Extension of Arbitrum’s Short-Term Incentive Program

[0xRamen]

Hey all, I am 0xRamen from Ouroboros Research, the research arm of Ouroboros Capital.

We’ve been watching the voting progress closely using this live dashboard we built.

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Arbitrum Short-Term Incentive Program (STIP) Oversubscription

At present (T-10 hours to vote end), ~29 projects fit into the 50m ARB budget.

In addition, there is currently a list of 26 projects with 1) 71.51m ARB quorum and 2) >50% in favor votes, which have collectively asked for 24.4m ARB worth of grants.

Given that >50m ARB request fulfill the quorum and voting criteria, a round 2 will no longer be held if there are no further votes to extend the framework.

STIP - Round 1: Voting Period Update

UPDATE: 50M ARB Budget Reached: As of now the 50M ARB budget for STIP has been exceeded. This means there will be no Round 2 as there is no budget remaining. Should the DAO wish to extend this framework, it may create a second proposal to either extend the budget for STIP to fund a Round 2 program OR create a proposal for an additional program to help meet the community’s extended demand for grants I will continue to provide updates on the status of the funding as the voting period comes to an…

It is apparent that there is significantly more appetite to approve grants than had expected, with 74m worth of grants or 1.5 times the amount of initially approved budget currently tracking for approval, implying 74% of total requested ARB grants being approved.

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Extension of STIP Grants

We believe that an extension of the grant program is warranted.

Our reasoning is as follows:

• Fairness: Exceeding 50m ARB was a somewhat unexpected outcome. Unfortunately, there were projects that were 1) waiting to apply in round 2 or 2) missed the deadline in round 1. Now with no round 2 happening, these projects will be denied of the opportunity to apply for the grant, which we think is somewhat arbitrary. The list of projects that have kickstarted round 2 applications is here.

• Grant diversity: For an ecosystem to thrive, we believe it is not only important to have large hallmark projects but also a diversity of smaller projects that have the potential to grow into ecosystem stalwarts. The top 5 requesters which are currently eligible collectively have 27m ARB requested. Extending the grant program will allow the DAO to honor its initially promised rules while letting in more smaller projects the opportunity to help grow the ecosystem.

We do understand that the initial consensus was leaning towards a 25/50m ARB grant program size rather than 75m. However, we do think that after going through the first round of pitches, opinions might have changed and from the voting results, we see that voting participants do think more projects should receive the grant than previously thought.

There have already been lively debates in the initial STIP thread. In our view, the quantum of extension should be chosen by the DAO, which we think could be:

1. Do not extend
2. Extend STIP by 10m ARB
3. Extend STIP by 20m ARB
4. Extend STIP by 30m ARB

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[0xRamen]

We’ve come to the end of round 1.

Adding the list of confirmed recipients:

and the list projects achieving quorum & >50% in favor votes but did not make the cut off:

[Synth]

Its only fair for the protocols which have reached quaroum but did not make it, to also have a share of another batch of 50mil ARB

[Dog]

As one of the projects on the list I am obviously coming from a stance of bias, but even with that aside— I think this list of protocols shown, that did not get an allocation but passed quorum in favor, include many high quality builders and contributors to the Arbitrum ecosystem.

With the recent clawback of the unclaimed airdropped ARB, there exists enough to cover the remaining 24m, and then some. I think there’s a compelling case to be made here since ~74m passed and one of the original ask options was 75m.

The main thing I believe in extending the rest of the budget to the rest of the protocols is to ensure increased opportunities on Arbitrum during the following months, plus to prevent stifling projects who can’t compete with those who passed.

Happy to hear the opinion of others but I think the overall benefits outweigh any downsides.

[ZIsBraindead]

Even just 20M more ARB, less than half of the original STIP, would give so many more protocols that were voted in favour of an allocation.

The purpose of grants is not to benefit the largest players with even more backing, but to allow the smaller guys a chance to prove themselves (especially in this STIP), so I believe it would be beneficial to extend the STIP amount to somewhere between 70M-75M. There is really not much downside.

[Mantis]

Its self-evident the current STIP framework lacked nuance having well-established non-native projects pooled with Arbitrum native projects (90% probably launching amidst this bear market).

Personally, if we want to stay true to the standard logic behind grant initiatives and how they typically function, the allocation should be extended to projects that made quorum but missed out on an allocation.

This will help enable long term blockchain usage, supporting native projects to continue to apply maximum bandwidth on the Arbitrum blockchain.

Additionally, it shows future innovators and builders that they can recieve support if decided to build on Arbitrum, despite competing against large, chain agnostic projects.

Thanks for your time.

[Trantor]

It is great news that we are able to have this discussion as it demonstrated the passion and commitment that protocols and the community have for our ecosystem. The other side of the coin could have been almost nobody voting!

So to my mind, this proposal is an easy win for the entire ecosystem!

Extending the grant by the additional 25M (or 20M or 30M) will see many of the projects who did very well get their allocation and thus avoid having the biggest protocols simply get the biggest grants because they are already the biggest. ie, just cementing their positions.
The wider these grants are spread to quality projects, who have support (ie over 70M votes and more than 50% in favor), the better. Increased capital flows are a benefit to all and the more it is spread amongst builders the better!

[Jonezee]

Concur with the sentiment that an extension would be just, considering a number of good projects didn’t make the cut because of a budget limitation rather than a lack of support.

[Shoos]

The DAO’s treasury allocation should be able to accommodate this requested increase as it was an option on the initial proposal when determining grant amount. By implementing this adjustment, the projects achieving quorum will all have the opportunity these incentives provide. This not only upholds the principles of fairness but also acts as a catalyst for innovation and diversity within our ecosystem.

It’s also worth noting that a significant number of projects that secured allocations from the initial 50 million grant have received funding in the past, which could solidify their dominant position. Without providing incentives to the rest, there’s the potential that established projects become complacent, with no real motivation to compete and innovate, propping up their platforms using grants alone. All the while, the upcoming projects struggle against the grant ARB being distributed, regardless of the tech the top projects are using.

[relied]

While I do understand that there is disappointment from some participants / protocols, this is the natural outcome of the 2 step vote we had. First the maximum program size is approved, then protocols apply with the reasonable asks and it is voted on the total of those applications. If the overall size of the grant program would´ve been bigger to begin with it surely would have led to bigger asks and eventually to a similar outcome with disappointment, same for a smaller overall program size.
While I am not against a second round / additional funding I do think the focus now should be on the execution of the first stage and to follow the spending of the approved funds and the contribution to growth of the arbitrum ecosystem. Starting an extension of the program right away undermines and devalues the steps that have been taken by the DAO to get this program started and should be postponed to a later stage, in my opinion.

[kiryu_0x]

In favor of 20m ARB to 30m ARB here. I think one thing that is obvious if you look at the chart is that projects that were larger were more likely to get voted in at a higher position. They have larger communities. So smaller projects asking for smaller amounts were largely the ones who made quorum and had enough yes votes, yet were not able to get enough votes.

The outcome of “Do you get a grant or not” should be decided by the result of the vote on a case by case basis. The way this proposal was setup, it put larger protocols in the front of the line.

[Chuba]

Agreed for an extension here as well, for projects which made the quorum, which was the main target to receive the grant. The 1st come 1st served basis was there in case too many projects were successful, but it shouldn’t limit Arbitrum expansion. Enough people voted FOR for each of them.

Once this final process is ended, we could start thinking about giving the funds to all projects. Let’s remain focus and logic.

Have a great day, my fellow arbinauts !

[zdeadex]

In terms of diversity, i’m still wondering why it’s allowed to ask for more than 20% of the total grant for only project.

The cap should have been below 10%, which is still too much (probably 2% so 2M cap per project - looking at data it makes sense).

I do believe than 10 projects requesting less than 1M $ARB is worth than 1 requesting 10M $ARB, even if it’s a big protocol.

Saying this, I think extending to a round 2 make sense with determined cap per project.

[Lunaman]

There are two main issues we have detected with the way the STIP process has been designed.
1.) Teams shouldn’t be spending time and resources lobbying to delegates. Of course the time that was given to review all proposals was minimal taking into account all projects that applied for the program so teams had to resort to private communications with delegates instead of having public discussions that would benefit all projects.
2.) The design of the program forced projects into competition instead of promoting collaboration between all of arbitrum’s builders. We should have done a budget per category where all the protocols per category would collaborate and come up with a unified budget that would need to get approved by the DAO. I think we are promoting the wrong values with this STIP design and should be corrected immediately to, again, foster innovation AND collaboration instead of competition.

[0xAlpha]

The primary objective of STIP is to enhance Arbitrum’s ecosystem by drawing in more developers and community engagement. As the first round stands, the top five eligible requesters have collectively sought 27m ARB. Extending the grant program adheres to the DAO’s initial commitments, also opening doors for more projects to contribute to the ecosystem’s growth.

0xRamen’s post concerning the STIP extension aligns with this aim. We ardently support this initiative and are optimistic that the Arbitrum DAO will provide solutions fostering a robust growth within the Arbitrum community.

[Nailax1]

I support your suggestion
I think DAO needs to consider extending the time, some projects are very good but I see they do not receive grants from Arbitrum

[bflynn]

I’m for extending this by 20M.

If the grant is extended by 20M, then according to the stack ranking from Round 1, an additional 20 projects will receive grants, which is a clean number. It’s worth noting that 29 projects received grants with the current 50M budget, so this will be a substantial increase and lead to a more diverse Arbitrum ecosystem.

It’s important that the Arbitrum DAO supports new projects in the ecosystem and rewards projects that have ambitious plans to expand the ecosystem with good proposals. This will result in not just more competition, but more innovation in the Arbitrum ecosystem which is a net positive for ARB holders.

It’s also worth noting that we should avoid these types of proposals in the future. This was a huge burden to ARB delegates, who felt pressured to sift through the 100 applications in just a week. I don’t think any delegate enjoyed this process, and we should work on creating proper accountability & transparency systems to grant recipients so we can iterate on results.

[Achi]

Advocating for an extension by 20m or 30m here. Given the unforeseen explosion in popularity of this grant program, it is highly advisable to broaden its scope and include other projects that have successfully met the quorum requirements. This initiative has absolutely no downside; quite the opposite, it stands to significantly benefit our ecosystem.

This extension not only ensures that more deserving projects receive crucial support, but it also serves as a substantial boost to the overall health of the ecosystem. By nurturing native projects and expanding their horizons, we are actively contributing to the growth and development of our ecosystem as a whole. So, let’s proceed this expansion in mind, knowing that it’s a win-win scenario for all involved.

[0xMasterCrypto]

I am in favor of the 30M ARB add. The top 5 projects got the majority of the allocation with 27M ARB. Some of those projects, with larger TVL indeed, are less efficient than other smaller native projects.

Its evident that the way this grant approval process was set up was unfair. There should have been a grant cap per project and ARB allocation should have been awarded by other metrics like efficiency instead of just TVL/MC/FDV.

[Mummy]

Extending the amount of Arb is def something that should be done to integrate a greater part of the network since the top 5 projects took half the grant for all the projects in the network.