Vertex would support this proposal, but we agree with @tnorm and @Bobbay’s comments that these programs can only succeed with true measures of success, without which the DAO can easily burn through millions of dollars without seeing the impact it desires. At the same time, @tnorm is also correct that it would be unfair to protocols to retroactively judge them on conditions that are set now. Therefore, we would support the current ask of 37.5M ARB but would also caution that, barring across the board success, this style of distribution may not be sustainable.
However, we also believe that there are tangible measures that can be used to better understand the incentive programs the DAO is running, and most effectively distribute funds going forward. OpenBlock’s work is a start on these measures. We believe that unique users, volume, and sequencer revenue especially reflect measurements that support long term growth on Arbitrum and would welcome more discussion on what other measures could be included here.
The STIP initiatives encourage developers to introduce promising advancements and create interconnected value across the Arbitrum ecosystem, establishing a robust ecosystem where users find compelling reasons to remain engaged. This strategy not only attract new users but also guarantees that current users consistently discover value, solidifying their commitment to Arbitrum over the long term, With the help of STIP initiatives, Arbitrum can further secure its expansion and lasting success amidst the dynamic blockchain environment.
Very well written - looking at competition in the space and how that is working for growth is a great idea.
Mantle has successfully onboarded 100k+ meth to their L2 through clever usage of incentives (and yield subsidization). There’s no reason arbitrum can’t mimic that model, altering it to incentivize what we deem important.
Recent L2 launches have been heavily incentivised and / or offered leading yields on blue-chips and stables to attract and retain users.
I think Arbitrum needs to stay competitive with these incentives especially with the current rise of Base / OP and the behemoth funding of Coinbase behind them.
This is a good initiative due to the wild market, but we should really encourage the DAO to analyze STIP and LTIPP performance so we can actually learn from the insights instead of throwing spaghetti against the wall.
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.
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.
@pedrob has pretty much summed up my thoughts regarding this proposal.
i understand we are still in growth stage, with massive treasury to fund initiatives, but i’m personally uncomfortable with two main developments. First is pushing forward very similar proposals with no clear explanation on their value-add vs the existing / in-progress ones. It’s important to look at proposals in tandem with DAO’s efforts as a whole vs. in a stand-alone, piecemeal fashion. Second is lack of follow-up to assess the supposed success of previous proposals before commencing with an extension.
On a related note, I don’t think there’s much debate that most of the capital (in DeFi in general) is mercenary and this cycle’s meta is not DeFi so we’re fighting an upward battle here. Measures like fund/user stickiness would be interesting to look at.
The ARB token had 42% (of existing circulating supply) unlock couple of days ago, and we’re already seeing movements to offboard the risks. With continued selling pressure of the token, perhaps it’s also a time to take care of our treasury.
I think the LTIP is the way forward, and this should be the time to demonstrate the results, achievement of product-market fit, liquidity stickiness for projects that have already benefitted from ARB incentives.
I don’t think all projects were successful in their actions, so I don’t believe all of them should be granted further incentives from the DAO.
I won’t be able to support this proposal until we have some clarity on this (and a sybyl report cannot be enough).
The incentives should be used to prove that a protocol can use a not-infinite amount of money to attract and retain value on Arbitrum.
Reminder: there will always be a new L2 that can offer more shiny incentives.
I like the idea of continuing good progress for STIP host protocols.
Does perform well coincide with the metrics provided during the STIP proposal phase by each protocol or a separate set of metrics?
It would be expected that protocols see a downturn when STIP grant funds are depleted so retained growth would be a clear metric.
Also at this point it feels like the ask is quite high with LTIP progressing and also balancing treasury funds. This is not withstanding further incentivisation whilst a number of viable L2’s are developing a robust user base
I think the best solution put forth here is to instead of just back funding proposals, allow protocols to apply to the LTIPP - or we could even call its Round 2 as was done during the STIP. Proposals can be critiqued by council members and also be adjusted down to a budget that they deem appropriate - we are happy to write a new proposal with clear milestone goals in mind.
I think it’s easy for protocols to hop in this forum and support this proposal to continue to boost the KPIs that STIP has allowed them to. However, do we have any solid data to give us a reason to believe that STIP materially increased these KPIs in the long term and is going to allow these protocols to retain users?
I think that having STIP rounds 1, 2, and the pilot program for LTIP will give us the data we need to properly assess the proposals for the LTIP. I imagine that any interim funding will smooth out the data we’re looking to collect and snub us of the insight we’re looking to attain from running this program in the first place.
This isn’t meant as a dig at Premia or anything but from the screenshot @dk3 attached to their message, it seems that their TVL is sinking as users are jumping ship to the next incentivized protocol. I don’t think that this is what was envisioned for the result of STIP; to have users temporarily come as tourists to enjoy the incentivized on-chain activity and then go back to the dApps and chains from which they came.
We believe there’s no need for a lengthy application process. Instead, protocols should back up their requests with data and conduct a quick vote.
As traders deeply involved in the ecosystem and positioned to assess opportunities in various DeFi protocols for our vault allocations ( see Dune below), we also have an additional suggestion for the metric to consider.
