I think this is an incredibly well thought out post. Thank you.
Without a grants framework, this is how these proposals will be posted. They will have a narrow scope of the protocol which posts them.
I’m not pushing for or against this proposal. If the DAO votes for it, great. If not, then we learned something.
A better solution would include some discovery to find what the principles the DAO would like to use to construct a liquidity incentive program. This is a component of what we would like to discover in AIP - 3 [Non-Constitutional] Fund the Arbitrum Grants Framework Proposal Milestone 1
Does the DAO have a preference for incentivizing USAGE or incentivizing BUILDING
While there are arguments against incentivizing usage in some replies, there is also an argument that Polygon, Avalanche, and Celo are doing programs for $100 million plus. Does this provide a long term strategic advantage? Does it only make sense to do this once there is a clear strategy for sustaining engagement afterwards? How does this enable the builders in the ecosystem by providing liquidity?
Does the DAO have or want a principle to ensure fair competition
A few arguments in this thread revolve around the proposal having the potential to disincentive competition. This could centralize a component of the ecosystem. However, it also stands to potentially reward a committed partner. There are competitive options - so do we want to reward the ones with a primary focus on Arbitrum? Is that more important than rewarding all DEX equally or proportionally?
What might a holistic grants plan look like?
A holistic grants program may acknowledge that there is a need for some liquidity incentive, but balances it against the other ecosystem needs against a yearly spending limit. To ensure sustainability, we would study the downward price pressure of liquidity incentive emissions and account for that in setting the yearly spending limit.
How can we help separate signal from noise without creating bias
We can create a better proposal process. One that assesses if the DAO desires an outcome separately from deciding the who and how of implementation.
If you are beginning to feel the number of proposal racking up, and noticing how difficult it is to diserne signal from noise, then please read Grants Funding Framework Discussion - How To Excel at Being a DAO
How the Plurality Labs proposal can help
Camelot will likely post this to snapshot soon. The grants framework from Plurality Labs is not competitive and shouldn’t be considered something to wait for. At this point, it is down in the voting on Snapshot. I hope this observation illustrates how a framework could compliment a proposal such as this by providing data and sensemaking which the delegates need to properly weigh the pros and cons.
We would create many of the components mentioned above to unbundle the proposal process. Delegates would then have a framework to value proposals which applied directly to the DAO outside our program. They could save time while making better decisions.