OpenBlock Labs STIP Incentive Efficacy Update (12/29)

[paulsengh]

OpenBlock Labs - Incentive Efficacy for Arbitrum STIP

Overview of Progress

OpenBlock Labs has continued to leverage its incentive modeling platform to deliver a comprehensive analysis of the Arbitrum STIP. We have added several new features to the dashboard:

• Post-Claim Activity Section under Claims Dashboard: This section offers insights into user activities after claiming ARB rewards; for instance, it provides an estimate on the amount of ARB rewards sold.

• L2 Analysis Dashboard: Here, we delve into the performance metrics of different L2 networks, providing a baseline level of growth to model the success of the incentive program.

• STIP Backfund Dashboard: We’re also excited to announce that Backfund claims are underway, and we’re diligently tracking them in real-time. Our team is fully equipped and has already begun closely observing STIP backfund claims, diving into the analysis of backfunded projects. We remain dedicated to delivering thorough data monitoring and insightful support for these initiatives.

Key Developments:

Overall Growth:

1. The Grantee Overview snapshot continues to indicate robust overall growth across various sectors in the Arbitrum ecosystem. The Total Value Locked (TVL) shows a 21.81% increase to $1.42B. Trading volume is down since the last report, but is still up 42.03% to $1.05B since the incentive program began. Overall DAUs continue to increase, with the 7D-MA at 17,721, up 32.37% since the start of the program. Yield sectors have witnessed the highest growth in TVL and volume growth at 94.86% and 160.18% respectively, while DEXs volume growth continues to increase, now up 100% since rewards began. DAU growth mixed, with Yield and Perpetuals users down, although overall DAU growth is still positive. Overall, we still see significant growth across the board since the beginning of the STIP.

User Post Claim Activity:

The “User Post Claim Activity” section is a dynamic addition to our dashboard, offering an in-depth look at the actions users take after claiming ARB rewards within the Arbitrum ecosystem. As of the latest data, a total of 14,169,175 ARB tokens have been claimed, and we can confirm that at least 4,354,819 of them have been sold, representing approximately 30% of the claimed tokens. Analysis indicates a vibrant interaction with activities such as Swapping, Swap/Leverage Trading, and Providing Liquidity, with Swapping being the dominant activity. It’s important to note that Swapping is essentially selling the claimed ARB tokens, reflecting a significant portion of users engaging in incentive campaigns are converting their rewards into other assets.

Here are the most common actions by users after claiming ARB rewards:

• Swaps (specifically selling): 4,354,819 ARB

• Swap/Leverage Trades in Perpetual Protocols: 1,340,144 ARB

• Liquidity Provision across DEXs, Money Markets, Perps, etc.: 1,061,835 ARB

The dashboard features two sankey diagrams that shed light on post-claim user actions and the destinations of claimed rewards. A comprehensive Sankey chart fuses these insights, mapping the flow of claimed ARB to various protocols and the subsequent user activities. For instance, GMX contracts receive 906k ARB, of which 715k facilitates Swap/Leverage trading, while 191k supports Liquidity Provision, positioning GMX as the leading protocol for utilizing ARB rewards.

L2 Comparison:

1. Overview metrics for TVL, DAU, total transaction counts, and network fees were compared against like networks since the cutoff Nov 1st date. Arbitrum showed the largest increase in TVL with an increase of $658m (+36%). Base and optimism showed an increase of $158m (+52%%) and $268m (+41%) respectively. Polygon TVL increased by $150m (19%) and gnosis increased by $58m (33%). Arbitrum, Optimism, Base, Gnosis had outperformed Ethereum mainnet relative TVL growth of $6.430b (+28%). Similarly, Arbitrum saw the largest increase in DAU (39%). Optimism, Polygon, Zksync, Gnosis, and Base saw DAU changes of 38%, 33%, 25%, 14%, and -11%. Arbitrum, Polygon, Optimism, and Zksync had outperformed Ethereum mainnet relative DAU growth of 20%. Additionally, Arbitrum has seen increasing transaction counts and network fees. It should be noted inscriptions have played a significant role in recent transaction counts & network fees.
   

Inscription Analysis:

1. On Dec. 15th inscriptions spiked causing a network outage for roughly 2 hours. Organic transaction counts likely suffered while inscriptions and network fees were spiking. Organic daily transactions have recovered and continued to grow since the outage.

Claims:

1. In the last two weeks an additional ~4.6M ARB tokens have been claimed by Round 1 protocols, bringing the total STIP claims to 23.6/50M ARB. All but 2 of the protocols have claimed a portion of their allotted tokens, with the majority claiming 57.13% of their grants

2. In addition to the ongoing round 1 claims, backfunded protocols have begun claiming tokens. 6.54% of the allotted 20M tokens have been claimed by 6 protocols so far, we will continue to monitor as new protocols claim their share of the allotted tokens.

3. The “User Claim Activity” section provides insights into the reward claiming patterns within the Arbitrum ecosystem. Out of 24.8k unique users, a total of 14.17M ARB has been claimed, with approximately 4.6M of that claimed in the last two weeks alone. A closer examination of top users reveals a concentrated distribution of claims, with the leading user claiming 7.2% of the total ARB. Our analysis of the activity patterns of these prominent users has yielded some interesting findings:

4. The user ranked #1 with the address 0x797a63cf969529E9083AEa6239B7014988c6A5dc is engaged in high leverage trading on the MUX protocol. This user has conducted just over 200 transactions in the past 30 days, all characterized by substantial positions and authentic profit and loss, without any evidence of wash trading. It’s worth noting that the MUX protocol’s rebate mechanism is structured around transaction fees rather than trading volume. Rebates are granted for the fees incurred during the opening and closing of positions, deliberately excluding other fees such as those for funding, borrowing, or price impact, to prevent any strategies aimed at exploiting the rebate system.

