Long Term Incentives Pilot Program

[SeriousKeith]

@tnorm

• To ensure each applications alignment with Arbitrum network goals (which I think the proposal should prob define)
• To maximize ROI on a per ARB spent basis by working with applicants to optimize their incentive tactics.

We completely agree with your sentiment and have done our best to take a first cut at what we believe could be a way for grant programs to be tracked and compared on an even playing field. More info here: Serious People: Proposed KPIs for Arbitrum Grant Programs

[thedevanshmehta]

Really appreciate Matt and the team being so receptive to feedback. I am now in a position to support the LTIPP!

@Matt_StableLab

To avoid too much centralization of power with the council the delegates will now get the chance to vote to confirm all of the council’s choices.

This is a great move because in their negotiations with applicants, the council has the ability to say “we don’t have all the power so make XYZ change else the delegates might not vote for approval.” Creating this check on the councils power will lead to a better outcome.

@Matt_StableLab

Additionally the DAO will now have the ability to choose the size of the Pilot Program with voting options of 25M, 35M, and 45M in incentives budgets

Just to clarify, this is how much the council can approve right? but if 45 million is allocated and the delegates reject 15 million of it, only 30 million would be spent. Is my understanding correct?

@Matt_StableLab

Retroactive Community Funding has been added to encourage community members to provide valuable contributions throughout the program

@Matt_StableLab

100,000 ARB will be allocated for retroactive funding to community members who add valuable contributions during the Pilot Program. The DAO will have the final say in how these funds will be used.

This might have intentionally been left vague (DAO will have the final say?) Its not necessary for this stage of the proposal, but I would like some details on who gets to allocate the 100k ARB. Would it be via Gitcoin matching funds to Arbitrum citizens? A JokeRace/snapshot weighted voting for anyone with delegated ARB to vote on those competing?

In my view we should not overcomplicate this by involving the entire DAO and just let the council members/application advisors give it to community members that have helped reduce their workload. But curious to know yours and others thoughts on this.

[Matt_StableLab]

Proposal Edit Note: We have added a small funding amount to compensate @AlexLumley and @Bobbay for the many hours they spent helping design the proposal and advancing it to the voting stage. This was done to reward DAO members for their hard work on the proposal and to avoid relying on other programs such as Plurality Labs to reward valuable contributions

Proposal Creation Assistance: 15,000 ARB - 10,000 ARB for Alex Lumley and 5,000 ARB for Bobby Bola for their time spent assisting with proposal design, hosting proposal office hour calls, and communicating with delegates to gather feedback.

[Matt_StableLab]

Hey @thedevanshmehta thank you for your support and valuable feedback!

@thedevanshmehta

Just to clarify, this is how much the council can approve right? but if 45 million is allocated and the delegates reject 15 million of it, only 30 million would be spent. Is my understanding correct?

Yes, this would be the maximum amount spent. The funds from any applications the delegates reject will be returned to the DAO.

@thedevanshmehta

This might have intentionally been left vague (DAO will have the final say?) Its not necessary for this stage of the proposal, but I would like some details on who gets to allocate the 100k ARB. Would it be via Gitcoin matching funds to Arbitrum citizens? A JokeRace/snapshot weighted voting for anyone with delegated ARB to vote on those competing?

In my view we should not overcomplicate this by involving the entire DAO and just let the council members/application advisors give it to community members that have helped reduce their workload. But curious to know yours and others thoughts on this.

This is very valuable feedback and we are still finalizing the exact mechanism. This will be figured out and clearly defined by the Tally vote!

[duokongcrypto]

Simplified Version of the Updated Proposal:

Abstract:
The proposal aims to address past incentive program issues and test new mechanisms through the Long-Term Incentives Pilot Program, distributing 35M ARB to protocols from January 2024 to April 2024.

Motivation:

• Advantages:

  • Positive outcomes from STIP V1 with increased metrics.
  • Recognition of structural flaws in STIP V1.

