1IP:XX 1inch DAO Aqua Revenue Stream Incubator

2.1 General Proposals
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1IP:XX 1inch DAO Aqua Revenue Stream Incubator

Core Program Structure

The 1inch DAO Revenue Stream Incubator Program will deploy a total investment of $400,000 into selected teams that develop 1inch Aqua strategies approved by the Grant Reviewers and the 1inch Core Team.

Each team that submits an Aqua Strategy can receive a maximum of $50,000 in funding to develop revenue-generating Aqua strategies. In exchange, the teams that develop these strategies will share a percentage of their gross revenue with the 1inch DAO for an extended period of time, which will be negotiated on a case-by-case basis, thereby creating sustainable income streams for the treasury. StableLab will serve as the program administrator, utilizing the Forse Platform to ensure professional execution and transparent operations.

Motivation

The 1inch DAO should fund an incubator program for Aqua strategy development because Aqua fundamentally shifts DeFi competition from TVL acquisition to formula and strategy innovation, meaning the protocol with the most sophisticated, specialized trading strategies will capture the most volume and fees.

Aqua’s shared liquidity model allows superior strategies to attract liquidity instantly without requiring LPs to migrate capital. By funding teams to develop differentiated strategies, whether constant product AMMs with dynamic fees, concentrated liquidity with inventory-based pricing, or specialized approaches for different asset classes and market conditions, the DAO would create a flywheel where better strategies attract more LPs, deeper liquidity attracts more taker volume through 1inch aggregation. Increased volume generates fees that can be shared back to the DAO as a return on its initial investment. This revenue share model aligns incentives across all participants while positioning 1inch at the center of a strategy innovation ecosystem rather than competing in the unsustainable race for TVL through token incentives.​​​​​​​​​​​​​​​​

Key Terms and Requirements

Revenue sharing begins from the first dollar earned by funded projects, with no waiting period or threshold requirements. All participating teams must complete comprehensive KYC and KYB procedures to ensure the legal enforceability of agreements. The program implements milestone-based funding releases, protecting DAO capital by requiring teams to demonstrate progress before receiving subsequent funding tranches. After three years of successful operation, teams will have the option to buy out the DAO’s revenue share at fair market terms.

Application and Tracking System Support

The StableLab will set up a centralized system for proposal submission and team documentation management. This eliminates the scattered approach often seen in DAO programs, ensuring all information remains organized and accessible. Teams benefit from streamlined communication channels that facilitate efficient interaction between funded projects, StableLab, and the DAO community. All relevant documents, agreements, and progress reports are stored in one secure location, creating a comprehensive record of each team’s journey through the program.

Disbursement Decision Process

Funding decisions for applicant teams will be determined by a simple majority vote among the delegate reviewers (StableLab, DAOPlomats, and Arana Digital). Each reviewer holds one vote, requiring at least two of three reviewers to approve before any grant disbursement proceeds. In cases where reviewers request revisions or additional information from applicant teams, a subsequent vote will be held once the team addresses the feedback. Milestone-based funding releases follow the same simple majority requirement, ensuring consistent governance throughout the funding lifecycle.

Milestone Management Framework

Clear milestone definitions and tracking mechanisms ensure teams understand exactly what needs to be achieved at each stage of development. The StableLab will work to enable systematic progress verification before any funding releases occur, protecting DAO interests while supporting team advancement. StableLab will efficiently review and validate milestone completions. This structured approach maintains accountability while providing teams with clear targets and expectations throughout their development process.

Milestone Funding Structure

To protect DAO capital and ensure accountability, the program implements a strict milestone-based funding release schedule with clear, verifiable criteria. The majority of funds are released only after implementation and demonstrated on-chain activity. All applicants must understand: if you do not hit the milestone, you do not receive the funding. No exceptions.

Funding will be released according to the following milestone breakdown:

  • Idea Verification (5%): Team presents strategy concept and demonstrates product-market fit through research, competitive analysis, or preliminary LP/user interest validation.

