📽️ Introduction Video

For a TL;DR version of this grant as an easy-to-digest video, see below 👇

Important Notes regarding the previous proposal (and the video above)

This video is now slightly outdated, as it was made considering the original proposal (v1).
Main changes:

🚢 Mission

Allow efficient communication between users, projects, and businesses while respecting users’ privacy.

🔎 Vision

We believe that evolving communications in web3 is key for accelerating the adoption we all strive for.

Hermes Protocol envisions 3 pillars of communication:

Nutshell

📖 Committed to Terra

Since the launch of Terra in July 2022, Hermes Protocol has consistently supported Terra even when we started to go to other chains (Near), we continued to invest in Terra partnerships and develop further the app on Terra notifications. Our tweets and videos have always been focused on our building on Terra.

🌔 Contents

  1. Hermes Protocol Funding

  2. What Hermes Protocol has built so far

  3. Alignment with the future of Terra

  4. Community grant request & usage

  5. Hermes Protocol revenue generation

  6. Community Pool for public goods

  7. FAQs

🌓 1. Hermes Protocol funding

🏗️ 2. What Hermes Protocol has built so far

Webapp with Discord integration

We released the Hermes Protocol web app on Terra and Terra Classic on September 6th (tweet).
People can freely subscribe to the following on-chain events which are currently live:

With thousands of different configurations possible, users are capable of intuitively setup the notifications that fit their needs through our web app or directly in Discord.

Explorer

Hermes Protocol Explorer was released on 15 December

Twitter 🧵

From within any Discord server (which has our bot added to it), you can query blockchain data whenever you want:

Public APIs

Notification Subscribe API

Twitter 🧵 / Documentation 📑

On December 20th, we released our Notification Subscribe API, which allows dApp users to subscribe to notifications in a decentralized way. This proof-of-concept implementation, developed in partnership with BackboneLabs’ Gravedigger, represents an important milestone for Hermes Protocol and demonstrates our commitment to improving the user experience for all web3 users.

We are pleased to announce that we are in discussions with Terrascope, TFM, and Terraswap about integrating this feature into their dApps as well. We believe that this demonstrates the UX priorities of these teams and sets a strong foundation for further adoption of our platform through third-party websites.

Assets repository

Several projects are already using our Assets repository as a back-end API to access useful information without overloading public LCD endpoints. Here’s how it works:

  1. The Assets repository is also a documentation site, which will explain how users can contribute to the repository, thus allowing our platform to support more protocols with minimal effort;
  2. Files under the /static/ folder are publicly accessible with no bandwidth or rate limits and can be used on front-ends as needed;
  3. The Assets repository is particularly useful for projects (such as NFTSwitch) that want to display information about all the NFTs in a collection at once, rather than querying them one by one from the chain. It also provides a convenient way to access all the indexed collections, smart contracts, tokens, and more. Additionally, the repository includes reliable LCD endpoints with failover options in case the main public endpoint becomes unavailable: we got you covered!
  4. A future update which is part of this grant proposal, will include “blockchain translation” files, so that anyone can easily understand how NFT trades are done, regardless of marketplace, how tokens are swaped, and so on. It will increase the Developer Experience for devs that build on the same chains as us by a big margin.

P2P smart contracts

On November 16th, we released our P2P (peer-to-peer) smart contracts on the testnet (finder link). This was made possible with the help of the Web3 Builders Alliance, whose expertise was invaluable in the development of these contracts.

The P2P smart contracts allow users to trade directly with each other using multiple items, including NFTs and tokens, simultaneously (same trade flow). They also support other interesting use cases, such as bidding or offering something for an unlisted NFT or facilitating over-the-counter deals between venture capital firms, angel investors, and teams with unlisted or low-liquidity tokens.

The UI is ~60% done, and should be completed by end of February '23.
Documentation so that other projects (games, marketplaces, etc.) can use our smart contracts as well will go live shortly before.
Note: we already have agreements with two undisclosed projects who will adopt our smart contracts for their trades in-game (for their upcoming projects);

Audit

We already asked for two budgets (SVC and Oak) for the Audit of the smart contract, and as soon as we get the upfront payment we will commence the audit.

Multiple Twitter bots (& TG alert channels)

As we always build our platform with scalability in mind, we can create hundreds of different automated Twitter accounts for any number of on-chain events, rather than being limited to two or three very specific and independently controlled bots.
As a proof-of-concept, we have already launched these accounts (actively growing in number) on Twitter and Telegram.
We are already in active conversations with multiple projects and dApps to build these accounts for them as well at no charge (unless they want a whitelabeled solution).

