[ FINAL] ANGLE STIP Bridge Addendum

Information about STIP/STIP Backfund

1. Can you provide a link to your previous STIP proposal (round 1 or backfund)?

2. How much, in the previous STIP proposal, did you request in ARB?

700,000 ARB

3. What date did you start the incentive program and what date did it end?

7 November 2023 - 31 March 2024

4. Could you provide the links to the bi-weekly STIP performance reports and Openblocks Dashboard?

Please note that the number of adresses effectively rewarded as shown in the bi-weekly reports and in the Merkl reports pages include Asset Liquidity Managers addresses such as Gamma that manage position on behalf on multiple individual LPs.

5. Could you provide the KPI(s) that you deem relevant for your protocol, both in absolute terms and percentage change, month over month, for the first of each month starting from October 2023 until April 2024, including the extremes? If you don’t know what KPI might be relevant for you or how to properly define them, please refer to the following document:[Arbitrum DAO] OpenBlock Labs Incentive Onboarding Spec

  • KPI 1 - User Count on Arbitrum: The program has helped onboard 5016 new EURA holders. At the beginning of the Angle STIP program early November, EURA (ex agEUR) has 63,063 holders on Arbitrum. This number has steadily increased during the program and continued to increase after. The count of EURA holders on Arbitrum is now 68,142.

The Angle analytics, when filters on the holders count on the Arbitrum chain, allows to se the progression (see screenshot below).

DATE 01/10/23 01/11/23 01/12/23 01/01/24 01/02/24 01/03/24 01/04/24
DAU (K) 62087 63063 63488 64754 65311 65997 67068
DAU % 0% +1.57% 0.68% 1.99% 0.86% 1.05% 1.63%

  • KPI 2 - Volume: From the start of the STIP campaign, EURA’s trading volume on Arbitrum increased from **281M in early November to 601M of volume as at today **, resulting in an increase of 115% in volume over time from early November to now.

The Angle analytics, when filters on the holders count on the Arbitrum chain, allows to se the progression (see screenshot below).

DATE 01/10/23 01/11/23 01/12/23 01/01/24 01/02/24 01/03/24 01/04/24
Volume (M) 266.6 281.1 366.3 423.9 462.2 509.7 562.7
Volume % 0% +5.45% +30.24% +15.71% +9.05% +10.30% +10.41%

  • KPI 3 - TVL: The TVL relating to the EURA stablecoin amounted $361k on Arbitrum at the start of the STIP in early November. It peaked at $6.7M and is now stabilized around $2.3M. The maximum growth of TVL during the program represented a 1753% increase. At the current stabilized TVL of $2.3M, the program allowed to create and retain a TVL increase of 538% between the beginning and te end of the program.
DATE 01/10/23 01/11/23 01/12/23 01/01/24 01/02/24 01/03/24 01/04/24
TVL ($M) 0.664 0.361 4.43 3.73 3.66 5.2 6.7
TVL % 0% -45.75% 1130.47% -15.8% -1.87% 42.62% 28.85%

6. [Optional] Any lessons learned from the previous STIP round?

Even if the program allowed us to grow (1) the Angle TVL on Arbitrum with peak 1753% increase now stabilizing at a 538% increased compared to the begining of the program, and (2) DEX liquidity, the remaining stEUR holders after the program did not necessarily leave their liquidity in the pools created, they keep holding the EURA and stEUR stablecoins but out the pools. In summary, new holders of the EURA stablecoin remained after the end of the program and a considerable part of them (approx. 50%) kept staking their EURA stablecoin into stEUR to gain the RWA yield associated with it. Indeed Around 1m of EURA are currently staked in the stEUR savings product. However, most of these people pulled their liquidity out the Camelot pools that were set up.

The integration of stEUR with Silo allowed the onboarding of new EURA and stEUR holders. Integrations and sigle-sided liquidity incentivization on Silo appears to be a good continuation path for this STIP Bridge.

New Plans for STIP Bridge

7. How much are you requesting for this STIP Bridge proposal? 350,000

8. Do you plan to use the incentives in the same ways as highlighted in Section 3 of the STIP proposal? [Y/N]*

No

9. [Only if answered “no” to the previous question] How will the incentive distribution change in terms of mechanisms and products?

Angle has launched a new USD stablecoin, USDA. USDA has a yield-bearing product associated called stUSD.

The reserves backing USDA and stUSD are as follows:

  • Price Stability Module:

    • SteakUSDC: the USDC deposits in the Steakhouse Financial curated Morpho vault, yielding the current DeFi money markets yield (64.70%)
    • IB01: Blackrock ETF of short term US treasury bonds tokenized by Backed Finance (18%)
    • USDC: the Circle USD stablecoin (17.30%)
    • USDA also has a safety surplus of $3M+ to further buffer overcollateralization, and this surplus is called to grow as the protocol grows. This surplus buffer is made up of the profits the protocol has built since its launch in November 2021.
  • Borrowing Facility on Morpho: For USDA, Angle delegated its borrowing facility to a Metamorpho vault curated by Gauntlet by pre-minting USDA in it. This is functionally equivalent to having a borrowing system on its own. The choice to delegate the borrowing infrastructure of USDA to the Morpho system holds benefits in terms of distribution, helps to benefit from the expertise of a reputed third party as Gauntlet and still allows the protocol to manage its risk on Morpho by proposing to adjust debt ceilings. To this date, the protocol has minted $3M USDA in the form of Automatic Market Operations (AMO) for seeding purposes in the Morpho vault curated by Gauntlet. This is always trackable in the real-time analytics and balance sheet provided by Angle. Please also see the Angle governance proposal detailing the borrowing facility set-up and the Angle documentation explaining protocol AMOs.

