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

Proposals
41

Hey @Saurabh, thanks for your insights! Let me answer questions first:

  1. The most important safeguard is the fact that funds will be disbursed based on the KPI achievement level. If 60% of the KPI is achieved, only 60% of the budget will be refunded.
  2. As above - partial funding up to the level that the previously declared KPIs are actually achieved.
  3. CAC will be measured based on off / on-chain marketing channels used. LTV will be displayed in Patterns app for every wallet and measured separately for:
  • Arbitrum ecosystem - sum of all network fees generated by the wallet acquired,
  • dApps & Protocols - sum of all in-protocol fees generated by the wallet acquired. This means translating smart contract ABI events into conversions and summing up all their values expressed in a common denominator ($ARB, $ETH or $USD).
  1. Since we’re not focusing specifically on incentivizing wallets with airdrops, we assume the retention for acquired wallets to be similar to the users already existing in the network since there’s no farming / mercenary incentives. To strenghten this effect however, we’re planning to add some retention-related KPIs as you already mentioned.
  2. We will be updated all KPIs, CAC & LTV metrics for the community once a month.

Ideas:

  1. Yes, we plan to include that.
  2. Yes, that’s already sealed.
  3. Can you please explain how this would differ from the existing model?
  4. That would highly depend on the type of campaigns that protocols come up with. For on-chain incentives we can use LTIPP infra as many members mentioned above, for off-chain different infra tools will be needed.
  5. We planned to increase the budget in such a way that if the initial $3m run is successful, we can move on with the campaign without another proposal. Would this be a good solution in your opinion?

Hey @CastleCapital, thanks for your insights! I reached out to Atomist on TG to consult about the KPIs :raised_hands: Answering your feedback:

  1. That’s a tricky subject. As you can see above, some believe this budget is not enough, some that it’s excessive. If we focus on the most experienced protocols (as its suggested), a $50k budget per month (assuming the our baseline CAC is $50) will actually not be enough. There’s no other option to gain the know-how than experimenting with different off-chain strategies. Infrastructure in this case is already built in this budget - ad networks, newsletter tools, cold-mailing tools, etc. have their own infra to run the outreach.
  2. We don’t think centralization of marketing will work in this case. Each protocol should know its userbase best and it’s up to the team to design a strategy to target this audience effectively. DAO should supervise the program but not organize the campaigns for protocols. Infra is already there, it doesn’t need to be organized.
  3. You’re perfectly right, we’re working with the Incentive Workgroup on improving these KPIs with retention in mind.
  4. Would you please explain how you’d envision this? We believe that Gaming users require a completely different approach that DeFi or NFT users. Even in every segment, like DeFi, there are different products targeting other type of users (eg. DeX and prediction markets). How would one, centralized campaign target all these different types of users?

Looking forward to the discussion!

1 Like
42

Hi Kamil,

As also voiced during our call I share @CastleCapital concern about shared Infra:
New projects do lack capacity but also skills and experience to execute campaigns - it is very easy to spend marketing money and get 0 new users. In my opinion the DAO should not just supervise but handhold closely, in order to make sure that the money is well spent/approaches are pivoted before its too late.

Imo knowing your userbase is one thing, addressing/engaging/retaining them properly through channels that you are not used to as Web3 protocol (now mostly thinking about Web2 marketing channels), a completely different one.

TLDR: Imo the DAO has to be the coordination, close supervisor, hand holder layer here - spray and pray for good KPI results wont work

43

Hey @tamara, thanks for the input! Let’s try to define what we exactly mean here as we’re probably agreeing but using different wording :raised_hands:

  1. Infra - by that we mean tools required to run campaigns, including:
  • Web2 - Google Analytics, Mixpanel, Twitter Ads, LinkedIn Ads, Lemlist, Mailchimp, etc.
  • Web3 - Biconomy (ERC4337), Addressable, Hypelab, Patterns, Dune, etc.
    Having that in mind, it’s hard to image a ‘shared infra’ as most of these tools are designed for single web2/3 apps. What definitely is going to be in ‘shared infra’ is the data in Patterns platform as well as Dune. What else would you see here?
  1. DAO supervision - it’s already agreed that DAO and Arbitrum Foundation members will be supervising campaigns too. By supervision we mean making sure the KPIs are on track, optimizing campaigns and delivering new, effective ideas observed among other projects - so that they can get fully funded and DAO can achieve its goals in the program. Most bigger protocols - on which the program will be focusing - have their own experienced marketing teams. In case of smaller projects, if external help will be needed, we’ll be engaging an experienced marketer to do the job and we definitely want a person like this within the ‘committee’. This is still being discussed as new participants are joining the discussion, including AF and Incentives WG so the final solution will be described in the updated proposal.

