I do not believe this proposal is worth funding, and would urge those who are voting on this to not support this type grant.
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The stated goal of the project is “maintaining and improving wstETH liquidity on Arbitrum DEXes vs ETH and stables”. With further explanation mostly geared towards a 1-sided benefit to wstETH. The goal of these grants is to use the funds to grow the Arbitrum ecosystem, and I don’t see where a clear benefit to Arbitrum is spelled out in this case. To me, strengthening Arbitrum’s DEX network would be better served incentivizing a robust marketplace across multiple assets. Subsidizing a specific token is not going to help the broad DEX network grow.
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wstETH is already the largest liquid staking token on the network. As such, I’m questioning if it really needs further assistance. Any funding will just extend it’s domination against competitors in it’s space.
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The request is for 10% of the entire grant fund. The opportunity cost should be considered here. Any benefit to Arbitrum gained by this will not outpace the lost benefits that funding a group of other projects with these same funds can achieve. All these funds going to wstETH is going to be a minor, and temporary, boost mainly to wstETH traders due to how proportionally little this is to what is already being funded. The ROI will be higher taking this type of funding to smaller projects that can have a chance to grow the Arbitrum space.
In summary, I simply don’t see much benefit to using such a large portion of the grant funds on an already dominant project like this. I think if Arbitrum is going to commit to growing the ETH Liquidity Token space, or DEX space in general, it should focus on up-coming-projects. Or projects that look to build the space on the whole, not singular tokens. I just fail to see how providing liquidity to wstETH benefits the Arbitrum chain on the whole.
The above I have tried my best to frame as Arbitrum-centric as possible. However, I think one more thing needs to be said — Lido’s systemic risk to Ethereum brought up by others should not be hand-waived or overlooked. Arbitrum is not just competing with other L2s across the Ethereum network, but competing against other blockchains and the general world market on the whole. A huge part of Arbtrium’s success is tied to Ethereum’s success. Lido’s staking dominance has posed a known threat to the decentralization and security of Ethereum, as documented numerous times by core devs and the community. Arbitrium’s reliance on Ethereum should be factor when these grant decisions are made, and it’s dangerous for the Arbitrum DAO to fund projects that benefit itself at the risk of harming Ethereum.