[FINAL] Jones STIP 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?

2M ARB, reduced from an initial ask of 3M ARB after the feedbacks from delegates.

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

The Jones STIP incentive program began November 28th and Ended March 29th.

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

STIP Bi-Weekly Updates

OpenBlock Labs

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

The nature of Jones vaults are “deploy and forget”, which aligns with our vision of making DeFi simple for users. For this reason, we think that TVL is the most important KPIs for us.

TVL of Arbitrum Vaults:

DATE 01/10/23 01/11/23 01/12/23 01/01/24 01/02/24 01/03/24 01/04/24
TVL ($M) 16.7 14.9 19.7 28 30.8 27.3 20.2
TVL % 0% -11% +32% +42% +10% -11% -26%


Source: https://dune.com/rebeca/jones-dao-stip-performance

From the above visuals, it is evident that Jones experienced a large uplift in TVL during the STIP program. This resulted in a scenario where the increase in TVL to the Jones protocol was greater than the ARB amount distributed for the vast amount of time during the campaign.

Alongside new deposits, incentivized Jones strategies such as jGLP grew in market value. For users, this was a great outcome as they received rewards from one of the most simple campaigns around, while being able to capture the effects of an upward-trending market, which provided them an incredible STIP experience!

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

One of the lessons we learned from STIP is that, to amplify success, we need to foster more cooperation and collaboration with partners ahead of STIP campaign launch. One of the campaigns we wished had a stronger presence was our campaign for wjAURA. While the rewards for wjAURA on Arbitrum were great, we did not see as much composability & cooperation from partners as we would have liked, and the utility of this product on the new chain (the result of a migration from ETH Mainnet to Arbitrum) didn’t grow as much as we wanted. This resulted in the lion’s share of rewards being absorbed by whales with a large wjAURA presence on Arbitrum.

We were not unhappy with the campaign, since the overall number of users and TVL of the jAURA strategy increased, but we want to make sure people are staying with the protocol and more importantly, staying on Arbitrum. This is why we think that downsizing the relative % amount of rewards per category, plus targeting Arbitrum ecosystem integrations more this time rather than the native farms themselves, could be a way to have more capital efficiency.

Another lesson would be to focus more on retention after the conclusion of our campaign.

For jGLP, we experienced a decrease in TVL after the STIP campaign concluded. By studying the top wallets holding jGLP, and by interviewing some of our user base, we can confidently assert that the new tokens stayed within the Arbitrum ecosystem, and specifically stayed in the GMX ecosystem, where they migrated to GMX V2 after rewards ceased. We hope that by launching a brand new incentives campaign centered around our new GMX V2 vault strategy, we will bring many of those users back to Jones and keep them satisfied for the long term, increasing the retention rate.

In order to improve the odds of a positive TVL flow for the GMX V2 strategy, we will begin a marketing campaign, both internally and externally, to push users to migrate from jGLP to jGM. This may happen organically, but we will be doing everything we can from our side to increase awareness and education. We hope that users will be very impressed with the performance of our strategy over orchestrating their own GM strategies, and stick with us like many of our jGLP holders have done. Better performance in retaining TVL after the end of this iteration of the program would mean a marked improvement in the performance of our campaign.

Finally, in our initial STIP campaign, we wanted to deploy a portion of the incentives towards our new product, jLP. jLP is a concentrated liquidity manager that is highly composable, with specific innovations that give it the Jones ‘touch’. We effectively released jLP in a beta state (labeled under “Jones Lab”) to gather initial feedback from users in terms of overall experience. After gathering this feedback and gathering data, we were not satisfied that the results produced were suitable for a STIP campaign that would provide enough value to users. As a consequence, we have been working for the last 4 months on the underlying infrastructure to be able to achieve the functionalities mentioned above as well as others beyond that scope. This time, we plan to utilize a portion of the STIP rewards to bootstrap this new revamped product.

New Plans for STIP Bridge

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

1M ARB (50% of the original STIP amount)

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?

We plan to allocate as following:

New Tokenomics: 5% - 12.5% (target: 10%)

Jones will release a new token format with a gamified mechanism for locking and redeeming tokens, alongside the ability to participate in strategic token purchases derived from protocol revenue. ARB rewards will be used to incentivise the conversion and locking of JONES tokens. This product is currently in audit and should be released during May.

