Title: Proposal to Allocate Funds for Feasibility Study on Polygon LSD Expansion
Author: Shane C/ Pulse Digital Date: March 18, 2025 Category: Operations Budget Allocation
Summary
This proposal seeks approval to allocate a portion of the K9 Finance Operations budget to fund a feasibility study on expanding our Liquid Staking Derivative (LSD) product to the Polygon network under the potential branding of knMATIC. This study will allow the development team to evaluate the technical, financial, and strategic requirements necessary for K9 to enter the Polygon ecosystem.
Rather than committing to a full deployment at this stage, the goal is to assess viability, risks, and potential benefits before making a formal launch proposal.
Objectives
Evaluate the Technical Feasibility
Assess the smart contract requirements for launching knMATIC on Polygon.
Identify necessary infrastructure, including validator setup and delegation mechanisms.
Determine compatibility with existing K9 staking mechanisms.
Assess Financial and Liquidity Requirements
Identify the initial capital needed to operate a Polygon validator, if applicable.
Explore potential funding sources, including grants or partnerships with the Polygon ecosystem.
Analyze how to bootstrap liquidity and avoid major sell pressure.
Examine Strategic Alignment with K9’s Goals
Assess the market demand for an LSD on Polygon after Lido’s departure.
Identify competitive advantages K9 could leverage.
Evaluate potential partnerships or integrations within the Polygon DeFi landscape.
Develop a Preliminary Roadmap
Outline the steps required to deploy knMATIC if feasibility is confirmed.
Identify key milestones and decision points before committing to full implementation.
Budget Request
We propose an allocation of $1k/week from the Operations budget to compensate development team members for their time and expertise in conducting this feasibility study. The funds will be used for:
Smart contract and infrastructure analysis
Technical research on Polygon validator setup
Economic modeling and liquidity planning
Initial outreach to potential partners
A detailed breakdown of spending will be provided upon request.
Timeline
Phase 1 (Weeks 1-3): Technical and Infrastructure Analysis Phase 2 (Weeks 4-6): Financial and Liquidity Assessment Phase 3 (Weeks 7-8): Strategic Review and Roadmap Development Final Report: Submitted by Week 8 for community review.
Potential Outcomes
If the study confirms feasibility and strategic alignment, a formal proposal will be drafted for a full knMATIC deployment on Polygon.
If significant barriers are identified, the report will outline alternative approaches or recommended adjustments before pursuing an expansion.
Conclusion
By funding this exploratory phase, K9 Finance ensures that all critical aspects of a potential Polygon LSD launch are thoroughly evaluated before committing substantial resources. This structured approach will protect the treasury, optimize decision-making, and strengthen K9’s position in the broader LSD market.
We invite feedback from the community and core contributors before proceeding with the allocation.
Voting Options: Approve - Allocate the requested funds for feasibility research. Reject - Do not allocate funds for this research at this time.
Also support this proposal. Would be a good use of resources and potentially additional funding with a bonus of cross-promotion for Shibarium.
From Grok: Polygon Ventures, the venture capital arm of Polygon
Polygon Ventures Funding Options
Polygon Ventures primarily invests in equity or token deals rather than traditional grants. For a new liquid staking protocol, here are potential funding avenues:
Seed Investment Rounds
Amount: $500K–$5M (based on past investments like Davos Protocol’s $500K pre-seed or larger rounds like Polygon’s $450M Series D).
Details: Targets early-stage startups with innovative DeFi solutions. A liquid staking protocol could qualify if it offers unique features (e.g., cross-chain staking, lower fees, or enhanced slashing protection).
Example: In 2023, Polygon Ventures invested $500K in Davos, a DeFi protocol with liquid staking components, alongside Polygon co-founder Sandeep Nailwal.
Process: Pitch directly to Polygon Ventures via their website (polygon.technology) or ecosystem outreach, emphasizing Polygon PoS integration and market differentiation.
Strategic Token Sale
Amount: Varies, potentially $1M–$10M, depending on tokenomics and project traction.
Details: If your protocol issues a native token, Polygon Ventures might acquire tokens in a private sale to support development and gain upside potential. This aligns with their investments in DeFi projects like Arrakis.
Fit: Ideal if your liquid staking protocol has a governance or utility token tied to staking rewards or validator operations.
Ecosystem Co-Investment
Amount: $1M–$10M+ (often co-invested with firms like Sequoia or SoftBank).
Details: Polygon Ventures frequently joins multi-investor rounds, leveraging Polygon’s $100M ecosystem fund (announced in 2022) to amplify impact. Your protocol could secure funding if it enhances Polygon’s DeFi landscape, like improving POL staking liquidity.
Example: Polygon’s $450M raise in 2022 included VCs like Tiger Global, some of whom could co-invest in ecosystem projects.
Polygon Ecosystem Grants (Non-Ventures)
Polygon also offers grant-based funding through its community and developer programs, distinct from Polygon Ventures’ VC focus. These are more accessible for early-stage or open-source projects and could supplement Ventures funding:
Polygon Community Grants Program (Season 2)
Bucket: General Ecosystem Growth
Amount: Up to 35M POL annually (~$12M at current $0.35/POL price).
Specific Allocations:
10K–20K POL ($3.5K–$7K) for ideation-stage projects.
25K–40K POL ($8.75K–$14K) for projects with an MVP.
50K POL ($17.5K) for projects with early traction.
Details: Announced in 2024, this program funds projects building on Polygon. A liquid staking protocol could apply if it boosts POL staking adoption or DeFi utility.
