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

[BlueClarity]

Hi all, Blue representing the Trader Joe Governance Committee.

We have cast our vote in favor of supporting the backfund with the reasons detailed below. There are, however, concerns on the implications of this backfund that need to be carefully thought about in the next steps for this proposal.

Our internal voting:

• Vote FOR: 4 votes
• Vote AGAINST: 2 votes

The Trader Joe Governance Committee have therefore voted in favor of supporting an additional 21.4 million ARB to be distributed among 26 more projects, thereby extending the STIP to encompass 56 projects in total. Our key reasons voting favor of supporting this are:

• Enhanced Impact: We believe that increasing the incentive will significantly bolster Arbitrum’s growth. By extending the reach of the STIP, we can nurture a more vibrant and diverse ecosystem.
• Support for Smaller Teams: The majority of the backfund is earmarked for smaller teams. This decision sends a powerful message of inclusivity and support within the ecosystem, fostering a nurturing environment for emerging projects.

However, in the spirit of constructive feedback and transparency, we also wish to address the reasons why a vote against the backfund could be considered:

• There is limited clarity on the implications for a Phase 2. Concerns include whether Phase 2 might be significantly delayed and also the amount of additional ARB funding required. Voting against the backfund could necessitate a more structured approach to Phase 2, avoiding hasty decisions.
• The concept of bankfunding sets a precedent that could be interpreted as “correcting past mistakes” by the DAO.
• Some proposals to receive the backfund are genuinely questionable in value generation for the Arbitrum ecosystem. The backfund is a broad brush approach to splashing incentives to all within a certain voting catchment.

In conclusion, while we have voted in favor of the backfund with the intention of fostering growth and inclusivity, we also recognize a number of above highlighted concerns.

We hope this feedback will be valuable for the proposal’s next steps and for the ongoing growth and development of the Arbitrum ecosystem and how the DAO operates.

[coinflip]

Will be voting Against this proposal in temperature check, but open to voting in the subsequent round depending on how this proposal interacts with a possible Round Two for STIP.

As we consider allocating over 20 million ARB to a specific set of proposals, I express concern. This significant approval differs from enabling frameworks or reviewing grant applications individually through delegates, committees or grant programs. This new proposal removes the nuance of any review and asks us to simply fund all of them in full on the basis of a backfill.

The majority of proposals approved in ST1P were smaller scale sized / newer protocols with grant requests of $1m or under. While I understand how it was difficult for smaller protocols to gain attention so did make their case successfully, many large established protocols (who had no shortage of attention) finally didn’t qualify IMHO partly over concerns on the grant applications (size, means of distribution, alignment with Arbitrum).

Knowing the DAOs appetite to fund grants has limits, extending grants to protocols that didn’t achieve the same level of consensus from the DAO in ST1P has the probable effect of limiting or eliminating a round two, which will result in exclusion not inclusion as this proposal presents. I respect that the backfill proponents have committed to support a Round 2, but this proposal isn’t contingent on the success of Round 2 passing, while practically making its passing more difficult by consuming resources that would have been dedicated towards it.

Considering the current landscape:

• There is a palpable appetite and momentum to swiftly continue grants frameworks, both in the short and long term.
• Some, but not all, proposals in the backfill might find stronger support in a Round 2, especially with adjustments addressing size and use case concerns.
• The introduction of fresh proposals continues to fuel energy into the DAO and ecosystem, offering diverse options for resource allocation.
• A Round 2, is both more meritorious and inclusive, standing as a superior alternative to the backfill proposal.

While I genuinely appreciate the effort and engagement behind the current proposal, admiration alone cannot justify such a significant spend. A Round 2 proposal, likely to surface in the coming days, holds the promise of supporting the strongest applicants from the current backfill proposal and numerous others.

Whether this proposal passes or not, I implore your support for the initiation of a Round 2, which is not a vote for specific proposals but for giving an opportunity to all projects. I and hope other delegates should weigh where we end up with both processes before pushing forward funding for either backfund or Round 2.