Let me know if this is how you imagined it :handshake:

44

Hi @kamilgorski,

We are aligned then :slight_smile:

1 Like
45

  1. Simply having the right tools doesn’t guarantee strong campaign performance, which is common sense. With the budget you’re requesting, how exactly are you ensuring the best ROI for Arbitrum?

  2. Yes, protocols generally know their own userbase best. The question is, how do we ensure their marketing efforts actually benefit the wider Arbitrum ecosystem rather than just their individual interests?

You’re basically asking the DAO to fund this, but what’s your baseline to gauge success or failure here? This directly ties into the issues you highlighted earlier about LTIPP and KPIs you mentioned in your post below. Would consider some hard targets rather than an arbitrary goal:

  1. :+1:

  2. What we’re proposing is a “master” campaign like Arbitrum’s “Enter the Odyssey” run by Arbitrum itself, with each project contributing under that overarching framework based on Arbitrum’s KPIs. This kind of unified approach could make a far bigger splash than piecemeal efforts by individual projects.

Projects would still tailor their marketing to fit their own audience, but they’d need to stick to the primary goals of Arbitrum’s overall campaign. That way, everything stays consistent, aligned with Arbitrum, and easier to amplify.

Hope the above helps clarify things more.

1 Like
46

Hey @CastleCapital, thanks for your replies :raised_hands: Let me share our thoughts below:

  1. Noone ever calculated ROI on previous campaigns - including STIP, LTIPP or Odyssey so it’s impossible to answer the question about “the best ROI”. We believe that starting small with $3m budget (compared to LTIPP’s $15m), working with the right tools and having right mechanisms in place (LTV, CAC) paves the way to the best ROI.
  2. We calculated that above, answering questions from Danielo - depending on dApp or Protocol, it’s around 40-60 interactions with a dApp to generate ~$50 in network fees - the same value as some protocols have declared as their CAC. It’s a perfectly achievable threshold, of course it doesn’t include dApp revenues & fees.
  3. In order to declare hard targets, we’d firstly need to know current CACs & LTVs - none of these were unfortunately calculated during previous programs :pensive: Most projects haven’t even tried off-chain campaigns or don’t have tools to track off-chain traffic in order to calculate CAC. That’s why we start with an initial run on a small budget to start calculating these.
  4. Such a campaign sounds great for new web3 users that want to enter an ecosystem and have fun with quests. No doubt that would bring users too although AFAIK this campaign’s success was partially coming from the Arbitrum airdrop at that time. I will ask Arbitrum Foundation on Monday if they have plans to run anything similar. In case of our program, we’re rather aiming at targeting narrower group of users (eg. liquidity providers only for DeXes) which requires running separate campaigns per each dApp. I personally think both types of campaigns are needed as they target completely different audiences.
1 Like
47

Here are the top 3 Consensus Priority responses as determined by SimScore API.

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Top 1 @Tekr0x.eth

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?

Top 2 @Tekr0x.eth

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?

Top 3 @Zeptimus

But instead of spreading resources thin, why not identify the few projects that could actually bring NEW users to Arbitrum? Im talking about projects with genuine product-market fit that just need a boost to capture users from outside our ecosystem.
2 Likes
48

Thank you for sharing the reply. While we appreciate the effort to grow Arbitrum’s user base, we are not in favour of the proposal it in its current form for the following reasons:

1. Unclear Returns
We recognize that previous programs did not fully track performance from a CAC perspective. However, for the channels you’ve proposed, there are established benchmarks (even if not specific to crypto). We would have expected a clear plan detailing how you’ll measure ROI and assess the performance of participating projects. The proposal mentions the need to consider LTV which we understand there is no clear basis at the moment, but it’s unclear how you intend to determine if these campaigns truly deliver sustainable growth.

2. High Budget
A budget of $3 million is significant for an offchain marketing experiment. We’d prefer a pilot phase with a smaller, more targeted scope, so we can gather meaningful metrics—like CAC and LTV—before committing to a larger budget. Testing on a smaller scale would also help the DAO determine whether these strategies are truly beneficial and worth further investment.

