Summary

1. About this Report
2. Referendum-Info
3. ANALYSIS
1. ■Impact on the Ecosystem
2. ■Governance Compliance
3. ■Cost-Benefit Ratio
4. ■Transparency and Traceability
5. ■Track Record and Credibility
4. Sources
5. Evaluation
6. Voting

About this Report

vonFlandern has developed a methodology to analyze OpenGov proposals as objectively and transparently as possible, and to evaluate them based on the central question:

Does the proposal contribute to Polkadot’s long-term success?

The expert personas shown here are completely fictional and AI-generated. The portraits, names, backgrounds, and credentials are created using artificial intelligence. These personas do not represent real people or actual institutional affiliations. This tool serves as a framework for structured Polkadot governance proposal analysis. For research and the creation of SWOT and stakeholder analyses, we use: Perplexity Enterprise | Mode: Research | Web, Academic, Social, Finance, Wiley. For the creation of the final analysis, we use: Claude Pro | Opus 4.1 | Mode: Advanced Reasoning | Research | Web Search

Referendum-Info

Title: StellaSwap Incentive Program

Track: 34 | Origin: BigSpender | Amount: 1.000.000 DOT

Status: Deciding

Remaining Time: 18d 16h 21m

Summary of the proposal

- StellaSwap is asking for 1 million DOT to continue a program that helps keep Polkadot's DeFi ecosystem active.
- The program gives rewards to people who provide liquidity, which makes trading easier for everyone.
- StellaSwap is a popular exchange on Polkadot where people can swap tokens.
- The goal is to keep users engaged and attract new projects to Polkadot.
- This will help increase trading, users, and the total value locked in DeFi.
- The DOT grant will be used to support important trading pools.
- StellaSwap has already handled over $2.2 billion in trading volume.
- They believe this program will help Polkadot grow even more.

ANALYSIS

■Question 1 of 19

1. Does the proposal measurably contribute to the long-term development, adoption, resilience, or relevance of Polkadot?

The proposal addresses critical liquidity depth requirements as StellaSwap accounts for the highest cumulative trading volume in Polkadot at over 2.2 billion dollars, positioning it as key infrastructure for ecosystem resilience. The continuation builds on Referendum 580's success, which was part of a 3 million DOT allocation that demonstrated Polkadot's community-driven approach to DeFi growth, with 2 million DOT to Hydration and 1 million DOT to StellaSwap for liquidity optimization. However, long-term adoption metrics beyond TVL increases remain difficult to quantify from the first program, and the proposal's emphasis on maintaining rather than expanding market depth suggests defensive positioning against liquidity erosion rather than aggressive growth.

Score: 6/10

■Question 2 of 19

2. What sustainable added value does the proposal bring to the Polkadot ecosystem in the long term, beyond the immediate project duration?

The program targets structural liquidity enhancement through StellaSwap's position on Moonbeam, providing cross-chain bridging infrastructure and concentrated liquidity V4 CL-AMM technology that maximizes capital efficiency. Recent data shows StellaSwap reached 12.5 million dollars TVL in Q4 2024, surpassing Moonwell as the leading protocol on Moonbeam. The sustainable value proposition is constrained by the temporary nature of liquidity incentives, which typically attract mercenary capital that leaves when rewards end, as evidenced by broader DeFi patterns and community concerns expressed during Referendum 580 about treasury-owned liquidity alternatives.

Score: 6/10

■Question 3 of 19

3. Is an existing structural weakness addressed?

The proposal directly confronts Polkadot's critical liquidity fragmentation challenge, where liquidity is dispersed across multiple parachains and pools, creating high slippage and low trading efficiency, a problem documented in academic research on the ecosystem. Polkadot's DeFi faces low liquidity, user numbers, and complexity of integrating with Substrate as highlighted in infrastructure proposals, with only 2.4 percent LST penetration rate indicating extremely low capital utilization. The continuation of liquidity incentives addresses symptoms rather than root causes of fragmentation, though StellaSwap's role as the primary DEX with concentrated liquidity provides some structural value.