[Lunaman]

Your comment presents a thoughtful perspective on the STIP 1 grant allocation process and the proposed Round 2. However, there are several underlying biases and contradictions in your argument worth addressing.

Firstly, your emphasis on the challenges faced by larger, established protocols in the STIP 1 grant process, while understanding the need for smaller protocols to gain attention, seems to inadvertently lean towards a more selective approach that could favor established entities. This stance inherently supports increasing the barriers of entry for emerging protocols, which contradicts the decentralized and inclusive ethos that many DAOs, including those associated with Arbitrum, strive to uphold. By advocating for larger grants to already well-established protocols, you seem to be favoring a more monopolistic approach under the guise of alignment with Arbitrum’s interests.

Secondly, while you voice support for a Round 2 of STIP and acknowledge the importance of diversity in grant allocation, your actions suggest otherwise. You fail to mention that you have not joined the open group working on Round 2, preferring instead to work on a separate proposal in a more controlled, closed group setting. This choice raises questions about your commitment to inclusivity and transparency, core principles of DAO governance. It appears that you prefer a scenario where you can exert more influence over the outcome, which might not align with the broader community’s interests.

The concern about resource allocation limiting the possibility of a Round 2 is valid. However, it’s crucial to balance immediate needs with long-term strategies. The backfill proposal aims to address immediate gaps, while Round 2 is about future opportunities. The DAO needs to consider both without unduly favoring one over the other.

Your call for support for the initiation of a Round 2, independent of specific proposals, is indeed commendable albeit superficial. However, it’s important that this support not be used to undermine current initiatives that also hold value for the community. A more balanced approach would be to advocate for efficient resource allocation that accommodates both the backfill proposal and the potential for a robust Round 2.

In conclusion, while your insights into the grant allocation process are valuable, it’s important to reflect on how your preferences and actions may inadvertently promote a less inclusive, more monopolistic approach. True support for the community involves embracing diversity, transparency, and equal opportunities for both established and emerging protocols.

[Lothaen]

“As we consider allocating over 20 million ARB to a specific set of proposals, I express concern. This significant approval differs from enabling frameworks or reviewing grant applications individually through delegates, committees or grant programs. This new proposal removes the nuance of any review and asks us to simply fund all of them in full on the basis of a backfill.”

The protocols to be backfilled reached quorum. How can the above thought process exist when they have all been reviewed by the DAO and achieved quorum?

[Midgetwhale]

@coinflip

The majority of proposals approved in ST1P were smaller scale sized / newer protocols with grant requests of $1m or under. While I understand how it was difficult for smaller protocols to gain attention so did make their case successfully, many large established protocols (who had no shortage of attention) finally didn’t qualify IMHO partly over concerns on the grant applications (size, means of distribution, alignment with Arbitrum).

This seems like an odd thing to say since in the original STIP, 50M ARB got distributed to only 30 projects meaning that the average project grant was 1.67M ARB. In comparison, this backfund asks for a distribution of 21.4M ARB to 26 protocols or 0.82M ARB per protocol on average.
So to make the claim that this backfund, where the grants are on average half the size of the original STIP grants, would fund too many protocols that demand a too large size of a grant seems an odd claim to make.

It becomes even more peculiar when one takes into account that this concern of too large grant sizes is being being expressed by the protocol that took a 12M ARB grant for itself, almost a quarter of the original STIP allocation.

Furthermore, I would like to note that each grant proposal already got assessed individually and received support from the Arbitrum delegations to the extent of passing quorum. So I also don’t quite follow you on that point.

To be honest, this feels a bit as if this vote, comment and future intent to publish a round 2 proposal in the coming days, is a deliberate move to make Arbitrum into a walled garden where only a certain number of established entities are well nourished instead of letting the ecosystem expand and flourish freely by maintaining a level playing field amongst all participants.

[CastleCapital]

Firstly, thank you for your proposal and keen interest in the Arbitrum ecosystem.