  • Proof of Concept (10%): Team delivers a functional prototype or testnet deployment demonstrating core strategy mechanics.

  • Working Implementation (35%): Strategy is deployed on mainnet with verified on-chain activity and functional trading operations.

  • Integration into the 1inch dApp (50%): Strategy is fully integrated into the 1inch dApp interface, accessible to users, and generating measurable volume through the aggregator.

This structure filters for teams serious about delivering and ensures the DAO’s capital is deployed only as teams demonstrate tangible progress.

Aqua and swapVM Strategies

The incubator program scope includes both Aqua strategies built with swapVM.

Notably, Aqua strategies built with swapVM are picked up automatically by the aggregator, meaning teams building with swapVM will be routed through the 1inch aggregator without relying on external arbitrage bots for volume.

Before opening applications, the 1inch Core Team will publish a reference list of strategies already in development by the core team and existing contributors. This ensures applicant teams can identify gaps where new strategies would add value and avoid funding duplicate work.

Fee Structure Clarification: The 1inch Labs License Fee specified in the Aqua documentation is separate from and independent of the revenue share that funded teams will remit to the 1inch DAO. Teams participating in this incubator program will be subject to both the standard 1inch Labs License Fee as outlined in protocol documentation and the negotiated revenue share percentage owed to the DAO treasury as a condition of receiving incubator funding.

Program Scope

To ensure incubator funding supports novel development that adds value to the 1inch ecosystem, the following scope definitions apply to all applications:

In Scope:

  • AMMs and DeFi services that utilize Aqua as an accounting and settlement layer, excluding strategies already implemented by the core team (see Out of Scope below)

  • swapVM instructions that introduce new functionality and bring additional value to the swapVM ecosystem

Out of Scope:

  • AMM implementations already developed by the core team, including: constant product (xy=k), concentrated liquidity xy=k, and stable swap curves

  • swapVM instructions already implemented, including: existing AMM curve instructions, plain fee mechanisms, and other currently deployed instruction sets

  • AMM mathematical formulas or mechanisms that are licensed by third parties

Applicants are encouraged to review the 1inch Aqua documentation, the Aqua whitepaper, and the swapVM documentation before submitting applications. The core team’s published list of strategies already in development will also be made available prior to opening applications. Projects that fall within the Out of Scope categories will not be considered for funding. Teams with questions about whether their proposed strategy qualifies should reach out to StableLab for preliminary guidance before submitting a formal application.

Aqua Documentation:

swapVM Documentation:

StableLab’s Responsibilities as Incubator Program Steward

StableLab will serve as the Incubator Program Steward with the following responsibilities:

  • Manage the end-to-end application pipeline, including intake, documentation, and communication with applicant teams

  • Coordinate milestone review sessions with delegate reviewers and facilitate voting procedures

  • Verify milestone completion and prepare funding release recommendations for reviewer approval

  • Provide ongoing technical troubleshooting assistance and resource guidance to funded teams

  • Maintain all program documentation, agreements, and progress records in a centralized, secure system

  • Prepare and publish monthly progress reports detailing team achievements, challenges, and upcoming milestones

  • Organize quarterly community calls for teams to present progress and engage with DAO members

  • Liaise between funded teams, the 1inch Core Team, and the broader DAO community

  • Flag at-risk projects early and recommend remediation actions to delegate reviewers

Ongoing Support Services

StableLab provides continuous technical troubleshooting assistance to help teams overcome development challenges. Teams gain access to resource connections and guidance that can accelerate their progress and increase their chances of success. Regular progress monitoring and feedback ensure teams stay on track while identifying potential issues early. When problems arise, StableLab offers direct problem resolution support, leveraging its experience to help teams navigate obstacles and maintain momentum toward their goals.

This proposal only requests $3,000/month for StableLab’s Steward support services. StableLab will primarily steward this program as a Program Manager, ensuring that this program runs end-to-end, while other recognized delegates will provide Incubator reviewer services as part of their mandate as a 1inch DAO Delegate.