  • AMO (Automatic Market Operations): To this date, the protocol has also minted USDA for seeding purposes on Uniswap ($5M USDA) in a EURA/USDA Uniswap v3 pool. This is also always trackable in the real-time analytics and balance sheet provided by Angle. Please also see the governance proposal relating to the seeding of that pool and and how this reflects within the balance sheet and the Angle documentation explaining protocol AMOs.

  • For stUSD, the yield comes from:

    • Assets held in the backing (price stability module)
      • steakUSDC currently yielding 7% depending on DeFi rates
      • bIB01: Blackrock ETF of short term US treasury bonds tokenized by Backed Finance yielding approximately 5% over the past year
    • Borrowing interest earned by the protocol from people borrowing USDA on Angle Morpho Blue markets

Currently stUSD yields 20%. Why is it the the yield so high? The current yield is at 20% for stUSD thanks to the multiplier effect that Angle’s savings solution benefits from. The yield that the protocol distributes to stUSD holders comes from the backing of USDA. Currently, only 27% of the USDA is staked into stUSD, this means that the savings contract utilization rate is low and it allows stUSD holders to earn more. Why is the utilization rate low? The current utilization rates on the stUSD and stEUR are low due to competing DeFi integrations that incentivize USDA and EURA holders to deposit their stablecoins in pools rather than staking them with Angle. For example, USDA supply is largely used on Aerodrome (Base Chain DEX) and Morpho rather than being staked.

A larger target and user base that the Euro stablecoin: USDA has been launched two weeks ago and currently has a 10m TVL. More generally, USD stablecoins have larger use cases and adoption in Defi, hence the plan to direct the potential STIP bridge funds to the development of use cases around USDA and stUSD.

After the initial STIP program, an event if Angle registered solid growth numbers in user count, volume, and TVL, it appears that favoring lending and/or perpetual DEX inregrations may be better long term spending for networks effects within the Arbitrum ecosystem.

The new plan would be to allocate the funds as follow:

  • Step 1 - 250,000 ARB dedicated to single sided USDA liquidity providers on lending markets including at least Silo,
  • Step 2 - 100,000 ARB dedicated to (1) bringing stUSD liquidity on a native perpetual DEX on Arbitrum (Vela Exchange or else) to facilitate more trades, or (2) bringing furthermore USDA liquidity a money market on results observed in Step 1

Incentives distributions on Silo
Angle will gradually distribute incentives on Silo starting with a lower amount of incentives during the first weeks to avoid incentives collection by a minority of lenders. Incentives will be streamed on a weekly basis in order to monitor and maintain a constant APR.

Incentives distributions on a perpetual DEX
The goal would be to facilitate more trades by bringing further liquidity on a native decentralized Arbitrum perpetual DEX. The incentives would be distributed to reward the liquidity deposited. If implemented, this distribution of ARB will be rolled out progressively to ensure a constant and controlled APR benefiting to a maximum of LPs.

10. Could you provide the addresses involved in the STIP Bridge initiative (multisig to receive funds, contracts for distribution, and any other relevant contract involved), and highlight if they changed compared to the previous STIP proposal?

  1. Could you share any feedback or suggestions on what could be improved in future incentive programs, what were the pain points and what was your general evaluation of the experience?

N/A. The STIP experience has been very productive (cf. numbers provided above) overall and well managed by the team in charge.

Hello @Mariam ,

Thank you for your application! Your advisor will be @JoJo.

Please join the LTIPP discord and ping your advisor in the general chat so they can create a new channel and start communicating with you.

1 Like

Following the ARDC recommendation, we believe that this proposed addendum requires further review by the DAO. Therefore, we challenge its optimistic approval so that the delegates can form an opinion on the merit of renewing the incentives received during the STIP.

We are publishing the review conducted by Blockworks for greater visibility and advice to the applicant to provide an explanation for the concerns raised.

“Is applying to the STEP as well (although doesn’t seem to be prohibited in STIP/STEP rules). Currently, TVL of Camelot pools incentivised during the program at ~$650K (~600K ARB spent in incentives). Deposited stEUR on Silo at ~$45K, with utilization at 1% (~100K ARB spent in incentives). However, circulating supply of EURA on Arbitrum increased from ~500K to ~1.6M (beginning of May). Extremely poor reporting during original STIP. New program would focus on USDA instead of EURA, but usage of incentives is quite similar to the original STIP, where results were lackluster (although, Bridge structure quite loosely defined). Hard market to penetrate, especially on the liquidity side. If accepted to STEP, would likely have a notably larger positive impact on the project relative to STIP allocation.”