The Funding Ladder

The funding ladder is the bridge between “I just pay $10 a day to compete” and “I’m a backed trader pulling profit splits from a vault.” It’s the part of Proovly that replaces the prop firm model — and the part that has to be rolled out carefully so the vault doesn’t blow up.

The three stages

Proovly will not have funded accounts on day one. It can’t — we’d be backing strangers with money we don’t have. The ladder unlocks in three stages, gated by what the platform has actually proven.

Stage 1 — Pure Arena (Months 0–3)

This is what launches in Phase 1. There are no funded accounts. The only way to make money is to win prize pools out of your own and other traders’ entry fees in the Daily Round — one round per day, 24-hour window, $10 USDC entry, top 50% of finishers paid via the harmonic prize curve.

Settlement is trustless commit-then-claim (see How Rounds Work for the full flow): the bot publishes a Merkle root on-chain, you wait 24 hours for the challenge window, then you pull your prize directly from the contract with a Merkle proof. The platform never touches your winnings — you do.

Every player is funding the ecosystem with the 10% rake (which auto-flows to the rake recipient address on every settlement), the platform’s revenue accumulates, and ELO ratings start to mean something because they’re being earned across hundreds of rounds. If you’re a top-10 ranked trader at the end of Stage 1, you’re queued for Stage 2.

Why we start here: It generates revenue, it stress-tests the contracts with capped exposure ($5,000 hard cap on the escrow contract balance — a deliberate blast-radius bound), and it builds the ELO history we need to make funding decisions later. No one gets backed by capital that doesn’t exist yet.

Stage 2 — House-Funded Accounts (Months 3–6)

Once the platform’s treasury hits a target threshold (Phase 1 target: ~$3,000 from accumulated rake), we start handing out small house-funded synthetic accounts to top-ranked traders. “Small” in this stage is intentional — think $500 to $2,000 of synthetic capital each, distributed across 5–10 traders.

How it works:

• Eligibility is purely ELO-gated. Top 10 by rating, no exceptions, no applications, no interviews.
• Account size scales with your ELO and your time on the ladder. New top-10 entrants get the floor amount; veterans get more.
• Drawdown rules are simple and immutable: hit -20% from peak, the account is frozen and your ELO drops one tier. No reset fee. No “challenge phase 2.”
• Profit split: 70% to you, 30% to the house treasury, paid in USDC after each round.
• No fees. Nothing comes out of your pocket. You earned the seat by climbing.

This stage is where Proovly stops looking like a competition platform and starts looking like a prop firm replacement. The crucial difference: the capital is real (held in escrow on-chain), the accounts are visible (everyone can see who’s funded and how much), and the rules are immutable code, not a TOS document.

Stage 3 — Public LP Vault (Months 6+)

Stage 3 is where Proovly becomes a two-sided marketplace. We deploy an audited ERC-4626 vault that anyone can deposit USDC into. The vault funds synthetic accounts for top-ranked traders, the platform takes a fee on profits, and depositors earn yield from the spread between trader edge and the platform fee.

The economics:

• Depositors (LPs) put USDC into the vault, get vault shares back, and earn yield as funded traders generate profits. Yield is paid net of trader splits and platform fees.
• Traders are matched to capital based on their ELO and historical Sharpe. Bigger ELO = bigger account size, capped per trader to limit tail risk.
• The platform takes a cut of profits (target: 10% of net trader PnL) to fund operations and the insurance buffer.
• Insurance buffer sits between trader losses and depositor capital — a portion of every winning round’s profit gets diverted into the buffer until it covers a configurable percentage of vault TVL.

Stage 3 only ships after a real third-party audit. Until then, the vault contract doesn’t exist on mainnet.

Why the ladder is structured this way

Every other “funded trader” platform in existence skipped to Stage 3 from day one — and that’s why they all blew up. They took LP-style deposits (challenge fees) for accounts they couldn’t actually back, then prayed the failure rate stayed high enough to cover the few winners. When it didn’t, they froze payouts.

Proovly inverts the order:

1. Prove the rounds work with real entry fees and real prize pools. (Stage 1)
2. Prove the funded model works with house capital we can afford to lose. (Stage 2)
3. Open it to LPs only once the trader pool, the contracts, and the risk model are all battle-tested. (Stage 3)

If Stage 1 doesn’t work, Stage 2 never opens. If Stage 2 doesn’t work, Stage 3 never opens. There is no “we’ll figure it out later” version of Proovly.

What you can do today

Right now, in Phase 0, the answer is: get on the waitlist. Stage 1 launches with the founding cohort. The earlier you join, the more rounds you’ll have on your ELO record by the time Stage 2 funding decisions get made — and Stage 2 picks are pure ELO, no exceptions.