[Non-constitutional][RFC] ARB Incentives: User Acquisition for dApps & Protocols

Proposals
1

Header
Header2408×160 17.1 KB

Summary (TL;DR)

88% of LTIPP dApps & Protocols that spent $ on off-chain ads & content campaigns in 2024 indicated that it’s the 2nd most effective user acquisition strategy. However, only 54% of dApps have used it last year, with only 21% being able to calculate their CAC and 0% calculating their users’ LTV.

Patterns proposes a 1st iteration of a program for dApps & Protocols to cover the costs of their off & on-chain user acquisition campaigns - up to a level they manage to achieve out of self-declared category KPIs. Participants can design their campaigns freely with a requirement for all of them to be measurable and Patterns will calculate ROI (CAC + on-chain LTV) for all campaigns to focus on the most efficient strategies in the next iteration.

The challenge

  • :money_with_wings: The main goal of incentive programs such as STIP & LTIPP is to increase the user inflow into the ecosystem that will lead to higher network usage, TVL and finally - the price of $ARB.

  • :cross_mark: Even though the budgets for these programs are increasing, their results are temporary and most metrics fall back to their baselines right after the program is finished, which is underlined by many ecosystem stakeholders, including IOSG in their latest proposal

:chart_increasing: Patterns team (f.k.a. Tokenguard) analyzed projects that took part in the LTIPP program and identified multiple reasons of this and similar programs not achieving long-term results that were expected:

  • No off-chain marketing - most protocols didn’t communicate rewarding to new users in other ways than using existing SM channels such as Twitter and Telegram.

  • Lack of knowledge of on-chain user acquisition funnels - only 37% of protocols have off-chain tracking tools installed for marketing purposes, which makes it impossible to run successful user acquisition campaigns.

  • No consideration for ROI and over-expenditure on non-performing projects - as discussed during ARB Liquidity Incentive calls, most teams don’t have any active marketing & growth teams that would take care of CAC & LTV ratios for their marketing campaigns.

These insights along with the supporting data were presented at ARB Liquidity Incentives calls organised by L2Beat (thanks to Kaerste & Sinkas):

The above reasons make most incentivization programs attract only a small group of existing Arbitrum users and / or users that interact with cross-chain protocols available on Arbitrum.

Insights from dApps & Protocols

While working on this proposal, our team conducted surveys amongst LTIPP participants to understand their perspective on user acquisition and most efficient strategies they used. Out of 40 protocols we’ve contacted, 19 filled out the survey. The results bring in some significant new conclusions:

  • 84% of surveyed protocols indicated covering user gas fees & airdrops as the most efficient user acquisition strategies
    – However, 53% of protocols haven’t spent a single dollar on off-chain user acquisition in 2024
    – Out of 47% of protocols that spent $ on off-chain user acquisition in 2024, 88% indicated 2 off-chain strategies (paid posts & ads; newsletters) as the second most efficient user acquisition tool.

  • Only 21% of surveyed protocols know their CAC (“Customer acquisition costs”)

  • 0% of protocols know their LTV (“Lifetime value of a user”)

Further questions uncovered more interesting insights about user-related development plans of dApps & Protocols:

  • Even though 84% of surveyed protocols mentioned covering gas fees & airdrops as the most efficient user acquisition strategies, only 37% of protocols are aware of or have plans to implement ERC-4337 standard (Account Abstraction standard allowing to easily onboard users and cover their gas fees).

  • Only 37% of dApps & Protocols have some kind of off-chain tracker installed - which is a crucial prerequisite for running successful user acquisition campaigns and calculating CAC & LTV

  • As many as 68% of surveyed dApps & Protocols mentioned metrics other than TVL as the most important for them.

The solution

Patterns would like to propose an iterative program, complimentary to the one proposed by IOSG, that would solve these challenges by helping protocols run and measure their off & on-chain user acquisition campaigns. The aim of the program is for protocols & ecosystem to learn how to run these campaigns successfully and build a culture of web3 user acquisition through measurable marketing that finally allows to calculate the LTV / CAC and ROI.

Duration: 3 months per iteration

Budget: $3m (first iteration)

Scope: Patterns will run a program to boost user acquisition by dApps & Protocols into the $ARB ecosystem. All projects will be divided into categories, based on the ecosystem user acquisition funnel:

Ecosystem User Acquisition
Ecosystem User Acquisition1920×1080 64.6 KB

Budget will be spent on helping these projects achieve predefined measurable goals through all the steps of the above user acquisition funnel:

  • Off & on-chain performance campaigns - consisting of measurable ad campaigns in networks such as Twitter, Linkedin and on-chain networks such as Hypelab and Slise; Paid content and landing page creation; Paid newsletters and cold outreach; Setting up off-chain tracking tools.

  • On-chain incentivisation - including gas fee coverage, rewards and long-term on-chain incentives; Setting up Account Abstraction infrastructure to make Arbitrum products user-friendly and easily acquire new users.

