CVI.Finance Response to Arbitrum DAO Delegates’ Feedback and Revised Proposal
Request: 125,000 $ARB (Previously 250,000 $ARB)
Executive Summary
After thorough consideration and valuable feedback from the Arbitrum Council, CVI has revised its LTIPP grant proposal. Addressing concerns over the original grant size, CVI reduced our request to 125,000 $ARB, aiming for a more balanced and responsible allocation of funds. This revised proposal includes adjusted milestones and a refined focus to optimize immediate benefits for the Arbitrum ecosystem.
CVI also revised our three core objectives: stimulating trading excellence and activity, increasing liquidity and market stability, and fueling widespread trading engagement. Each objective is accompanied by concrete execution plans and clearly defined milestones to ensure transparency and accountability throughout the grant period.
Council Feedback
Wintermute:
Wintermute recognized the application as robust, with a clear execution plan and unique product offering. Yet, they observed that it may serve a limited user base. The main criticism was the lack of detailed justification for the requested grant size and the seemingly arbitrary nature of the distribution amounts. Consequently, Wintermute did not support the application due to these issues, despite acknowledging CVI’s solid distribution mechanism.
GMX:
GMX appreciated the detailed plan to boost trading and liquidity but pointed out the need for more clarity on the grant size justification and potential market risks. They expressed concern over the proportionality of the requested funds to the current TVL and suggested a phased funding approach based on tangible outcomes. GMX recommended refining the application to ensure a responsible and transparent grant usage.
Karel:
Karel found the proposal to be well-crafted with clear goals but voted against it due to insufficient justification for the grant size and the need for evidence of market demand and user growth. They advised observing proven results from the platform before implementing scaling incentives, signaling the necessity for CVI to demonstrate its effectiveness and user adoption before receiving substantial funding support.
CVI Response
In response to the valuable feedback from the Arbitrum Council, CVI have taken the concerns regarding the magnitude of our initial LTIPP grant request into thoughtful consideration. Our commitment to aligning with the expectations of the Arbitrum ecosystem and its governance has led us to make the following adjustments to our proposal:
- Grant Request Reduction: CVI have proactively decided to halve our initial request from 250,000 $ARB to 125,000 $ARB. This significant reduction directly addresses the concerns raised about the grant size, ensuring a more balanced approach to fund allocation within the Arbitrum ecosystem.
- Milestone Revisions: Corresponding with the reduced grant request, CVI have tactically recalibrated our project milestones. Our aim is to maintain the integrity and the objectives of our initiative while scaling the scope to reflect the revised funding. This ensures that the essential deliverables remain on track, guaranteeing progress and continuous development.
- Focused Impact: By resizing our request, CVI aim to concentrate on critical areas of our platform that promise the most immediate and impactful benefits for Arbitrum users. This will allow us to leverage the grant in the most effective way possible, ultimately enhancing value within the Arbitrum network.
Adjusted Grant Objectives, Execution, and Milestones
Objective 1: Encourage Trading Excellence and Activity
- Execution: Allocate 40,000 $ARB for trading and trading competitions. Past data show trading competitions significantly boost TVL and engagement in CVI.
- Note: By making consecutive trades every day, users will raise their chance of receiving a bigger allocation of $ARB.
- Milestones:
- Milestone 1: Achieve $15M in trading volume by week 4, allocating 10,000 $ARB.
- Milestone 2: Reach $30M in trading volume by week 8, allocating an additional 15,000 $ARB.
- Milestone 3: Hit the final target of $50M in trading volume by week 12, allocating the remaining 15,000 $ARB.
Objective 2: Amplify Liquidity and Market Stability
- Current Status: $720K TVL in Theta Vault.
- Target: Increase TVL to $2M to enhance market stability and liquidity.
- Execution Strategy: Allocate 40,000 $ARB with a tiered incentive structure to incentivize Liquidity Providers (LPs), adjusted to current $ARB price.
- Incentive Plan:
- Initial Liquidity (up to $1M TVL): 8,333 $ARB, providing an additional 7% APR.
- Intermediate Liquidity ($1M to $1.5M TVL): 12,500 $ARB, offering an additional 10% APR.
- Target Liquidity ($1.5M to $2M TVL): 12,500 $ARB, providing an additional 15% APR.
- Special Bonuses for Consistency: Additional 2% bonus for LPs who do not withdraw any liquidity.
- Performance-Based Adjustments: Regular assessments to adjust incentive structures as necessary.
- Transparency and Reporting: Provide regular updates and detailed reports on the liquidity pool’s status.
- Milestones:
- 1-month Milestone: Evaluate engagement and adjust allocations.
- Milestone 1: Reach $1M TVL within the first 4 weeks.
- Milestone 2: Reach $1.5M TVL by week 8.
- Milestone 3: Achieve $2M TVL by the end of the 12-week period.
Objective 3: Foster Widespread Trading Engagement
- Execution: Implement 12,000 $ARB in raffles and 33,000 $ARB for trading fee rebates. Past raffles have proven effective in boosting engagement.
- Last raffle example: CVI V4 Traders Incentive Program
- Milestones:
- Milestone 1: Increase to 350 unique traders by week 4, allocating 4,000 $ARB.
- Milestone 2: Grow to 450 unique traders by week 8, allocating an additional 4,000 $ARB.
- Milestone 3: Achieve the target of 500 unique traders by the end of the 12-week period, allocating the remaining 4,000 $ARB.
- Rebate Schedule:
- Initial Engagement Boost: Week 1-4, 8,500 $ARB, 50% rebates on open/close fees, 30% rebates on funding fees.
- Sustained Trading Incentive: Week 5-8, 11,000 $ARB, 35% rebates on open/close fees, 15% rebates on funding fees.
- Final Push and Trader Retention: Week 9-12, 13,500 $ARB, 25% rebates on open/close fees, 5% rebates on funding fees.
Detailed Justifications and Strategic Enhancements
User Growth Strategy:
- Tactics: Utilize KOLs and tailored marketing campaigns to maximize reach and engagement within traders and DeFi community before and during the campaign period.
- Expected Outcomes: These strategies are expected to accelerate user acquisition and retention, aiming to increase our user base by at least 50% over the campaign period.
Financial Transparency:
- Budget Allocation Breakdown: Detailed budget breakdowns will ensure financial oversight, with each $ARB accounted for and tied to specific strategic outcomes.
Community and Council Engagement:
- Engagement Plan: Commit to regular AMA sessions, community updates, and active participation in forums to maintain transparency and incorporate community feedback.
Final Closeout Report:
- Report Components: Detailed report outlining all activities, expenditures, lessons learned, and the impact on the ecosystem, to be provided within two weeks of the program’s conclusion.
Conclusion
In revising our proposal, we’ve taken to heart the feedback provided by the Council, understanding the importance of not just transparency and detailed planning but also a demonstration of practical value to the Arbitrum ecosystem. We’ve adjusted our grant size to reflect a more conservative and measured approach, affirming our commitment to responsible growth and mutual benefit.
By accepting our revised proposal, the Council will be endorsing a project that stands ready to demonstrate significant value addition through precise, strategic implementation of the resources entrusted to us.
CVI look forward to a favorable consideration of our amended application and the opportunity to contribute tangibly and meaningfully to the Arbitrum ecosystem. Thank you for your thoughtful consideration and the chance to refine our approach based on the invaluable insights provided. CVI are confident that CVI can set an example of how strategic funding can be a catalyst for growth and innovation.