How the STIP Grants Program fostered innovation for Abracadabra and Arbitrum
Executive summary:
The Abracadabra DAO was proud to receive a 1.5M $ARB grant following its application to the Short-Term Incentives Program (STIP thereafter). This grant helped Abracadabra grow, and due to the nature of the protocol, this growth trickled down and impacted all partners the DAO worked with.
Here’s a summary of how the funds were utilized and their impact.
As per the original proposal, the goals were for Abracadabra to develop new Arbitrum-native products and use the grant in order to:
- Deepen MIM Liquidity on Arbitrum
- Increase the share of MIM circulating on Arbitrum
- Increase the native Arbitrum borrowings
- Create a MIM Savings Rate
While we exceeded most of the KPIs proposed, some changes were made to the original proposal as the program developed in order to stay agile and better address the needs of the protocol and the Arbitrum ecosystem at large; as such:
-
We did not need to incentivize the direct borrowing of MIM on arbitrum, because the cauldrons’ performance itself was enough to foster demand and further incentives on the demand-side were not needed. Instead, the DAO allocated those funds to deepen MIM’s liquidity, which was key in increasing its supply to match the growing demand.
The Partnership with Curve Finance, which saw both DAOs co incentivising the MIM-crvUSD pool was an extreme success, making it the largest decentralized stablecoin pool on Arbitrum. -
We did not need to create the MIM savings rate, as the inflow of MIM to Arbitrum, both from native borrowing but also from other blockchains exceeded our expectations and goals set with the Arbitrum Foundation. The DAO instead allocated those funds to deepen MIM’s liquidity in order to keep matching the growing demand.
MIM Savings rate contracts have been fully developed and audited, and are ready to be deployed on Arbitrum.
Key Performance Indicators (KPIs)
The following is an overview of the KPIs) set in our original proposal:
Grant Allocation
The use of the STIP grant by the Abracadabra DAO has been focused on deepening MIM liquidity, which is crucial in order to meet the demand for the products developed.
It was allocated to 3 liquidity pools:
- Curve: MIM-2CRV 0x30dF229cefa463e991e29D42DB0bae2e122B2AC7
- Curve: MIM-crvUSD 0x4070c044abc8d9d22447dfe4b032405970878d06
- Camelot V3: MIM-USDC 0x0e7ac13617cc1a289b222e4602bdaaa53ea4dc61
The following is a recap of the biweekly reports, summarizing the use of the grant per epoch per pool. Figures are in $ARB tokens.
During this same period, the DAO allocated 239,400,000 SPELL tokens to also deepen MIM liquidity on Arbitrum (13.3M per epoch allocated to the MIM-2CRV Curve pool), compared to our initial commitment of 160,000,000 SPELL tokens.
Note that the CamelotV3: MIM-USDC incentives have been deposited on a biweekly, triweekly basis, but the incentivisation campaign has continued during all epochs.
Effects of the incentives on the depth of MIM Liquidity
The dual ARB & SPELL incentives had a lasting effect on MIM liquidity, with the incentivized pools growing significantly.
This liquidity allowed the DAO to open 7 new cauldrons, 5 of which were created in partnership with GMX, enabling users to borrow MIM against gm Tokens.
Impact on the larger Arbitrum Ecosystem
The development of Arbitrum Native cauldrons, in partnership with GMX, allowed the Abracadabra DAO to showcase that incentives allocated to Abracadabra benefit more than itself. Those incentives allowed the creation of 5 cauldrons using GM tokens as collateral:
- gmARB
- gmSOL
- gmETH
- gmBTC
- gmLINK
In total, those cauldrons currently have 10M MIM borrowed. As most of the borrows is used to lever up gmToken positions, the majority of it is added TVL for GMX, increasing its own liquidity and making it more competitive, benefiting the whole Arbitrum DeFi ecosystem.
The gmSOL cauldron was the most impressive, as Abracadabra currently represents 35% of the pool, making it the largest liquidity provider.
In aggregate, over GMX V1 and V2, Abracadabra provides 32.5M USD of liquidity, making it one of the biggest liquidity providers.
Conclusions:
Abracadabra Money has successfully executed its incentive program, resulting in a notable increase in MIM trading volume, MIM liquidity provision, community growth and new products development. This achievement has led to enhanced user engagement, a surge in total value locked, and the emergence of numerous successful new projects driven by the newfound liquidity.
The insights gained from this initiative, coupled with refined strategies, will serve as guiding principles for our future endeavors as we continue to advance within the DeFi landscape, with a strong focus on Arbitrum.
The STIP grant program has played a crucial role in accelerating the growth and development of Abracadabra and the role of MIM within the ecosystem, resulting in the shipment of new products and some of the best leveraged yield available on Arbitrum.
A grant for Abracadabra, is a grant for all the ecosystems we support, so we are excited to announce that our development of new products will now focus on Jones DAO, Camelot LPs, and similar Arbitrum native assets.
We express our sincere gratitude to the Arbitrum DAO and the STIP Grants program for their unwavering support, and we are looking forward to completing our journey making Arbitrum the leading chain on which $MIM products are offered on!