3. Limited Arbitrum Brand Association
If each project runs its own campaign, the benefits to the Arbitrum brand would be minimal. We’d rather see a coordinated, umbrella-style effort, similar to Odyssey in terms of coordination where multiple projects align under a larger Arbitrum initiative. This approach would likely amplify the impact of any individual campaign and foster a stronger association with the Arbitrum ecosystem.

While the proposal is interesting, it seems overly optimistic in its current form. We’d recommend a a smaller pilot program with more measured, data-driven approach (can be drawn from existing web2 performance and extrapolated up/down to provide a range) before committing more substantial resources.

1 Like
49

Hey @CastleCapital, thanks for your feedback! This proposal in its current form is an RFC and we’re currently working on an improved, final version which includes solutions to some of your concerns :handshake:

  1. Returns (ROI) measurement is as follows:
  • Ecosystem ROI = LTV gas fees / CAC
  • dApp ROI = LTV fees / CAC
    Both LTV values are derived on-chain (sum of network gas fees and sum of in-dApp fees), CAC is derived off-chain. Patterns will be publishing both data-points for every dApp and the ROIs for ecosystem and dApps. As we mentioned above, we only have CAC data from 3 protocols out of 20 surveyed. There’s no LTV data because the actual goal of this program is to calculate it.
    CACs in web2 can vary from as little as $21 up to +$300 and benchmarking it to web3 may be misleading (Customer Acquisition Costs by Industry (2025) - Shopify).

  1. Please note that this program is not limited to off-chain marketing only. Size of the budget was discussed during ARB Liquidity Incentives calls and is a consensual value. Some of the participants did ask about increasing it as in case of bigger protocols, $50k budget per month may not be enough.

  2. We discussed this idea with Arbitrum Foundation and they are willing to engage into this program to amplify marketing activities ran by participants. Arbitrum Foundation will prepare a unified marketing package and will be supervising marketing campaigns too as a part of the Committee.

Hope these explanations and modifications are aligned with your expectations.

50

Hey Everyone, thank you for helping improve the proposal :fire: We’ve updated it today with the following changes:

Changelog 20/02/2025

What has been changed compared to the initial version of the proposal:

  • A Committee consisting of DAO, Arbitrum Foundation and Off-Chain Labs representatives has been added to supervise and optimize campaigns.
  • An External Marketing Specialist will be hired to help smaller projects set up and run their campaigns. Bigger projects within Arbitrum Ecosystem were consulted and declared having their own marketing teams that could run the campaigns.
  • Arbitrum Foundation will prepare a unified marketing package for projects to amplify their activities and will supervise the program.
  • Retention KPIs have been added to the proposal to cater for long-term results.
  • Methodology of measuring CAC, LTV and ROI was added.
  • Payment mechanism was adjusted to allow smaller projects participate in the program.
1 Like
51

We find this proposal to be exceptionally well-structured and particularly exciting in its user-centric, data-driven approach to ecosystem growth. It’s genuinely refreshing to see such a comprehensive framework that addresses the fundamental challenges of user acquisition in crypto, backed by concrete data and clear methodologies.

The analysis of previous LTIPP results is particularly insightful, highlighting critical gaps in current approaches - notably that only 21% of protocols know their CAC and none track user LTV. This empirical foundation is yet another testament to the strong justification underlying the proposed solution.

The recent update effectively addresses any leftover concerns, as the addition of a diverse committee structure ensures proper oversight, the inclusion of retention KPIs addresses long-term sustainability concerns and the clear methodology for measuring CAC, LTV, and ROI enables proper evaluation.

What makes this proposal truly worthwile is its emphasis on measurable outcomes and iterative improvement. The combination of off-chain marketing support with on-chain performance tracking could hopefully set and reinforce a new standard for how projects approach user acquisition and retention.

We’re particularly supportive of the proposal’s emphasis on helping smaller projects through dedicated marketing expertise while providing flexibility for larger protocols to leverage their existing capabilities. This balanced approach should help foster broader ecosystem growth.

Overall, we strongly support this initiative as it represents a crucial step toward more sophisticated, data-driven ecosystem development. The focus on measurable outcomes and user retention could provide valuable insights for future growth initiatives across the entire space.

1 Like
52

I think the proposal has some solid ideas, especially around marketing and PR. It actually values off-chain marketing—something a lot of protocols overlook. Things like paid ads and newsletters have been shown to work for user acquisition, and it’s nice to see that recognized.

