Thanks all for your replies. A couple of themes have emerged in the discussion, thank you all for the input - has been incredibly valuable and had many points that we had not thought of. The main one being how should the extension work?
We put together the discussion thus far and summarized some pros / cons.
Option 1: Continue with round 2. Continue with the existing program structure where we hold a round 2, everyone from round 1 who had not qualified can retry in round 2. Supporters - @limes@DanThales@mint_cloud@deBridge
Pros: Beneficial for projects who waited for round 2, Projects with >50% in favor votes + quorum but missed the 50m ARB cut-off get a second chance
Cons: Projects with >50% in favor votes + quorum but missed the 50m ARB cut-off will have to canvass for votes again
Option 2: Grant extension to round 1. Give out remaining ARB grant to the projects missing the cut-off with >50% in favor votes + quorum but missed the 50m ARB cut-off. Supporters - @teddy-notional@bflynn@blazedbison
Pros: Projects with >50% in favor votes + quorum but missed the 50m ARB cut-off do not have to canvass for votes again
Cons: Projects who waited for round 2 will likely not get a chance (there are 24m ARB worth of grant requests which will likely take up a significant proportion if not all of the extension)
Option 3: Pro-rata distribution. Give out grants where Project grant = ( project vote * project request ) / sum ( all project votes * all grant requests ) * budget. Supporters - @Midgetwhale
Pros: Better distribution of funds, not winner takes all
Cons: If retroactive, changes the initially proposed rules, disbenefit to already selected grantees
Both Option 1 and 2 are viable options but we prefer Option 1, given that:
This will give a chance to projects who were waiting on round 2 a fair chance at application
It is also not all negative for projects with >50% in favor votes + quorum but missed the 50m ARB cut-off, since they will be getting a second chance, versus no grant currently.
We are generally not in favor of retroactively changing the rules, which rules out option 3.
That said, we prefer for the community to decide on the nature of extension and suggest the next steps for this is to proceed with a 2x temp check votes:
How much to extend STIP by?
Option 1: 10m ARB
Option 2: 20m ARB
Option 3: 30m ARB
Option 4: Abstain
How should the extension work?
Option 1: Continue with round 2
Option 2: Extended STIP grants to go to projects with >50% in favor votes + quorum but missed the 50m ARB cut-off
Option 3: Abstain
Following which, the final vote should be a combination of the above, for example:
Option 1: Extend the STIP by 20m ARB and continue with round 2
Personally, I think you should prepare a temp check with four choices.
Round 2 - 10mm
Round 2 - 20mm
Round 2 - 30mm
No Round 2
Let any team apply that did not receive in the first round.
I think you should also add some timelines to the temp check.
For example.
Proposals due End of November
2 Weeks for Feedback Period.
2 Weeks for Voting (Single Spend with Decay Like the Security Council)
Aim for Round 2 teams to receive as Round 1 starts to phase out.
You probably won’t get meaningful engagement until after DevCon (Ends Nov 20).
Based on the calls this week on governance, think something like this would garner support to get over the line.
Out of curiosity, is there a specific reason you are so against allowing others to get funds during/before the round 1 starts? The goal of the STIP is to incentivize in the short-term, thus the more incentives during the same time period, the larger influx of capital/impact. Hamstringing this explosive growth seems counterintuitive.
In my eyes it is more likely that the same two protocols will be competing for the same dollar at the same time frame. Wouldn’t you rather have the capital flow from DexA to DexB to DexC over three different durations to ensure you maximize the users on each platform so they get exposure to trying out all three Dexes? Then they can come back after the program and now they have tried all three decide which they like most?
Otherwise, it is cannibalizing the same ecosystem, so in my opinion, this is a better use of ARB tokens. To get the benefits of the program participants need adequate time to experience and learn all the different projects they wouldn’t have tried without the juice. LPs I have discussed this with, want to deposit capital in Project A for a month, Project B for a month, and so on, to get a real feel for the returns and have adequate time for decision making, I am interested to hear the feedback LPs have given your team.
