[FINAL] Socket 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)?
  1. How much, in the previous STIP proposal, did you request in ARB?

1M ARB

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

Started on Feb 12, 2024 ended on Mar 31st, 2024.

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

Biweekly Report 1
Biweekly Report 2
Final Report

Openblocks Report:
https://www.openblocklabs.com/app/arbitrum/grantees/Socket Protocol

  1. 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?

Generic metrics: Monthly Numbers for Arbitrum - Highlighted numbers are months when rewards were live!

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Daily Protocol Fee: 0 (Socket contracts charge 0 fees for all our users)

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

On the first grant, we had asked for expected the user rebates portion of our grant(700K ARB) to last us over 3 months, but we witnessed higher users using us than expected and were able to disburse the rewards in less than 5 weeks.

The rest of the grant allocated for Superbridge/Supertoken incentives was not fully utilized since we were not able to work with enough projects as per our original expectations in the allotted period.

New Plans for STIP Bridge

How much are you requesting for this STIP Bridge proposal?

500,000 ARB

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

No

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

We will be using the entire 500K ARB requested for user rebates(80% rebates on bridging+gas fees) on Socket API/SDK (similar to our original application) on select Socket partners.

As mentioned in our learnings, we believe the SuperBridge/Supertoken portion of our earlier grant was underutilized and thus feel the best use of the grant would be to incentivize bridging on our API/SDK contracts.

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?

Funding Address: 0x952aB7dd815558511bc80A3532D89368130F0809

Funding Address Characteristics: Multi-sig

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?

Overall experience was positive, with no specific feedback :slightly_smiling_face:

2

Hello @sriram ,

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.

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.

“Addendum extremely barebone and doesn’t discuss events that have taken place during the original STIP in a detailed way (hack, incentive allocation). Reporting during the original STIP was very bad and the impact of incentives is unclear. Funding address still seems to hold ~260K ARB”

4

I voted to reject funding on this STIP addendum because the first round of STIP was not operated effectively (poor reporting and communication).

5

Funding address still seems to hold ~260K ARB

We have successfully returned the amount back to the treasury here:

With regards to the hack, we don’t believe it falls in purview of the distribution. We had a minor security incident on 16 January which we successfully rectified before we began the grant distribution on Feb 8, 2024. We also communicated this in our bi-weekly updates.

6

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

While Socket achieved impressive growth metrics during the initial STIP round, with monthly unique users peaking at +211%, volume spiking +171%, and daily transactions doubling, concerns remain about the efficient use of funds and reporting transparency.

The fact that the 700K ARB user rebates budget was exhausted in under 5 weeks due to higher than anticipated demand suggests the incentives may have been too generous.

For the 500K bridge request, Socket is wisely proposing to focus all resources on the most effective rebates covering 80% of bridging and gas fees. This should help drive further adoption via their API/SDK partners.

However, absent reporting on how much of the initial grant remains and a clear rationale for why an additional 500K is needed now, it’s difficult to justify extending the program at this level. The lack of detailed bi-weekly updates and final STIP report also hampers our ability to thoroughly evaluate the impact and ROI.

We would have preferred to see Socket first utilize their remaining budget rather than return it to the Foundation 3 days ago, provide transparent accounting of spend and results, and then propose a renewal amount commensurate with their actual needs and proven traction. Requesting another 50% of the initial 1M grant without this context feels premature.

Therefore, while we’re encouraged by Socket’s strong growth and appreciate their overall positive STIP experience, we believe pausing the program until clearer reporting is available and a more targeted budget can be formulated is the responsible path. We welcome Socket to return with a revised proposal backed by detailed insights into their initial performance and projected bridge impact.

Ultimately, as stewards of the community’s resources, we feel it would not be prudent to allocate additional funds until we have better visibility into Socket’s current positioning and go-forward plans. But we remain excited about their potential to drive bridging activity to Arbitrum and look forward to continuing the discussion in the near future.

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7

Hey guys, we believe our impact on Arbitrum Ecosystem was extremely positive and we just want to clear all the concerns that were raised by the community.
Arbitrum is the most bridged chain on Socket, and we are proud to support the ecosystem and keep on doing it even ahead.

Hack:
With regards to the hack, we don’t believe it falls in purview of the distribution. We had a minor security incident on 16 January which we successfully rectified before we began the grant distribution on Feb 8, 2024. We also communicated this in our bi-weekly updates. So it shouldn’t have any impact on the distribution.