Score: 7/10

■Question 4 of 19

4. Does the proposal promote interoperability, user retention, or parachain development?

The proposal explicitly promotes interoperability by including native Polkadot parachains such as Bifrost, Manta Network, Apillon, and Pendulum in its incentive structure and leveraging Moonbeam's EVM compatibility to attract Ethereum developers. StellaSwap's integration with cross-chain protocols including Snowbridge, Wormhole, Axelar, LayerZero, and Hyperlane creates critical infrastructure for asset movement across the ecosystem. The program supports Polkadot's DeFi Singularity vision by fostering cross-chain liquidity hubs, though user retention remains challenged by competition from Ethereum L2s and other multi-chain ecosystems that offer lower learning curves for developers.

Score: 7/10

■Result category 1

Total score: 26/40 | Average: 6.50/10 (65%)

■Question 5 of 19

5. Does the proposal clearly fall within the scope of the chosen origin (Treasury, Tipper, Spender)?

The proposal appropriately uses the BigSpender track which is specifically designed for treasury expenditures up to 1,000,000 DOT, exactly matching the requested amount. Liquidity incentive programs constitute legitimate treasury spending for ecosystem growth, as evidenced by previous successful proposals including StellaSwap Referendum 580 and HydraDX Referenda 560 and 561, all requesting 1 million DOT through the BigSpender track for similar liquidity programs. The track parameters include a 400 DOT decision deposit, 28-day decision period, and 7-day confirmation period, all appropriate for this funding level and align with the proposal's scope.

Score: 10/10

■Question 6 of 19

6. Are there previous proposals with comparable content, and if so, what were their outcomes?

StellaSwap previously submitted Referendum 580 in March 2024, requesting 1 million DOT for an identical liquidity incentive program on the BigSpender track, which was approved and executed. HydraDX secured approval for two comparable 1 million DOT liquidity programs, Referendum 560 for Treasury LP and Referendum 561 for Liquidity Incentives in March 2024, with Referendum 561 including a commitment to match 40 percent of the DOT value with HDX tokens, demonstrating stronger co-investment than StellaSwap's proposal. Referendum 1771 represents a continuation request from the same proponent within approximately 18 months, though community feedback on Referendum 580 noted concerns about proposal quality compared to HydraDX's more detailed planning and native token matching.

Score: 8/10

■Question 7 of 19

7. Is the governance system being used meaningfully or burdened?

The governance system shows significant burden indicators as the Polkadot Treasury recorded its first negative net flow of 101,000 DOT in April 2025, raising sustainability concerns. OpenGov Adjustments 2025 known as Referendum 1701 passed as a Wish for Change proposal to address voter fatigue by reducing maximum deciding proposals from 50 to 5 on MediumSpender track and increasing decision deposits from 1,000 to 25,000 DOT for the Treasurer track, explicitly citing governance overload as a time and brain drain from the ecosystem. This second consecutive 1 million DOT request from StellaSwap within 18 months, alongside concurrent large requests including the DeFi Infrastructure Bounty for 1 million DOT and Events Bounty for 500 thousand DOT approved in Q3 2025, contributes to treasury strain and governance bandwidth pressure during a period when the community voted for supply cap and reduced.

Score: 5/10

■Result category 2

Total score: 23/30 | Average: 7.67/10 (77%)

■Question 8 of 19

8. Is the requested amount proportionate to the potential or demonstrated benefit?

StellaSwap's first 1 million DOT program known as Referendum 580 at approximately 7 million USD generated 111 percent TVL growth in Q3 2024 from 5.6 million to 11.9 million dollars, but TVL subsequently declined 26 percent to 8.8 million by Q1 2025 per Messari reports. Calculating return on investment: First program spend equals 1 million DOT at 7 million dollars producing peak TVL increase of 6.3 million dollars, yielding ROI ratio of 0.9 to 1 TVL per spend; Current TVL totals 8.8 million dollars including all sources making attribution unclear; Trading volume of 2.2 billion dollars cumulative is claimed but timeframe is unspecified, making per-dollar efficiency incalculable. The second 1 million DOT request represents 8.3 percent of treasury at 35.46 million dollars with no clear multiplier effect demonstrated, as industry standards suggest 3 to 5 times TVL to incentive ratios for sustainable programs, but StellaSwap achieved less than 1 times sustained growth.

