Title – Proposal: Distributing ARB Tokens to L3 MXC zkEVM Users to Encourage Growth on Arbitrum One. Non-Constitutional Abstract
The MXC zkEVM team proposes to distribute zkMXC tokens on the inaugural L3 layer on Arbitrum( Announcement link), with a focus on IoT applications. We believe that the DAO should consider distributing ARB tokens to participants who are contributing to the L3 layer from L2, including L3 provers and bridge users on Arbitrum One.
Motivation
Following EIP-4844, the potential for substantial growth in L2s is limited due to lower gas fees. Arbitrum One, as the leading L2, dominates the space in terms of Total Value Locked (TVL) and the number of transactions. The natural next step is to extend into the L3 space to facilitate greater scalability in application-specific chains such as MXC zkEVM.
Rewarding L3 activities on Arbitrum One L2 would encourage more developers to build L3s using Arbitrum Orbit or other Roll-ups, thereby solidifying Arbitrum One’s position as the premier L2 in the Ethereum ecosystem.
Rationale
This AIP is designed to align with the DAO airdrop list of 3/23/2023 , Arbitrum supports L2 projects and distributes ARB tokens to them, so it is logical that L3 chains should receive similar amounts of ARB. This initiative could potentially stimulate the emergence of hundreds of L3s on Arbitrum One.
Key Terms
L3s: These are Layer 3 solutions built on top of Layer 2.
Arbitrum Orbit: A layer 3 scaling solution for Arbitrum.
zkEVM: A zero-knowledge EVM compatible Layer 2 or Layer 3solution.
IoT: Internet of Things, a system of interrelated devices with unique identifiers (UIDs).
Specifications
The platforms involved in this proposal include Arbitrum Orbit and any L3 Roll-up such as zkEVMs that can expand Arbitrum’s scalability.
Steps to Implement
Identify the L3 participants in L2 Arbitrum One, such as L3 provers that submit proofs to Arbitrum One, and bridge users that transfer from Arbitrum One to L3 MXC zkEVM.
Calculate the gas used in Arbitrum One via Smart Contracts, and consolidate this data monthly.
Publish the verified L2 addresses monthly, facilitated by MXC DAO.
Distribute tokens to these users each month based on gas used, continuing until the grant amount is depleted.
Timeline
Grant ARB tokens to be held by MXC DAO, pending approval of AIP.
Commence monthly distribution to Arbitrum One addresses based on L2 gas usage.
Overall Cost
The proposal suggests a grant of 5 million ARB tokens to the first L3 MXC zkEVM, for distribution to the aforementioned L2 addresses. This cost is comparable to that allocated to top projects like Uniswap, which received nearly 5 million ARB tokens, providing a precedent for this amount.
MXC zkEVM links
Revised Funding Request for Proposal: Distributing ARB Tokens to L3 MXC zkEVM Users
Specific Use of Funds:
Developer Incentives: 2 million ARB tokens to incentivize developers to build and maintain the L3 MXC zkEVM.
Infrastructure Costs: 1 million ARB tokens to support the infrastructure, including servers, security, and maintenance.
Marketing and User Onboarding: 1.5 million ARB tokens to promote L3 MXC zkEVM and onboard new users.
Miscellaneous and Contingencies: 0.5 million ARB tokens for unforeseen costs and other initiatives to promote L3 growth.
Milestone Breakdown:
Milestone 1: Initial Setup and Onboarding (Duration: 3 months)
Objective: Set up L3 MXC zkEVM and onboard initial developers and users.
Expected Outcomes: 20% increase in transactions on L3 MXC zkEVM.
Allocation: 1.5 million ARB tokens (1 million for developer incentives, 0.3 million for infrastructure, 0.2 million for marketing).
Milestone 2: Expansion and Growth (Duration: 6 months)
Objective: Expand the user base and increase the number of transactions.
Expected Outcomes: 50% increase in transactions and 30% growth in L3 provers.
Allocation: 2.5 million ARB tokens (1 million for developer incentives, 0.5 million for infrastructure, 0.8 million for marketing, 0.2 million for contingencies).
