MFP #18: Enzyme referral program: Proposal to launch the first campaign

[oSaaT2]

Background:

The general idea for an Enzyme affiliate/referral program had been lightly brought up and supported in past Enzyme Council discussions (initially by Will Harborne) It was formalized and discussed with ENZIP 13 (https://github.com/enzymefinance/ENZIP/issues/13). Which resulted into MFP 17 (https://github.com/enzymefinance/MFP/issues/17) and its passing governance. The above has led to this current proposal.

Description of the project:

We propose to run a referral program in a 6-month campaign. After a few iterations and discussions with the team, the design chosen is as follows:

• Objective: introduce new vault owners to Enzyme
• How: by rewarding existing users for valid referrals
• Terms & Conditions: see "Guidelines & T&Cs" below with details on eligibility, payouts & restrictions, as well as disclaimer

Synergies/benefits to the Enzyme ecosystem

Key benefit: growth in number of vaults on the platform, leading to TVL growth (item further developed in MFP 17)

Token use

Users initiating valid referrals are eligible for rewards in MLN tokens (T&Cs apply):

• A) an immediate payout (success fee) upon creation of a vault (30 days later)
• B) possibly a bonus payment 6 months later - depending on the vault’s AUM level at that moment

Timeline

The design is ready. As we opted for a “low-tech” version, the implementation is ready as well. Upon a successful vote, the program can be launched within a few days. The program is designed as a 6-month campaign. As we’ve introduced a cap in the MLN funding for the program, the campaign could also end sooner.

Funding needs

For the 6-month campaign, we propose to set aside a budget of MLN 25,000 (about $500,000 at the average MLN price over the past 6 months) This figure has been derived from the following parameters & assumptions:

Each successful referral would result in the following outflows (cf. details in T&Cs): A) immediate rewards between $100 and $200

• amounts based on benchmark for customer acquisition costs and similar programs in fintech

B) a chance to get bonus rewards between $200 up to $1,000

• bonus levels set so that they don’t exceed what the vault would pay as protocol fees within the 6-month period.

We made some rough assumptions as to the number of participants: 10% of users making 2 referrals each, with 50% of referrals eligible for a bonus.

Team presentation

(Same as in MFP17)

• Projet coordinator = osaat
• Project sponsor at the Enzyme technical council = Avantgarde Finance
• Referent person at Avantgarde Tech = Mona El Isa

Contact information

Remarks on the program? please comment below Other questions about the project? TG: @ oSaaT2

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Draft for Guidelines & T&Cs // final version to be released at launch

Guidelines to participate (T&Cs below apply)

You have an organization or a person in mind who should be a vault owner? It could be someone on the treasury committee of a DAO (or its CFO), a manager looking to launch a fund… You only need to decide what option suits you best:

1. do you want to send them over to Avantgarde for onboarding (cf. “lite” in T&Cs)? → Put us in touch per email with the contact person Remember to mention your Enzyme wallet address to get your rewards

2. or you wish to help them create the vault directly (and be eligible for “full” referral)?
   → Let us know per email once the vault is created
   Remember to mention your Enzyme wallet address to get your rewards

Both for the rewards and the later bonus, there are minimum levels of AUM that the vault should reach to be eligible. Please check the full T&Cs below.

T&Cs:

Disclaimer

• We reserve the right to cancel, modify or terminate the Program at any time for any reasons.

Eligibility

• Referrer:
  • any user of the Enzyme platform (manager or depositor) can become a Referrer
  • the address must have been active on Enzyme up to 30 days prior to program launch
• New vault:
  • to be valid, a Referral must have led within 30 days to a minimum initial AUM of $10k (or equivalent value in tokens)
  • “lite” Referral = user sends a qualifying prospect to Avantgarde; onboarding handled by Avantgarde
  • “full” Referral = vault created directly by new owner, with the eventual assistance of Referrer
  • to be eligible for bonus payment (cf. bonus details below), 6 months after creation, new vault’s AUM must be at least $100k (or equivalent value in tokens)

Restrictions & limitations

• limit of 5 Referrals per user (address) per 30-day period
• program duration of 6 months (or earlier if budget cap is reached)
• global limit of 25,000 MLN allocated to the program

Payout(s)

for a valid Referral (cf. criteria in Eligibility & Restrictions above):