Support Budget - $36,000/year

Total Budget requested - $436,000

If this proposal is approved, all funds will be paid into and managed through the 1inch DAO Operations Multi-Sig.

Community Visibility and Engagement

StableLab will provide Monthly progress reports and provide detailed updates on each team’s achievements, challenges, and upcoming milestones. Quarterly community calls create interactive forums where teams can present their work, answer questions, and receive feedback from DAO members. Direct engagement channels ensure community members can communicate with teams and StableLab, fostering a collaborative environment that benefits all participants.

Program Key Performance Indicators

The incubator program will be evaluated against the following KPIs:

  • Revenue Generated for the DAO: Total cumulative revenue share payments received by the 1inch DAO treasury from funded teams, measured monthly and aggregated quarterly.

  • Volume Processed Through Aqua Incubator Graduates: Total swap volume in USD executed through strategies developed by incubator-funded teams, tracked via on-chain analytics and reported monthly.

  • Number of Live Strategies: Count of funded strategies that have launched on mainnet and are actively processing volume.

  • LP Participation: Total value of liquidity provisioned to incubator graduate strategies.

Program Timeline and Review Process

The program operates on a twelve-month timeline from launch to comprehensive review. The first three months focus on team selection, application review, and legal formalization. Months four through twelve constitute the main development phase, where teams build their strategies, achieve milestones, and begin generating revenue. At the twelve-month mark, a comprehensive review examines program performance, revenue generation, and overall success metrics.

The review of applications to join the incubator program will be led by StableLab, supported by DAOPlomats and Arana Digital, as part of their mandate as Recognized Delegates for the 1inch DAO.

Based on this review, the DAO will determine whether to continue the program, potentially with modifications to structure, funding amounts, or management arrangements to optimize future performance.

Creating Sustainable DAO Revenue

This incubator model represents a fundamental shift from traditional grant programs that deplete treasury resources without expectation of return. By structuring funding as revenue-sharing investments rather than one-way grants, the program creates potential for returns that far exceed initial investments. The portfolio approach of funding teams developing Aqua strategies provides natural risk diversification. This sustainable model positions the 1inch DAO as an innovator in decentralized governance while building a permanent portfolio of revenue-generating assets that support long-term treasury health.

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Thanks for putting this together, I think it’s a great idea. I have a few points of feedback from the core team side:

Scope may include swapVM, not just Aqua. Additional swapVM instructions that enrich swapVM functionality and allow teams to build more robust strategies should also be a subject for the grant. Since discovery is handled on the Aqua side, both Aqua and swapVM strategies are visible to the 1inch aggregator at the protocol level — so expanding the grant scope to include swapVM work would strengthen the overall strategy ecosystem without creating integration friction. Also, swapVM liquidity is picked up automatically by the aggregator, so those strategies would not need to rely on arbitrage bots.

Milestone structure needs to be stricter with clear, easily verifiable criteria. The proposal mentions milestone-based funding but doesn’t specify the weighting. The majority of funds for each team should be released after implementation and demonstrated on-chain activity, not upfront or at early milestones. Every participant needs to clearly understand going in: if you don’t hit the milestone, you don’t get the money. No exceptions. We’d suggest the following milestone breakdown:

  • Idea Verification (present idea, prove product-market fit) — 5%
  • Proof of Concept — 10%
  • Working Implementation — 35%
  • Integration into the 1inch dApp — 50%

This protects the DAO’s capital and filters for teams that are serious about delivering.

The core team will publish a list of strategies already in development. Before opening applications, the program should include a reference list of strategies the core team and existing contributors are already building. This avoids funding duplicate work and helps applicant teams focus on gaps where new strategies would actually add value. We will provide this list.