Program KPIs: Each category will have a different set of on-chain KPIs connected to its role in the Arbitrum Ecosystem according to the user acquisition funnel:

  • Bridges, On-Ramps & Wallets (up to 5 projects) - the only purpose of bridging & on-ramp projects is to bring in as much funds into the ARB ecosystem as possible and make them as hard as possible to move out. This strategy has worked really well in LTIPP projects and should be continued.
  • DeFi (up to 10 projects) - this segment is characterized by high to medium value transactions and wallets. It’s main purpose is to generate as many high volume trades as possible to keep users’ capital engaged in the ecosystem for as long as possible. Additionally, offering assets available only on ARB would be highly appreciated.
  • Others (up to 5 projects) - this segment includes all non-financial products within the Arbitrum Ecosystem - such as NFT Publishers & Marketplaces, Games, Social Platforms, AI Platforms and others. All of them are characterized by low value transactions and require high user stickiness to be sustainable. From ecosystem perspective, incentivizing these projects can be beneficial only if users stick with them for long, making their lifetime number of transactions high enough to generate sequencer fees.
Goals KPIs (every 1 month) Retention KPIs (after 3 months)
Bridges, On-Ramps & Wallets - Maximize inflow of new funds into $ARB ecosystem; - Minimize outflow of funds out of $ARB ecosystem - Net inflow balance; -Net inflow volume - % change in inflow balance; - % change in inflow volume
DeFi - Maximize number & value of trades; - Increase TVL & trade volume on assets available only in $ARB - Number of trades; -Volume of trades; -TVL - % change in number of trades; - % change in volume; - % change in TVL
Others (NFT, Gaming, Social, AI) - Maximizing stickiness; - Maximizing in-product purchase - Monthly Active Purchasing Users; - Avg. in-product purchase volume per wallet - % change in Monthly Active Purchasing Users; - % change in purchase volume per wallet

dApp & DeFi User Acquisition
dApp & DeFi User Acquisition1920×1080 65 KB

Application process:

  1. Arbitrum dApps & Protocols apply to the program by filling out a predefined form, where they specify:
    1.1. KPIs they declare to achieve every 1 month as well as Retention KPIs after the campaign.
    1.2. Requested budget with expected items & costs
    1.3. Tools used for running and off-chain measurement of the campaign * All activities must be measurable and Patterns will receive access to tools used (eg. Google Analytics, Mixpanel, Meta Ads, etc.). If activities include KOLs, paid content creation, SEO - all of these need to be fully measurable.
  2. After all applications are collected, the Committee assesses all applications and chooses projects at its own discretion based on the following factors:
    1.1. KPI to budget ratio
    1.2. Existing track record
    1.3. Size of the project * The goal of the program is to both set up a successful campaign examples coming from the most experienced teams, as well as, amplify marketing efforts of smaller and promising projects.
  3. Depending on the type of campaigns, projects will either receive a prepayment for the upcoming month of campaigns or will be reimbursed afterwards. The Committee decides about the payment type.
  4. User acquisition campaigns start and are independently ran by dApp & Protocols teams.
  5. Committee monitors and optimizes campaigns, delivering on-chain reports & insights about users acquired. Patterns delivers LTV value of wallets.
  6. After every month campaign results are compared to initially declared KPIs levels.
  7. Prepayments or reimbursements for the next month of campaign operation are paid out based on the level of achieved KPIs.
  8. Unused funds are returned to Arbitrum Treasury.
  9. Insights & takeaways are collected and if results are satisfactory for the Arbitrum Foundation, the program runs with a second iteration.

Program framework
Program framework2444×1372 321 KB

DAO Reporting:
Project’s results will be measured for each campaign separately and for the program as a whole. Pattern’s will be transparently showcasing information following the below frame:

  1. Start: Publishing information about which campaigns were accepted along with an explanation for the decisions made. All KPIs declared by applicants will be shared with the DAO on the forum along with links to real-time dashboards measuring these KPIs (every metric will be linked to Dune Analytics or DefiLlama or Tokenterminal or Flipsyde). The templates are subject to change:

    template-1
    template-11920×1135 199 KB

  2. 30 days after & 60 days after & 90 days after: Results of campaigns ran by dApps & Protocols will be showcased to the Arbitrum community for every month with a community Q&A section. Patterns will be calculating on-chain LTV and real CAC will be collected to derive the overall ROI on campaigns (exemplary data on the image). 5 most successful campaigns will be explained and showcased to the community. The templates are subject to change:

    template-2
    template-21920×1018 190 KB

  3. Summary after 90 days: Results of the whole program will be published, along with the information about KPIs, CAC & LTV achieved by each campaign financed within it.

