Information about STIP/STIP Backfund
Can you provide a link to your previous STIP proposal (round 1 or backfund)? [Balancer] [FINAL] [STIP - Round 1]
How much, in the previous STIP proposal, did you request in ARB?
1.2M ARB
What date did you start the incentive program and what date did it end?
11/2/23 - 3/22/24
Could you provide the links to the bi-weekly STIP performance reports and Openblocks Dashboard?
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
DEX TVL (Arbitrum Only)
| 10/1/23 | 11/1/23 | 12/1/23 | 1/1/24 | 2/1/24 | 3/1/24 | 4/1/24 | |
|---|---|---|---|---|---|---|---|
| TVL ($) | $97.5M | $114M | $122M | $144M | $139M | $175M | $137M |
| m/m % change | - | 16.9% | 7.0% | 18.0% | (3.0%) | 25.9% | (21.7%) |
Daily Protocol Fees (Arbitrum Only)
| 10/1/23 | 11/1/23 | 12/1/23 | 1/1/24 | 2/1/24 | 3/1/24 | 4/1/24 | |
|---|---|---|---|---|---|---|---|
| Fees ($) | $8,447 | $9,633 | $6,960 | $7,572 | $5,372 | $15,507 | $9,278 |
| m/m % change | - | 14.0% | (27.7%) | 8.8% | (29.1%) | 188.6% | (40.2%) |
Volume (Arbitrum Only)
| 10/1/23 | 11/1/23 | 12/1/23 | 1/1/24 | 2/1/24 | 3/1/24 | 4/1/24 | |
|---|---|---|---|---|---|---|---|
| Volume ($) | $4.12M | $4.57M | $4.34M | $8.58M | $8.87M | $11.87M | $9.05M |
| m/m % change | - | 10.9% | (5.0%) | 97.7% | 3.4% | 33.8% | (23.8%) |
Source for the above data: Dune
The following performance was realized during STIP:
- TVL grew from $114M on 11/2/23 to $151M on 3/22/24, an increase of 32% (source: Dune).
- DAU increased from 1,112 on 11/2/23 to 27,707 on 3/22/24, an increase of 25x (source: Openblock). Please note, the last two weeks of March were an outlier for DAUs as a result of a Rabbithole Quest. For comparison, DAU were 1,741 on 3/18/24, an increase of 56% compared to 11/2/23.
- Volume increased from $11.1M on 11/2/23 to $54.M on 3/22/24, an increase of 3.9x (source: Dune). Both 11/2/23 and 3/22/24 were outliers. A more accurate comparison would be $6.8M on 11/3/23 and $27.6M on 3/21/24, an increase of 3x.
- LST/LRT TVL grew from $19.7M on 11/2/23 to $40.2M on 3/22/24, an increase of 104% (source: Dune)
- LST/LRT Volume grew from $80.8M in November to $246.5M in March, an increase of 205% (source: Dune)
[Optional] Any lessons learned from the previous STIP round?
- The Yield Bearing Thesis works well on Arbitrum. This is why we’ll be especially focused on yield bearing assets during the STIP Bridge program.
- The strongest results came from working with Frens. We should double down on that and allocate a majority of incentives towards situations where there’s more cooperation going on than co-incentivization. Examples include the plsRDNT stableswap pool and the sFRAX pool, where both teams we coordinated in both incentivization and communication.
- In a truly open system the smartest “arb protocols” will move to absorb incentives. Having a group of people who make decisions about which pools to include and how to tune settings around boost and fixed incentives prevents the system from being gamed and allows Balancer to be more strategic. This is why we are proposing the Balancer STIP Council ‘BSC’.
- The BSC will replace governance in making changes to STIP parameters, including a new whitelist of allowed gauges. This is due to the overhead involved with Balancer governance changes in a short-term program, where a committee with authority to make changes would be much more effective for the protocol and the wider ecosystem. See HERE for more details on these parameters and the system in use.
- It can take more than a month for everything to spin up onto AURA with our emissions system, and these STIP programs are reasonably short lived. We should consider Aura direct incentives to help mitigate this. See here for a detailed diagram explaining this lag/delay.
New Plans for STIP Bridge
How much are you requesting for this STIP Bridge proposal?
600k ARB
Do you plan to use the incentives in the same ways as highlighted in Section 3 of the STIP proposal? [Y/N]
No, we plan on making some changes to the incentive mechanism, but will continue to use the system developed for STIP. The dynamics and parameters of the original STIP are described here.
[Only if answered “no” to the previous question] How will the incentive distribution change in terms of mechanisms and products?
- While we still want to incentivize core liquidity across Balancer, such as the USD 4-pool which continues to show very high utilization bringing value and utility to the arbitrum ecosystem, we will focus our incentives on yield bearing assets such as LSTs, LRTs, and yield-bearing stables.
- The dynamic boost formula will be returned to the one originally proposed in STIP: max(3, Protocol Fees Earned /USD value of BAL emitted + 1). Note that this was changed during STIP to prevent gaming of the system, but is unneeded if pools involved are curated as described below.
- Balancer will create a Balancer STIP Council ‘BSC’ (including an Independent Council Member, if desired by the Arbitrum Grant Committee). The BSC will consist of Tritium, Lipman, and ZenDragon. We would welcome an independent member from the Arbitrum community as well. The role of the BSC will be to manage the following configurable parameters on a pool-to-pool basis for $ARB distribution.
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In order to help mitigate the lag effect described in the learnings section above, we recommend allowing for the allocation of 50% of the $ARB incentives per pool to direct AURA incentives for the first 2 weeks of any pools membership in the program. See the green line here to understand more details, Note that 100% of $ARB will be paid out directly to Balancer LPs on either Aura or Balancer gauge system, or in some cases via both. No fees will be charged by either protocol. No $ARB will be paid out on vote incentive markets, and 100% of the $ARB will stay on the Arbitrum chain as part of this process.
