I have to say that the current large-scale grant incentives are a failed experiment. I support shifting the direction and strategy.
At present, the incentives have not brought a more prosperous ecosystem to Arbitrum. Instead, as the benefits fade away, a severe decline has occurred. The Arbitrum DAO should directly allocate some incentives to users, such as launching a new Odyssey program to create more rewards for ordinary users. As for spending on ecosystem projects, due to the lack of real-name authentication for EVM wallets, nobody knows where these ARB tokens ultimately go, leading to excessive fake transactions and artificial prosperity. Without the official participation and initiatives from Arbitrum, it is difficult for users to gain tangible benefits.
Establishing longer-term incentive goals and plans, as well as cautious spending, is a responsible approach for ARB token investors and will help the DAO build a positive reputation for future prosperity and development.
I agree that previous grants did not bring as much positive as expected.
However, giving rewards to users without being tied to the project is a bad idea, because as soon as the rewards run out, the users will leave this project.
Therefore, it is necessary to support projects that can retain the user, possibly through direct payments to users, but it must be based on a good and useful project.
Thank you for the proposal. I appreciate you bringing in the data to support your proposal. I agree that we need a more fair and efficient design of incentive programs—and more importantly, a sustained one.
An ongoing incentive program with well-defined rubrics will build trust among builders. So far, Arbitrum has only had fragmented efforts at incentive distribution, and even some of those programs have received negative feedback.
The reason OP Stack has been winning this race is because of the incentives it promises to the superchains and, of course, the narrative around it.
While I agree with this, another important—albeit clichéd—aspect is the UI of any DeFi platform. Case in point: Hyperliquid. It won so many users because of the ease of use it provided. Some platforms I’ve seen on Arbitrum lack that ease. As a community, we should also delve into this aspect, and DeFi platforms eager to grow should be given constructive feedback to improve.
Lastly, coming back to the point of sustained incentives, we need programs running regularly, as well as a retroactive factor. We should not hesitate to implement programs that have proven successful in other ecosystems.
Thanks again for the proposal. This is a strong starting point but still high-level. I’m hoping to see a more detailed plan with specifics in place to get this proposal up and passed.
The proposal highlights key concerns around the effectiveness of past incentive programs and proposes a strategic pivot to deepen blue-chip liquidity and expand token diversity. While we agree with some aspects, there are critical areas that require refinement, clarification, and community alignment.
1. Evaluation of Past Incentives
We agree that past incentive programs have shown mixed results; however, there were clear success stories for particular protocols that should not be overlooked. Accurate assessments of these outcomes are necessary to refine future strategies. For instance, GMX performance has been incorrectly framed —their V2 pools incentivized during Arbitrum’s programs are at ATHs and continue to grow.
2. Strategic Shift
A focus on deeper blue-chip liquidity is worth exploring, but ensuring those assets remain post-incentives is critical. The proposed self-adjusting mechanisms for incentives are promising, but the program’s design should also consider modular, multi-pronged approaches. These additional approaches could include:
TVL and usage bootstrapping for new protocols.
Retroactive rewards for users, protocols, and communities.
Targeted support for native, innovative projects with proven product-market fit.
Chain abstraction strategies to onboard users.
3. Community Engagement
Effective program design requires feedback from stakeholders with direct experience in previous initiatives. We encourage input from delegates like @404DAO, Wintermute, @JoJo, @SeedLatam, and Blockworks, as well as other service providers involved in incentive implementation.
4. Additional Positives
We appreciate the inclusion of Kaito for mapping and understanding mindshare of assets for data-driven incentive adjustments, which could lead to more efficient allocation and better ecosystem alignment. This collaboration could also serve a dual purpose if an Arbitrum Yap Leaderboard was created.
The data reported around GMX is somewhat inaccurate. The incentives were primarily distributed to facilitate the transition from V1 to V2, and as a result, V2 has achieved its highest Total Value Locked (TVL) to date, currently standing at $553 million.
Below are some questions and considerations we have regarding the proposal and its incentives:
Strategic Alignment:
◦ How does the proposed KPI-driven rewards framework ensure long-term alignment with Arbitrum’s broader ecosystem goals beyond spot market liquidity?
◦ Are there plans to expand incentives to other verticals, such as derivatives or lending, once the spot market reaches maturity?
Market Competition:
◦ With competitors like Base, Solana, and Hyperliquid experiencing rapid growth, what differentiates Arbitrum’s strategy to retain projects and liquidity providers?
◦ How does Arbitrum plan to prevent migration to other chains offering comparable or superior incentives?
Cross-Chain Bridge Criteria:
◦ Elaborate on security standards and audits required for cross-chain bridge partners to mitigate risks.
KPI Definitions:
◦ What specific KPIs will be used to evaluate success in terms of liquidity depth, user retention, and ecosystem growth?
Here are some suggestions to improve the proposal:
While liquidity and token diversity are highlighted, user retention mechanisms could be further detailed, such as incentivizing long-term engagement.
Create a publicly accessible dashboard for tracking real-time performance against defined KPIs, improving accountability.
Include mechanisms to discourage liquidity providers from dumping ARB tokens immediately after receiving rewards and have stickiness post the incentives.
The following reflects the views of GMX’s Governance Committee, and is based on the combined research, evaluation, consensus, and ideation of various committee members.
This proposal echoes what many of us have been discussing in the last months. The data presented here confirms that Arbitrum has been losing ground to other competitors in the space. I agree we need a structured approach like this one to stay competitive.
I also agree that we should not be funding protocols individually in hope of ecosystem growth but actually building sustainable liquidity depth. This is like building a city selecting random places for buildings instead of having a proper infrastructure and urban planning.
However I believe this proposal lacks more information for a complete assessment by the delegates. How much ARB will be allocated for liquidity categories? The proposal states the need for “higher rewards” and “deepening liquidity”, what APY ranges are we targeting? How much volume should be captured in order to qualify the incentive scheme as a success?
I believe @GensDAO makes a good point on the need to build upon a communication strategy. Base and Solana are doing this in their own way and Arbitrum should do something that reflects our core values. It could be time to consider a broader repositioning that highlights Arbitrum’s maturity and that would differentiate us from the crypto casino perception of other chains.
gm, I broadly agree with the purpose of the iniative. Here are some considerations from my side.
First, the core data analysis probably needs refinement - measuring in USD rather than ETH skews our understanding of real growth and market share trends, and as others have mentioned some pools have actually performed better than described.
That said, I agree with the assessment that we’re losing ground to competitors and need to act.
I love that this is an initiative with a specific target: whales. Which I should add could be an intermediary step towards a somehow similar group, just one step above: institutions.
Their trading patterns clearly show a need for deeper liquidity in blue-chip assets and stablecoins, and we want that activity on Arbitrum.
For implementation, I don’t think we should be protocol agnostic.
I strongly believe we should focus on Arbitrum-aligned protocols (like Camelot) and those pushing capital efficiency boundaries (like Fluid from Instadapp). Simply throwing capital at high-TVL protocols risks wasting resources without building lasting infrastructure.
As others highlighted, the vesting mechanics need careful consideration.
Incentives are short term, no matter how you frame them, but the LTIPP has generated some good ideas to improve the dynamics, and there are solutions already in the market that can help.
Ex:
Dolomite has a form of vested ARB
Royco and Merkle help to seamlessly distribute incentives to users directly.
As the slides highlighted, two critical questions remain unanswered:
What additional APR threshold makes supply truly elastic?
How do we measure and achieve genuine long-term retention?
Thanks and will be following the development of the program as these details are clarified.