• Feedback:

  • Brief overview of lessons learned from STIP V1 and Backfund.
  • Emphasis on how the pilot program contributes to cost and time savings.

Why Protocols Need a Round 2:

• Advantages:

  • Acknowledgment of unexpected popularity.
  • Focus on protocols missing the first round, balancing the competitive landscape.

• Feedback:

  • Specific metrics on the impact of the first round.
  • Emphasis on dual benefits for individual protocols and the Arbitrum ecosystem.

Rationale:

• Advantages:

  • Recognition of the need for a 2024 long-term plan.
  • Desire for evidence-based decision-making.

• Feedback:

  • Brief summary of findings from STIP V1 and Backfund research.
  • Emphasis on how the pilot program aids in cost and time savings.

Specifications - Problem/Solutions:

• Advantages:

  • Clear identification of the three main issues from STIP Round 1.
  • Introduction of specific solutions.

• Feedback:

  • Simplification of problem and solution statements.
  • Ensuring solutions directly relate to the lessons from STIP V1.

V2 Flow:

• Advantages:

  • Defined application, feedback, selection, and reward phases.
  • Inclusion of StableLab for program management.

• Feedback:

  • Further streamlining the application process.
  • Emphasis on how StableLab’s experience benefits the program.

Roles and Responsibilities:

• Advantages:

  • Clear delineation of responsibilities for the council, application advisors, multisig, program manager, and data provider.

• Feedback:

  • Brief profiles of potential council members and application advisors.
  • Emphasis on the expertise and neutrality of advisors and the program manager.

Research Bounties:

• Advantages:

  • Allocation of ARB for key questions.
  • Emphasis on the importance of meaningful conclusions.

• Feedback:

  • Simplification of language for clearer expression.
  • Ensuring bounty questions align with DAO’s strategic goals.

Arbitrum Delegates:

• Advantages:

  • Acknowledgment of delegate power and responsibility.
  • Inclusion of veto power in funding decisions.

• Feedback:

  • Emphasis on the importance of collaborative decision-making.
  • Highlighting the involvement of delegates.

Eligibility Requirements:

• Advantages:

  • Clear qualification standards for grantees.

• Feedback:

  • Further simplification and clarification of language for easy understanding.
  • Emphasis on the importance of KYC for accountability.

Steps to Implement:

• Advantages:

  • Sequential breakdown of implementation steps.
  • Clear involvement of stakeholders.

• Feedback:

  • Further simplification of language for easy understanding.
  • Emphasis on collaboration among stakeholders.

Overall Cost:

• Advantages:

  • Clear breakdown of ARB allocation.
  • Transparent presentation of costs.

• Feedback:

  • Brief justifications for allocation amounts.
  • Emphasis on how each allocation contributes to program success.

Conclusion:
The proposed Long-Term Incentives Pilot Program shows promise in addressing past issues and preparing for a comprehensive long-term framework. Improving communication effectiveness and simplifying language could further enhance clarity and implementation efficiency.

[Matt_StableLab]

This proposal is now live for vote! Please cast your vote on Snapshot

[cp0x]

Hello, @Matt_StableLab!
Thanks for the proposal, it’s great.
A small note, we think that 2500 ARB for a multisig is atoo much. In all other proposals on the platform it was 1000 (taking into account the fact that the cost of the ARB increased to $2)

[karelvuong]

@TreasureDAO’s Arbitrum Council (ARC) will vote FOR this proposal on Snapshot to fund the program with 45,815,000 (ranked in descending order of ARB amount).

Treasure has been involved in the pre-forum socialization process for the Long-Term Incentive Pilot Program (LTIPP) and believes it addresses many of the challenges identified through STIP Round 1, further builds upon it, and will set the foundation to establish a long-term, sustainable incentives/grants program that will support the growth of the Arbitrum ecosystem.

