Proposal to Backfund Successful STIP Proposals (Savvy DAO) [FINAL]

Camelot will be voting against that proposal.

We would like to start by saying we are very much in favour of the DAO finding a way to distribute STIP ARB to more protocols, given that many deserving projects failed to make the cut during round 1, or were waiting for a round 2. Camelot has been supportive of this since the very inception of the first STIP working groups.

However, we see major flaws in this backfund proposal as it currently stands:

  1. Several delegates have voted in the context of a 50m budget and the specific parameters known at the time. We believe that voting would have been significantly different if delegates knew in advance that their votes could be potentially carried forward into an entirely new situation. Votes were made under known parameters, and therefore taking them as valid into an entirely new circumstance sets a worrying precedent.

  2. Several protocols (GMX, Radiant, Trader Joe…) consequently reduced the amounts requested in the first round so that more projects could be included in the STIP. Arbitrarily increasing the total amount afterwards - by including proposals with sometimes less reasonable asks - would simply mean that their proposals had been weakened for nothing. Again, this emphasises the point above that votes were cast under known parameters, and to take this as valid in a new context does not make sense.

  3. Last but not least, we believe that the protocols that were waiting for a second round should be included in the same proposal.
    Although we are aware that a separate proposal is being drafted, we believe that the success of a round 2 is currently significantly limited in the context that the backfund proposal is passed.

We strongly support inclusion and a clear path forward for new entrants to the ecosystem - the most appropriate way to facilitate this would be a proposal that includes a round 2. A backfund would significantly limit inclusion because of the above mentioned reasons.

For example, an interesting potential alternative would be to set up a small committee with a voted budget (e.g. 20-30m) which could distribute it to all the protocols that weren’t included.
This is just one possibility, but it shows that there are other quick and far more effective ways of remedying the situation.

Most importantly, in the scenario where a backfund passes we would expect all the included protocols to equally push for a further long-term framework and/or solution for round 2. We will continue to actively contribute throughout this process.

5 Likes

To be candid, I feel neither shame nor the need to defend myself against the finer points of message here.

I hope Alex and the team behind this backfund prop would state that I’ve been nothing but supportive of their intent to create this proposal including helping them use the working group as a platform in its early weeks, providing feedback, and not gatekeeping or pushing the political games that you seem to think occur.

My comments clearly addressed a specific tactic that I do not support, which is the (sometimes sublte, sometimes blatant) perpetuation of narratives that are manipulative and often take statements out of context. These narratives are being used to inflame divisions in the community and target some of the most important stakeholders and contributors at Arbitrum.

As to @Djinn’s points, the point is that to spin the WG as being designed by big protocols for big protocols is simply not reflective of the spirit of the proposal, which was literally borne to ensure that both large proposals and smaller proposals, could be passed simultaneously so that not just massive protocols got incentives for the fall/winter. Many of the protocols who knew they would likely ask for large grants actually lobbied quite hard for a 75M ARB cap for the very reason of including more smaller protocols, which you can also track in the original proposal thread.

The fact that ~90 protocols only engaged with the DAO once the grants program had launched was unfortunate and unexpected. I simply can’t stand by quietly and watch those who were not present (and apparently do not care to read) to claim any original contributor’s intent, especially for the sake of trying to pass a proposal.

As for alleging that gaming was not considered, that’s simply false and was addressed throughout the original STIP comments, as we purposefully made the tier recommendations “guidelines” rather than “rules” to allow them to participate:

The WG calls actively tried to address gaming both pre-STIP and post, but there has been little to none engagement from any gaming representatives thus far.

3 Likes

Just want to point out that this has/should have been done during the actual STIP Rd 1. These are all projects that received a majority FOR vote AND met quorum.

Also, a Round 2 working group is/has been formed, and this proposal in no way impacts that. Why should those who were ready and did put the time in for round 1, and as previously mentioned DID obtain the required votes to pass - a taxing task in itself for smaller projects who could better spend their time building their products rather than lobbying delegates - be punished by having to apply again and go through this whole process…

But, I appreciate the response/reasoning. Just think there’s been a lot of confusion about this proposal and who it’s rewarding.

3 Likes

Hey everyone, a reminder to please keep comments and replies respectful, professional, and constructive to this proposal. I had to delete some comments which undermined the integrity and/or character of individuals and/or teams.