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Thank you for the feedback, all the points have been addressed in the proposal, please let me know if there are any other concerns. @RoundElephant

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Thanks @Kene_Anode, one more piece of feedback regarding scope:

In scope

  • AMMs and DeFi services that use Aqua as accounting/settlement layer (except for already implemented - see the out of scope section)
  • SwapVM Instructions that bring new value to SwapVM

Out of scope

  • Already Implemented AMMs (xyc, concentrated xyc, stable swap)
  • Already implemented instructions for swapvm (amm curves, plain fees, etc.)
  • AMMs math that is licensed by 3rd parties
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Thank you for this feedback; it has been incorporated into the proposal. @RoundElephant

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1inch DAO Aqua Revenue Stream Incubator: Q1 2026 Report

Reporting Period: January 1 – March 31, 2026
Program Steward: (Anode)
Reviewers: Anode, DAOPlomats, Arana Digital
Published: May 2026

TLDR

  • Governance passed in Q1. Snapshot vote approved the full $436,000 budget from the DAO treasury.
  • We built out the entire operational infrastructure: application pipeline, review process, evaluation rubrics, legal framework, and public-facing guidelines.
  • 15 applications received
  • Aqua0 is our first approved team. Disbursement is greenlit; we’re waiting on legal to finalize revenue share terms before the first payment goes out.
  • $0 disbursed so far. The full $436,000 remains in the treasury. This is expected for a setup quarter.
  • The pipeline spans 5 distinct strategy categories. No two teams are building the same thing.

1. How We Got Here

The Aqua protocol and SwapVM give builders serious primitives to work with, but there was no structured incentive for external teams to actually build on top of them. That’s the gap this program fills.

The incubator deploys $436,000 from the DAO treasury into teams developing novel Aqua strategies and SwapVM instructions. Each team can receive up to $50,000, released across four milestones (5% / 10% / 35% / 50%). In return, the DAO earns a negotiated percentage of gross revenue from the first dollar generated. After three years, teams can exercise a buyout at fair market value set by an independent valuation expert.

The program structure is simple: we fund builders, they build on Aqua, the DAO gets a cut of everything they generate. Perpetually, unless they buy out.

Governance Timeline

Things moved quickly:

  • February 2026: We published the proposal on the governance forum. TempCheck vote passed shortly after, confirming community alignment.
  • March 8, 2026: Snapshot vote went live and passed, formally authorizing the $436,000 allocation.
  • Late March 2026: Infrastructure setup wrapped up. The Notion workspace, application pipeline, review workflows, and evaluation framework were all operational. Applications started coming in immediately.

2. Infrastructure and Operations

Most of Q1 was spent building the operational backbone. Not the most exciting section of this report, but it’s what makes everything else work.

Application Pipeline. We built a structured Notion database that tracks every application from submission through funding. Each entry captures the team’s strategy description, technical approach, Aqua/SwapVM familiarity, competitive advantage, target markets, milestone plans, proposed revenue share, and reviewer votes. The three-reviewer panel (StableLab, DAOPlomats, Arana Digital) evaluates every applicant against the same surface.

Review Process. We documented and published a formal review workflow: scope verification criteria, evaluation rubrics weighted across seven dimensions (scope, innovation, feasibility, market opportunity, team experience, revenue potential, technical proficiency), and a 2-of-3 approval threshold.

Application Guidelines. Public-facing guidelines went live covering eligibility, in-scope and out-of-scope definitions, the milestone structure, revenue sharing mechanics (including the Aqua Source License 1.1 obligations), and the full six-step application journey. These serve as both a recruitment tool and a filter; teams can self-assess before applying.

Legal Framework. Draft grant terms were prepared covering milestone disbursement, revenue sharing, the buyout clause, KYC/KYB requirements, and how the DAO’s revenue share interacts with Aqua Source License 1.1 fees. Legal review is ongoing (more on this in Challenges).

3. Application Pipeline

15 applications came in.

