April 11 (Thursday) at 8pm UTC (4pm EST)
Arbitrum, Kwenta, and Perennial will be teaming up to do a twitter spaces.
Set a reminder here: https://twitter.com/i/spaces/1OyJAWdOObMKb/peek
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I would love to answer this question, though keep in mind the broader alignment of Kwenta may be a bit beyond the scope of this proposal. I’m still happy to provide some context so the Arbitrum community can understand our roadmap, and how Arbitrum fits.
First, I believe that simply bringing existing OP users is a bit of an understatement of our value. Kwenta’s multichain expansion has already begun, and we’ll be continuing to onboard users from Base through our Synthetix partnership. During this process, we’re well incentivized to surface our Perennial integration and future Arbitrum products to any newly onboarded users, as well as lobby other partners to launch products on Arbitrum and migrate trading activity there. Here are a few reasons why these incentives are so strong:
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Our partnership with Perennial is more favorable for the KwentaDAO than any other partnership, and the Perennial team has demonstrated themselves to be incredibly capable, and uniquely committed to working with us to deliver a product which meets the needs of our traders. The economic incentive to direct volume to Perennial is 75% higher for Kwenta, which is a significant reason to feature Arbitrum prominently in our communications and our own native token incentives. While I don’t wish to represent our incentive cynically here, I believe a purely objective answer to be the strongest reason. Spinning up, scaling, and maintaining a new perps product is an expensive, laborious task, and the best possible outcome for Kwenta is to see sustainable returns from these efforts from a sticky user base. There is no way to achieve a sticky user base for a sustainable product simply by acting as mercenaries jumping from chain to chain, so we necessarily need to make a serious effort to attract loyal users and respond to their needs by working with Perennial to improve the product.
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Beyond our Perennial integration, Kwenta’s immediate goal is to set the industry standard for perps aggregation. We believe Perennial is an incredible partner for our first Arbitrum integration and is likely to produce a highly competitive product, but a successful aggregation product requires that we deploy on a chain with a sufficiently rich perps ecosystem. While there have been other attempts at perps aggregation, we see a huge unmet need in the market for a platform which can provide a user friendly perps aggregation tool, including tools for arbitrage and other advanced cross-platform strategies. This current product focus should demonstrate why Arbitrum is clearly the best place for us. While Kwenta has worked closely with Optimism on past product launches, our previous decisions were based on our committment to support Synthetix as our only partner. Kwenta’s first foray in to forging an independent partnership is centered squarely on the Arbitrum ecosystem as our first choice for this product.
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Likewise, our Quanto Perps product is most likely to be successful when surfaced to users alongside existing popular perps markets, and ideally as part of our arbitrage product. While Arbitrum is not yet explicitly named in our development proposal for this product, a strong showing of support from the Arbitrum community would create an excellent case for us to push this product to Arbitrum. Once this initial deployment is finalized, Kwenta would need to move ahead with establishing a pool of sticky liquidity to back the product and further cement our committment to ongoing support and contribution to the Arbitrum ecosystem.
I believe these 3 points not only give insight in to our own thought process and why we’re huge fans of the Arbitrum ecosystem, but also why the decision to develop our most ambitious products on Arbitrum is a logical decision, and highly unlikely to change based on any shortsighted opportunities to become protocol level airdrop farmers or mercenaries. Our ability to make this commitment only improves if the Arbitrum ecosystem continues to support a healthy DeFi ecosystem, and extends this support to Kwenta.
Hopefully my answer can provide some detailed context for how Arbitrum and Kwenta might move forward together. While I’m advocating for an expansion to Arbitrum in any case, I believe support from the DAO would allow is to prioritize this work and maximize the impact of our launch in terms of user awareness and attention.
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Update: There will be a big update to this proposal (full LTIPP format + additional info requested by delegates) out very soon.
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Jumping in to say that, although I see a lot of value in frameworks and working groups, I’m supportive of proposals like this one that don’t fit into existing frameworks for some reason having the opportunity to propose directly to the DAO. Looking forward to seeing the updated proposal.
3 Likes
Proposal was updated last week.
high level updates:
- Full LITPP format
- Ask of 1.9M ARB, down from 4.5M
- Detailed onboarding incentives methodology & model: quest-style incentives, one targeting a broad base of users, one specifically scaling CAC to target the highest value users
- Matt from Stable Lab & LTIPP multisig confirmed to handle accountability, in line with STIP.b requirements
Perennial & Kwenta will be hosting office hours to answer any delegate questions on Wednesday at 11am EST - Noon EST (and would be happy to schedule one-off calls with delegates).