Each of these Twitter accounts has a respective Telegram channel (see examples for Gov Polls & Gov Votes (validators & whales)), so people can subscribe to these “general alerts” on both platforms (whichever they prefer or both);

NFT Projects or dApps who wish to have their own automated Twitter account(s) can reach out to us via our Discord or Telegram.

🪶 3. Alignment with the future of Terra

As an active validator on Terra, we are committed to supporting the growth of the platform and believe in its vision of a multi-chain future. To this end, we have already partnered with Backbone Labs and become one of the six validators for the BoneLuna LSD. We are also interested in becoming validators for feather chains in the future.

To show our commitment to Terra, we are partnering up with different platforms by integrating our notification solution in exchange for Luna delegations.

We have also already tested our smart contract for P2P trades on Juno and are working to have our contracts available on all feather chains for further expansion. While we also plan to explore adoption on Cosmos chains, we anticipate that these chains may require some adaptations and adoption may be slower than feather chains.

We have always been an active and supportive member of the Terra community and are committed to continuing to bring significant value to all community members.

🤝 4. Community grant request & usage

We are requesting a community grant of 80,000 LUNA (~$160k) to be paid into a multi-sig wallet controlled by five trusted members of the community. Upon approval of this proposal, 25,000 LUNA will be transferred upfront to Hermes Protocol to pay for the audit included in the first deliverable and other ongoing expenses.

We propose that the remaining 55,000 LUNA be unlocked through objectives every couple of months, with 27,500 LUNA being transferred per each objective delivered. This will allow us to continue building and expanding our platform while also providing a steady source of revenue.

During this period Hermes Protocol will deliver the following new features:

1st deliverable (27.5k Luna) - Q1-Q2 '23

2nd deliverable (27.5k Luna) - Q2 '23

Hermes Protocol will continue to close partnerships on Terra and will start to close partnerships on other Feather & Cosmos chains as it expands.

Expenses are categorized and allocated into:

Salaries (~65%)

This includes the engineering & product teams to continue shipping new features and improvements, and the operations team that works on the indexer, docs & assets. Includes expenses related to protocol integrations.
We have recently downscaled our team to just 5 people in February, and have cut on other costs such as the Lisbon office. Our avg. expense per person ~$5k/mo, which makes our burn rate at around $25k/mo (including work insurance and taxes).
This brings the cost of 6 months of runway to $150k, not ~$100k (65% of $160k). However, Hermes Protocol already has, very little, recurring revenue from its validator which helps subsidize this cost.
Momentum One (the company building Hermes Protocol) also has some recurring revenue from clients and is able to cover the remaining costs of Hermes Protocol’s development.

Audit (~15%)

Early budget estimates that were given: ~$15-20k.
However, the contract has since become more complex, and we’ll likely have to cover bug fixes that surface from the audit, hence the ~15% ( ~$24k ) total.

Infrastructure (~20%)

Server Costs for indexers/nodes, SaaS subscriptions, and cloud services for one year. Current costs are lower, but we expect to have to scale this, specially if the chat pops off and we have more dApps integrating our open API.

Runway: This grant would provide us with 6 months of runway with Luna @ $2. We believe that until mid-2023 we will be able to drive enough revenue to either sustain our team until the bull market comes back (and then we can go back to reinvesting our own profits to keep building).

Multisig details (3 out of 5)

🧑‍💻 Multisig address: terra1vpr0yc7w4z3jxne3np9ka9qfrjzavnzm5r85kltmrcraxr90jzgqqv6ms5

📊 5. Hermes Protocol revenue generation

Hermes Protocol is developing a communications platform with a range of free services for users, similar to web2 business models. However, we also offer paid services for projects. Currently, we are gaining traction and are receiving some Luna delegations from supportive platforms. While this is not a long-term revenue generation model, it is a strategy that helps us attract users and increase adoption of our platform and bring the Terra user experience to a new level. In the future, we plan to release additional revenue streams to ensure sustainable growth.

So where and when the revenue will come from?

P2P trading (free on Terra)

One of our key revenue-generating features is the P2P trades feature, which allows users to trade directly with each other using multiple items, including NFTs and tokens. This feature will charge a trading fee of 1.5% of the tokens exchanged in each trade. Trades that include one or more NFTs will also incur an additional cost of 1 Luna per trade. For example, if two users swap three NFTs for four others, each user would pay an additional 0.5 Luna.