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While the automated nature of the $ARB incentive distribution mentioned in the original STIP Program section mentioned above created an efficient grant program from an operational standpoint, it rigidly pre-ordained the way in which rewards were distributed across assets. Especially since the only way to change the structure of the STIP System was to go through a full Balancer governance process. Our approach would be very similar in the STIP Bridge program, but any changes could be made by this BSC so we can remain strategically flexible. This agility gives us the ability to pursue strategic opportunities that pop up with new partners, and to prevent gaming of a fixed system by those who are seeking only max extraction.
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We plan on making changes to the incentive mechanism (as described above), but will continue to use the system developed for STIP. The dynamics and parameters of the original STIP are described here.
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The BSC will manage the Static, Fixed, and Cap incentive parameters within the ranges mentioned in the table above. This will enable us to be quick to respond to opportunities and prevent gaming of a fixed system by those who are seeking only max extraction.
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600,000 $ARB over 12 weeks results in an available spend of 50,000 $ARB per week. 10,000 $ARB will be dedicated to fixed incentives, 40,000 $ARB will be used to follow voting, using the same logic and automation used for STIP.
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Note that at the end of STIP we were distributing 5k $ARB in fixed incentives and 36142.65 $ARB following votes.
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As a refresher, the original STIP program is defined here
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The primary objective of the BSC and STIP Bridge program will be to bring new yield bearing partners and/or expand the presence of yield bearing assets on Arbitrum.
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Balancer will also try to bring ‘net new’ partners to Arbitrum. However, doing so is out of Balancer’s immediate control due to the bandwidth and priorities of partners.
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Additionally, we will look to further support smaller and newer partners, such as jitoSOL, which is a good example of a novel, yield-bearing use case on Aribitrum. jitoSOL highlights the innovation happening on Aribitrum and acts as a potential conduit to get Solana users to engage with Arbitrum as well.
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Examples of other partners that have committed to collaborating with Balancer for the STIP Bridge program include Kelp, Renzo, Frax, Etherfi, and Gyroscope (AaveUSDC rehype pools).
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Balancer will also collaborate with quest platforms in a coordinated effort after the surprise influx of users (and some sticky ones) from a RabbitHole quest during March. This Quest from RabbitHole generated a 25x spike in typical DAUs on Balancer. However, it was created by RabbitHole with limited input from Balancer. During the STIP Bridge Program, we want to collaborate with Quest providers to create impactful engagement strategies with yield-bearing assets. This will help ensure users are engaging with the primary source of our $ARB incentives, yield-bearing assets.
Balancer - STIP Bridge KPIs
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?
The addresses will remain the same as last time.
- Multisig to receive the incentives: 0xaF23DC5983230E9eEAf93280e312e57539
- $ARB ChildChainGaugeInjector: 0xf23d8342881edecced51ea694ac21c2b68440929
Note: that in working with Openblocks last time it became clear that there was a desire to track flows a bit further. We will continue to work with Openblocks to provide the necessary queries and help them understand how to ingest any of the below information about how $ARB flows through the system that are not already well ingested.
- The ChildChainGaugeInjector will forward $ARB onto Balancer Gauges that distribute the rewards to LPs. These gauges can be found by looking at contract creations from 0x22625eEDd92c81a219A83e1dc48f88d54786B017.
- As specified above, Balancer may pay in half of the first 2 weeks of $ARB for a pool directly into Aura Stashes. Further, any LPs that deposit on Aura will have their $ARB moved from the Balancer Gauge to the aura protocol through these same stashes before being claimable by LPs. These Aura Stashes can be found by looking at the contract creations from the Aura Stash Factory 0x779aa2880d7a701FB46d320C710944a72E2A049b
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?
- The naming conventions Arbitrum has used for its grant programs has caused a lot of confusion in the past couple months (STIP, LTIP, LTIPP). Not only are these acronyms very similar (especially LTIP and LTIPP) but it wasn’t clear nor was there any easy way to find clarity on the differences between the two programs and who was eligible. There’s clarity now, but I think the rollout of LTIPP and its intention could have been more thoroughly explained.
- It’s hard not having time after the program is approved/assured to work on a proposal.
- Application window should start or have plenty of time after a program has been funded by governance.
- We understand that these things tend to come with a sense of urgency in the community, but it’s hard to get people to put time into writing a good application when it is unclear if it will even matter.
- Having an advisor to work with, discuss with has made this second application process much easier, nicer and more productive than the original STIP process.
- The amounts available are enough to have real impact.
- The Arbitrum community is open and diverse. There’s not one or two major players calling the shots behind the scenes. This has been a challenge in other ecosystems where we have sought grants.
- The whole STIP thing created a cohort of people with something to work with. This enabled/pushed new relationships forward. That feels like ecosystem, which is what we’re all really hopefully here to build.
- Openblocks has done a stellar job of collecting and presenting meaningful data throughout the Arbitrum grant journey. They’re also talented and a pleasure to work with.
- Building long term sustainability takes time. So far these programs have been relatively “short and heavy”. The gap between STIP and STIP-Bridge, while a bunch of new DAOs had $ARB bags makes it really hard to build lindy. Really looking forward to the point where Arbiturum gets to some “long and steady” flows going on. Even if they are for less money per week, with some other “short and heavy” grants to build momentum.
- We have found the program reasonably open and easy to work with. Other than the timeframe and gap between programs, all of the limitations we had we set ourselves, and this grant seeks to learn and grow from that.