[ FINAL] ANGLE STIP Bridge Addendum

Archive STIP Bridge Addendum
1

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%

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  • 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%

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  • 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%

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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.

2

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.

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3

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.”

4

Thank you @cattin and all involved delegates for your review and feedback.

Please see below additional information to address the concern raised re: the Angle STIP Bridge application. Please let us know if there are any concerns or questions you have regarding the below or our application in general in order to help us bring a better value to the ecosystem.

  • KPIs - Initial STIP results re: TVL, volume and holders on Arbitrum: Angle’s EURA’s key KPIs on Arbitrum all grew and did not go back to level lower than before the STIP as it has ben observed in other cases upon reading the ARDC report. Please see the addendum above for main KPI and results.

  • Liquidity on Camelot - Solution for the STIP Bridge to deploy the Angle Price Stability module on Arbitrum, deepen liquidity and create native USDA and stUSD on Arbitrum: Part of Angle STIP incentives were distributed on Camelot. As noted on the ARDC report, liquidity decreased after the end of the program. Please note that Angle however retained new EURA and stEUR holders that pulled their liquidity from camlot but kept their EURA and staked EURA (stEUR). 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 (see addendum above). In order to make a better use of the STIP Bridge incentives and deepen Angle’s presence on Arbitrum, Angle contributors decided to submit the deployment of the Angle PSM on Arbitrum to a vote by Angle DAO (currently it is only deployed on Ethereum mainnet) to solve liquidity issued and make an even more efficient use of the STIP Bridge. The core contributors are working on the technical implementation and it will be submitted to vote at the end of June maximum (probably before but stating end of June as a precaution).

  • Change use of incentives from EURA to USDA, and from liquidity incentivization to perpetuals DEXes and money market use cases: As noted in the ARDC report liquidity is hard to acquire and lack of liquidity hinders development potential. For that reason the deployment of the Angle PSM on Arbitrum will be submitted to Angle DAO (see above). The STIP bridge incentives that were almost entirely dedicated to deepening liquidity will thus be used differently. They will be used to keep supporting a protocol that was included initially (i.e. Silo) and Vela Exchange. The goal is to dedicate the use of these incentives to two distinct but complementary use cases of both USDA and stUSD as loan currency then margin collateral. Please also note that in general, USD stablecoins have a larger addressable market and integration possibilities in the current Defi landscape than the EURO stablecoins, that remain niche in DefFi ans are largely used for Forex trades and payments via cards (Gnosis Pay, Holyheld etc.) even though the report indeed rightfully mentions that the EURA supply grew on Arbitrum post STIP and did not go back down to the original supply, in addition to Arbitrum holder growth and volume growth that we have noted in the addendum above.

  • Tracking and reporting: Angle will set up a Dune dashboard in addition to the team-built analytics and Merkl statistics that were initally used in order to allow a real-time and trackable reporting for the STIP Bridge (with the help of OpenBlock if applicable). Improvements on the tracking/reporting side will me implemented.

  • Reward program by Angle and upcoming integrations of USDA and stUSD for increased network effects: Angle has set up a reward program geared towards protocols that will be announced this week and will be applicable to all protocols creating network effect and utility for users of USDA, including on Arbitrum, irrespective of whether they or Angle participate to the STIP Bridge program. Also as mentioned, the integration possibilities being higher for USD than Euro, USDA already has integrations planned in various few Arbitrum protocols that will be made possible thanks to the upcoming deployment of the Angle PSM on Arbitrum. These integrations along with the reward program in place will complement and multiply the effects created by the STIP Bridge if the opportunity to participate to the program is granted.

I hope the above provides more context as to Angle’s short term plans for Arbitrum, USDA and the usage of the STIP Bridge allocation.

5

I voted to approve funding from this STIP bridge addendum because I am satisfied with the team’s plans to improve reporting and improve performance by shifting incentives from liquidity incentivization to specific collateral use cases.

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Thank you for your feedback and vote @Frisson!

7

On behalf of the Arbitrum community members who delegated their voting power to us, we’re voting Against this proposal.

While Angle achieved respectable growth in some key metrics during the initial 700K ARB STIP, with EURA holders increasing 8%, trading volume rising 114%, and peak TVL jumping 1753%, the sustainability and cost-efficiency of these gains is questionable.