Name-calling, personal attacks, and comments which challenged the integrity of individuals and/or teams will not be tolerated as per the community guidelines.

Remember, the purpose of this forum is to foster productive and respectful discussions related to governance. We encourage everyone to contribute their ideas and perspectives in a respectful and constructive way, and to learn from each other.

1 Like

First of all, MUX delegates sincerely appreciate all the DAO members who pushed for the productive yet intense STIP program, and we also respect all the efforts that went into this backfund proposal. After internal debates and long discussions, we have decided to vote “Abstain” for this proposal.

Although MUX delegates totally support the idea of having more protocols and builders to be supported, backfunding doesn’t seem to be the most reasonable approach:

  1. The 25+ proposals in this backfund bundle have mixed quality; some are worthy of support, while some are questionable, considering the protocol fundamentals, incentives execution strategies, and actual grant requested.
  2. It would be more reasonable to have the proposals being voted on individually in a round 2 type of event instead of binding all the proposals together.
  3. The term “inclusion” was used frequently in this conversation to back up the intention. However, it seems the phrase has been used to dodge the fact that the original grant size was set according to supply & demand + DAO treasury fund management concerns instead of being “exclusive”.
  4. Round 1 was made possible by DAO members advocating for a framework so more protocols and builders who are building projects with solid fundamentals and clear benefits to the ecosystem can be supported. Some of the claims that tried to twist the original intention in this forum thread are a bit sickening to see.
  5. Passing the quorum wasn’t a solid reason to back up the claim for a “guaranteed” grant; Passing the quorum + making it to the cutoff line was, given the fact that the VOTED size for the first STIP was 50M.
  6. We hope the backfund attempt won’t become a recurring behavior that will always happen after all STIP types of events :slight_smile:

To conclude, although MUX delegates would love to support many individual proposals included in this bundle, the delegates can’t seem to all align with the backfund approach and reasonings behind this proposal. Therefore, MUX delegates will vote “Abstain.”

Additional Disclaimer:
Previously MUX delegates didn’t have a chance to participate in the backfund proposal AMA hosted by @SavvyDeFi due to time conflicts, but we listened to the full recording.

4 Likes

The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.

L2BEAT is voting FOR STIP backfunding proposal in the temperature check vote.

At first we were hesitant regarding this proposal, for the reasons already mentioned by other delegates:

  1. Initially, the spending limit for the STIP program has been set at 50M ARB through a DAO vote. Even though the original proposal did mention a possibility of extending this amount, it’s not a good precedent to immediately ignore this self-imposed limit with a follow-up proposal.
  2. There are concerns regarding the impact that the deployment of 20M additional ARB to the market through direct incentives will have on the short- and mid-term price of the ARB token.
  3. There was also a concern about the potential delay of STIP Round 2 and the long-term program development. That concern was raised especially by projects that did not make it to the list in this proposal or that did not apply for the STIP during round 1 at all.
  4. Lastly, there was a concern related to the fact that in our opinion the results of STIP Round 1 were far from perfect. As we have previously mentioned, we were not satisfied with the end results of the STIP voting as there was not enough time to review the applications and provide proper feedback. That includes the applications included in the back-funding list.

Given the concerns mentioned above, we engaged in a discussion with the team behind the backfund proposal. We held discussions both during our Office Hours calls as well as during public Twitter spaces and in Telegram group chats. The team addressed most of our concerns and while they were not completely dispelled, we got convinced that this proposal is safe to pass and will not be a blocker for future rounds.

It is worth noting that the team behind this proposal was very active in assembling a dedicated team to work on Round 2 and pushing the needle forward with the work in that front. In addition, the team showed dedication and perseverance in pushing this proposal through the temperature check, making themselves available for any questions we had and willing to find ways to address concerns raised by us or other parties. This was, and still is, a very promising signal for the actual execution of the proposal.

In addition, since STIP was designed to be a short-term experiment, doubling the number of projects in the program, and ensuring the inclusion of smaller projects, will provide us with more data on how this program is performing and allow us to draw better conclusions and lessons for the long-term program.

Considering all this, but especially considering the dedication and openness of the team, we have decided to support this proposal for the temp check, and we will continue to support the team in the execution and validation of the results.