Check this link please, it doesn’t work.
And I don’t have balance:
- Onboarding - 110k
- Weekly - 652k
- Fee - 816k
- LP - 812k
Sum = 2 390k, not 1.900
We are in favor of the proposal and think as a whole this proposal stacks up very well and deserves an allocation. Many of our opinions on this end are already represented.
Our main and only true concerns is how should the DAO move forward with these one off LTIPP related proposals and project submissions that fall outside the normal time window. We can see something in the future that just makes it too hard and unscalable for this process to continue and should be segmented only into review by LTIPP reviewers or whatever project/program that was implemented.
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These comments and thoughts reflect my personal assessment, and do not necessarily represent the opinions of any protocol or entity that I might be part of, partner with or contribute in any form. Remember, I’m just a cow.
I am voting For on this proposal.
I am intrigued by the shared mechanism of two protocols, and I personally love incentive mechanism aimed to acquire/retain users in other chains. The quest for kwenta users in other chains is good (and i suggest the team to put a cutoff to wallets right before this mechanism was published). For the fee rebate, would suggest, if it was not done yet, to align to other perp protocol to have a 75% rebate and not an 80%. Seems like there is a general consensus on this number for this asset class; the leftover 5% of the 36% (so, 1.8% of the total or 34200 arb) can likely be allocated to quests or LP, or potentially be used as wildcard for other initiatives still allocated to users.
There is overall a net benefit for Kwenta to be here, and the fact that the proposal is outside the framework of stip, ltipp and others should not stop us from moving forward good initiatives, in the same way it happened with curve a couple of weeks ago.
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After thoroughly reviewing the proposal and the thoughtful discussion from delegates, I believe there are compelling arguments on both sides.
On one hand, onboarding a major player like Kwenta from Optimism to the Arbitrum ecosystem could bring significant net new users and volume. Kwenta has a proven track record and loyal user base that could benefit Arbitrum’s DeFi activity if successfully migrated over. The proposed incentive mechanisms seem well-designed to drive usage and retention.
Partnering with Perennial, an Arbitrum-native protocol, is also a positive sign of ecosystem alignment. Perennial’s capital efficiency and novel market offerings could create a strong foundation for Kwenta’s expansion on Arbitrum. The two teams appear to have a genuine integration plan beyond just incentives.
However, valid concerns have been raised around Kwenta’s long-time Optimism loyalty and whether this proposal truly demonstrates sufficient commitment to Arbitrum for the long haul. There is a risk of “incentive mercenary” behavior where Kwenta funnels the ARB incentives then shifts focus back to Optimism/Base once the rewards dry up.
While Kwenta has taken initial steps like exploring KWENTA token deployment on Arbitrum, delegates are right to want to see more evidence of “skin in the game” before committing such a large grant. The Synthetix factor also muddies the waters in terms of where Kwenta’s priorities will ultimately lie.
Kwenta’s argument that Arbitrum is the ideal home for their aggregation plans is compelling. But actions need to back up those words. A phased approach where Kwenta first proves out the integration and volume, then receives progressive incentives, may be more appropriate than a huge upfront grant.
In summary, while I’m excited by the potential user acquisition opportunity here, the concerns over long-term alignment are valid. Therefore, on behalf of the Arbitrum community members who delegated voting power to me, I lean towards voting AGAINST this proposal in its current form.
I would be open to reconsidering a modified proposal with stronger commitments from Kwenta, a more modest initial grant size, and clear milestones for earning additional incentives based on proven results. But at this stage, 1.9M ARB feels premature given the open questions around Kwenta’s ultimate loyalty to the Arbitrum ecosystem.
2 Likes
Firstly, thank you for the proposal. Quest-based rewards and weekly incentives are effective methods for increasing user engagement. The proposed measures against Sybil attacks seem appropriate. For these reasons, as ITU Blockchain, we will vote in favor of this proposal.
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Savvy DAO has voted FOR this proposal.
Additionally, we have the following feedback for the proposal.
Just adding small feedback, in terms of communication we should focus on “bringing” more users into our ecosystem rather than “stealing” users from another ecosystem.
We are excited to see the execution and communication of this project in the coming months, especially the focus on high-value users and the frequent incentives aimed at retention.