In addition to data like the Sybil analysis from forum.arbitrum.foundation (e.g., “OpenBlock Labs STIP Efficacy Sybil Analysis”), to also consider token price as a metric.
This is by no means a perfect metric, but it’s less susceptible to manipulation compared to TVL and volumes. Ultimately, the token price signals the market’s confidence in a protocol. If it suffers significant losses, it’s likely because users did not see the benefits ( maybe because was diverted by sybil) of the STIP and they “voted” already with their wallets.
I also understand the questions of some who are saying: why we should double down on stip if we can’t measure it yet. Why don’t we wait for the ltip to iterate on that. Etcetera. I get it. These are all valid concerns.
But, to me, the above is valid: we can’t stop right now. And also, if we REALLY want to know what success looks like, we would need to all sit down at a table, for a few days, and just discuss what we want to achieve in arbitrum in the next 6 months, 2 years, 5 years. Which is something realistically not doable in a DAO and that is usually what a board + a ceo do in the corporate world. What I mean is that while there is a merit in knowing what metric grew and what didn’t, metrics are just that: metrics. They don’t define necessarily on a 1:1 relationship success.
Lastly, i think that crypto AND the ethereum world AND the L2 world are in a specific phase (at least for another few years): growth. Which means, it could make sense to target generic metrics (users, tvl, volume) as proxy of a pathway to greatness, which is what we should generically pursue regardless of specifics.
NOTE: i obviously have also a biased interest here in voting yes, since i work for Jones DAO. For what it matters I would have voted yes even if i was working in a mc donald tho.
The fact that this is already pushed to a vote when everyone sensible in the comments asked for time and moderation shows how corrupted things has become.
When you love Arbitrum, It’s truly disheartening to see the platform eaten from the inside.
After double-down, will come triple-down and quadruple-down, you can be sure of it. Each time with great enthusiasm from the same projects praising each other on how great they are and how necessary this is. Each time sensible people will tell that this has to stop but each each time the vote will go through…
decentralization means also that whoever has enough voting power can post to snapshot this proposal, or any proposal for what it matters.
But I also understand your comment tho. Here the idea was, the way I understood it, to make a timeline that would match ltip.
There has also been a few discussions about this in public governance calls, and several points raised by some delegates were also implemented in the proposal as well.
On the project praising themself: think about next iteration, in which you would have both protocols from stip, and also from ltip (which, latter, i think are double) going for this. I can’t obviously know how is this going to go, but talking in arbitrum about “only the same projects” is likely not the right way to frame it seeing how the stip is evolving over time and how broad the particpation in last month ltip has been.
The distribution of common goods should always be accompanied by an expectation of transparency and a quantitative framework to measure its effectiveness. There is nothing more important than this, and no greater goal that supersedes it. Otherwise, we enter a situation where the grantees become both judge and jury which is the very definition of a corrupted governance. After all, if it makes sense to distribute another round of grants, why shall we not double the grants or even triple them, this would surely bring even more success to arbitrum?
I am not suggesting that everyone involved in this decision is morally corrupt on an individual level. However, I firmly believe that the facts surrounding the current state of things are absolutely morally corrupt. I am sure that as individuals, you all look at public corruption with disgust. Therefore, I am calling upon this part of your conscience to reflect on what is happening here and how wrong it is to shove this STIP extension without a due process to evaluate the grants effectiveness.
No L2 competitiveness will ever undo the damage that you are currently doing to Arbitrum public image if this goes through.
I’ll also add that Base is doing extremely well right now in drawing attention, and they use zero incentives. Why can’t we? Why can’t we rely on the quality of projects rather than on the distribution of token which has so many bad externalities for the ecosystem?
On behalf of Stella protcol, I support the proposal, and think it is a strong effort in maintaining Arbitrum’s lead amidst strong competition from upcoming L2s.
Also support the thought of minimzing the overhead and fatigue on delegates of going through the application process all over again. The good work done by the Openblocks team can be used as a yardstick in judging the performance of protocols.
Thank you for your proposal. It is great that it is aimed at improving Arbitrum. But, I have reviewed the proposal and here are the weaknesses I see:
Unclear objectives and lack of specificity: Insufficient definition of specific goals and expected outcomes from implementing STIP. Failure to specify concrete steps or mechanisms that will be used for successful implementation of STIP. Unclear benefits: Need for a clearer description of the benefits and advantages that will be gained from using STIP. Insufficient risk assessment: Failure to mention potential risks or obstacles that may arise during the implementation of STIP, as well as plans to manage them. Financial aspects missing: Not addressing financial aspects such as implementation costs of STIP and assessing the return on investment. And one of the main points: Can we choose any STIP service provider from those that are already operational? Perhaps Wormhole, LayerZero, Axelar, etc.?
To improve such a proposal for implementing STIP, it is recommended to:
Clearly define the objectives and expected outcomes of implementing the protocol.
Present specific steps and action plans for implementing STIP.
Describe the benefits and advantages for stakeholders clearly.
Identify potential risks and outline strategies to mitigate them.
Analyze the financial aspects and evaluate the economic feasibility of implementing STIP.
These additions will make the proposal more informative, convincing, and understandable for those who will be voting on this proposal.