ARB Distribution:
Socket via it’s partners like Metamask, Rainbow, Zerion, Zapper, Coinbase Wallet & 50+ partners and also it’s own dapp Bungee issued a 80% rebate on users bridging to Arbitrum. This was pretty successful campaign as our incentives got over in 5 weeks and not just us, all our partners promoted bridging to Arbitrum during this campaign, which adds a lot of value.

Reporting and Impact of incentives:

  • We had created a public dashboard to track and see how Socket is doing live.
  • The impact of our incentives is pretty amazing, users who bridge to Arbitrum stayed in Arbitrum (insert more details here)

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  • We understand the feedback from delegates and ensure a more detailed reporting going forward.

Funding address still holds ~260K ARB

  • Yes, because we had allocated this to distribute to our partners building on top of Arbitrum which wasn’t part of 80% gas rebate via Partners.

  • We didn’t have any partners so didn’t want to utilize these Arb in any other way than what we requested for.

  • We couldn’t have utilize these funds for anything else, as we were asked to refund the the funds.

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  • There was a delay in returning the ARB it was an operational overhead, but it’s done now.

Impact & Funds Usage

  • We used 740K amount for gas rebates which generated user rebates on Socket LL and SuperBridge. The claims for the rebates are live on the merkle here.
  • 260K ARB was granted for Arbitrum Projects Building on Socket, we didn’t have any so refunded the amount
  • The rebated amount of ARB Is in the Merkle contract which is for people to claim their rewards

We thank the delegates for their valuable feedback, hoping we addressed them all above!

8

While Socket demonstrated growth and usage of its product, the lack of communication and reporting made them miss some basic requirements, and the ability for the DAO to evaluate the impact and ROI.

Voting abstain.

9

Want to echo Max’s point, while Socket have been great builders here in our ecosystem, the lack of timely responsiveness to the DAO both during STIP and over the last week while the proposal was challenged means the DAO likely doesn’t direct funds towards it.

For anyone who claims this is bureaucracy over performance, I’ll disagree in advance. A protocol that received 1 million ARB from the DAO and was seeking 0.5m ARB more, we fully should expect them to provide feedback and data to properly review their performance. Delegates are entrusted with a responsibility of distributing these funds to support growth and can only realistically do it with partners who meet these requirements and can show value.

I’m voting Abstain but hope that the Socket team comes back again with a strong case and timely responses

10

PBC voted to abstain from the Socket 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 voted yes on funding this proposal due to Socket Protocol’s proven track record and efficient use of incentives. Their approach to user rebates, which refunds 80% of onboarding fees in $ARB, has shown significant success in attracting and retaining users. Additionally, their strategic focus on incentivizing bridging through their API/SDK contracts is expected to enhance user engagement and cross-chain liquidity.

We believe they will understand the reporting an data metrics better this time and should be give another change given the appropriate size of grant.

12

DAOplomats voted to Reject funding.

There was lack of clarity as to what was truly done during STIP. This could be attributed to poor reporting throughout STIP. Adding this to the comments from Blockworks, we decided to reject their request.

13

Socket Bridge is one of the innovative applications within the ecosystem, and its user-acquisitive approaches in STIP proposals are notably prominent. However, according to the scale reported to OpenBlocks, we believe that the KPI evaluation requires a re-examination and reassessment for the Addendum. Therefore, we are casting our vote as “abstain”.

14

Grant expects to use ARB to provide discounts to users (80% discount on connection + gas fee) in the Socket API/SDK

I don’t like the approach of using grants to offset fees or the cost of the project itself.
Thus, the project can charge a higher and non-competitive cost through the grant.

There is no normal link in the report; it is unclear to me how they obtained this data. There is only a screenshot of their calculations, which by default I do not trust.

So I don’t understand whether there are positive results from the past grant or not

15

Below are the opinions of the UADP:

The reason we voted FOR this proposal is because we believe that Socket is/has been able bring liquidity to the ecosystem through their protocol. The rebate model that’s been used seems to be a solid approach for utilizing these funds. We do ask, however, that the Socket team picks up the slack on the reporting front.

16

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

Reason: While it seems that part of the first round was a success, the protocol needs to improve the funds’ management, as it still have part of it.