Score: 4/10

■Question 9 of 19

9. Is the budget framework reasonable compared to similar proposals?

HydraDX received 2 million DOT total through Referenda 560 plus 561 but committed to matching approximately 40 percent at 4.15 million dollars with HDX tokens, creating combined 14.1 million dollar incentive pool, demonstrating stronger co-investment. Comparing investments: HydraDX provided 2 million DOT plus 40 percent match equals effective 2.8 million DOT commitment; StellaSwap offers 1 million DOT plus 0 percent STELLA match equals 1 million DOT commitment; Per-protocol basis shows HydraDX committed 2.8 times more value with explicit skin-in-game versus StellaSwap's zero co-funding commitment. Bifrost's 1 million DOT program from October 2024 achieved 423 percent APR on BNC-DOT pairs and 20 times TVL growth on vDOT-DOT pool to 622 million dollars while maintaining 19.92 percent APR sustainability.

Score: 3/10

■Question 10 of 19

10. What specific added value does the Treasury or network gain in return for this expenditure?

Claimed benefits include maintaining market depth and 2.2 billion dollars cumulative volume, but specific treasury returns are unquantified. Calculating value: Treasury receives 0 percent direct revenue share, 0 percent protocol fees, 0 percent LP position ownership; Network gains temporary liquidity proven unsustainable by 26 percent TVL decline post-program with no protocol-owned liquidity accumulation; Comparison shows protocol-owned liquidity models like OlympusDAO and Fei allow treasuries to earn LP fees perpetually and own liquidity outright versus mercenary capital that exits when incentives end. Treasury expenditure totals 2.947 million dollars for continuation program with no equity stake, fee share, or permanent liquidity acquisition representing purely rental model with zero long-term asset accumulation for Polkadot ecosystem.

Score: 2/10

■Question 11 of 19

11. Were cheaper alternatives considered?

Proposal contains zero analysis of alternatives despite established DeFi 2.0 options. Analyzing alternatives: Option one for protocol-owned liquidity where Treasury deploys 1 million DOT directly as LP position earning perpetual trading fees estimated at 0.3 percent on 2.2 billion dollars volume equals 6.6 million dollars cumulative plus retaining DOT ownership versus spending it entirely; Option two for bonding mechanisms in OlympusDAO model to acquire LP tokens at discount via bonds, building permanent liquidity at 50 to 70 percent cost reduction versus pure incentive spend; Option three for hybrid approach using 500 thousand DOT incentives plus 500 thousand DOT treasury-owned LP equals balanced temporary boost with permanent position; Option four requiring STELLA token matching as HydraDX did with HDX to demonstrate project commitment and reduce treasury burden by 40 percent. No evidence these cost-efficient, sustainability-focused alternatives were evaluated or discussed in proposal materials.

Score: 1/10

■Result category 3

Total score: 10/40 | Average: 2.50/10 (25%)

■Question 12 of 19

12. Is it clearly communicated how and for what purposes funds will be used—including KPIs, milestones, metrics?

The proposal states funds will grow and deepen the market depth of strategic assets with a primary goal to maintain and grow DeFi activity including active users, transactions, and TVL but provides minimal specificity in accessible materials. The proposal mentions an efficiency rate metric that multiples the market depth beyond target TVL goal without defining measurement methodology or specific targets. Critical details appear relegated to an external Google Doc that lacks transparency for public scrutiny, as previous Moonbeam grants specified TVL targets of 25 to 45 million dollars, but Referendum 1771 omits comparable concrete milestones.