For the jGM/jUSDC Ecosystem: 30% - 85% (target: 50%)

ARB tokens for the jGM/jUSDC ecosystem are expected to be distributed in three parts. On one side to incentivise deposits and boost jUSDC APR, on another to bootstrap and boost jGM APR, and the last for partners who could offer integrations such as lending & borrowing markets on top of these strategies (ie: Dolomite for example).

The split between jGM, jUSDC, and partners will be established on a week to week basis, since these strategies may receive yield boosts that will potentially be subject to other incentives placed on top by integrators. jGM will allow people to enjoy a product similar in structure to jGLP, in which a basket of GM tokens (gmETH, gmBTC, gmARB, gmSOL, among others) will be leveraged and algorithmically balanced against the borrowed USDC tokens provided by the jUSDC vault, which will enjoy a portion of the yield generated by jGM. jGM is currently in audit and should be released during May

For the jLP Ecosystem: 10% - 49% (target: 40%)

As highlighted above in section 6, jLP will be the full iteration of our current Jones Labs automated V3 liquidity strategy offering, which is currently open to users. The vaults will have new innovations like: bull / bear / neutral strategies, limit / exit orders, and other functionalities that are not available in other products which will be announced on launch. The revamped infrastructure is currently going through audit and should be released during the first half of the STIP bridge.

We will also attempt to coordinate with partners, especially lenders, to be able to spin up composable utility for the vault tokens right away. We plan to support of Uniswap and Camelot from day 1 (Camelot already publicly supported, Uniswap supported on our backend), and to open vaults specifically for blue chip pairs (ie: ARBETH, ETHUSDC) and other native arbitrum coins, with neutral(s), bull, and bear strategies available at launch.

Distribution Strategy:
Our strategy relies not only on products that we are confident will be released within the specified timeline, but also agreements with partners which may require development of some infrastructure. For this reason, we have provided specific ranges with ideal targets and would like to reserve the right to redirect any or all of the incentives outlined towards certain subsets of products to others.

For jLP, since we have been building the infrastructure internally for the last 6 months, we can consider the full release a "new product”, but it is not really something new. We have seen that during the last quarter, without specific marketing push and effort, this strategy has accumulated more than 600k USD in TVL at the peak. We are looking to push most of our efforts in the form of upgrades in order to reach a TVL that is at least x10 higher than what we realized with minimal effort. All in all we see our current lineup as an upgrade of what we have: jGM is an upgrade of jGLP which proved PMF, jLP will be a total revamp in user experience and functionality compared to what we achieved through the Jones Labs branding.

Accordingly, not only market conditions but also security may have an impact on distribution. To us, security is paramount, we wouldn’t put out a non secure product even if we have incentives on top.

KPIs:

For STIP Addendum, we are focusing on only 3 indicators of performance.

  1. TVL - Our mission has always been to create ‘set and forget’ vaults that make earning yield easy for users. We want to stick to this mission, which means we don’t put a lot of emphasis on interactions from users as a performance metric. Typically, they are much less than other protocols, and that is a good indicator of how effective our strategies are at allowing users to “park” their tokens in our vaults. Therefore, to Jones TVL is paramount since it is a direct proxy of the interest of markets and users.

  2. TVL Retention - Being able to retain 50% or more of the TVL brought in by the STIP Addendum program would be a marked improvement over STIP Round 1.

  3. New Users: - Since we are releasing jLP as a ‘new strategy’, we recognize that this product should attract more users. So an increase in new users will be a useful metric to check the performance of jGM, but especially important for jLP.

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?

jUSDC: 0xB0BDE111812EAC913b392D80D51966eC977bE3A2 - This contract was recently re-deployed as a result of upgrades made to jUSDC that enabled the addition of the jGM strategy.

jGM: TBD

wjAURA OFT (Arbitrum): 0xcB9295ac65De60373A25C18d2044D517ed5da8A9

jLP: TBD

11. 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?

We think looking at ecosystems like Optimism & Uniswap, with fleshed out governance models, would be great for the Arbitrum DAO team to take some notes from. Arbitrum is a different DAO: likely the most decentralized available and also the one with the highest amount of participation. For this reason, the goal is not to copy, but to iterate and improve on what they have already done.