I also like how the proposal sets clear goals with measurable metrics like KPIs and CAC/LTV, which makes it easier to track success and avoid wasting money. Plus, it directly tackles the big question: “How do we get more users?” There’s even a plan for the Arbitrum Foundation’s marketing team to provide a starter kit for projects to boost their marketing efforts.

But there are concerns too. What is the ROI for the DAO—will this $3M really pay off? It may be smarter to start smaller and scale up if it works. There’s also the risk of projects manipulating KPIs to secure funding.

The short three-month timeframe feels rushed, especially since marketing takes time to optimize. Plus, many projects don’t have experienced marketing teams, and calculating long-term metrics like LTV over such a short period is tricky. And, of course, market volatility could mess with KPIs.

Overall, it’s a solid idea with a strong focus on user acquisition and measurable marketing, but concerns around ROI, scale, KPI manipulation, and support need more thought before moving forward.

1 Like
53

You said you would add more detailed information about the costs of funds.
Apart from me, several delegates have expressed such a claim, however, in this update of the proposal there are no details on the costs.

Of course, I support the current changes, if this does not increase the already considerable budget, or are DAO, Arbitrum Foundation and Off-Chain Labs planning to work for free?

54

Hey @TodayInDeFi, thanks for your comments! :raised_hands:

  1. Regarding ROI - as explained in comments above, no campaigns measured ROI so far, this will be the first one. So there’s nothing to compare to and we can safely assume that due to the lack of retention and focus on TVL, LTIPP had a negative ROI for $ARB (of course it was still needed to learn from). However with a $50 CAC declared in our survey it gives a potential for positive ROI with fees from acquired wallets :fire:

  2. The 3-month slot was discussed during ARB Liquidity Incentive calls as an optimum. Most experienced projects have their own marketing teams and if the program works well, we will be able to run another iteration afterwards. This is in initial run only with a small budget.

Hope this answers your concerns!

Hey @cp0x, we detailed the budget and methodology of measuring on-chain metrics but if that’s not enough then sorry, we might have misunderstood the level of details you were expecting. We’ll try to put some more details - DAO representative & marketing specialist are going to be paid positions and it’s included in the proposal already. And yes, Arbitrum Foundation and Off-Chain Labs waived their remuneration for the presence in the Committee :handshake:

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55

General Opinion
Directionally speaking, we’re leaning against this proposal because it seems as though the DAO is leaning back into old habits after the incentive embargo—approving an expensive pilot program in the name of bolstering the ecosystem and trying something new. Is acquisition marketing truly Arbitrum’s main challenge? Given that most users actively seek out DeFi protocols, visibility may not be the core issue.

We encourage delegates to view the survey results as one perspective rather than a definitive guide. With only 19 protocol participants, the findings may not fully capture the ecosystem’s needs. If these protocols are struggling with user acquisition, their recommendations may not always align with the best strategies.

On Selection and Strategy
This proposal does not give an opinionated take on protocol selection or strategy selection. In the application process it outlines:

The proposal would benefit from clearer guidelines on acceptable tools and funding strategies. Additionally, a more defined selection process for protocol incentives would enhance effectiveness. For example, this doesn’t outline whether protocols should only explicitly create ads that promote explicitly Arbitrum, it is easy to imagine a protocol using this budget to advertise their multichain offering. Furthermore, we need to have some scrutiny in what we consider to be a user acquisition policy for prospective protocols in this proposal. Candidly, we’ve seen protocols in STIP and LTIPP toe a fine line on what incentives could be used for, and thus it’s best to outline criteria for the acquisition methods and have pre-approval. It is easily imaginable that a protocol could reason its way into using user acquisition incentives for a ‘long-term airdrop,’ which may not be the most sticky method for user retention.

On Operations
The committee structure may be overly complex. Bi-weekly meetings with multiple organizations, along with additional monitoring responsibilities is a hefty ask for folks working on a full-time basis. There’s also the need to establish arbitration criteria, in previous programs we have had managers ask protocols to return funds with the DAO voting on whether these protocols could have an extension to use the remaining. There should be a delineated path for protocols to negotiate a possible extension with remaining funds or have it explicitly outlined and denied that this will not be the process.

More details on the proposal’s reporting standards would be helpful. If approved, refining the operational structure, timeline, and reporting process could improve execution. The expectation for most of this work to be done by teams is a difficult assumption, especially when in former incentive programs, reporting was found to be an issue with some protocols unable to finish reporting in a timely manner.