• Tests a program structure that could be greatly scaled up across sectors with a lens towards plurality: In the long run, we believe that sector/cluster-based programs with DAO-elected councils comprising subject matter experts and Arbitrum-aligned builders will win out as the optimal set up to award incentives. LTIPP will serve as the first stab at this, applied against all categories within Arbitrum DAO which will be an informative exercise while unlocking necessary funds for ecosystem protocols and builders.
• Broadens scope of incentives to enable greater flexibility: Coming from the gaming angle, we’re delighted to see the acknowledgement of this problem (#3) as it was a pain point that was universally shared across games both in and outside of the Treasure DAO ecosystem. Notably, the strict limitation on incentive mechanisms forced DeFi distributions of grants which needed to be expressly complied with which we do not believe to be aligned to the needs of games.
• Reduces the burden on delegates while maintaining veto power: As an active delegate who reviewed and voted on all STIP Round 1 applicants, the burden placed on protocol delegates was great as we felt the weight of responsibility and expectation to strive to participate in the STIP engagement, review, and voting process, while also delivering against the needs of Treasure DAO’s own priorities.

With our support of this proposal, we also urge the DAO to consider the following:

• Electing a diverse council: We believe the council approach paired with the application advisors are both a step in the right direction. Beyond this, what will be of paramount importance are two things: (1) ensuring both groups comprise balanced, knowledgeable and thoughtful members who can represent Arbitrum’s diverse ecosystem of projects across sectors; and (2) ensuring the council designs a universal rubric that can be applied across all types of projects – whether they be DeFi, RWAs, gaming, infrastructure, and so on.
• Getting this program in front of as many Arbitrum builders as possible: For those of us who have been deeply engaged in Arbitrum governance, this has been a major topic of discussion for some time. For those outside of it though, it’s easy to not be aware of this potential funding and support path for all who would be able to benefit from this. The Arbitrum DAO community and Arbitrum Foundation needs to amplify and promote this program as much as possible to get this in front of the protocols and builders helping grow the Arbitrum network.

[cattin]

The @SEEDLatam delegation has decided to vote AGAINST this proposal at the Temperature Check.

Rationale

I want to say that I appreciate all the effort that went into drafting this proposal. I understand that the whole STIP was a bit chaotic, so I really like seeing a proposal that aims to make its successor more efficient, but I’m not sure if this is the best way.

First of all, I feel like relying so heavily on a council could end up centralizing Arbitrum’s governance a bit too much, especially if it’s related to protocol incentives since they are essential for the development of the ecosystem. Because, even though I understand that it was a burden for most delegates, I think that we could just give them more time to review proposals (with longer review windows and feedback periods). This, coupled with compensations for delegates, could alleviate the burden.

Replacing delegates with a council might be more efficient in a way, but it also takes away value from governance - if I’m not wrong, many protocols started engaging with the DAOs governance thanks to STIP.

Second, I think some expenses are a bit too high and might not be necessary. I understand that the DAO has a massive treasury but it doesn’t mean we shouldn’t be a bit more careful with it ~ excluding the incentives, there’s an additional 815,000 ARB requested for various purposes, this amounts to roughly $1.7M. For example, I think that the program shouldn’t include the role of the advisor since, ideally, with a longer timeframe, feedback should come from the delegates + it would encourage protocols to learn the DAO governance process. As a side note, I noticed that @SEEDGov applied to this role, but I just wanted to state that our delegation decides independently from the organization.

Conclusion

Eventhough I like the direction towards this proposal is going, I think we have to develop a program that seeks more involvement from the delegates and relies less on centralized committees.

[maxlomu]

gm all, nice to see the hard work of the last few months coming to fruition.

I am supportive of this intiative and voted FOR the pilot program of the LTIP.

Rationale:

I think the 3 key problems identified are tackling the right frictions that currently exist for such a program to be lean, effective, yet fair and open.