See the voting rationale here:
After reviewing the proposal and considering the feedback from the community, we have decided to vote in support of the 'Kwenta x Perennial: Arbitrum Onboarding Incentives proposal. Our decision is based on the following key points:
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Kwenta is a significant Dapp in the Optimism ecosystem, known for its robust perpetual trading platform with a high number of DAU and its volume.
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Supporting Kwenta’s onboarding to Arbitrum will increase competition among perpetual platforms within the Arbitrum ecosystem. This competition is likely to drive innovation, leading to better services and products for users, and instead of choosing one winner in the Arbitrum ecosystem by funding this.
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The proposal will facilitate the onboarding of Kwenta’s user base from other chains to Arbitrum, bringing new users and liquidity to our network. This influx will enhance the overall liquidity and activity on Arbitrum, benefiting all participants in the ecosystem.
The collaboration between Kwenta and Perennial will accelerate the onboarding process and ensure its effectiveness.
I second this, excited to see how many users will be permanently brought from other chains.
Voting FOR.
Expecting the Perennial team opt out from the STIP Bridge program as agreed.
DAOplomats voted to Abstain.
No doubt, this is a well thought out proposal. However, sighting the same reason we abstained with Curve, we did the same here as well.
Blockworks Research will be voting FOR this proposal on Snapshot.
This one-off application is one of the most comprehensive we have seen. The requested amount of incentives has been rigorously justified both qualitatively and quantitatively. Although some of the stated goals seem ambitious, they are supported by historical performance. Overall, as stated in our earlier comment, we believe that receiving a one-off incentive allocation should be more challenging than going through the dedicated programs and should be reserved for unique opportunities. The thoroughness of the updated application as well as the strong focus on and opportunity to onboard users from other ecosystems meet these conditions, in our opinion.
Our only remaining concern is the 80% fee rebate rate. As @JoJo points out, a rebate rate of 75% has become the standard across perpetual DEXs following GMX’s and Vertex’s STIP incentive mechanisms. This rate appears sufficient to entice significant platform usage. Theoretically, if all perpetual DEXs on Arbitrum offer the same rebate rate, it should ensure that protocols within the ecosystem do not capture traders from each other purely based on reduced fees through incentives.
Edit (June 19, 2024): As the fee rebate rate has been decreased to 75%, we are voting FOR this proposal on Tally, based on the reasoning presented above.
All in all, this is a lot of money but it attracts a proven team to the network. I think it’s hard to know if this is in good faith without a time machine but everything seems to point in that direction. It’s a risky bet, but I think there are more reasons to try it than not to.
We vote FOR the proposal while we recognize controversial perspectives around this one-off incentives request, but as it can be considered as a great opportunity for the Arbitrum ecosystem to grow, we would like to approve this funding as we voted for the Curve proposal. We also appreciate all the efforts to address the feedback from the delegates and modify the proposal to the ideal state of it under the DAO’s framework (LTIPP).
Our concern is around how the protocol can retain users after the incentives program end. Eventually, we should see how it turns out, but we are particularly looking forward to their committed developments for the Arbitrum native products and ongoing treatments to achieve the success of their multi-chain strategy.
The following reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.
We’re voting in favor of the proposal, and we appreciate Matt’s willingness to handle the accountability part in the context of the LTIPP and STIP.B. The proposal itself is very comprehensive, and both Kwenta and Perennial have a solid track record in Optimism.
Having said that, we want to note that we are against any structure that promotes the cannibalization of users from other Ethereum ecosystems (we’re referring to the following quote from the proposal):
Targeting Kwenta users from Optimism and Base using incentives to bring them to Arbitrum makes little sense and is something we’d rather avoid. Instead, the focus should be on sidelined Kwenta users who want to trade on Arbitrum and CEX traders.
Overall, we find the proposal to be valuable, but we’d like to see the above point addressed, and the high level goal of the incentive distribution to not focus on existing Kwenta users on other protocols.
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We are voting FOR, Kwenta and Perennial teams had been building and shipping products that will increase activity to the arb ecosystem, in addition, they took feedback and lowered grant amount to match current KPIs.
Voting “For” on Snapshot.
Both teams have a proven track record and although the ask is pretty high, its a good bet to onboard more funds and activity over to Arbitrum. As Jojo and Blockworks mentioned, perhaps the fee rebate should be reduced to 75% to be in line with other similar running programs and promote a more equal playing ground for all platforms on the fees side. I’m eager to see how user retention will look like post-incentives period. Good luck!
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