Milestone 3: Sustenance and Future Plans (Duration: 3 months)
Objective: Sustain the growth achieved and draft future plans.
Expected Outcomes: Stable growth and a clear roadmap for the next phase.
Allocation: 1 million ARB tokens (even distribution across all expenses).
Performance Metrics:
Number of L3 provers onboarded
Increase in transactions on L3 MXC zkEVM
Number of new users onboarded
Grant Window Duration: 12 months
The grant of 5 million ARB tokens will be utilized across the 12-month window in alignment with the milestones mentioned above. This structured approach ensures the funds are used judiciously to achieve the desired outcomes.
I don’t think the idea is bad, but I would like to know a little more about the distribution plan, how they would use those funds especially for growth and what proposals they bring for it.
I am in favor that Arbitrum should support projects that allow to scale its functionalities even more.
This proposal is actually a good one. it can incentivize developers to explore L3 solutions on Arbitrum and foster the emergence of numerous L3s.
But careful evaluation should be conducted to ensure appropriate resource allocation.
Thanks, yes, the distribution will be per month as it suggested, will be the L3 DAO to decide how much for this month’s gas users on Arbitrum One. For example, let’s say this month’s gas on Arbitrum One for L3 proofs is 100ETH, then the distribution of ARB tokens to L2 addresses should be around the similar amounts.
It’s exciting to see teams building L3s on Arbitrum interested in receiving grants from the Arbitrum DAO!! To my understanding, this proposal asks for 5M ARB to fund a gas rebate program for MXC zkEVM users.
While a formal DAO grant program is yet to exist, these requests are anticipated and provide meaningful insight into the ecosystem’s appetite for support. That said, I do think that the warnings of @DisruptionJoe are prescient here:
As painful as it is for applicants, the DAO is currently in the process of defining a grant program structure. The risks of allocating without structure are likely greater than the risks of delaying allocations until a sustainable grants strategy and process are in place. Incentive programs are susceptible to abuse and varied results. Without meaningful objectives, oversight, and planning, these programs often disappoint (See critiques on previous incentive programs re: Optimism, Avalanche, Fantom, etc.).
That said, new L3s deploying via Arbitrum Orbit and L2 Arbitrum chains are a stakeholder class that can and should benefit from Arbitrum DAO support. The demand for optimistic rollup chains is apparent as Coinbase, Lens, and Worldcoin have all committed to building on Optimism’s OP Stack architecture. The Arbitrum stack should hold similar ambitions and support the development and growth of emergent Arbitrum ecosystems.
Our team has conducted some research independently (and will share our thoughts in due course) but would prefer to collaborate with additional stakeholders if interested!
Thank you for your response and for recognizing the potential of new L3s deploying via Arbitrum Orbit and L2 Arbitrum chains. We wholeheartedly agree that this stakeholder class should benefit from the support of the Arbitrum DAO.
We have been closely observing the optimistic rollup trend, and we are inspired by the commitment of Coinbase, Lens, and Worldcoin to the OP Stack architecture. We see great potential for the Arbitrum stack to similarly nurture and support the growth of emergent ecosystems.
Our proposal to distribute ARB tokens to L3 MXC zkEVM users aims to stimulate the development of such ecosystems. We believe this initiative will not only incentivize more developers to build on Arbitrum, but also cement Arbitrum One’s reputation as a leading L2 solution in the Ethereum ecosystem.
We are excited to hear about your team’s independent research and would be more than happy to collaborate with all stakeholders. We believe that by working together, we can further our shared goal of expanding and enriching the Arbitrum ecosystem.
We look forward to engaging in further discussions on this proposal and moving forward with this initiative. Thank you for considering our proposal, and we hope to have the opportunity to contribute to the growth of Arbitrum in a meaningful way.
Well said. I do think that the DAO can provide funds outside of the grants program to some L3 deployments, but I wonder how we know that the project is legitimate in actual development, desire to complete and capability to be successful.
I would put up an individual proposal for each ask and let the DAO decide if it is worth hearing. Hard to say they would go for it, but if Nike was going to deploy something - it might get the attention it deserves.