In terms of support via official tracking sites, it would be very attractive to see in-house versions of the 3rd-party information that was shared by the community during the lead up to STIP Round 1. These information spreadsheets and sites covered things such as: how much ARB each protocol was asking for, which protocols passed quorum, and which protocols were likely to receive their grants. A centralized hub for info on the incentive program, and if possible on all incentive programs, would be immensely helpful for transparency and project discovery.

Learning from other ecosystems and implementing official tracking tools will make it easier for the DAO to help Arbitrum grow and create opportunities for protocols & users to attract more attention to the chain by word-of-mouth or targeted marketing.

Finally, having measurement metrics that take into account what has happened on Arbitrum, and more specifically protocols on Arbitrum, normalized for what has also happened in the market, would be a good way to properly understand the effectiveness of these programs.

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Hello @Shreddy ,

Thank you for your application! Your advisor will be SeedLatam Gov @SEEDGov

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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Hi @Shreddy we are waiting for you in the discord !

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Hello,
as a major jGLP holders we have decided to wait with our position for this proposal, and we are bit dissapointed about the allocation of STIP. As we have seen huge decline in jUSDC TVL in past months and jGLP vault is filled to 100%, we hoped for higher allocation to jUSDC to support the bottleneck we see in your project rather than development of jGM pools (maybe the extra yield from those to jUSDC will compensate, but it’s hard to predict from the outside).

Retention of TVL in jUSDC pool should be your priority for following year or two, as crypto prices moves significantly the APR of the pool will not be incentifing enough users to hold jUSDC over crypto.

I like the small allocation to support Jones token as it really needed some overhaul.

Wish you good luck

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Hello! Thanks for your response.

Just wanted to make one point clear that might not have in the proposal, there will definitely be a focus on incentivizing jUSDC deposits similarly to how things occured in Round 1 with jUSDC & jGLP’s reward split. We also recognize that a healthy jUSDC vault is vital to our success and will work to support this :saluting_face:

Cheers!

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Following feedback on the proposal to establish the STIP Bridge, it was agreed to involve the LTIPP Advisors in this process with the mission to “help applicants gain insights into their proposals. This not only guides applicants through the process but also ensures that the DAO will review better proposals.”

Despite the inclusion of Advisors, this process does not involve the Council, leading us to believe that this addendum places a significant burden on the delegates who must review all the proposals. One of the reasons for the LTIPP was precisely to avoid this excessive burden. Moreover, the optimistic model adopted in this phase could raise concerns about the real control the DAO will have over these proposals, as reviewing six months of data for each applicant is time-consuming.

For this reason, we decided to accompany each application we reviewed with a brief report. We ask the delegates not to take this as an in-depth or definitive basis for deciding your vote, but rather as a high level overview that can potentially raise questions for your own analysis.

Regarding Jones DAO their KPIs were:

In terms of the metrics obtained from both the OBL report and the Dashboard created by the Jones team, it can be seen that TVL, number of users and number of transactions rose during STIP.

Despite this, we have noticed that after the incentives ended, there have been some issues with TVL stickiness and and transaction count (user activity) since both metrics are down from November when STIP started.

Also, there has been some concentration on the distribution of incentives in strategies such as wjAURA (as can be seen in the third image, from the team’s dashboard) as a result of which the applicant agreed to remove the incentives in this case.

All of this has also been noted both in the addendum and in the bi-weekly reports made by the team and in the public STIP bridge Discord. Their reflections on this show that there was deep learning and that they have done enough research, allowing them to modify their strategy for the STIP Bridge.

Notably, the team has collected enough information to be able to draw accurate conclusions about the performance of the incentives introduced and to act accordingly. This indicates that for this type of incentive programs we should allow protocols to change strategy if they detect errors and improvements, as happened in this case.

Conclusions

While the results during STIP were positive, we believe that some objectives were partially met (for example “attract and onboard new users to Arbitrum” Although the TVL has fallen, it has partly migrated to GMX and other apps in the Arbitrum ecosystem.) while other objectives were not (like increasing participation in Jones Vaults).

We are confident that the learnings from STIP, together with the modifications made by the applicants for the STIP Bridge, can lead to better results.

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Hey SEEDLatam team!

Just wanted to extend our gratitude for your help during the proposal process and your thoughtful assessment.

Cheers,

  • Shreddy & the Jones team :heart:
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