inclusive blockchain solutions.

4. Commitment to Building on HashKey

Seamless Integration: Rhombus is committed to fully deploying its lending protocol on the HashKey network, leveraging the network’s infrastructure to optimize performance.

Alignment with Vision: Rhombus aligns with HashKey's goal of bridging the gap between Web3 and real-world economies by providing financial primitives that enable broader adoption of blockchain technology.

Long-Term Collaboration: Rhombus will actively participate in HashKey’s initiatives, such as co-hosting community events, offering grants for developers to build around the protocol, and integrating with other projects in the ecosystem.

Transparency and Governance: All smart contracts will be audited, open-sourced, and transparent, ensuring security and trust within the HashKey community.

5. Deployment Status

Current Stage: Rhombus is already in operation on Kaia network, so it's ready to deploy on HashKey netowork promptly. We will need to prepare some more additional features such as Hook and native token.

Technical Preparation: Rhombus’ architecture is fully compatible with the HashKey network, ensuring seamless integration and scalability.

Milestones

Upcoming Milestones:

Q1 2025: Launch of the Rhombus protocol on the HashKey testnet for internal testing and community feedback. As soon as the mainnet launches, Rhombus will deploy the smart contracts promptly. Onboarding of early users through targeted campaigns and partnerships within the HashKey ecosystem.

Q2 2025: Mainnet deployment with additional features, hooks for correlated assets and initial CDP stablecoin functionality.

Q3 2025: Proceed TGE and airdrop

Achievements to Date: Successfully under operation on other EVM-compatible networks, demonstrating security, scalability, and reliability. This positions Rhombus for a rapid and efficient launch on HashKey.
By addressing these points, Rhombus aligns itself as a transformative project within the HashKey ecosystem, driving growth, utility, and innovation.

Terms Confirmation

• I confirm that all information provided is true and accurate
• I understand and agree to comply with the grant policies
• I understand the KYC requirements
• I confirm token distribution complies with legal requirements

[SpectreMercury]

Thank you for your comprehensive grant application and for sharing your vision for a lending protocol on HashKey Network. After careful review, we regret to inform you that we are unable to approve your grant request at this time.

Our decision is based on several key considerations:

Market Differentiation & Innovation:

• The DeFi lending space is already saturated with mature solutions and established protocols
• The proposed features, including the Hook functionality and CDP stablecoin, do not present sufficient innovative elements to distinguish the project
• We do not see compelling unique value propositions that would drive sustainable user adoption

Financial & Development Concerns:

• The requested grant amount of $500,000 appears high relative to the project scope
• The 40% allocation for development seems excessive, particularly given the availability of existing open-source lending protocol implementations
• The token distribution plan allocating 60% to liquidity mining rewards raises sustainability concerns about long-term protocol health

Business Model:

• The revenue model relies heavily on lending-borrowing yield spreads
• The lack of diversified income streams presents significant risks to long-term sustainability

We encourage you to consider:

1. Developing more innovative features that clearly differentiate your protocol
2. Optimizing the development budget by leveraging existing open-source solutions
3. Designing a more sustainable tokenomics model with reduced reliance on incentives
4. Diversifying revenue streams beyond traditional lending spreads

We welcome you to submit a revised application addressing these concerns in the future.