The council and advisors are tasked with supporting applications and ensuring a minimum agreed-upon quality, while still preserving the ultimate decision-making power of the delegates.

Still, I want to echo @cp0x and @cattin : the proposed compensation for some positions are not aligned with the current market.
While people involved in the different roles take the downside risk of the market if the ARB tokens go down, I would encourage to review the different compensation packages before submitting the final proposal on Tally.

[cp0x]

Good day, @cattin
I like your rationale for rejecting the offer.
In addition to payment, in order to avoid centralization of grant decisions, perhaps if @att_StableLab adds the following changes to his work, we may consider the proposal again:

1. att_StableLab makes a selection of rejected grant recipients according to their parameters.
2. att_StableLab makes one general proposal with a vote to exclude funding for the above grant recipients. With detailed information on each project, with explanations of why you should not allocate ARB to this project.
3. This way, we will reduce the number of votes and the community will be able to influence who exactly gets the grant, even if this project was excluded from funding.

[coinflip]

Voting order

1. Fund Program with 25,815,000
2. Don’t Fund Pilot Program
3. Fund Program with 35,815,000
4. Fund Program with 45,815,000

If the option to Abstain was available this would have been availed but it was not possible on this snapshot vote, so voting and providing feedback.

Highly supportive of the idea of running a V2 to the original STIP with those protocols having weighted months, while the backfund worked through voting, funding and now disbursment before their proposal finally came to vote. Voting in support instead of to not Fund the Piliot Program is to ensure the V2 opportunity does exist, despite misgivings on the proposed size of this Pilot program at between $52.5 and $105 million + overheads.

Concerns
Voting on Tally in support will be contingent on seeing progress on the below concerns.

Size of the Pilot program

• Presented as a Pilot program, given this is the first time the DAO is delegating the vetting and evaluation process of an Incentive grant program to a council / committee, as STIP involved direct voting on 100+ proposals and backfund was an omnibus funding. The proposers state a need for caution before spending significant amounts under a long term program yet the smallest funding option provided is 25 million ARB (52.5 million USD on the average value over the last 7 days) that means this PILOT program even at the LOWEST level will be the second biggest disbursement of total ARB ever by the DAO and the largest ever disbursement by the DAO in USD.
• When a V2 was being evaluated the most common number floated was 25 million ARB which would have grown made STIP + V2 to the same 75 million ARB that the incentive committee originally floated. Since that time, an additional 20+ million ARB was added via the backfund (those protocols would have been in a V2) and the underlying value of the ARB token has increased by over 100%. Yes to those asking, the value of the ARB token going up is relevant because the network that we are growing isn’t denominated in ARB but in gas consumption in ETH and TVL and other metrics that are $/ETH based, the ARB token is simply the mechanism by which this growth is being funded in this context. Meaning both the ARB, USD and ETH value should be considered when determining sizing.
• Concerns were raised on the size in community calls but the proposers didn’t seek to give delegates the option of looking at more modest budgets for the pilot, I’m sure they will share their reasons.
• Appreciate that the council could choose to award or recommend less than the entire amount, but it is reasonable for the council to assume they have a mandate to spend the amount and choosing to spend materially less then the total funds committed might not align with the DAOs intentions. In the end they can say they are only providing recommendations, the DAO can decide which proposals to support. Difficult acts of self restraint may be needed by the council or DAO, or we may end up with less effective funding.

Eligibility

• “The pilot program is intended for protocols that did not receive ARB during STIP or the Backfund. However, protocols that received grants from the Arbitrum Foundation, Questbook’s grant program, or any other Arbitrum Grants program are eligible to receive Pilot Program funding.”
• If someone read the entire test of the snapshot and gave up after reading 80% of a 5000+ words from an additionally provided link, they might miss the above line that indicates that this vote for funding between $52.5-105.0 million in incentives from the DAO is intended only towards protocols that did not succeed in securing funding in STIP + backfund.
• This choice of presentation needlessly creates confusion, especially when proposing a grants program as large or larger than STIP it seems eligibility should have been front and centre.
• It would also be ideal to have clarity (via a snapshot vote?) if the words ‘intended’ means prioritization of projects outside of STIP+backfund or complete exclusion, including a silly edge case of protocols who received funding via say the foundation claiming that the exclusion does not apply to them since the language says recipients of those grants ARE eligible.