12 Likes

This is reasonable. I believe that a Back-fund proposal has more disadvantages than advantages. Well-thought-out Round 2 is a much better solution. Many mistakes made during STIP 1 could be avoided (they should be), and the whole process could be done rather quickly. Projects could get grants as early as January, so there is little advantage to rushing with the back-fund proposal on that front. Yes, projects would have to go through an additional round of voting (and all the stress surrounding it), but I don’t see anything wrong there; they failed at the first attempt, but they will improve their proposals and try again.
I know many community members don’t share my opinion, so maybe it would be best to let delegates decide between Back-fund and Round 2.

3 Likes

“We strongly support the inclusion of more for the biggest protocols - we wouldve asked for more”

guh. I mean sorry - but the implication that it wouldve resulted in just more funds going to the biggest protocol is precisely what I mean about the trend against diversity here.

2 Likes

Reviewing the community’s perspectives on our proposal to backfund STIP projects, it’s encouraging to see a consensus around the importance of innovation and diversification in the Arbitrum ecosystem. As an applicant seeking support from the Arbitrum Foundation, we resonate with these values. We believe that such initiatives can significantly contribute to a more robust and interconnected network, fostering not only technological advancement but also commercial growth. This approach aligns perfectly with the ethos of decentralized finance, paving the way for a stronger, more dynamic ecosystem.

2 Likes

Gm everyone

As Alex and the gang at Savvy know, we were not always in favor of this backfund proposal over at Serious People. We tend to be extremely conservative in our approach to token emissions or token spends of any kind. We have developed our entire research methodology around trying to maximize the dollar value that a protocol can receive in return for every token that they emit or spend.

With that particular framework in mind alone we were weary of the STIP in the first place, and especially wear about increasing the size of something that we already were not necessarily in favor of.

However, after countless conversations with delegates, protocols, the team at Savvy and others, and joining several working calls, I am pleased to say that our opinion has been changed. While we are still firmly of the belief that there are more efficient ways of spending tokens in regards to the dollars that one can get in return, we have come around for a couple of reasons.

  1. The optics of this are very important. Builders and web3 enthusiasts are looking across the crypto landscape at various ecosystems in order to decide where they want to spend their time building or deploying their capital. By funding a significantly larger sample size of protocols, especially the smaller ones, Arbitrum positions itself to attract more and more builders and therefore more and more users.

  2. There is an unlock coming in March that nearly 2Xes the token supply overnight. Over a billion tokens are being unlocked and the 50M-71M STIP funding is a mere drop in the bucket in comparison. With this unlock in mind in it imperative that the DAO does what it can to stimulate enough interest in the ecosystem that we are adequately prepared for that unlock in terms of buy-side liquidity.

  3. We have collaborated with several different individuals and teams to analyze the price impact of the STIP and subsequent backfund + even a round 2. The conclusions that we have come to suggest that the $ARB token is far more resilient than we had previously given it credit for. We still contest that $ARB’s on-chain liquidity profile is far from perfect, its centralized liquidity is stalwart for now.

In conclusion, Serious People, Inc. stands behind and in full support of this proposal.

7 Likes

Michigan Blockchain is voting FOR this proposal to Backfund Successful STIP Proposals. The first round of STIP distribution was an unprecedented process for DAO governance that reached a scale and level of DAO participation that the Arbitrum DAO should be proud to have accomplished. The initial proposal by the working group asked for 75MM $ARB tokens and the DAO decided to allocate 50MM. Having no previous experience with such a process, it is understandable that we were unable to anticipate the number of applicants, amounts requested, and quantity of successful proposals determined by the Arbitrum DAO.

While the success of this process is something for the DAO to be proud of, it should also be recognized that the level of effort and commitment that was required of DAO participants in the span of a couple of weeks was greater than any similar span for our delegations from other protocols. Therefore, the best next step is to compensate all of the successful applicants and move forward with analyzing the success and effectiveness of the current STIP rather than conducting an additional round of applications and voting. Additionally, this proposal will fund a greater number of up-and-coming protocols that succeeded in receiving support during the STIP, but not to the same extent as others possibly due to simple lack of recognition by voters compared to the large well-known projects.

Given this, we are in favor of this proposal and look forward to supporting all successful, deserving applicants of this STIP round.

8 Likes

Sharing this on the forum @North had asked for thoughts from the delegates who voted against.