Deadline: Rolling, but specific tracks (e.g., Encode Club’s AI/DeFi grants) had deadlines like March 20, 2025, per X posts. Check polygon.technology for updates.
Encode Club x Polygon Grants
Bucket: AI, DeFi, Tokenization Tracks
Amount:
10K–20K POL ($3.5K–$7K) for ideation.
25K–40K POL ($8.75K–$14K) for MVP.
50K POL ($17.5K) for traction.
Details: Launched in early 2025, this track (via Encode Club) targets DeFi innovations. A liquid staking protocol fits perfectly, especially if it integrates AI (e.g., predictive yield optimization) or tokenizes staked assets.
Application: Apply via Encode Club’s portal (encode.club/polygon-grants).
Thrive Polygon Grants
Bucket: Memecoin and Community Projects
Amount: 2.4M POL (~$840K) total pool.
Details: While focused on memecoins, this bucket could fund a liquid staking protocol with a community-driven token model. Less likely unless your project has a viral hook.
QuickSwap/TrustSwap Launchpad
Bucket: DeFi Fundraising
Amount: Varies, typically $50K–$500K in POL or token raises.
Details: A joint Polygon-supported launchpad for DeFi projects. Your protocol could raise funds here post-MVP, especially if it integrates with QuickSwap’s liquidity pools.
Tailored Considerations for Liquid Staking
Differentiation: Polygon already hosts liquid staking via Lido (stMATIC) - PHASING OUT, Ankr (ankrPOL), and Stader Labs (MATICX). Your protocol needs a niche—e.g., targeting small stakers, offering instant unstaking, or supporting Polygon’s zkEVM.
POL Focus: Since Polygon transitioned from MATIC to POL in 2024, funding proposals should emphasize POL staking enhancements.
Traction Boost: Ventures prefers projects with MVPs or users. Grants like Encode’s 50K POL bucket reward early adoption, so a working demo could unlock bigger funding.
Next Steps
For Ventures: Submit a pitch via polygon.technology, highlighting your team, tech, and Polygon synergy. Expect equity/token negotiations.
For Grants: Apply to the Community Grants Program or Encode Club track now—some deadlines loom (e.g., March 20, 2025, for certain tracks).
I support branching into other chains, and like the verbiage of “Allocating” much more than the word “Re-Allocating”.
I still believe Shibarium will have its day, but it’s a smart idea to continue to expand this amazing product in ways that benefit K9 and the rest of Defi as well.
One more consideration: We could potentially tap into the AI angle with the addition of our Dune work, Bonecrusher success & AI proposal agent.
Relevance: Liquid staking fits the DeFi track, and adding an AI angle (e.g., yield prediction) could strengthen your case. Apply via encode.club/polygon-grants.
Good oportunity to expand to other chains, besides integrating in this chain could be beneficial as it could lead to using some protocols with good liquidity!
K9 Finance DAO, bringing Liquid Staking to the world of crypto!
I am for this proposal as it will bring standard processes to the main development team for future chain expansions, pay them for their time and expertise, as well as potentially provide for an opportunity to create a new road map for the adoption of $KNINE and the LSD platform.
By determining if Polygon is a beneficial chain for the project, K9 will be able to fill gaps in the blockchain’s technologies that other projects are creating.
I fully support this proposal, and I think this is a great time to enter the Polygon ecosystem, especially with Lido exiting and leaving a gap in the liquid staking market. Expanding to Polygon not only benefits K9 Finance but also brings more visibility to Shibarium as a whole, making this a win-win for both ecosystems.
Key Considerations for the Feasibility Study
Ensuring Bonecrusher’s Structure is Consistent & Competitive
A big question is whether Bonecrusher on Polygon will mirror the staking structure of Bonecrusher on Shibarium. Will rewards follow the same math and distribution models? If not, what changes will be required to ensure competitiveness?
APR Data from Lido → If anyone has data on what Lido’s APR was before they phased out, that could give insights into what users found unsustainable.
Comparing with Stader & Other LSDs → We need to analyze whether existing solutions like Stader (MATICX) leave room for K9 to differentiate itself.
Liquidity & the Role of Reclaimed $KNINE
The “Strategic Use of Reclaimed $KNINE Tokens for Marketing & Community Growth” from the earlier proposal could be leveraged here as an additional liquidity source. Would it make sense to allocate a portion of those tokens to bootstrap initial liquidity on Polygon instead of a burn? This could strengthen cross-chain liquidity while keeping funds within the ecosystem.
Polygon’s Dev Grants & Funding
As CryptoQueen outlined, there are multiple funding avenues we can explore to minimize reliance on K9’s treasury. Could some of these be pursued in parallel with the feasibility study? If there’s a clear path to external funding, it would further reduce financial risk for the DAO.
Final Thoughts
Overall, this is one of the most strategic expansions K9 Finance can make right now. We’re looking at a perfect market opportunity with Lido’s exit, and if we position Bonecrusher correctly, it could become the dominant liquid staking solution on Polygon.
I’m looking forward to seeing the feasibility study results and hope we can capitalize on this opportunity while ensuring strong liquidity and a sustainable staking model.
Just want to clarify - is this proposal coming from the Dev team or were they consulted/agreeable on the stages/requirements/budget already?
How was the budget arrived at?
Why is there a need for a separate budget instead of using a portion of already approved operations budget and devs time for this purpose?
As to the proposal itself - I agree that it is worth studying the situation.
Particularly it would be interesting to find out why Lido actually left Polygon.
Approve - Allocate the requested funds for feasibility research.
Reject - Do not allocate funds for this research at this time.