I understand that if it was a closed loop, but the entire point of the STIP is to bring NEW capital into the system. Socket got 1m ARB to promote bridging into Arbitrum. Fresh and new capital WILL bridge in for good incentives, as is what we want. DexA-DexB-DexC are not necessarily fighting for the same capital. It’s as simple as X% yield is desirable by LPers, they dilute each exchange to the point where those yields align. Higher yield on all of them, more capital flight to achieve that target APR. This is very common and “cannibalize” isn’t a real concern here-- we want to promote competition on fair grounds, not asymmetric advantages.
If this was true I would think this would be the case for the dollars already on Arbitrum. But it seems that not to be true:
DexA 3mm LP 5%-15% APR
DexB 723k LP 14%-31% APR
Same Pair
Was just giving my explanation on what types of proposals I would support.
But I am just a single opinion, maybe other delegates disagree.
There’s lots of nuance in that, but I’m not sure how to prove a point with fake variables. An anecdotal example I can give is that we are in close contact with large capital providers and it’s as simple as: “show us the X% yield and we will deploy all capital feasible to it.” Full stop. Dexes aren’t the only ones to compare. Lending markets experience the same thing. The only place there is asymmetric yield is typically more obscure and less proven protocols.
Besides the point, fresh capital will bridge over to Arbitrum (as it has in the past), with incentives. There is frankly no reason a top chain like arbitrum would experience zero growth and create a capital vacuum/closed loop. I can assure you with full confidence TVL on chain will skyrocket as a result.
Competition is good, and the whole point of decentralization is to allow competition to thrive innovation on seemingly level playing fields.
I think Option 2 makes the most sense. It is true projects that haven’t applied will not get a chance however opening a Round 2 rises some logistic issues. As Dog stated above, the goal of STIP is to incentivize short-term. There will be 50M in ARB given already which will create explosive growth and delaying the incentive extension can be counterproductive.
Furthermore, agreeing again on a sum for a hypothetical Round 2 means repeating the exact same mistake of this past round. That is we are agreeing on a sum without knowing the demand for incentives and again creating a bottleneck that can repeat ad infinitum.
Extending round 1 for the projects that achieved quorum + the 50% for/against gives us a known demand quantity with the extra benefit that these proposal HAVE already been approved by the delegates in both extent and size. A round 2 where all this projects submit a replica proposal as in round 1 just unnecessarily complicates the work of delegates.
Thank you for your thoughtful summary.
I would say that my comment about the pro rata proposal was not so much to be applied retroactively to the vote of round 1, but just to get the idea out there for future STIP-like contests or thus, perhaps for round 2.
As such, I would not necessarily see it as a competing third option but rather something that could be implemented if the community would either agree to move forward with a Option 1: Continue with round 2, or even if the community selects option 2 but does not want to provide funding to the full 24M extent.
In both cases, a pro-rata approach could make for a more sensible distribution of funds.
Extend STIP with a 500k cap / project.
This way all the remaining projects can get funded for a small price, it brings some fairness back to this fiasco of overinflated asks.
I have the same question - this should be done now. Waiting is just going to make this proposal discussion lose pull as we’ll be moving to new proposals.
Hi, just caught up with reading this and I want to echo @dk3 and @limes.
One thing the advocates of the Option 2: Grant extension to round 1 are not considering is that delegates knew and did vote according to the agreed rules, which were very clear:
Only 50m were going to be allocated, only with those criteria.
Implying that the other protocols that didn’t meet the threshold would have automatically achieved it with a larger grant cap, is not correct. Delegates could have voted more strongly against proposals - instead, we abstained or didn’t vote against projects that were not meeting that specific threshold.
The options here should be only to create a new independent proposal, or run a round 2.
Changing anything for round 1 would be unfair.
STIP round 1 ended with those results, and I understand it’s frustrating for protocols/communities that didn’t make it, but there will be (and we can create) new initiatives.
I’ve just finished reading. Thank you for the draft. I believe it’s crucial to onboard more new projects, which will, in turn, diversify Arbitrum’s ecosystem.
Also, I agreed with @maxlomu on the comment that we should focus on creating a new independent proposal.