  4. Methodology: All metrics mentioned in the proposal will be calculated in a following way:

  • LTV - Wallet X Arbitrum Ecosystem: Sum of all sequencer fees generated by a wallet while interacting with the network. Data will be displayed in Patterns app and DAO reports.
  • LTV - Wallet X dApp: Sum of all fees generated by a wallet within a dApp based on smart contract events by dApp teams. Data will be displayed in Patterns app and DAO reports.
  • CAC - Campaign X dApp: The cost of marketing spending per wallet acquired to interact with the dApp. Data will be displayed in DAO reports.
  • Ecosystem ROI = Ecosystem LTV / CAC - Campaign X dApp: The overall value of sequencer fees generated for the ecosystem by a specific campaign divided by campaign’s CAC. Data will be displayed in DAO reports.
  • dApp ROI = dApp LTV / CAC - Campaign X dApp: The overall value of dApp revenue / fees generated by the campaign dividied by its CAC. Data will be displayed in DAO reports.
  • Category KPIs & Retention KPIs - per dApp: Each dApp’s KPIs will be measured using Dune Analytics or DefiLlama or Patterns app.
  1. A recommendation on continuing or discontinuing specific campaigns will be delivered to the DAO along with showcase of the 5 most successful campaigns that had the highest ROI and an explanation from a marketing expert on why this specific campaigns were successful.

List of acceptable strategies:
Below you can find an exemplary but not exhaustive list of campaigns acceptable within the program. Any strategy that is measurable can be used in the program:

  • Off-chain:
    • Inbound:
      • Ads: Twitter, LinkedIn, Meta, Google Ads, PropellerAds, Farcaster, others
      • SEO: Backlinks, paid articles, SEM
      • Content: Sponsored news, articles, paid newsletters, blog posts, videos
      • Events: Online webinars and events
      • Affiliate marketing: KOLs, Affiliate networks
    • Outbound:
      • Cold-mailing, newsletters
      • Telegram, Discord, LinkedIn campaigns & outreach
      • Outbound sales: Apollo, Lemlist, 3RM, Convrt, Growbots, others
  • On-chain:
      • Ads: Hypelab, Slise, Addressable, others
      • Quests: Layer3, Galxe, Tide, others
      • Gas fee coverage: Setting up and financing an ERC-4337 Paymaster
      • On-chain rewards: Different types of conversions - adding liquidity, trading, creating new token pairs, etc.
      • On-chain rewards: Airdrops

Application requirements:
Every application requires the following information:

  • Name of the applicant:
    • Category (Bridge, DeFi, Other)
    • KPIs for the last 6 months (specific for each category) with minimum 1-week granularity available on Dune Analytics or DefiLlama or TokenTerminal or Flipsyde or Patterns. In case of multichain dApps, all KPIs must be measured for Arbitrum chain only.
    • List of other than Arbitrum chains the applicant has deployed its smart contracts on
      • Share of MAU or DAU on specific chains for the last 6 months
    • Results and budgets of previously conducted off & on-chain campaigns
  • For every planned strategy:
    • Strategy description
    • Requested budget
      • Minimum 50% of the budget needs to be spent on off-chain marketing
      • Maximum 30% of the budget can be spent on on-chain rewards
      • Overall maximum budget per applicant is $200k
    • Requested type of funding: % of upfront + % of arrears
    • Expected category KPIs at the following time-points:
      • Start of campaign
      • 30 days
      • 60 days
      • 90 days
    • Tools required for measurement
    • Expected CAC

Application assessment:
The Committee holds a right to choose and deny applicants at its own discretion for any reason. Factors that will be taken into consideration while choosing applicants:

  • KPI to budget ratio - a metric derived by dividing expected KPIs growth at the end of the campaign by the campaign’s budget
  • Type of payment - arrears payment will increase the chance of winning an application
  • Track record and previous results of off & on-chain campaigns for the past 12 months
  • Applicant’s share of activity on Arbitrum blockchain
  • Direct interviews with applicants

Committee:
The program will have a decisive committee consisting of:

  • Arbitrum DAO representative - 1 person selected from DAO candidates
  • Off-Chain Labs representative - 1 person appointed by Off-Chain Labs
  • Arbitrum Foundation representative - 1 person appointed by Off-Chain Labs
  • Patterns representative - 1 person appointed by Patterns
  • Independent marketing consultant - 1 person selected from experienced candidates

Committee will hold bi-weekly meetings will all protocols and will be responsible for:

  • Accepting or denying projects into the program (3 out of 5 votes needed),
  • Putting incentives of a specific project on hold (3 out 5 votes needed),
  • Monitoring the campaigns and consulting on their realization,
  • Optimizing campaigns, including sharing the best results coming from other projects,
  • Sign transactions via multi-sig to disperse funds to projects.

Additionally, Arbitrum Foundation marketing team will prepare a unified marketing package for participating projects to help them bootstrap their marketing efforts. DAO representative and marketing consultant role will be gratified with a monthly remuneration of $2.5k.

Budget & costs:
The $3m budget dedicated for the program will be divided as follows:

  • $2.82m will be disbursed to dApps & Protocols as campaign budgets. All unused funds will be returned to the Arbitrum Treasury. We expect to support ~20 applicants with this budget.
  • $100k will be spent on Patterns KPI off & on-chain LTV tracking for all participating dApps & Protocols as well as setting up required external tooling - GA, Mixpanel, etc. Full budget cost can be found here.
  • $7.5k * 2 / month will be spent on 2 dedicated data analysts from Patterns to facilitate and help dApps & Protocols achieve their goals. Specialist requirements:
    • Min. 5 years of experience in web3 analytics
    • Min. 2 years of experience in Solidity & smart contracts
  • $7.5k / month will be spent on 1 external marketing specialist to help set up marketing campaigns.
    • Min. 5 years of experience in web2 performance marketing
    • Being responsible for ad budgets of at least $1m
  • $2.5k / month will be spent on 1 DAO representative to help optimize and supervise campaigns.