• (A) one-time payout as success fee
  • funds sent to Referrer’s address
  • paid 30 days after vault creation
  • paid in MLN tokens
  • using average MLN price over past 30 days to determine payout amount
  • for “lite Referral”, amount = $100 equivalent
  • for “full Referral”, amount = $200 equivalent
• (B) bonus payment, AUM-based
  • $100k < AUM < $500k ⇒ 100% bonus (of “full Referral”)
  • $500k < AUM < $1m ⇒ 200% bonus (of “full Referral”)
  • AUM > $1m ⇒ 500% bonus (of “full Referral”)
  • AUM < $100k ⇒ no bonus
  • funds sent to Referrer’s address
  • paid 180 days after vault creation
  • paid in MLN tokens
  • using average MLN price over past 30 days to determine payout amount

Other T&Cs

• Program monitoring: under responsibility of Enzyme Council, delegated to a Program manager

Workflow visualized (T&Cs apply)

[salis]

Might referrer eligibility also benefit from having created an Enzyme account to link their wallet address with an email address?

[plutoegg]

I think overall this is a simple but low risk way to test a referral scheme. I don't see any major risks, and think that it could begin straight away to test whether it is successful in bringing on new vault managers.

Suggestions (which could be for further iterations and tests, rather than the initial launch):

1. It is common for referees to get something in many referral schemes, instead of just the referrer. For example a $100 bonus for a new manager who reaches the $10k AUM threshold, as well as the referrer. This makes it much easier to convert the new person to try it out.
2. Given the nature of Enzyme I suspect that these reward and bonus amounts may be too low to be very effective. To become a vault owner and take on that responsibility, you have to be quite serious and devote a significant amount of time to it. My guess is that $100 to $200 will not be enough of a reward for people to spend the significant amount of time finding and convincing 'good' vault managers to try Enzyme. This is also true with with the max cap on the bonus amount of $1000.

I don't see either of these as a blocker to going ahead, but perhaps should be kept in mind when interpreting the results of the referral scheme over the next few months.

[oSaaT2]

Might referrer eligibility also benefit from having created an Enzyme account to link their wallet address with an email address?

Thank you @salis for this good point.

For the first campaign, we've decided not to add this as eligibility criteria (-> "keep it simple" + have a large(r) pool of referrers)

If at a later stage, changes are made to the front-end, eg. to integrate referral code(s), then having created an account could be helpful to manage one's referrals.

[oSaaT2]

I think overall this is a simple but low risk way to test a referral scheme. I don't see any major risks, and think that it could begin straight away to test whether it is successful in bringing on new vault managers.

Thanks a lot @plutoegg for taking the time to review the proposal and for this initial feedback. Simple and low-risk is exactly how we want it!

Suggestions (which could be for further iterations and tests, rather than the initial launch):

1. It is common for referees to get something in many referral schemes, instead of just the referrer. For example a $100 bonus for a new manager who reaches the $10k AUM threshold, as well as the referrer. This makes it much easier to convert the new person to try it out.

2. Given the nature of Enzyme I suspect that these reward and bonus amounts may be too low to be very effective. To become a vault owner and take on that responsibility, you have to be quite serious and devote a significant amount of time to it. My guess is that $100 to $200 will not be enough of a reward for people to spend the significant amount of time finding and convincing 'good' vault managers to try Enzyme. This is also true with with the max cap on the bonus amount of $1000.

Those are 2 very good points. We did consider and debate these in the draft phase. For now, we've decided against it. Here is the rationale:

1. splitting rewards: Yes indeed, this is common. And it usually helps the person being onboarded to "remember" the referral code at sign-up. As we start with a more manual process, and a guided onboarding of new managers (via referring user or Avantgarde), we felt splitting rewards was not really necessary to implement. Also, a guiding principle has been to "keep things simple", and 1 recipient is simpler than 2...

2. level of rewards: This is in fact related to the item above as well. Indeed, this level of rewards would not move the needle much for a vault owner planning to scale AUM in the millions. It should work better as an incentive for the "average" Enzyme user, hence the focus on the referrer for the rewards.

I don't see either of these as a blocker to going ahead, but perhaps should be kept in mind when interpreting the results of the referral scheme over the next few months.

Perfect. Yes, exactly! We'll do.