Goodhart’s Law
People have already been doing this work for 2 years without targeted rewards based on accomplishments. Go back to LTIP and STIP, see who created outsized value for the tokens they were given. reward them more now. and create a culture where people who do the best work are rewarded instead of the people gaming the system.
Hello! Thanks for your proposal.
I have a few questions, as some items looks contradicting each other.
In the previous statement, you mention that Arbitrum needs to attract more builders and talent (I agree with that). And then you proceed with “Opening the possibility of future airdrops will be a solid move to do that, and bring users home.” (here, we disagree, but this will come later).
A few lines below, you wrote this:
Here, I have my questions:
Regarding the execution:
I understand that framing such massive proposal is not a work to be done by one guy (as you mentioned in one of your replies). But in this proposal, you are already framing most of the relevant concepts for the incentives, leaving for this WG the execution of the strategy.
(now the part we disagree) As we are talking about an incentive program, what makes you not consider the other ideas already proposed, like:
It seems more reasonable to follow a structured program with other metrics besides gas fees, for instance.
Thanks in advance!
Great response! Too often delegates have expected to get all answers without funding the work to produce the needed answers…
That being said, I think the scope of the WG should start by mapping and considering multiple ecosystem development strategies out of which Airdrops is one path.
We’re doing something that goes in that direction for another ecosystem (we suggested doing it here first but there was no tracking) and I think the initiative could be copied here:
Personally, I would be purely selfish: for example, to distribute 2nd drop tokens to the wallets who hold tokens from the first drop and vote properly as an option
First and foremost, we really admire the enthusiasm and passion @cupojoseph has for Arbitrum, and recognize the good-intentions behind this proposal.
With that being said, we believe spending 500M ARB on a retroactive airdrop to be a very bad idea. This would represent ~17% of the ARB remaining in the DAO’s treasury, and it only rewards existing builders rather than trying to onboard new cohorts. We understand the intention is to “lure” new builders to Arbitrum by signaling the willingness to support them retroactively, but we do not believe this desired result would be achieved in practice through this proposal.
Entropy firmly believes that it is time for the DAO to focus on long-term sustainability after ~2 years of “spray and pray” spend, and that this proposal goes directly against that idea. If the DAO wants to support its ecosystem into perpetuity, it needs to begin seriously considering how it can fund the ecosystem from revenue generation rather than relying solely on ARB as a funding source. We envision a future where the yield generated from hundreds of millions of non-native assets passively earning are funneled to builders/users, but it will take 2-4 years of time and effort to get to that point.
While user incentives can spur activity over the short-to-medium term, we firmly believe the success of Arbitrum will depend on attracting innovative builders who in turn create applications that naturally attract users through true product market fit. Entropy is in favor of programs and initiatives that support builders, but in a way that treats newcomers and incumbents equally and in a manner that establishes confidence in the DAO’s ability to support them into perpetuity.
In summary, we recognize the author’s intentions and respect that important details are proposed to be determined through a funded working group, but this proposal ultimately requests a level of frivolous spending that directly conflicts with Entropy’s goals of sustainability, and thus we are firmly against it.
I must say this is a well intentioned proposal. Rewarding builders based on their activity can motivate them to create valuable products/ services for Arbitrum.
That said, with 500 million ARB, this is quite a financial strain :). The DAO has already funded many builders from the start to encourage new ideas to integrate with Arbitrum, and now we’re rewarding their success (which is great), but it feels like double funding 
I agree with other delegates, this could put selling pressure on ARB, leading to inflation and a decrease in ARB’s value.
Also, the $100K cost for a 2-3 month project with 6 people seems a bit high to me, to be honest.
I also think future airdrops should be forward looking, for example announcing them in advance and inviting builders to build, rather than rewarding past activity.
Not ready to say yes yet.
incentivizing builders is a good thing to do, and doing it related to gas fees generated is a really interesting idea which seems to be working for Sonic.
That being said this proposal is a massive amount of ARB, at a time when ARB doesn’t have otherwise equal buying pressure to offset it.
If the proposal could be designed in a way where the fees generated offset the ARB distributed it would be a lot more sustainable.
Without a more sustainable economic design there’s no way we’d support this as ARB holders and delegates and I think many other holders and voters would say the same .
Thanks for sharing this proposal, @cupojoseph.
A 500m airdrop program is certainly bold, and there’s a lot to unpack before deciding whether this approach makes sense. As you mentioned:
We’re not opposed to considering a program of this nature, but tying the idea to a hard 500m token allocation right from the start may draw attention away from some essential questions:
These points are important, regardless of the exact shape or size of any potential future airdrop.
Additionally, clarification is needed on how the proposed $100k would be spent. The current breakdown doesn’t offer enough detail on how the funding would be allocated:
One approach worth considering is to engage the ARDC for a viability study first as also mentioned by @Chris_Areta. That step could help us gather a broader range of insights before the formation of a dedicated committee focused on execution. It might also help refine the proposal so we have a clearer path to fostering growth and alignment in the Arbitrum community, rather than just tackling an airdrop head-on.
Being builders who are committed to Arbitrum ourselves, we obviously have a strong bias.
Therefore, we don’t want to comment too much on the idea aside from being supportive in general.
Though, given that all the essential details regarding the execution are still outstanding, we’re not sure what could be voted on at this moment.
