Important: this opinion is solely my own and in no way reflects that of SEEDLatam or any of its members
gmgm.
Just a few comments from an LTIPP workforce member (Applicant Advisor).
Firstly, what were the objectives of the STIP? Were they achieved? Do we have the necessary data to be convinced of this? Because when money is given away to users, the growth in TVL and volume is somewhat obvious. And it seems that this is the only thing highlighted by those who posted in favor of this proposal.
In this regard, I totally agree with @tnorm:
But beyond that, the introduction of the Long Term Incentives Pilot Program (with “pilot” emphasized) highlighted a series of issues in the allocation of funds during the STIP:
First, what was the reasoning expressed by the DAO in approving that proposal?
This should address one of the concerns of this proposal: the competition against other L2s. This program is about 1 month away from distributing 45M ARB in incentives to users, which is attractive enough to:
a. keep the current users engaged, and
b. bring in new ones, as there have already been proposals presented with interesting mechanisms to incentivize bridging and volume towards Arbitrum.
Disregarding through this proposal the consensus rationale behind the LTIPP makes it look like all relies on the fear of the protocols that benefited from the STIP of losing the users they gained through those incentives. Nothing against that nor is something wrong, but it has nothing to do with competing against other chains, which is a clear and stated objective of current LTIPP.
In this regard, I believe it is a great opportunity for the beneficiaries of the STIP to gather data on:
a. stickiness
b. performance without incentives (before and after STIP / BSTIP)
c. performance/stickiness without incentives in the context of incentivized competitors.
Has that situation changed? Do we have evidence that the STIP worked better than the intended solution? (of course not, since LTIPP hasn’t started yet)
So, moving to the problems that the LTIPP proposal identified and is trying to solve:
This led to the introduction of the Council. Which is currently studying and evaluating 173 elegible applications.
Basically, this proposal suggests that we forget that this was a problem, asking the protocols that received STIP to come up with some justification for why they shouldn’t lose funding, and asking the delegates to do all the work over again. This involves 65 possible proposals.
Moreover, all the work we’ve done over these two weeks as Advisors seems to have been for nothing:
As Advisors, we worked extensively over the last weeks to help all protocols improve their applications. Only the other Advisors know the enormous amount of hours we dedicated to this.
But our efforts were not solely to assist those protocols that are less well-known or not as well-connected with the delegates in crafting competitive and appealing proposals. We also aimed to help everyone improve or modify their proposals for the benefit of the Arbitrum DAO, ensuring that the proposed incentive mechanisms are sustainable in the long term and aligned with the goals of the Arbitrum DAO.
This proposal overlooks the value of this function to the DAO and assumes that because they were approved in the past, the same proposals as they were originally designed would be approved today.
It also does not justify why 50% of the incentives received in the past are sufficient to achieve the same objectives that were set in the STIP for each applicant. In these past weeks, we have seen all kinds of applications and mechanisms, and the need for incentives varies greatly in each case and depends on (at least):
a. current metrics
b. market conditions
c. expected metrics.
None of these are the same today as before STIP. Why 50% of received incentives would help protocols to do the same? What are the objectives? And how do those objectives align with the DAO’s objectives?
“Allowing protocols to innovate on incentive distribution mechanisms will allow Arbitrum protocols and community members to get a better idea of which designs work and which don’t work.”
Again, this proposal overlooks the objectives set out in the LTIPP. It was not just another round of STIP to continue throwing money into the network to incentivize users.
It is about experimenting with a new mechanism in search of perfecting a long-term plan, to address many of the deficiencies that this proposal suggests repeating without consideration.
The great thing is that the approved LTIPP proposal includes research bounties. Currently, the Council is working on defining the questions that must be answered. I take this opportunity to invite everyone here to post any questions that arose during STIP that would be valuable targets for research.
Conclusions
I apologize if anything I’ve said here comes across as aggressive or upsetting. We’ve put a lot of effort into these weeks to give the DAO the best possible applications. Seeing this proposal makes me feel as though all that effort was in vain, and that old grants can simply be renewed without even waiting for a general conclusion or analysis on the impact of the STIP and the future impact of the LTIPP.
With this, I support @Bob-Rossi proposal:
Thank you for initiating the debate, and again, apologies if anything was upsetting.