Who are we?

Patterns (formerly known as Tokenguard) is an experienced team of web3 data & user activity analysts who build a web3 user acquisition tool with DeFi & dApp builders in mind. Our tool offers a web3 CRM for builders and growth specialists to boost their conversions & revenue. We started working on this idea in early 2023 and quickly gained traction with protocols and companies such as Optimism Foundation, Polkadot, Aleph Zero, Astar Network, Sygnum Bank, Bitcoin. com and others. Our work includes:

  • Optimism Foundation - co-developing on-chain activity metrics for Account Abstraction ERC-4337 standard (ERC-4337 Data & Attribution Standards for the Superchain)
  • Polkadot DAO - delivering on-chain user acquisition insights for Polkadot DeFi protocols (including Hydration, Bifrost, StellaSwap)
  • Aleph Zero Foundation - boosting on-chain growth through actionable user acquisition insights for dApps & DeFi

Discussion & sources

Most important materials and insights regarding user acquisition & incentivization in the Arbitrum Ecosystem (from newest to oldest):

6 Likes
2

My background is in sales and marketing, so I was intrigued when I read this proposal. I think it’s great and a nice, fresh approach brought into this space. :raised_hands: Here are my thoughts:

  1. I think this proposal addresses the issue of bringing new users (non-crypto) on-chain. Since you are using channels like Google Ads, etc., I think this is the awesome. To incentivize crypto projects to go for non-crypto users.

  2. I like that the whole proposal is very metric-driven. I think this is the only way to approach this. In case the proposal would pass, I expect strict metrics for all participating projects.

I do have a few questions:

  1. From the project perspective, this initiative makes sense. They get funds (budget) to run these campaigns. The issue might be that currently, projects have small marketing teams (sometimes even no marketing team at all). Who will pick up the workload? It might be an issue since the project would have to hire new people. What would be a solution here? Offer services by outside marketing agency?

  2. You mentioned you contacted 40 protocols to fill out the survey, and 19 filled the survey. Which protocols shared interest? Did you pitch them this idea already? What was the feedback? Can you name the protocols that showed interest?

  3. With a $3M budget, you expect to serve 10-20 projects. So, a $150k-$300k budget per project. How long would the experiment take before you could do the analysis and show results?

2 Likes
3

Thanks for your proposal. It helps to answer a part of the “how to get more users” question that was not dealt with by the DAO yet.

I have a few questions:

When the DAO is trying to provide an answer to “how to get more users”, IMO it does not make sense to tackle only one part of the issue. As you mentioned that the proposals are complimentary, why not present it together and provide a complete answer to it?

Without having this “holistic” approach, as a standalone proposal, it helps to get more insight and see how this approach would work, but does not solves the issue.

By laying down the metrics like this, what happens when 2 protocols of the same category, but with different sizes, apply to the program? Larger protocols would get an advantage in the way the KPIs are presented:

For example, for DeFi, I would suggest to introduce a % increase instead of only absolute numbers. It is usually the smaller and newer protocols that need more help with user acquisition.

Still regarding this point:

It would be interesting to see a more diverse set of actors judging this, to provide additional context regarding Arbitrum and Web3 in general.

Regarding this point:

As it is today, it is a little bit the other way around, no? If the protocols, by their own means (including money), achieve the KPIs they proposed, then the “Incentive” is paid (looks more like a rebate system). If, by our survey, they don’t do it, or don’t know how to measure, how can them apply for the incentive program with correct/realistic KPIs? How is the program helping them to enhance their strategies? What I see here is a well-defined tracking proposal that will reward protocols that perform well by themselves.

On LTIPP, for example, there were teams (facilitators) helping the protocols to define/enhance their proposals. Is this going to happen here?

Thanks in advance!

1 Like
4

@Tekr0x.eth thanks for your comments! Answering your questions:

  1. Most teams already have team members responsible for growth / community tasks. We expect most of the workload to be done by teams, however, an external help from marketing specialist(s) will be needed. We’re yet to decide how to structure this and talks with teams to understand their capacities are in progress.

  2. We didn’t pitch it but all projects that have responded to our survey were positive about the idea - both big protocols as well as smaller ones. Bottom line here is that conducting an open call might be difficult as responsiveness varies significantly. Can’t share the names as it’s too early and we only outreached to gather insights - these are not final choices.

  3. The whole campaign would take up to 3 months but we expect to have first shareable insights / results after 1 month :fire:

@jameskbh thanks for your comments! Please find answers beow:

  1. This proposal is a part of this ‘holistic’ approach you mentioned - meaning we had numerous calls and discussions within ARB Liquidity Incentives group within the last few months. There are currently 3-4 proposals being worked on, each tackling a specific challenge. Posting all of them as a single proposal would overcomplicate things and make decision-making much harder for Delegates.

