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 Lodestar, they their KPIs were:
During the execution of the incentive program, we believe their metrics improved and goals were met. Deposits grew from 15 million to a peak of 24 million in March.
Their user base also expanded, which as OBL data shows, remains stable to date, which is positive.
What is truly concerning is how the TVL has declined since the incentives were discontinued, even falling to levels below those before the distribution began.
One thing that the Lodestar team has acknowledged is that they should have focused more on what to incentivize. Therefore, in this addendum, they propose allocating a larger percentage of the distribution to their emission bribe gauge flywheel. For more data on their answers, please check the Discord.
They highlight that there was a x5 increase in user participation in this system, and that participation has been maintained even after the incentives ended.
For this reason, they are targeting a specific type of user to be part of this flywheel:
User with leveraged position >> earns LODE >> converts LODE to stLODE to get governance power >> Uses governance power to boost emissions to his supply and borrow side to increase his profitability.
Lastly, they highlight the experience they had in their partnership with FRAX. Therefore, it is interesting that they plan to use part of the ARB from the incentives to match potential bribes from partners.
Conclusions
We believe that the incentive distribution has met the goals set at the time of request, although we have concerns regarding the sustainability of the attracted liquidity.
As we have seen, the Lodestar team plans to redirect 10% (from 5 to 15%) of the incentives to their emission bribe gauge flywheel, in order to encourage more users to try their system and stay in the long term.
We noticed in all the applications we reviewed that there is a significant drop in TVL during the last month. We believe there are multiple reasons for this, and there isn’t enough time to conduct a thorough and conclusive analysis of the long-term effectiveness of the STIP.