Blockworks Research will vote against this proposal.
While it is clear that a vast amount of onchain activity across ecosystems is currently inorganic, and Arbitrum needs to maintain its competitiveness, we feel the distribution of incentives should be done on a more granular level. Moreover, in a hypothetical situation where Arbitrum doesn’t distribute incentives at all, users/capital that opt to leave the ecosystem completely aren’t valuable for Arbitrum in the long term in the first place, as these users/capital are likely to be purely extractive.
As has been mentioned across several sources, the original STIP process had many nuances that could be improved on, implying that the selection of protocols could have been more effective. Arbitrum is rightly in a growth mode, but distributing incentives in a semi-automatic way will—in the long term—likely lead to a situation akin to the problem known as Zombie Financing in corporate finance.
Due to the aforementioned reasons, we suggest that previous STIPs as well as the upcoming LTIPP be studied more closely through quantifiable KPIs and with a focus on customer retention. Furthermore, we think that a detailed execution plan for the usage of Arbitrum’s balance sheet should be considered to ensure the ecosystem’s long-term success. This will be especially important once market conditions worsen, and, in our opinion, is something that the DAO should start preparing for.
We consider this proposal to be structurally incomplete in its current form, and thus, vote against it.