  2. Thanks for the idea! :bulb: The bottom line of this proposal is to understand ROI behind user acquisition - both for protocols as well as for the DAO that pays for it. That said, we will experiment with projects of different size.

  3. Yes, we’re now discussing about including external specialists into the program.

  4. Great catch @jameskbh! Category KPIs we proposed are usually already being measured - many of them were covered in LTIPP. What is not measured is CAC, LTV & ROI from campaigns and the goal is that by the end of the program, they’re measured by projects too. Our role is to cover this measurement.

2 Likes
5

Hi!

Thanks for the proposal.

Something to consider in your analysis is that during the STIP and LTIPP, the recipients of the incentives were not allowed to use those funds for marketing campaigns. Instead, the ARB had to go directly to the users. This should explain why they didn’t engage in off-chain marketing.

I think it’s a good idea to try off-chain campaigns targeting new users. I have the following questions:

  • Why 3M? What is the rationale behind this number? What is the cost of a campaign like this per protocol?
  • If the goal is to attract new users, how can they be identified? And what would the plan for their retention look like?
  • I believe the effectiveness of the campaign should be measured after its implementation to determine if it’s worth continuing with this type of action
1 Like
6

Thanks for the proposal!

Our team also has some concerns regarding the proposed budget. It seems that applicants determine the portion of the budget they will use. How will you ensure that the requested amounts are not excessive? Is there a maximum allocation allowed per protocol?

Perhaps setting a fixed number of beneficiaries, along with a maximum budget allocation per applicant, could provide greater clarity and structure to the budget.

We also believe that starting with a smaller number of beneficiaries would help assess the success of this proposal with a lower budget before scaling up to support more dApps and protocols.

Lastly, it would be valuable if the Patterns team were not the sole evaluators of all applications. Involving community members with marketing expertise in this process could bring additional perspectives and strengthen the evaluation process.

1 Like
7

Hey @pedrob, thanks for questions!

Yes, we have a similar view on this - marketing campaigns weren’t covered in STIP / LTIPP so most protocols didn’t run them. However, this doesn’t mean that they’re ineffective.

  1. Assuming a $50k budget per project for a month, $3m would be enough to test this approach with 4-5 projects per category - 2 bigger ones, 3 medium & smaller ones (20 overall). This is enough to gather ROI insights across the whole ecosystem. We’re discussing increasing this number to speed up the whole process, however, we don’t want to overspend as (in my opinion) it happened in LTIPP.

  2. Measurement of new users will happen through Patterns tool (first interaction with dApp / ecosystem) and will be cross-checked with off-chain trackers. Since most of the funds will not be disbursed directly at users, we expect no mercenary / farming behavior - meaning regular average user retention. Some of the KPIs are already focused on retention (eg. minimizing outflow of funds through bridges).

  3. That exactly how we’re approaching this :raised_hands: Although mid-term metrics will also be available.

@Argonaut - good points! Thanks.

  1. You’re right, we’re going to introduce a budget limit per project - although please note that we’re going to choose projects based on their KPI <> budget ratio. The higher the budget, the higher KPIs need to be delivered and if they’re delivered partially - the funds are disbursed partially too. This requires projects to set design these budgets reasonably.

  2. Yes, we’re already discussing engaging an external specialist or someone from the Arbitrum Ecosystem to validate these strategies with us :+1:

2 Likes
8

The following reflects the views of the Lampros DAO governance team, composed of Chain_L (@Blueweb), @Euphoria, and Hirangi Pandya (@Nyx), based on our combined research, analysis, and ideation.

Thank you for putting forward this detailed proposal.

This proposal takes an interesting approach to tackling user acquisition by combining off-chain marketing with measurable on-chain incentives. The performance-based funding model ensures that funds are used efficiently, and the focus on tracking CAC and LTV is a necessary shift for long-term ecosystem growth.

Similar problems were highlighted in our LTIPP Research Bounty reports, which also indicate that short-term user boosts from reward increases show that rewards alone are insufficient to sustain long-term user engagement.

There are a few areas where further clarification would help understand how this will be implemented effectively.

Since funding is directly linked to KPI achievements, how will the Patterns team verify the accuracy of these metrics? Will there be measures in place to prevent projects from inflating their numbers artificially? For instance, certain metrics like DAU/MAU ratios or on-chain interactions could be gamed through non-organic activity.

If selection is based purely on KPI-to-budget efficiency, larger protocols with existing user bases may have a significant advantage over newer projects. We suggest incorporating percentage-based growth metrics instead of absolute numbers to ensure fair participation for smaller dApps. Ensuring a mix of both well-established and emerging protocols could provide deeper insights into what works best for different segments of the ecosystem.

We echo with other delegates as many early-stage projects lack dedicated marketing teams, will this program offer any guidance or resources to help them structure their campaigns effectively? While providing funding is crucial, teams with limited marketing experience may struggle to execute high-ROI campaigns.

In LTIPP, application advisors assisted projects in refining their proposals. Will there be a similar support mechanism here to ensure that protocols make the most of the funding they receive?

