# DeFi Renaissance Incentive Program (DRIP) **URL:** \ **Category:** Finalized AIPs\ **Tags:** proposal\ **Created:** [April 17, 2025, 12:05am UTC](https://forum.arbitrum.foundation/t/defi-renaissance-incentive-program-drip/29049 "2025-04-17T00:05:20Z")\ **Posts on this page:** 1\ **Showing post:** 13
**Author:** ![SEEDGov](https://yyz1.discourse-cdn.com/flex029/user_avatar/forum.arbitrum.foundation/seedgov/32/14560_2.png) [@SEEDGov](https://forum.arbitrum.foundation/u/SEEDGov)\ **Post date:** [April 20, 2025, 4:36pm UTC](https://forum.arbitrum.foundation/t/defi-renaissance-incentive-program-drip/29049/13 "2025-04-20T16:36:45Z")
Hi @Entropy! Thank you very much for this long-awaited proposal. > [@Entropy](#): > > Entropy proposes a new type of incentives framework focused on targeting specific assets and activities across Arbitrum rather than specific protocols. Incentives per specific assets/activities will run in 3-month seasons through the DRIP so that the program can be adapted and different assets and activities can be selected as learnings are taken into account. Each season must have a singular, specified goal. For example, Make Arbitrum One the best place to borrow USDT against wstETH or Ensure Arbitrum One Has the deepest liquidity for trading USDT/ETH. We believe this approach is on point. From our perspective, incentive programs should be protocol-agnostic, as long as user safety is properly accounted for. In that regard, we noticed there is a “minimum threshold of security and maturity” required for a protocol to be eligible: > [@Entropy](#): > > -Need to be chain-wide and protocol agnostic (minus security-related whitelisting or a TVL/protocol-maturity requirement). Depending on the vertical and ROI after a program starts, the committee can expand or restrict how broad the program is. This raises a question: in the event a protocol is excluded, is there any mechanism to appeal or revert that decision? We understand the Season Selection Committee has discretion to exclude, but it is still composed of humans, and errors or oversights may occur. Therefore, there should be a transparent mechanism for an excluded or omitted protocol to request inclusion. > [@Entropy](#): > > ### Condensed Example of a Season: > > **Goal: Make Arbitrum One the best place to borrow USDT, USDC, and ETH against wstETH.** > > **Select Collateral** : wstETH > > **Select Borrowable assets** : ETH, USDC, and USDT > > **Required LTV** : 15% > > **Target yield boost for wstETH** : 2% APR (increase over wstETH base yield) > > **Maximum collateral incentivized** : $1B > > Protocol Partner RFP: The program will be platform/protocol agnostic and target lending across Arbitrum One. With that said, protocols will be screened for security purposes before being included in the program. The thought process behind this decision surrounds not incentivizing (or appearing to endorse) Arbitrum’s users to deposit assets into protocols that have a higher likelihood of being hacked. The security provider selected in the ARDC will be in charge of whitelisting lending protocols or alternatively the committee enlists a firm that can do this. The lending platform partners must support wstETH as collateral and borrowing of USDC, USDT, or ETH against that collateral in order to be eligible. This creates a fair environment that should not negatively encumber any specific lending market. > > In practice, this means that any borrower of USDC, USDT, and/or ETH on a whitelisted Arbitrum One-based lending platform will be eligible to receive 2% APR paid on the total value of their wstETH deposited into the lending protocol. Wallets will only be eligible if they have reached and sustained an LTV of 15%. Rewards will be paid out weekly by a distribution partner. > > With a 3-month program, targeting a 2% yield, $5M will cover 3 months of runway on $1B in collateral participating in the program. We understand this is just an example, but something that concerns us is that the ARB token is not mentioned at all throughout the proposal. While we’re not suggesting to preset specific goals, part of strengthening the native token involves ensuring deep liquidity. We suggest initially focusing on ARB + stablecoins + ETH. Greater depth in ARB/stablecoin or ARB/ETH pairs is a win-win for the ecosystem. This is especially relevant when assessing ARB’s risk profile as lending collateral. > [@Entropy](#): > > ## Season Selection Committee > > 1. Arbitrum Foundation > 2. Entropy Advisors > 3. Offchain Labs > > ⅔ votes are required for a season to be approved. The first 4 seasons that meet the rule requirements and are deemed valid by the committee will be enacted. > > The committee also has the power to: > > 1. Kill the Program: If the program fails to perform, at the discretion of the committee, it reserves the right to terminate it. > 2. Adjust the Program: Reward allocations or program parameters may be modified, guided by insights from the evaluation partner. All adjustments must remain within the scope of the original proposal, balancing agility with accountability to ensure the program continues to serve its intended goals. > 3. Widen or constrict the apps eligible in a season > 4. Any other changes: The season selection committee will be able to make any changes to the program as they see fit as long as it maintains the spirit of the DRIP proposal As we’ve mentioned in the thread [**A Vision for the Future of Arbitrum**](https://forum.arbitrum.foundation/t/a-vision-for-the-future-of-arbitrum/28962/13), it not only makes a lot of sense to have Arbitrum Aligned Entities involved in key proposals like this, but it’s also virtually impossible for any other proposer to gain enough consensus to pass a competing incentives proposal. We’ve already seen this play out with [ARB Incentives: User Acquisition for dApps & Protocols](https://snapshot.box/#/s:arbitrumfoundation.eth/proposal/0x7689f957c8cc37e991c7bed0f1d3dd3f6024a921b0bfbae5c897a09ab45c538b), where the DAO made it clear that the incentives strategy must come from entities such as OCL, AF, or Entropy. That said, although the current committee already partially represents the DAO via these entities, we see potential value in incorporating two additional members selected from the current pool of independent DAO contributors. The AAEs could even appoint these two additional members after the proposal is approved. This aligns with what we outlined in our [SOS Submission](https://forum.arbitrum.foundation/t/sos-submission-seedgov-strategic-objectives/28975): If the DAO already has talented contributors, and the main challenge is better coordination, then the best alternative is to ensure that talent is integrated into the execution of proposals. We emphasize this because, since this is a DAO-funded initiative, delegates will naturally expect some diversity in who holds decision-making power. We believe the structure we’re proposing could help ease those concerns. Otherwise, we risk swinging from a model where initiatives were 100% executed by external contributors to one where execution is entirely in the hands of the AAEs (excluding the two vendors they plan to hire), which could lead to future issues—as @pedrob pointed out: > [@pedrob](#): > > One of the unique (albeit sometimes chaotic and inefficient) strengths of the DAO has been the involvement of contributors in operations. That structure helped surface and highlight individuals (we all know who)—now active contributors and respected delegates. If programs had been this closed off from the beginning, the DAO might not have built the pool of engaged contributors it has today. I understand the goal of efficiency, and I think it makes sense in many ways. Still, I believe it’s worth exploring ways to balance that with contributors’ involvement. A good example—one that we believe has been working well—is the Stylus Sprint Committee: there’s a strong mix of contributors (OZ, Jojo, and SEED) and AAEs (Entropy, OCL, and AF) working together, each bringing unique skills to the table for effective proposal execution and having Entropy’s management of task allocation based on each member’s strengths. A similar approach could work here—for example, assigning DAO communications to one of the additional members, thereby reducing the operational load on the AAEs so they can focus on more strategic matters like designing the next seasons. --- _[View the full topic](https://forum.arbitrum.foundation/t/defi-renaissance-incentive-program-drip/29049)._