Summarizing some of those thoughts:

  1. For those who were not funded via round 1 and went to the foundation for a grant directly, some additional color would be helpful to ensure there is no double funding for the same initiative. In recent days I have seen social posts of community participants confusing these concepts as well.

  2. Some that voted against are doing so because STIP extension is making assumptions that they do not believe to be true (that if the funding was 75mm or 100mm, the voting results would be the same). Some delegates that have commented they would have voted against instead of abstaining if this were to be the case in Round 1.

  3. Some that voted against think that the appetite for a Round 2 greatly diminishes if STIP Extension were to be funded.

  4. Groups that were funded in round 1 made alterations, considerations, and compromises (prior to and after the initial submission) to help their application get the support needed and increase the chances of being included within the cutoff. This puts these groups at a disadvantage now because if they didn’t compromise, maybe they would have gotten what they wanted anyway or a participation award at minimum, and this sets an unwanted precedent.

  5. I don’t think many are sensitive to the amount, but I do think saying its nil impact compared to the 1bn in unlocks this year is a cop-out; the DAO is not a charity or welfare/entitlements program, not saying the extension implies this per se, just being mindful of the narrative and attraction that it may bring.

Most of this feedback is just a consolidation of what is already on this thread.

Thinking out of the box, if a proposal were to evolve to package the STIP Extension with Round 2 Funding, I think generally most parties would be happy with that outcome.

Discussions on Round 2 for reference: V2 Incentives Program - Working Group (STIP Round 2)

6 Likes

I keep seeing point 4 about certain groups making compromises like that’s a bad thing. One of the main reasons why so many projects didn’t get funded even after making quorum is because of the percentage of the pie certain projects received in the first place. We would have the same problem of all these projects not getting funded if they hadn’t made those compromises so it’s a non point.

5 Likes
  1. Foundation grants have been in the talks for many projects since beginning of the year and have no bearing on the STIP. If you have a project that is of interest to the Foundation, nothing is stopping anyone at any point from putting in a proposal to them.
  2. Delegate votes should have taken into account potential for back funding as back funding is clearly declared and stated in the STIP documentation
  3. Appetite for grants will always be there regardless of how the distribution is done
  4. Groups that did not make it into round 1 cut off also made adjustments in order to try to make the cut off as well. It was not just adjustments being made at the top of the stack, the majority of projects made changes in order to try to be accommodated.
  5. What?
7 Likes

UPDATE - we want to draw attention to a budget clarification that the total listed for Data and Monitoring for Plurality Labs (performed by OpenBlock Labs) is not 100K ARB but 149,500 ARB. The total ask of 21.52M remains unchanged. (also pinning this post)

3 Likes

We are voting no to the STIP backfund. We would like the DAO to revisit the idea of another short term incentives program once the first round of applicants have spent the ARB already allocated. This way analysts can look at the data and evaluate how beneficial the STIPs actually were. In order to efficiently/effectively allocate ARB in the future, delegates need to if/know how much ARB incentives hurt the underlying price, how much TVL and fee revenue changes, whether or not new users are onboarded to Arbitrum, and other important metrics. We would also suggest capping the amount of ARB available to projects to ensure more protocols are included in the allocation next time. January 31st is only 2 months away and we do not believe the benefit of getting this done quickly outweighs the advantage of using data from STIP round 1 for future incentive endeavors.

3 Likes

Is there a reason why Blockworks did not vote in the temp check or engage in any of the conversations here on the forums or the myriad of other comms channels?

Pretty disappointing to see, but at least the community gets to see some rationale of your decision after your decision.

2 Likes

After the original STIP allocation was distributed (mostly uncapped and favoring already massively established projects ahem), there have been plenty of opportunities to contribute to the discussion of this backfund. The results?

Overwhelmingly positive by all those who actually participated in the discussion. I urge the community and our delegates- please don’t let this blunder of over expenditure towards a handful of projects be what drives small startups and innovation away. What we see here are the few gate keeping the many.

Good job, decentralization.

4 Likes

Question, so for those who are stuck in this voting process, if this vote fails to pass, then we will not get an opportunity to apply for STIP round 2. How do we consider those protocols that might have wanted to make a submission, but are waiting for the results of this vote?

1 Like

Curious why an AGAINST vote was submitted now? Did anything materially change since this post? Would appreciate some transparency and what swayed your thoughts.

Edit: I see the comment on Tally now, still would like clarity on what changed.

4 Likes