Who are the team members from Patterns that will be assessing these applications? Can you please share the evaluation process which will be used to assess the applications?

Overall, this proposal presents a structured and results-oriented framework for funding user acquisition in Arbitrum, which is a much-needed evolution from previous broad-based incentive models. However, ensuring that KPIs are not manipulated, tracking long-term retention, and supporting smaller teams will be critical factors in making this a truly impactful program.

Looking forward to hearing more details on these aspects.

1 Like
9

I see potential issue here. Giving a project $150k-$300k budget and give them 3 months window to use. It not enough time. Finding and optimizing channels takes time. A, B, C… testing. Adjusting. Optimizing.

Since this will be the first time for many of these projects to try User Acquisition strategy I would not ask them to rush it. It could results in burning budget on channel that doesn’t work. And project might just do that since its not “their” money, but from DAO. What would be a possible solution here?

2 Likes
10

We appreciate the initiative and overall support of the focus on improving user acquisition through both on-chain and off-chain strategies. Encouraging protocols to run simultaneous off-chain marketing campaigns is indeed a valuable approach to match on-chain incentives.

However, one key aspect that should be explored further is why many protocols are not already implementing these off-chain strategies. It could be that they lack the expertise, resources, or guidance to execute such campaigns effectively. Simply requiring projects to define KPIs, budgets, and measurement tools (sections 1.2, 1.3, and 1.4) in their applications without addressing potential blockers might not yield the best results. Understanding these limitations could help structure a more effective support system rather than just mandating compliance.

For instance:

  • The requirement for teams to specify KPIs and measurable outcomes assumes they have prior experience in running such campaigns. It may be more effective to provide direct guidance in defining these elements rather than expecting them to figure it out on their own.
  • User acquisition campaigns are expected to be independently run by dApps and protocol teams. However, if teams lack the knowledge of how to design and execute these effectively, the program should incorporate hands-on support.
  • Funding is provided after the campaigns, but some projects may not have the initial capital to execute these off-chain initiatives upfront. This could be a major bottleneck preventing participation.

Given the $3M budget, we believe a portion should be allocated to actively assisting teams in overcoming these challenges, rather than structuring the program in a way that assumes compliance will automatically lead to success. By helping protocols address their specific gaps—whether educational, strategic, or financial—the initiative could achieve much stronger and more sustainable results.

Do you think these considerations could be added to the proposed framework?

2 Likes
11

Hey @Euphoria, thanks for your thoughts, I really appreciate your input in this and former proposals (including LTIPP):

  1. You’re right that in case of gaming / NFT projects it’s easier to artificially boost metrics. In order to counteract such actions, Patterns team is going to cross-check on-chain data with off-chain trackers that will be required. Additionally, we could include revenue / fee related metrics into these 2 categories - happy to hear your thoughts!

  2. That makes sense and as it was mentioned in comments above, we’ll probably go for a mixed set of metrics - absolute and relative.

  3. This is currently being discussed with teams, please bear with us until we propose a solution. Some kind of external validation will be included, it’s not yet decided what kind though.

  4. On Patterns side it’s going to be me and our data analysts who analyzed LTIPP - we’ll share more personal details with the upgraded proposal version :handshake:

Hey @Tekr0x.eth, thanks for bringing this up! First of all, on average the budgets should oscillate around $150k. Secondly, we expect that being responsible for the KPI deliveries, teams will not overpromise or overspend without being sure about the results they’re going to deliver. Otherwise, it could end up with them not getting reimbursed with the full amount they’ve spent. I think such potential loss is enough of a security measure but if you think otherwise - happy to understand your line of thinking.

@karpatkey, great to see you here! Yes, some of your considerations are already being worked on:

  1. It’s already decided that additional guidance will be delivered - currently discussing what this guidance is going to be.
  2. Judging from our conversations with teams, this varies significantly. Bigger teams have their own marketing specialists & designers and prefer to run such campaigns in-house. Smaller teams may not have this advantage and we’re discussing currently what the perfect solution would be here.
  3. This is correct, the idea was that smaller projects would run a campaing with a smaller budget. Let us think if we can find a solution to this! :raised_hands:
1 Like
12

We particularly appreciate the focus on measurable metrics (KPIs, CAC/LTV), as this is something we always emphasize. To further strengthen the proposal, we would like to share some thoughts and questions from our perspective:

1. Validation of Self-Declared KPIs

Allowing projects to define their own KPIs carries the risk of setting overly conservative goals (to ensure full funding) or unrealistic targets (without execution capacity).

How will you ensure that the KPIs proposed by projects are both ambitious and achievable? Would you consider setting minimum/maximum ranges per category (e.g., minimum TVL for DeFi) based on Arbitrum’s historical data?
Is there an option to publish a reference framework with suggested KPIs for each category (Bridges, DeFi, etc.)?

2. LTV Calculation in Short Timeframes

LTV depends on long-term retention, but the program lasts only three months.

How will you calculate the LTV of acquired users if, for example, a Gaming project only has two months of data? Will you include predictive models or extend post-campaign tracking?