Snapshot of Pipeline

# Strategy Type Category Funding Requested Revenue Share Status
1 Dynamic Fee AMM Aqua + SwapVM $50,000 5% Pitched to reviewers
2 (Aqua0) Cross-Chain Liquidity Aqua + SwapVM $50,000 10% + 3yr buyout Approved, pending legal
3 Dynamic Fee AMM Aqua + SwapVM $50,000 10% Intro call completed
4 Novel Approach Aqua + SwapVM $45,000 10% Rejected (out of scope)
5 Novel (AI Agent) Aqua + SwapVM $50,000 12% Outreach sent
6 Inventory-Based Aqua + SwapVM $50,000 12% Outreach sent
7 Novel (Clearing Layer) Aqua + SwapVM $50,000 10% Simulation reviewed

Total received: 15
In-scope and active: 6
Rejected and Out of cope: 9
Total funding requested (active): $300,000 of $436,000

Examples of what we are seeing

Team #1 brought a dynamic fee AMM with EWMA-based volatility-aware pricing and two new composable SwapVM instructions. They’ve already got the core math battle-tested in a live Uniswap V4 Hook deployment. The application has been pitched to the reviewer panel and we’re waiting on formal votes.

Aqua0 (Team #2) is our first approved team. They submitted, got revision feedback, resubmitted a stronger application, and earned approval, all within Q1. Their strategy enables cross-chain liquidity amplification using Aqua’s virtual balance accounting: a single LP’s capital can back multiple pools simultaneously across chains via LayerZero V2. The team includes alumni from Nethermind, EtherScan, NEAR Protocol, and Solv Protocol, and they were previously accepted into the Uniswap Incubator. Revenue share was agreed at 10% with a 3-year buyout at independent valuation. We’ve approved disbursement. The only blocker is legal finalizing the revenue share agreement terms.

Team #3 applied in late March and completed an intro call on March 31. They’ve got a live ETH/USDC dynamic fee hook on Base mainnet, calibrated against 130M+ data points using a modified Parkinson volatility model. They also route idle liquidity to Aave for baseline yield (a nice touch). Pitch call is being scheduled.

Team #4 was one of the rejections that got to pitch to the reviewers. After review, the strategy fell outside our scope for novel Aqua strategies or SwapVM instructions. The team was informed directly.

Teams #5 and #6 were identified through proactive outreach. Both received personalized emails. We’re waiting on responses.

Team #7 has gone furthest in technical diligence. We’ve done an intro call and a full simulation review of their backtesting model (1,461 daily epochs, ETH/USDT OHLC data from Jan 2022 to Dec 2025). Their approach is genuinely novel. Pitch call with the reviewer panel is next.

4. Strategy Diversity

One signal we’re encouraged by: no two teams are building the same thing. The pipeline spans five distinct categories.

Dynamic Fee AMMs (2 teams): Volatility-responsive pricing that protects LPs during turbulent conditions while staying competitive when things are calm.

Cross-Chain Liquidity (Aqua0): Capital amplification that lets LPs earn across multiple chains simultaneously without fragmenting their deposits.

Inventory-Based Market Making (1 team): Adaptive spread and skew management that moves beyond static AMM curves into something closer to how traditional market makers actually think about positioning.

AI-Orchestrated Liquidity (1 team): Autonomous agent-driven strategy management across multiple specialized hooks.

Deterministic Clearing (1 team): A structured clearing layer that transforms Aqua’s shared liquidity into bounded execution capacity for intent-based markets.

This is exactly the kind of range the program was designed to attract. Collectively, these teams would expand Aqua’s capabilities across capital efficiency, risk management, cross-chain reach, and novel execution models.

5. Financial Summary

Item Amount
Total program budget $436,000
Funds disbursed in Q1 $0
Funds committed (approved, pending legal) $50,000 (Aqua0)
Remaining unallocated budget $386,000
Revenue generated to date $0

No money has left the treasury yet. That’s expected for a quarter spent on governance approval and infrastructure buildout. Aqua0’s disbursement is approved and ready to go; we’re waiting on legal to finalize the revenue share terms. Once the agreement is executed, the first milestone payment (5% = $2,500) gets triggered on delivery of their Idea Verification milestone.