The fact that TVL stabilized at a much lower $2.3M (+538%) after the program ended, with many new EURA/stEUR holders removing their liquidity from pools, suggests the incentives did not create lasting, organic protocol adoption. An 8% increase in EURA holders for 700K ARB also seems like a relatively expensive acquisition cost.

We do see promise in the learnings around single-sided liquidity provision with lending platforms like Silo. Focusing the bridge round on this mechanism for the new USDA stablecoin makes strategic sense given the larger addressable market for USD-based assets.

Allocating 250K ARB to USDA liquidity on Silo and other lending markets, with 100K reserved for stUSD liquidity on Arbitrum perp DEXes like Vela or further USDA incentives based on initial results, is a sound plan. The emphasis on progressive reward distribution to maintain a stable APR and wide participation is also encouraging.

However, absent clearer projections on the expected impact of this 350K ARB investment and a more definitive assessment on the ROI of the first 700K, we are hesitant to extend the program at this juncture.

With USDA at $10M TVL just two weeks post-launch, it seems prudent to allow more time for natural growth trajectories to emerge before deploying additional liquidity incentives. We would recommend first gathering data on the stickiness of this initial traction and the marginal returns on incremental rewards.

Therefore, while we commend Angle on their overall STIP execution and the thoughtful iterations in their bridge proposal, we believe pausing rewards to assess the sustainability of USDA’s early momentum is the responsible path forward.

Should Angle demonstrate evidence of continued organic growth and the potential for targeted incentives to efficiently accelerate it, we would eagerly reevaluate a revised proposal. But at this stage, we feel the community’s funds are best reserved until a clearer case for the ROI on liquidity mining can be made.

We appreciate Angle’s commitment to supporting the Arbitrum ecosystem and look forward to future opportunities to collaborate on sustainably growing the DeFi community.

8

We vote to reject funding the protocol.

Reasoning: While we understand the team promised to improve the method and reporting process, we don’t consider a complete shift to the red-ocean USD stablecoin market is qualified for a bridge funding.

9

gm, I am voting FOR.

  • The team successfully increased the TVL of a new EURO stablecoin on Arbitrum. While this operation was costly in terms of ARB, I believe a stablecoin differentiation (different currencies) is beneficial for our L2.

I echo this, the distribution plan seems solid to me, and I hope the Angle team will do a better job at reporting.

10

PBC voted to abstain from the Angle STIP Bridge grant.

Our team was out of office this week and was unable to do a complete review of the request/challenge in time for voting.

11

We support Angle’s STIP Bridge addendum for its introduction of the USDA and stUSD stablecoins, which promise high yields and robust backing. Additionally, the strategic allocation of incentives towards single-sided USDA liquidity on lending markets and stUSD liquidity on perpetual DEXs ensures sustainable growth and increased activity on Arbitrum. This targeted approach will drive user engagement and enhance liquidity in the ecosystem, we are in favor.

12

DAOplomats voted to Approve funding.

We were happy to support this project based on the milestones met and plans for this addendum. With plans to set up a Dune dashboard, we are confident reporting will be properly done this time.

13

ANGLE, with its offered features and the new niches it has introduced for DeFi, is a value-added product, as evidenced by the KPIs presented in previous STIPs (which are clearly significant for the Arbitrum ecosystem). We believe that presenting the proposal with an Addendum and new approaches is optimistic for the sake of the Arbitrum ecosystem.

14

The project increases its TVL from the beginning of the grant to now from 300k to 2 million.

I like that they plan to spend the grant on the USDA launched and profitable stUSD with 20% APY

15

Below are the opinions of the UADP:

We voted FOR this proposal. The increase in TVL for EURA during the incentive period was impressive, even though it dropped from its peak of nearly a 19x increase–the stability of the TVL is what we find more impressive, increasing from $361k to $2.3M. We hope that a similar result can be achieved for USDA. Our team is glad to see diversified products being launched in the stablecoin space.

16

For tracking purposes, I’m copying the reasoning given on my snapshot vote:

Reason: The changes are welcomed, and the protocol seems to use the lessons learned to make a strong proposal.

17

Update:

Turns out that we hadn’t used the full budget that the Arbitrum DAO had allocated to us for the STIP. We’ve returned the leftover amount to the STIP Multisig: Arbitrum One Transaction Hash (Txhash) Details | Arbitrum One

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