In our opinion, 500M ARB is a lot, yet could make sense under certain conditions. But depending on the execution strategy, a smaller amount could be more adequate, so we don’t think that voting on the airdrop amount can be separated from the execution strategy.
At this moment, a temperature check for the general idea with an attached expense, workload & timeline estimation seems most appropriate?
Would you be the project manager for this? @cupojoseph
If not, we would prefer if there was someone volunteering as PM or ideally even the whole working group being assembled before voting on the expenses to avoid approving the budget before execution can be assumed.
My initial gut reaction is ‘damn, this is a lot of money’. I understand the sentiment from this proposal but something tells me that its a bit too early for another airdrop.
I want to take a step back here. What is the problem we are trying to solve here? The motivation points to other programs and encourages us to copy them – but why are we copying them?
The rationale is the standard rationale for any incentive program IMO. We should analyse the period of significant growth a lot more deeper too – was it actually tied to that? how long did it last? why was it short lasting?
I think the author is aware of that this is a massive task and there’s a lot to figure out and I appreciate that. There really is a lot to figure out here. Start small, research the problem and the effect of the prev airdrop.
Maybe I’m out of the loop here too, so it might be a dumb question, but doesn’t the dao employ a team to help with these tasks before getting another working group?
We oppose this proposal. We believe given the incentives detox, the general mood of reducing spend in the DAO, and the questionable value of an airdrop at this stage of Arbitrum’s development compared to more targeted growth spend, this would be a poor use of DAO funds.
We encourage the DAO to think critically about large spend like this and consider the vast amount being spent with few clear KPIs, metrics, or desired outcomes being targeted by the spend.
The following reflects the views of GMX’s Governance Committee and is based on the combined research, evaluation, consensus, and ideation of various committee members.
The proposed allocation of 500 million ARB tokens for an airdrop raises significant concerns regarding its effectiveness, sustainability, and impact on the DAO’s long-term financial health.
Instead of a one-time, high-risk airdrop, the DAO should focus on incentive structures that ensure long-term alignment, sustained engagement, and ecosystem resilience.
Below is the perspective of the UADP:
The motivation behind this proposal makes sense, and we are on board with establishing more programs to appreciate builders. However, it seems irresponsible to conduct a second airdrop round because the benefits of such a program seem flimsy, leading to nothing more than exacerbated sell pressure.
The crux of the issue really is the amount of long-term value that the 500M would bring to the ecosystem. More than likely, giving protocols with high usage—based on gas for example—will reward large, existing protocols as opposed to bringing in new talent. That is, unless, we conduct this operation on a continual or tranched basis where newer builders enter due to future expected rewards. Dividing the 500M up over time would make more sense. A lump sum retroactive distribution would not prioritize new entrants and would concentrate sell pressure into a short timespan.
We are not convinced that loyalty through an airdrop would increase either—that’s why increasing the builder cohort may be more important than retaining existing builders. Large protocols who are entrenched in Arbitrum are more than likely to stay in the ecosystem. And if a protocol is more fickle and is thinking about existing Arbitrum already, they may just see this as a final payday before exiting.
If we want to appreciate builders, it’s likely best to continue expending capital on either developer tooling/operations (this is more salient for newer builders) or through user-oriented incentives like the LTIPP/STIP because builders, at the end of the day, would be highly appreciative of an opportunity to attract more users to their protocol. A team that’s aligned with staying on Arbitrum, upon reception of an airdrop, may even decide to use that allocation for incentives. So why not just give out more user incentives at that point?
If an argument can be made that simply airdropping more tokens to builders leads to more loyalty which would otherwise wane, we’d be open to hearing that perspective. But no matter which way we twist this, the justification for going forward with an airdrop to builders over more developer grants/user-based incentives seems subpar.
gm, I find myself aligned with the comments from @pedrob @Argonaut and @Entropy and strongly against this proposal despite our urgent need to attract new builders to Arbitrum.
The goal is right, but airdrops are the wrong approach IMO. Creating a builder flywheel requires structured support systems, not scattered token distributions that have proven to only retain (users and builders) short term.
What we need is a comprehensive builder incubation program that provides resources, mentorship, and targeted incentives tied to development milestones.
I have the highest respect for builders like the OP and want to see more innovation on Arbitrum. Let’s channel our resources into programs that actually give builders what they need to succeed long-term.
Thanks
okay where’s the proposal for this?
I think we want the same things, let’s make this happen. And thank you for the serious response.
I see you are well intended. But airdropping this amount of tokens doesn’t solve anything on the long term except depleting our treasury and create huge sell pressure. Would be much better to have delegations from treasury plus a path like the one suggested above for builders in our chain.
Second airdrop may be a good idea.
How about we calculate fees generated by users/protocol to determine its relative size for each eoa/protocol, as in proposal. Then we vest it for 2 years with montly unlocks, percentage of unlocks is determined by activity (eg. fees) since vesting is started. That way we ensure activity on chain is constantly rewarded. The future activity can be same or higher (coefficient is chosen by dao). It is not clear rn how absolute fee value is different over time, but it is sure possible to calculate.
Users/protocols loyal to the Arbitrum eco will get rewards, mercenaries dont. Any unvested tokens will return to the treasury in 2 years.
This is just a general idea, thanks for your time