Newletters & off-chain notifications (free on Terra)

Our newsletters and off-chain notifications feature allow projects to send news and updates to their users on a monthly subscription basis. This feature will be available in the second quarter of 2023.

Airdrop Notification/Marketing Ad Campaigns

Our airdrop notifications feature, known as “Marketing Ad Campaigns” to businesses, allows platforms to send targeted airdrops to users based on on-chain user data. This feature aims to provide a more effective alternative to traditional advertising by allowing businesses to reach their target audience through claimable airdrops that generate direct notifications to users. Instead of receiving unwanted ads or using ad blockers, users can choose to claim airdrops that are relevant to them. This feature will be available in the third quarter of 2023.

Validator

Our proof-of-stake validator currently has approximately 1.2 million Luna delegated, which generates around $1,000 per month in revenue (excluding hardware costs). With a targeted marketing strategy, we believe that we can increase the number of delegations to our validator to between 3 million and 6 million Luna.

This revenue stream has the potential to significantly contribute to our overall sustainability as a project. We are confident that we can attract more delegations to our validator by highlighting the value and utility of our services and demonstrating our commitment to the Terra community.

At Hermes Protocol, we are committed to advancing communications in the Web3 space through the development of innovative solutions. We have made significant progress in building the first pillar of our platform, which enables communication from the blockchain to users, and are now focused on developing the second pillar, which enables communications between users themselves. This includes the implementation of wallet-to-wallet cross-chain chat and P2P trades. We believe that the completion of these two pillars will help drive new activity on Terra and make a positive impact on the ecosystem.

We are also excited to announce that several NFT projects have expressed interest in using our smart contracts for their pilot games, as a way to revitalize their economy. We look forward to continuing to bring value to the Terra community through our ongoing development efforts.

Here’s a simple graphic:

Revenue TLDR

💖 6. Community Pool for public goods

On our previous proposal, we figured that having a buyback system would be interesting for a community pool funded project, so that the pool can replenish over time.
Unfortunately, we received some backlash since revenue generation during the bear market is complicated and the future is uncertain.

Having this consideration, we have decided to remove the buyback program (effectively making the grant a “development bounty”, rather than a financial loan), and in exchange we will waive ALL FEES for the developments covered by this grant indefinitely (on Terra).
This effectively means that the P2P contract, the off-chain notifications, wallet-to-wallet messaging, additional Explorer features and the Custom outgoing Webhooks (which effectively allows anyone to build their own bots without programming a single line of code) will have no fees forever on Terra.

💬 7. Frequently Asked Questions

Why don’t you raise a seed round?.

We have been actively seeking a seed round, but have not yet found the right fit for our team and project. Raising capital can be challenging in a bear market, especially when building on a chain with a tainted reputation (hopefully not for long). However, we believe this is not a reflection of the attractiveness or potential of our product, but rather due to other external factors.

Is Hermes Protocol self-sustainable ?

At this time, Hermes Protocol is not self-sustainable. We have always intended for the platform to have three pillars to become profitable, and we are currently in the process of building out the second pillar. We are committed to achieving self-sustainability within the next six months.

Why did you start Hermes Protocol from notifications?

Our primary goal with Hermes Protocol has always been to bring utility to users, rather than seeking quick and easy profits. We believe that notifications of on-chain events are an essential feature for decentralized finance platforms, but implementing them in a decentralized fashion can be challenging and requires users to trust their privacy to individual projects. By offering free notifications, we aim to provide a useful public good and connect users to the various platforms they are interested in, while also serving as a viable go-to-market strategy.
Unfortunately, the collapse of Terra and the subsequent bear market have disrupted our plans (we had more than enough money to bootstrap everything with our own funds) and made it more difficult for us to fully build out the three pillars of our platform without external funding. However, we are committed to continuing to develop Hermes Protocol and hope to achieve self-sustainability soon. Note: we are not blaming anyone but ourselves for losing that runway, but are just explaining why we started with “free stuff first”.

You already received the Emergency Grant Allocation, why it was not enough, will you ask again in 6 months?

We were grateful to receive the emergency grant allocation of 60,000 Luna, which we used to bring on-chain event notifications to Terra. We have dedicated all of these funds to the development of our platform and have also stretched our personal finances (used up our “rainy funds”) to bring more functionality to Hermes Protocol.
However, we underestimated the time and resources it would take to secure investment while also continuing to build and deliver new features. As a result, we are now requesting a new grant to support the development of additional features. We do not plan to request grants for the same features in the future, and instead, our goal is to become self-sustainable with this new development. When we can do so, we intend to start compensating Terra for the trust and support it has provided to our project.