Score: 3/10

■Question 13 of 19

13. Are budgets, timelines, and work packages clearly specified?

The proposal requests 1 million DOT with no budget breakdown showing allocation across specific pools, time periods, or distribution mechanisms visible in public-facing materials. Community discussion mentions a potential 6-month duration, but this timeline is not officially confirmed in the proposal itself and remains speculative. No work packages, phased milestones, or itemized expense categories are documented in accessible proposal content, though the team clarifies 100 percent of grants are meant for liquidity mining programs but provides no granular distribution plan.

Score: 2/10

■Question 14 of 19

14. Are there success criteria for later evaluation?

No explicit success criteria, performance thresholds, or evaluation metrics are defined in the accessible referendum materials for assessing program effectiveness. Previous Moonbeam grants established measurable targets like aggregate TVL of all farms on StellaSwap as the primary milestone and defined specific TVL ranges, but Referendum 1771 omits comparable quantifiable benchmarks. The proposal describes itself as a continuation of a previous program yet provides no retrospective analysis or data from that prior initiative to establish performance baselines.

Score: 1/10

■Question 15 of 19

15. Is documentation or reporting planned?

No reporting plan, documentation schedule, or accountability framework is articulated in any accessible proposal materials. There is no commitment to periodic updates, final reports, on-chain data publication, or transparent tracking dashboards for community oversight. Despite claiming this is a continuation of a previous program, no publicly available report from the prior initiative demonstrates accountability or establishes precedent for transparent reporting practices.

Score: 0/10

■Result category 4

Total score: 6/40 | Average: 1.50/10 (15%)

■Question 16 of 19

16. Have the proposers or involved organizations made verifiable, traceable contributions to the ecosystem?

StellaSwap launched as the first DEX on Moonbeam within 24 hours of the network going live in January 2022 and has maintained continuous operations for nearly 3 years. The platform has processed 1.634 billion dollars in cumulative DEX volume according to DefiLlama data and successfully executed a previous 1 million DOT treasury proposal known as Referendum 580 awarded in March 2024. StellaSwap maintains active GitHub repositories with recent commits and has received Moonbeam ecosystem grants, demonstrating consistent ecosystem.

Score: 8/10

■Question 17 of 19

17. What projects have been successfully implemented so far?

StellaSwap has implemented a V4 concentrated liquidity AMM known as CL-AMM powered by Algebra engine, featuring both standard and stable AMM pools for optimal price discovery. The platform successfully delivered on Referendum 580's incentive program goals, maintains 5.45 million dollars combined TVL across V2, V3, and V4 versions, and operates yield farming, bridging integrations with Multichain and Axelar, and cross-chain XCM. However, the platform experienced significant impact from the Nomad bridge exploit in August 2022 which caused TVL to drop from 187 million to sub-60 million dollars, though this was not a StellaSwap vulnerability.

Score: 7/10

■Question 18 of 19

18. Are there publicly accessible references (e.g., code repositories, publications) or community feedback supporting the proposers’ credibility?

StellaSwap maintains multiple public GitHub repositories including core contracts, V2-core, stable-amm, swap-sdk, and assets repos with documented development activity. Security audits are publicly available from CertiK dated January 2022, SolidProof, and a Code4rena joint audit with QuickSwap, plus an active Immunefi bug bounty program up to 250 thousand dollars. However, DeFiSafety noted concerns including no publicly identifiable team members working on the protocol and lack of readily available admin control information, though the team is KYC'd by Moonbeam leadership.

Score: 6/10

■Question 19 of 19

19. Is the team capable of delivering the promised outcomes?

The team has demonstrated technical capability by launching advanced V4 CL-AMM technology, successfully executing the previous 1 million DOT proposal known as Referendum 580, and maintaining operations through major ecosystem challenges including the Nomad bridge exploit. Co-founder Aziz Zainuddin known as Atticus has a traditional finance background from hedge funds and helped create one of the first regulated crypto exchanges in the Middle East. The team remains largely anonymous to preserve decentralization but faces transparency concerns, and ChainLight disclosed a zapIn function vulnerability that was deemed out of scope for bounty payment.

Score: 7/10

■Result category 5

Total score: 28/40 | Average: 7.00/10 (70%)