5. The user ranked #2, utilizing Vertex, is engaged in legitimate high-frequency trading and hedging strategies, confirmed by Vertex’s team to be within the program’s parameters. Their trading, capped at 75% of taker fees by the incentive program, ensures profitability beyond mere incentive farming. This firm, presumed profitable given their volume, contributes to a competitive and diversifying trading environment within the Arbitrum ecosystem, demonstrating the effective functioning of the incentive structure designed to promote genuine trading activity.

Flow of Funds:

1. We continue to closely observe the flow of funds from the vesting contract, tracking each protocol’s use of funds. 46.35% of STIP round 1 incentives have been claimed by projects. A dedicated form for protocols to report their address categories is available here, which aids in pinpointing fund allocation and usage. The community is encouraged to view these details here to confirm the transparency and correctness of the information provided by each protocol. This process is meant to ensure funds are used appropriately and effectively within the STIP program.
2. As backfunded projects begin claiming their allotted ARB, we continue to track the distribution of funds. So far 6 out of the 26 backfunded projects have claimed their tokens, with 6.54% of the total amount claimed so far.
   
   

Efficacy Across Verticals:

The “Annualized Fee Growth Relative to Claimed ARB Grant” chart on the OpenBlock dashboard evaluates the efficiency of ARB grants by comparing the annualized growth in protocol fees to the ARB grants claimed. The leading protocols, like Gamma, demonstrate strong fee growth compared to their received grants, indicating a productive use of ARB incentives. This metric, underpinned by a 7-day moving average, provides insights into the effectiveness of grant allocations in promoting protocol growth and sustainability.

DEX’s:

The latest DEX data highlights significant trends in Total Value Locked (TVL), trading volume, and Daily Active Users (DAU) for protocols Camelot, Balancer, and Trader Joe.

1. TVL Growth: Balancer and Camelot had a good few weeks, with remarkable 33.17% and 31.62% increases in TVL respectively.
2. Volume Surge: Trader Joe’s volume is still up by 145%, while Camelot has also displayed strong growth, up 123% from pre-incentive levels.
3. DAU Changes: Trader Joe’s DAUs are slightly down from the last report, but still up 99.25% from pre-incentive. Balancer is still down 35.41% in DAU, signaling a potential area for user retention improvement.
4. Volume and DAU metrics, smoothed by a 7-day moving average, paint a clear picture of user preference and protocol performance in the Arbitrum ecosystem.

Lending:

After reporting some great numbers in the last report, Silo has largely maintained this growth in both TVL and borrowed amounts, up 175% and 241% respectively from pre-incentive levels. Meanwhile Dolomite and Lodestar also saw substantial growth in TVL. This uptrend, accentuated by a doubling of Silo’s DAUs, reflects the impact of strategic timing around incentive distribution, as captured by the lending data with a 7-day moving average applied. Unfortunately, Radiant is down double digit percentages across the board since incentives started, indicating that some of the newer protocols may be eating into Radiant’s dominant position in the lending ecosystem.

Notably, stable reserves continue to flee lending protocols as users look to gain exposure to other tokens. Since Dec 1st, Silo Finance has seen a decrease from $15.5m USDC.e to $7.61m. Silo USDC.e average deposit/borrow APR’s rose from 4.4%/7.8% to 7.0%/11.1% across the top 3 isolated markets: wstETH, ARB, wBTC. The current average utilization rate sits at 80.7% among these markets. Similarly Radiant has seen a decrease from $17.7m to ~$2.0m in stables TVL with a current deposit/borrow APY of 5.7%/29.5% and 86.4% utilization rate on the USDC.e market.

Perpetuals:

1. Perpetual’s TVLs are up across the board, although Perennial is slightly down from last report, it is still up 232% since the start of incentives. Trade volume and DAU, on the other hand, are down a bit since the last report, with Mux down 31% in volume and 15% in DAU from pre-incentive levels.

Notably, GMX continues to see an increase in stables likely being used to leverage broader crypto exposure. The growth of stablecoin deposits and open interest are growing at similar rates. Additionally, TVL in stable only pools are steadily decreasing as people likely seek out exposure to the wider market.

Similarly, Vertex users are looking to increase their exposure to crypto movements as WETH and wBTC TVL continues to climb and USDC.e continues to decline. Users are likely using WETH & WBTC as collateral to facilitate unique trading strategies. This includes strategies such as leveraging up on a certain token, trading token ratios, or delta neutral trading strategies.

Options:

1. Dopex continues to show massive gains in TVL and volume due to the timing of its launch coinciding with the start of incentives. Other options protocols show varying degrees of success, with Rysk TVL and volume up 136% and 3,179% respectively, but DAUs have fallen by 31.69%. Good Entry, on the other hand, has fallen off the map the last few weeks, with all 3 categories down by over 75% since incentives started.

Notably Rysk vault has reached its vault’s $2.5m cap. Depositors are earning significant incentives in addition to vault performance.

Conclusion:

Our comprehensive monitoring, including the new “L2 Analysis” and “STIP Backfund” dashboards, continues to provide transparency and depth with regards to the STIP, capturing the nuances of a rapidly growing DeFi landscape. We look forward to your feedback on our current progress, and we encourage greater involvement from protocols and the broader community. Please do not hesitate to reach out:

Twitter: @openblocklabs

Website: www.openblocklabs.com

Email: team@openblocklabs.com

[dk3]

This is awesome, as a data nerd i love this, keep them coming!