6. Recruitment and Outreach

Inbound applications have produced a healthy pipeline on their own, but we’re also investing in proactive outreach to make sure we’re reaching the strongest builder talent.

Governance forum and 1inch Discord have been the primary organic channels. Several applicants cited the governance forum or Twitter/X as how they found us.

Direct outreach has been targeted at teams identified through hackathon results, Uniswap V4 hook repositories, DeFi protocol directories, and research publications. We’re selecting targets based on demonstrated technical capability in areas relevant to Aqua.

Telegram builder communities: We’ve compiled a directory of relevant groups (solver communities, Solidity developer channels, DeFi-focused chats) for targeted recruitment posts.

Referrals from the 1inch community and support team have also driven applications.

Q2 Recruitment Goals

We’re targeting 30 total applications by end of Q2, with broader geographic and team-size diversity. One specific gap: SwapVM-native instruction proposals are underrepresented so far. We want at least 2-3 applications focused purely on new SwapVM instructions.

7. Challenges and Lessons Learned

SwapVM familiarity is a real barrier. Almost every applicant flagged limited hands-on SwapVM experience, even when their broader technical backgrounds are strong. That’s not surprising for relatively new infrastructure, but it tells us the program should invest in developer education. Our recommendation: the 1inch core team should publish additional SwapVM tutorials, example programs, and a reference list of existing instructions.

Legal infrastructure takes longer than you’d think. Drafting grant terms that properly account for the interplay between the DAO’s revenue share, the Aqua Source License 1.1 fee obligations, the buyout clause, and KYC/KYB requirements has taken more legal coordination than we initially anticipated. We’re resolving this, but it’s created a lag between approval and first disbursement. That’s the bottleneck right now with Aqua0.

Scope assessment needs precedent. One application was rejected as out of scope, and that decision was clear-cut. But as more applications land near the boundary of “novel Aqua strategy” vs. “execution optimization,” the review committee will probably need to develop more detailed scope precedents to keep decisions consistent.

Solo founders are a tradeoff. One application comes from a solo developer. The technical work is impressive, but bus factor and execution capacity over a 6-9 month timeline deserve careful scrutiny for one-person teams.

8. Q2 2026 Outlook

Q2 is when the program shifts from setup to execution. Here’s what we’re targeting:

Get Aqua0 funded. Disbursement is approved. Legal is the last gate. Once the revenue share agreement is executed, the first milestone payment goes out. Aqua0’s timeline is aggressive (2 weeks for merged M1+M2), so we could see a testnet deployment within weeks of signing.

Move 2 more teams through the review process. Teams #3 and #7 have both completed intro calls and shown strong technical foundations. Pitch calls with the full reviewer panel are being scheduled for early Q2.

Grow the pipeline to 30 applications. Continued proactive outreach, with a focus on SwapVM-native proposals.

Nail down the legal and KYC process. We need a repeatable workflow for grant agreement execution and KYC/KYB verification so future approvals don’t hit the same bottleneck.

First milestone completions. If timelines hold, we could see Idea Verification and Proof of Concept milestones completed within Q2, with corresponding funding disbursements.

9. Key Metrics

Metric Q1 Actual Program Target
Applications received 15 20+
Applications in-scope 6 —
Applications approved 1 8-10 teams funded
Applications rejected 9 —
Funds disbursed $0 $436,000 total
Revenue to DAO $0 TBD post-launch
Strategies launched (mainnet) 0 6+
Intro calls completed 15 —
Reviewer pitch calls completed 5 —

10. What’s Next

Q1 was about building the foundation: governance, infrastructure, legal framework, early pipeline.

The real test starts now. Q2 and Q3 are when we move from pipeline to production, from approved applications to funded teams shipping code on testnet and mainnet. The quality of what we’ve seen so far gives us confidence the program will deliver on what it promised: new strategies on Aqua that generate sustainable revenue for the 1inch DAO.

We will continue operating with full transparency. Application data, reviewer votes, milestone progress, and funding disbursements are all tracked in the program’s Notion workspace and will be reflected in future reports.

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