On KPIs
On a side note, as others have noted Gaming, Social, and NFTs all have very gameable metrics. For G&S, the monthly KPIs alone could be satisfied with wash activity, and the retention KPIs are a bit unclear. For the NFT category, floor price manipulation is possible as well.

While we recognize the intent behind this proposal, we remain unconvinced that this is the best approach for Arbitrum at this time. Candidly though, the Account Abstraction infrastructure push here makes sense, and perhaps should be revisited post EOA account code implementation.

1 Like
56

I mean this point from February 1st to my previous question about the cost of $2.85 million. I think this should be the most detailed point of your proposal, because it is a large amount

And you wrote that you agree that this should be described in more detail.

57

Gauntlet has provided private feedback on this proposal. We do not understand the inclusion of Gaming, Social, and NFTs in this program, and we also do not think the KPIs represent meaningful or measurable goals without clarity around the incentives distribution. It’s also unclear what optimization level will be provided for the incentives themselves, and the onchain distribution methodology is unclear.

What we like about this program is the focus on web2-style user tracking with digital marketing in conjunction with onchain incentives (if the goal is to attract users, it makes sense to have this functionality).

1 Like
58

A quick note from my side - I just want the community to know that @kamilgorski was ready to publish the proposal for the temperature check vote two weeks ago, but due to the discussions in Denver and public announcements from AF and OCL declaring greater involvement in the DAO activities coming soon I asked Kamil to delay the vote until after all these declarations come to fruition, as I see incentive programs as one of the strategic programs in Arbitrum that could use support from both organizations. I hope we’ll be able to move to proceed with this proposal (one way or another) soon.

7 Likes
59

It’s nice to see a proposal of this state focusing on measurable outcomes such as Customer Acquisition Cost and Lifetime Value.

Some thoughts:
Data-Driven Approach: Emphasizing metrics like CAC and LTV ensures that incentives are allocated efficiently, targeting strategies that yield the highest return on investment. This shift from past “spray and pray” methods can mitigate the influx of short-term users seeking immediate gains.​
Off-Chain Marketing Integration: Encouraging dApps and protocols to engage in off-chain marketing activities, such as paid advertisements and newsletters, is interesting. We think this should have been a flatline assumption alrdy prior but making it possibly a requirement is a good step.
3. Support for Emerging Projects: By providing resources and external marketing expertise for newer project especially, this ensures that more projects can compete on a level playing field, fostering innovation and diversity within the ecosystem.​
4: Implementation Support: Given that some projects may lack dedicated marketing teams, offering access to external marketing agencies or shared resources could be beneficial.
5. Transparent Selection Criteria: Clarifying how projects are selected for participation, especially concerning their size and potential impact, would enhance fairness.

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60

This comment resonates with me. I look at the funnel-graphic in the original post and all I see is marketing seemingly aimed at cannibalizing existing users from other chains onto Arbitrum, which are users that will by definition be “flighty” and the quickest to depart as soon as another shiny thing comes along. The top of the funnel when it comes to “off-chain ads” includes Twitter and Telegram, really? Telegram is almost the first thing that comes to mind when I think of “marketing-to-existing-crypto-users”, and Twitter isn’t far off either.

Is the goal to increase acquisition of “new users”, or increase acquisition of “users new to arbitrum”?

I would like to see another layer added on top of the funnel aimed at capturing “new users”. That’s going to be by definition the hardest type of user to acquire, but also the most valuable kind of user, both to Arbitrum and to the entire EVM-based ecosystem as a whole

On the other hand “users new to arbitrum” just require some juicy incentives and they’re on their way from whatever other chain, but that ends up being the kind of mercenary capital that I think we broadly recognize isn’t worth paying for.

I want to recognize this part in the original post, and I wish it could get some more focus as part of the overall proposal. If as described in the original post, projects have a hard time engaging effectively with marketing in the places that matter, I think producing a well-researched (through this program) and easy-to-understand (for the aforementioned projects that lack this expertise, thus causing them to make aforementioned mistakes) template for how to efficiently market, perhaps in a “How to market yourself The Arbitrum Way” or something similar, could be really valuable output!

Speaking from personal experience, such an summary coupled with guidance for where to start, what spend is worth versus what is a waste of time, would be immensely helpful to me, a marketing novice, and could make for a great seed around which later to germinate a second iteration of this proposal.

1 Like