  1. LTV Attribution in the Ecosystem

If a user is attracted by a Bridge but generates value in DeFi, how will their LTV be attributed without distorting incentives? Will you implement a multi-touch attribution model (e.g., the Bridge receives 30% of the LTV generated in DeFi), or will only the acquiring project be considered?

4. Program Duration vs. Market Cycles

Over three months, external factors (e.g., market volatility, war, and other political issues I will avoid mentioning) could impact KPIs such as TVL or trading volume, distorting results
How will you isolate the real impact of the campaigns from external variables? For instance, if ARB or ETH rises by 50% during the period, will you adjust expected metrics accordingly?
Would it be possible to include a correlation analysis in the reports? (e.g., “TVL increased by X%, but the global market rose by Y%, so the net impact is Z%”).

Once again, we appreciate the proposal and its emphasis on transparency and measurable results, thank you

13

Hey @GensDAO, thanks for your insights!

  1. This mechanism is based on two assumptions:
  • Achievability: Projects will be reimbursed up to the % of KPIs they achieve. If they overestimate, they bear the risk of not receiving all the costs spent.
  • Limited number of seats: Expecting only up to 20 projects in the program, only the ones that set up ambitious goals will be selected to participate.

We may however design some kind of references before applications launch, thanks for the idea!

  1. Once whole Arbitrum network is indexed (which is included in the budget), Patterns will have all the historical data and possibility to calculate LTV. Since incentives aren’t sent out directly to users, we don’t expect farming & mercenary behavior so the LTV shouldn’t vary much - although we don’t know that yet and will monitor it in real-time.

  2. LTV will be calculated for each protocol (revenue from user) and for Arbitrum Ecosystem (sequencer fees). Attribution will be measured separately only to understand user acquisition funnels, it doesn’t influence the LTV itself (although different acquisition funnels may bring in users with different LTV).

  3. That’s an interesting approach and you’re right that some kind of normalization should take place. I think it’s either measuring the volume in absolute amount of assets or normalization with USD value correlation, although if you have a solution in mind - we’re happy to discuss!

1 Like
14

@kamilgorski thank you for submitting this proposal. I like the direction. Can I ask a maybe sensitive question? How would you compare this program you are proposing, versus using something like royco.org ?

2 Likes
15

Hey @paulofonseca, thanks for the question and bringing this product up. I think it’s somehow similar to Merkl, which is also working on its ARB Incentive proposal simultaneously.

I perceive platforms like Royco more or less as a farming solution for users who are looking for the highest yield within multiple ecosystems. It allows to seamlessly move funds between protocol X in ecosystem A to protocol Y in ecosystem B and probably works great from a user perspective (as long as these protocols are secure). Protocols start to compete for the highest APY and eventually, they start offering additional incentives for users to end up higher in the ranking :money_with_wings:

And it’s all great unless these incentives are financed by ecosystems because then you may have an inflow of tens of protocols into the platform with multi-million USD budget which is basically spent within a short period of 3-6 months on competing with other multi-million USD ecosystem budget.

The result is that existing loyal ecosystem users start using this platform, searching for the highest APY and farm incentives. Once budget is depleted, they do exactly the same thing that happened after LTIPP - move to another ecosystem with highest incentives. It works great for the platform and users (as long as there’s budget to spend) but not necessarily for the ecosystem (which probably lost a % of its loyal users to the platform).

Summing up, I believe that platforms like these can be useful for single protocols to enhance specific liquidity pools or token pairs and that’s what they’re doing great. But they might be dangerous for ecosystem retention if you start competing with treasury-funded incentives at a large scale.

16

Thanks a lot for this proposal.

To understand my point of view: I have in the past managed (Web2/Ecom) companies with a monthly Ad Spend of 200-300k on Meta & Google.

What I know is

  • ROAS (return on ad spend) on these platforms has been deteriorating in the past 3 years (mostly because tracking users became more difficult after the iOS 14 upgrade → meaning you have to spend more money to actually understand which ads are working and which are not)
  • 99% of performance marketing agencies do not deliver/overcharge. They are used to large companies with large budgets - as long as you don’t have 1 person who is dedicated 100% to you (or ideally internal) & fully understands your product you will be poorly served by agencies
  • Marketing is an end-to-end game. It doesn’t make sense to only look at the top of the funnel - whoever eventually oversees getting new users into Arbitrum, needs to be able to give them a better UX, solve other problems throughout their “user journey”

Please don’t get me wrong I am a big believer in getting new users on Arbitrum & using Web2 channels but in my opinion it can only be successful if it has the power to
a) hire a marketing person/get a dedicated marketing person
b) influence the new user experience end-to-end

4 Likes
17

We are very pleased to see that the heavy reliance on on-chain incentives is being tackled and more emphasis is being placed on off-chain marketing. With clear metrics and goals being set for different sorts of projects, we can see that the project helps mitigate campaigns that do not perform. However, there are some concerns:

There is no solid system or mechanism being used to verify the authenticity of the KPIs being reported. These KPIs can be easily manipulated, such as by buying bots rather than actually getting user growth. Without a clear system in place that is standardized across all the projects, some protocols may be able to inflate metrics.