Additional Budgets

• In addition to grant budgets of 25 -45 million ARB ($52.5 - 105.0 million) there is an additional budget of 815,000 ARB ($1.7 million) towards a range of administrative, support, retrofunding and research
• The research grants are explicitly indicated as being subject to further DAO votes which would make it safe to assume the remaining amounts are not although presumably can be stopped by the multi-sig only for improper activity.
• Not arguing against the merits or need to potentially fund these various activities, but I do think that it would be appropriate for the DAO to be able to weigh in individually on some of these expenditures especially since many are commenting that they are supporting inspite of these expenditures and not in support of some of these expenditure
• A caveat that the project manager compensation is implicitly linked to the proposal itself and probably should not be touched since the project manager is named but for positions and expenditures not yet committed to a specific party as the vote to determine who will receive them hasn’t happened or for retro amounts these amounts can be amended if the DAO weights in.
• Propose that while the full amount be voted on Tally, in parallel snapshot votes are done on these additional budgets effectively allowing the DAO a line item veto for them.

No doubt the role of the council we elect will be very important, and it would be prudent for everyone to understand the philosophy of candidates including with regards to their view on how the budget reflects a mandate to spend.

[juanbug]

@AbdullahUmar and I have shared our thoughts on this vote here. Overall, we’re in favor and are excited to see this get going. One thing to note and consider we think is reevaluating some of the compensations, for example the Multi-sig signer.

Uniswap-Arbitrum Delegate Program (UADP) Communication Thread

Long-Term Incentives Pilot Program Vote: Fund Program with 25,815,000 (then increasing numbers and lastly don’t fund) We are in support of the Long Term Incentives Pilot Program as its structured approach to enhancing the Arbitrum ecosystem takes into account much of the negative feedback from prior proposals and finds a nice common ground between many different opinions. The program addresses key issues from STIP Round 1, like delegate workload and feedback for protocols, and offers a more str…

[krst]

The below response 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.

After following the development of the proposal through the relevant working group, we have decided to vote in its favour during temp-check.

It is apparent that the LTIP working group put a lot of thought into addressing the challenges delegates faced during STIP and although the proposal isn’t perfect, it’s a huge step forward. And, considering this is a pilot program, it’s a good stepping stone upon which the DAO can iterate in the future.

Having a council screen applications before having the delegates vote on them is a great way to ease the burden put on delegates, while at the same time letting them retain the decision-making power. On a similar note, enabling applying protocols to have someone to turn to (Application Advisors) to get feedback will allow them to create even better proposals, thus increasing their chances of being accepted, and in turn potentially increasing the positive impact they can have on the broader Arbitrum ecosystem.

The biggest improvement in our eyes however, is the fact that this proposal, contrary to the STIP (although OpenBlock Labs did retroactively analyse the STIP), includes a data provider to monitor and report on the data from each protocol receiving funding. Understanding the impact the LTIPP has (and STIP had) is crucial in order to create a sustainable, long-term incentives program that has a positive and lasting effect on Arbitrum.

[Curia]

Thank you, @Matt_StableLab , and everyone who were involved in drafting this proposal. The initiative to transition from short-term incentive strategies to a more sustainable long-term framework is commendable and aligns with the growing demand and lessons learned from the STIP.

Support for the Proposal:

• Alignment with Previous Success: The pilot program is well-structured to address the shortcomings of STIP Round 1, proposing more efficient mechanisms like a dedicated council and Application Advisors. These improvements are crucial for the effective distribution of incentives.

• Testing New Mechanisms: As a pilot, this program offers a valuable opportunity to test and refine incentive mechanisms, providing essential data to shape the future long-term framework.

Areas of Consideration:

• Cost Considerations: The proposed compensation for the election position appears significantly high, particularly for an initial pilot program. We recognize that this proposal was developed during a period when the ARB value was comparatively lower than it is now. Considering the magnitude of the allocated funds, it would be great to have some detail on the basis of this amount justification. Hence, we are leaning toward the lower end of the program funding size.
  

  

• Council and Advisor Roles: Diversifying expertise in the council and advisor roles to cover specific sectors like gaming, DeFi, and NFTs could enhance the program’s effectiveness. This specialization would ensure deeper understanding and tailored support across various segments.

[Bob-Rossi]

I don’t believe the 45M option pays 125k ARB per council member, but 125k ARB total at 25k per member regardless of size.

[Bob-Rossi]

I have voted FOR this proposal. I appreciate that this next iteration of the grants program has taken STIP pain points into consideration and I think the changes will help alleviate the issues.

The grant program has to keep growing in some manner, and at this ‘exploratory’ stage of ARB’s grant ecosystem I believe the changes are a great step towards a final product. I’ll add that I think the applicant advisor roles are a nice addition as I have gotten feedback from a few would-be applicants now that they have had trouble knowing where to start when applying. This should help make sure projects that are great on their own merit but not so great at drafting a request won’t be behind the 8 ball against others.

I’ll add I’m glad to see that there are research components and emphasis on gathering data, as arguably one of the most import parts of this LTIPP is growing into whatever the ‘final’ form of the Arbitrum Grants program looks like.

[Curia]

Thanks, @Bob-Rossi for correcting me. I appreciate your input and assistance.

[CastleCapital]

We believe electing a council to speed up the delivery of proposals to a final vote would be of great benefit to the broader Arbitrum ecosystem, ensuring delegates are not overloaded.

As competition continues to increase with newer launches and market sentiment increasing, we want to ensure that governance proposals achieve an efficient delivery mechanism to voting which we believe a council and advisor structure can achieve. We fully support this proposal as it aims to serve the good of the Arbitrum ecosystem.

We have a few concerns regarding the length of the pilot, the barrier against STIP recipients, and the overhead size.

• Clarity revolving around the length would be appreciated given that we are currently halfway through January [January-April described in the forum]. An updated timeline could be sufficient to address that concern.
• We believe that while STIP recipients should not be excluded from the pilot program, they should be considered heavily based on the effectiveness of the previous allocation to their protocol. This should maintain the heaviest weight above all else when evaluating such applications.
• Many participants in the forum have voiced their concerns regarding the large overhead. We at Castle believe the overhead can be justified given the overarching net benefit of such a large incentive program. While this is a pilot program, the effects of the program will be seen in a short time and can be evaluated going forward.

Even with the concerns above, we fully support the LTIP if wider concerns are appropriately addressed before a Tally vote.

[ITUblockchain]

The ITU Blockchain Delegation Committee acknowledges the challenges faced during the STIP voting process and aims to turn them into constructive opportunities. Notably, ITU Blockchain has demonstrated commitment by thoroughly voting on all 97 proposals in the STIP, accompanied by detailed rationales available here. The committee is excited about replicating this engagement in the LTIP and emphasizes the positive impact of retroactive community funding in encouraging project votes. While appreciating the innovative concept of the research treasury, the committee suggests enhancing clarity on research grants, defining expectations for researchers, and specifying response times for inquiries to foster community involvement and inspire creative ideas. In a positive light, a comparison between LTIP and STIP treasuries indicates potential growth, attributed to an extended timeline (18 weeks) and consistent ARB token allocations. Consequently, the committee lists its votes as follows: Fund with program 45.815.000, Fund with program 35.815.000, Fund with program 25.815.000, and against.