Cryptex

Pilot Program Summary The subDAO was tasked with executing a pilot incentive program for the CTX/USDC pool on the aerodrome platform. The original pilot program had two goals:

1. Generate yield using CTX.
2. Grow the CTX LP position.

This pilot program has been extremely successful in growing the CTX/USDC pool. The CTX/USDC pool has grown from 278k at the start of the program to ~650k in pool value. Some of this can be attributed to price appreciation of CTX but the fast majority of this TVL growth has been from new LPs to the CTX/USDC. This exponential growth in CTX/USDC TVL is great for the community but has unfortunately diluted the subDAOs CTX/USDC position. Subsequently reducing the weekly returns the subDAO LP position. Even with the reduction in yield the pilot program will break even and has been able to accumulate over 15,000 veAERO. This veAERO is now voting on the CTX/USDC pool indefinitely creating a base yield for the CTX/USDC pool.

Based on the above information, the subDAO believes that the program has delivered outsized benefits and should create a long term incentive program.

Sustainable Incentives Building on this success, The subDAO is requesting ~$715k in funds from the treasury, ⅓ of this would be in USDC (215k) and ⅔ would be represented as CTX($500k) to continue the incentive program for one year. The program has two key goals.

• Grow liquidity and volume on aerodrome
• Create a healthier trading experience on mainnet

Growth Our goal with this proposal is to compound on the success we have seen during the pilot program. The subDAO will use the funds to increase the LP position by approximately 100k and will use ~520k(20% USDC 80%CTX) to incentivize the CTX/USDC pool for the next 52 weeks. Moreover, by allocating ~520k for incentives it allows the incentives to grow with the TVL growth reducing dilution of APR. To ensure sustainability after the incentives end, the subDAO should lock 100% of the Aerodrome emissions earned and vote to direct emissions to the CTX/USDC pool. By doing this the subDAO is creating a base line yield for CTX/USDC LPs (see flywheel here).

A Bit of Math Based on the pilot program, we can expect an incentive-to-emissions ratio closer to 1.25. This means that for every $1 the subDAO spends on incentives, the CTX/USDC pool will earn ~$1.25 in Aerodrome emissions. With a $520k incentive program, the expected total return is approximately $650,000 in emissions to the CTX/USDC pool. The subDAO would earn a significant share of these emissions due to our Protocol-Owned Liquidity (POL) in the pool. Even in a worst-case scenario like reduction in emissions or dilution of our POL, the subDAO can still expect to break even based on emissions and yield from the veAero.

Healthier Pricing During the pilot program, another issue has emerged: maintaining consistent pricing for CTX across multiple trading venues. To address this, we propose establishing a Uniswap V3 liquidity pool on the Ethereum mainnet. Currently, liquidity on Ethereum is significantly lower compared to Base. By creating this pool, we aim to: Utilize a 50% CTX and 50% USDC ratio. Set the price range for liquidity from $2.50 to $100.

A Bit More Math Liquidity Pool Composition: CTX - Transfer 10,000 CTX from Cryptex DAO’s Treasury to the Cryptex Liquidity Management SubDAO. USDC - Transfer 10,000 USDC from Cryptex DAO’s Treasury to the Cryptex Liquidity Management SubDAO.

Justification: The introduction of this liquidity pool aims to bolster the trading environment for CTX on Ethereum, thereby: Increasing the token’s accessibility and stability. Facilitating arbitrage opportunities between Base and Ethereum pools. Aiding in maintaining the price peg of CTX.

Fee The subDAO should receive a revenue share of 20% only after the program has broken even based on emissions distributed to LPs. IE this fee is only applied when the CTX/USDC pool has earned over ~520k in aero rewards. The goal of these fees is to pay for any operational needs and to create a self sustaining incentive program.

Final Thoughts The pilot program has showcased how powerful the aerodrome system can be in growing liquidity pools and providing alternative sources of revenue for protocols. This expansion of the pilot program is a logical next step and allows the subDAO and CTX community to have a clear path to TVL growth, volume growth and eventually product growth. I once again hope the community recognizes the value and potential revenue that this can bring to the Cryptex ecosystem.

**If/when this proposal goes to a Tally vote we will edit the proposal to provide exact amounts of CTX needed for the program.