With different marketing platforms having different ways of handling interactions and performance metrics, the absence of fixed guidelines could lead to unfair payouts. Additionally, since KPIs are self-declared, they may not always be suitable targets—for instance, projects could set goals that are too low.

We would also appreciate further clarity on the Pattern team, including its structure and the expertise of its members. Given the significance of this initiative, would it be beneficial to involve additional parties in the application review process to ensure a well-rounded evaluation? To further add to this, the method of choosing applications based on the highest KPI-to-budget ratio could result in overly ambitious targets that are not realistically achievable. (This concern seems to be addressed with the mixed set of absolute and relative metrics.)

We’re looking forward to the outcomes of this proposal. :slight_smile:

1 Like
18

Hey @tamara - these are great insights, thank you very much for this :raised_hands:

  1. This overlaps up to some point with the answers we got in a survery - the most efficient off-chain strategies mentioned by protocols were “Social Media Ads” and “Newsletters”. This confirms that regular ecom platforms such as GAds or Meta (with FB and Insta rarely being used in web3) don’t give results.
  2. This is currently the essence of our discussion - how to cater for needs of different-sized protocols, some of which have experience in marketing and some of which have none & need external help. Our team has seen Polkadot ecosystem spend around $4m budget on multiple agencies, none of which measured their results. We assume that measuring campaigns real-time should cut down on overcharging but I’m more than happy to hear your take :handshake: Let me reach out to you directly to exchange views!
  3. You’re right - that’s why we also asked about ERC-4337 adoption. In our opinion it’s a UX game-changer in web3, although being a long-term solution.

Hey @BristolBlockchain - thanks so much for your kind words! Let me answer your concerns:

  1. Yes, this was discussed above - the non-financial metrics can be artificially boosted. We’re going to propose a better version of this framework next week.
  2. The final choice of the analysts & consultants along with external members will also be included in the upgraded proposal. We’re aware of the fact that external experts need to be included here.

Regarding the KPIs being too low or too high - with limited budget, we expect some level of competition between participants. At the same time, they will be responsible for delivering their results, risking budget loss if not delivered. However, an additional mechanism is being created here. Thanks for your support! :clap:

19

Thanks for sharing this! Some great insights here. From the first look, it seems like you’re focused on keeping things as transparent as possible, which I really appreciate.

I really liked the idea of tracking CAC and LTV—these are fundamental for any org. But onchain apps have completely changed the game. And now it is relatively difficult to track these accurately.

That said, I have a few questions:

If dApps are seeing results—though temporary—doesn’t that mean user acquisition isn’t necessarily the issue? Could it be a problem with UI or the use case itself? How would increasing the budget for user acquisition solve this?

If campaigns are being run independently, and Patterns is mainly optimizing and tracking metrics, don’t you think this is a relatively small value-add?

How do you justify this budget? If a web2 project runs its own campaign and uses a CRM tool, how much do you think it would cost them? Most of those tools provide deeper insights than what’s being proposed here.

Lastly, I appreciate that you’ve included data from LTIPP participants, but 19/40 is a pretty small sample size.

20

Hey @Amira, thanks :raised_hands: These are very in-depth questions, let me answer below:

  1. Based on LTIPP example - in my opinion it’s natural that if you push $15m into user incentives in a 3-month timeframe you’re going to see “some results”. I think that everyone agreed afterwards that such temporary results weren’t satisfactory (hence incentive detox proposed by L2Beat) and to make these programs at least partially sustainable, we need to start calculating ROI (= LTV - CAC) on these campaigns, as well as, focus less on airdropping users with free $ARBs to not gather mercenary capital that will flow out once incentives end. We therefore analyzed strategies that worked well in LTIPP (which was discussed during ARB Liquidity Incentives call here) and implemented them into this proposal along with upgrades based on insights gathered directly from protocols.
    There are multiple challenges in web3, including UI - which is partially solved by ERC-4337 standard that is also being encouraged by our team (and can be covered within this program). Regarding use case - it’s not for us to judge but data says that 90% of the web3 volume is still generated in the DeFi sector so we keep on to that. I think there are other programs for projects to experiment with other use cases - this program is focused on improving user acquisition for existing ones.

  1. As you mentioned here - CAC and especially on-chain LTV are difficult to calculate. That’s why I think we’re proposing a substantial value-add. Web3 might have changed the game, but the rule of positive ROI is still valid. You might agree that it’s better to have important & accurate metrics rather than a pool of hundreds of metrics that aren’t decisive.

  2. None of these tools provide information about CAC and LTV for web3 protocols - because of the same technical difficulty you mentioned. This is the exact reason for the proposed budget. Of course, any web3 protocol can set up HubSpot or 3RM but none of these tools will answer the question:

“How do I acquire this wallet segment that generates positive ROI for my dApp?”

Unfortunately, most of web2-focused tools aren’t designed for web3 complexity - I can get into more technical details if needed. And I really appreciated answering these questions! :handshake: