Extension of Arbitrum’s Short-Term Incentive Program

[ArbDefender]

I would say that this was not a surprise. We could see more than one hundred projects applying for grants so idk why everyone are now saying wow what a surprise lot of projects could get grants!!
Lot of projects were aiming for millionaire requests for ARB when it was obvious that them getting so many ARBs would let many other projects out. I said this in many proposals but no one cared, they all stated that they thought it was fair since their project was big, delegates didn’t care either to ask them to lower their bids.

I dont like people acting surprised now. But saying this I would vote to extend some more funds for those poor projects that left out because of others greed. But this should end after this, no cycle 2 or whatever because you are pushing lot of ARB out because others aren’t doing things right, very stupid really.

[TheMetaverseGuy]

I agree completely with a 30m extension. The innovative projects that are already here need support to encourage more innovative projects to build on Arbitrum.

An extension will also limit the unfair advantage some of the older, more established projects had in STIP round 1, which will increase competition and innovation.

There needs to be much tighter caps on what projects can request in the future.

[teddy-notional]

I support an extension of the STIP to give an allocation to projects who got quorum and passed but did not hit the vote cutoff. It’s fair that Arbitrum incumbents receive their share of the grant outlay due to the contributions they have made to the ecosystem, but it’s also important that Arbitrum encourage new projects instead of shutting the door on them.

I think an extension in this situation is fair and will help support a new batch of projects that isn’t already well-established on the chain. I also think that this should be an explicit goal of future grant programs and we should structure them differently to avoid getting in this kind of situation again.

[romang86]

I want to show my strong support for this idea and explain why using a ranked-choice voting system would benefit the Arbitrum ecosystem.

First of all, I want to say that I appreciate your careful attention to the grant program’s progress and your proposal. More people want grants than people initially thought. The demand is about 74 million ARB, much more than the 50 million ARB the foundation had planned for. This shows the community is enthusiastic about supporting projects and growing the ecosystem.

The idea to extend the grant program makes sense, and here’s why:

1. Fairness: You mentioned fairness, and I agree. The unexpected demand for grants and the absence of a round 2 could mean some projects miss out on the chance to apply for funding. This isn’t fair to those projects and doesn’t help the ecosystem grow equally. Using ranked choice voting would make the decision process fairer and allow us to consider all projects more equally. This would reduce some blatant lobbying and “horse trading” (favors/backdoor deals) that have been happening.

2. Variety of Projects: Ecosystems are healthiest when they have all sorts of projects, big and small. Big projects are essential, but we (the community) also need smaller ones that can become big in the future. Extending the grant program lets us support big, established projects and the more petite, promising ones. Ranked choice voting helps us make these choices more carefully and ensures a mix of projects that benefit the ecosystem to grow and thrive.

3. Changing Opinions: You also pointed out that people’s opinions might have changed after the first round of voting. Ranked choice voting is significant for situations like this. It lets people express their preferences more accurately and adapt to the community’s current needs. This keeps the grant decisions in tune with what the community wants.

[limes]

@0xRamen

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 .

So clarifying here. We are not talking about increasing the allocation to projects who missed the cutoff in round 1, but rather running a round 2 to be fair to projects who were waiting.

I think there was a lot learned in round 1 and we could benefit from running a round 2 with 25m ARB. One adjustment I would make would be to change the voting to 1 ARB = 1 Vote and add a decaying voting power mechanism similar to security council voting.

[bflynn]

So clarifying here. We are not talking about increasing the allocation to projects who missed the cutoff in round 1, but rather running a round 2 to be fair to projects who were waiting.

I think there was a lot learned in round 1 and we could benefit from running a round 2 with 25m ARB. One adjustment I would make would be to change the voting to 1 ARB = 1 Vote and add a decaying voting power mechanism similar to security council voting.

I don’t agree with this. After talking to many ARB delegates, many of them did not enjoy the process of voting in Round 1 because of the large sheer number of proposals. This solution will only result in a large number of proposals once again. We should avoid burn out by ARB delegates by seeking to rectify the extension to Round 1 participants and iterating on results with the lessons learned. The DAO will not be able to learn the lessons fully of the proposal until we start seeing results onchain from each of the projects.

[limes]

The vote was to allocate 50m ARB, not 60m, 70m, or 80m. To arbitrarily allocate more to projects because the outcome was undesirable isn’t how votes work.

@Matt_StableLab said this in another post

@Matt_StableLab

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 end.

The options here are create a new independent proposal all together or run a round 2

[DanThales]

29 projects received 50m.
35 projects were voted in but are below the cut-off.

This vote created a very competitive and destructive atmosphere where each DAO had to fight for votes while in parallel ensure others don’t get more votes than them.
It’s the opposite of what the Arbitrum ecosystem intends to be.

As the result of the vote, the major ecosystem projects just got their existing large share cemented it. Maybe that is indeed the best for Arbitrum, but there is no doubt that the smaller projects trying to carve their way also deserve a fairer fighting chance.

Doing another voting round with yet another hard cap of 20m would definitely yield similar results with more projects voted in than the hard cap, and will again leave more than 50% of project below cut-off, even though their proposal formally passed.

If the funds are there, and we know there are, I think all voted in grant proposals should be honored.

A potential round 2 should allow all new projects to submit proposals, but without a hard cap, so that each grant is decided on its individual merit.

[teddy-notional]

Are those really the only options? I would support a round 2 if that’s where we end up, but couldn’t we start by voting on one of three options?

1. Do nothing.
2. Allocate an extra X ARB to proposals that passed quorum in the original vote but didn’t get the cutoff.
3. Re-do the entire process with a round 2 only open to projects which didn’t receive a grant in round 1.

If people want option 1 or 3, then so be it. But if people choose option 2, why is that not valid?

[limes]

That would change the integrity of the vote.

To make a metaphor in US politics, imagine an election of the 100 senate seats. To say let’s have a second vote to add 30 more seats for the next 30 people in line because we like them defeats the outcome of vote #1.

Personally I’m burnt out as well as I took 30+ pitches from projects involved in STIP and read almost all of them. I wouldn’t want a second round. But extending to include projects that missed the cutoff because I’m burnt out isn’t the correct indicator we should be optimizing for.

[romang86]

I don’t think an extension on executing a flawed go-to-market strategy for this grant undermines anything. The funds will already be streaming through Hedgey NFT’s which are composable and easy to work with.

[DanThales]

Totally agree with such a vote.

I would also consider an option of allocating the 50m pro rata to all projects, rather than only the 29 that were above the threshold. It would be like a 33% decrease on all asks.

[romang86]

It would be in the ecosystem’s best interest to impose an upper limits on how much any project can receive.

[Midgetwhale]

I think we should go with a pro rata distribution rather than a hard cut-off.
If a project is deemed to ask for too much, the vote should account for this and allocate that project less than requested.

Simplified example:

I.e.
Project A asks 10M
Project B asks 7M
Project C asks 3M

Budget = 10M
Total requested = 20M

Project A gets 100M votes
Project B gets 200M votes
Project C gets 50M votes

Now multiply the votes with ARB requested:

Project A: 10 x 100 = 1000M
Project B: 7 x 200 = 1400M
Project C: 3 x 50 = 150M

Total: 2550M

Now divide the budget with the total Vote*arb:

10M/2550M = 1/255th

Now multiply this factor with the vote*arb request per project:

Project A: 1000M/255 = 3.9216M ARB
Project B: 1400M/255 = 5.4901M ARB
Project C: 150M/255 = 0.5882M ARB

Total distributed is 10M
This way there’s nothing like a hard cut-off, the vote impacts directly the size of the distributed funds and there will be less stress for all actors involved because the repercussions are less drastic.
Now, missing one or two major delegates may have been the difference between getting millions of ARB or nothing at all.
If we keep doing this, bribery and corruption will seep into the system.

[wagmi]

Strongly support an increase of the grant amount to support and fund all the projects that met the grant criteria, passed quorum, and got >50% of votes. These are all projects with strong community support and the overwhelming demand, support, and governance participation is an indication of how thriving the Arbitrum ecosystem is. Especially in a bear market, it’s important for well-funded foundations to support and invest in the ecosystem to establish dominance (over competitors), and clearly these are projects that have strong community buy-in.

I support choice #4: Extend STIP by 30m ARB

If there is a concern about the total amount of ARB being distributed, I think a pro-rata distribution among all qualifying projects would be a much better solution than imposing a hard cutoff.

[dk3]

Given the unclaimed Arbitrum Airdrop amounted to 69 million tokens I am in favor of at least doing a second sprint of 19 million tokens. Time-wise though, it should pick up right at the beginning of the 2024 year as the original STIP rewards start to phase out, this would give the other projects ample time to create another proposal, prepare for handover, and not cannibalize the 1st round participants.

Will also give some leighway for the Arbitrum Grant framework to be discussed & ratified going into the 2024 year.

[Hubirb]

Thanks for proposing this, I think it makes total sense.

This STIP was great but highlighted a few issues. One of them is that rules changed between the snapshot vote and the execution of the vote. With the voted allocation (final allocation on a first-come-first-served basis), nearly all projects would have received their grant (52 out of 64, compared to 30 with this new cut-off method invented 24h before the end).

Second issue: a handful of projects are trusting the quasi-totality of the STIP, leaving dozens of projects who passed the governance vote with nothing. Those projects are generally projects who already made it, are very profitable, and don’t really need additional subsidies, but managed to push massive grant request thanks to their governance power.
GMX alone takes 24% of the program (even though with the voted allocation method they should have add $618k).
First 4 protocols take half of the STIP, and 2/3 are taken by the top 8.

One of the ideas that could help would be to “flatten the curve”.

Furthermore, these funds are not efficiently helping to bring value to Arbitrum since they are going to be concentrated to already successful Arbitrum native projects. Top 8 mentioned above is all native Arbitrum projects (except Trader Joe). If one of the objective of this program was to incentivise protocols to come and build on Arbitrum, it is however sending the opposite message: “don’t come on Arbitrum, you are not welcome and won’t be able to compete with our native projects”.

In my opinion there are a few possible ways going forward to maximise the efficiency of this STIP (which needs to be efficient as it is still a 50m ARB investment).
There are two main categories: A) rething the distribution process to make the STIP more efficient and fair, and B) increase the enveloppe.

A) Adjust the distribution process for a fairer and more efficient STIP keeping the 50m ARB enveloppe

1/ Keep the voted process of first-come-first served basis
This would lead to 52 beneficiaries instead of 30, and only 12 projects would be left out with nothing despite them passing their proposals by the rules.

2/ Distribute pro rata of asked grant:
That’s the normal way to do things in finance: when a pocket of money is overallocated, every body is downsized proportionately to what they asked for.

3/ Adjust the cap amount that could be given to a single project
If the total amount that can be given to a single project for this 3 month period is 1.5m ARB, then every project can receive their fair share of the STIP.

Here is a little table of what each solution would give:

B) Increase total enveloppe
Two ways here: either we increase straight to get all those good projects the funding they deserve, and not do any second round, or vote an enveloppe for second round, and consider the projects who passed already at this round but had nothing, as qualified already for this second round.

I would personally lean towards adjusting the capped amount so that everyone can get allocated, but any step towards more fairness or efficiency of this STIP would be in the right direction.

[LootCapital]

I agree with this post .
Highlight statistics that favor proposal and downplay aspects that could work against it. A well-crafted narrative can make data tell the story we or they want.

Play the neutral card while secretly supporting a particular outcome.
This can make us or we or them appear unbiased while quietly steering discussions in your preferred direction.
Introduce seemingly unrelated elements that indirectly benefit the cause. It could be an additional proposal or a side discussion that, in the end, supports main agenda(s).

[wavebender]

Ban previous grant recipients from eligibility. Problem solved.

[Severus]

This is the way. It’s not fair to move the goal posts just because the proposal was over allocated. Either allocate more funds or divide the 50m quadratically