Proposal Outline and Importance

The proposal’s primary objective is to backfund all “approved but not funded” projects from the first Arbitrum STIP round. This initiative, involving the distribution of over 21.4 million ARB, is said to be crucial for fostering diversity and supporting emerging builders, aligning well with Arbitrum’s inclusivity goals. It addresses the weaknesses of the original STIP structure and aims to create a more inclusive environment for new projects, using the same tracking systems as STIP 1 for monitoring progress.

Concerns

While we appreciate the focus on diversity, the proposal seems to prioritize this over assessing the potential impact on the ecosystem of each project. Nevertheless, while we do not necessarily agree with the narrative of avoiding punishing smaller protocols, we believe that there are great positives available to the ecosystem in funding these additional projects.

Wider Comments and Thoughts

A couple of points we believe are worth keeping in mind moving forward:

• The DAO should work on establishing clearer criteria for future incentive programs to prevent ambiguity regarding funding allocation and backfund possibilities.
• We would like to encourage projects that were planning to apply for STIP Round 2 to form a collective proposal, for additional funding consideration. We would be happy to discuss and comment with any working group formed.

Closing Remarks

We support this proposal for its alignment with the core values of Arbitrum and its potential to enrich the ecosystem’s attractiveness to both protocols and users whilst driving the growth of the chain. The operational ease for delegates and the reasonable request for ARB funds make it a valuable opportunity for the DAO. Our support is predicated on the understanding that this initiative will serve as a learning curve for refining future incentive frameworks within the Arbitrum community.

We hope that our feedback is received as a constructive contribution, aiding the further enhancement and success of the Arbitrum ecosystem.

[romang86]

I appreciate your detailed response and your thoughtful analysis of the proposal. You’ve raised valid points regarding the allocation of funds, and I understand your reservations. However, I’d like to draw your attention to some critical aspects of the “Call to Action for Arbitrum ecosystem” and the proposal itself:

1. The proposal’s core objective is to support a diverse range of emerging builders and create a more inviting environment for new projects within the Arbitrum ecosystem. It also places importance on upholding values of inclusion and avoiding any potential harm to small but promising builders. It would be best to attract more projects to build here because rewards were accurately spread, which is paramount for our ecosystem’s growth.

2. The proposal addresses a significant issue where smaller projects were excluded from the study due to budget constraints. This exclusion can impact the ecosystem’s growth and limit our learning. Many projects passed the quorum votes, and the original design was more extensive than 50M ARB.

3. The backfund proposal is designed to swiftly provide resources and data to support future programs and enhance the Arbitrum ecosystem.

While I acknowledge your support for Round 2, it’s essential to consider the immediate opportunities and benefits that the backfund proposal can bring now which is pivotal for Arbitrum’s growth. It has the potential to bridge the gap for smaller projects and contribute significantly to the overall development of our ecosystem.

It is fair to say that several projects sought disproportionate amounts of ARB that would not provide as much ROI to Arbitrum and would not result from a net new amount of users and capital.

[coinflip]

Since a few posters have drawn inference to GMX with regards to my post and vote.

Wanted to clarify that while I am a contributor to GMX, my vote as a delegate is strictly my own although do adhere to a conflict of interest policy where possible avoiding voting on proposals specific to a GMX competitor and disclose when there is a relationship with a protocol. I do not consider a grant or funding proposal of this nature to apply to such a COI policy as it is general.

Have not consulted with others involved with GMX in deciding this vote, and some may even take the view that this vote is not in the protocols interest as multiple integrations and partners would get funded.

In the end my concerns come down to it being poor governance and how I think this proposal could crowd out other efforts to support incentives on the DAO.

To those who claim i’m hoping to see a less inclusive environment, monopolization, a walled garden, understand your motivation and can just let me words and future actions stand for themselves. I believe Arbitrum will thrive with competition and I hope we robustly support new protocols coming to the ecosystem and create not just financial incentives but a strong ecosystem that will be the biggest attraction to build here.

[olimpio]

100% agreed on the importance of this proposal and the positive impact for the Arbitrum Ecosystem that the protocols, builders and communities already approved in STIP R1 should get funding.

I support the possibility to continue to fund the ecosystem communities through the protocols outlined here, even more considering that they had already reached approval individually in the Round 1 temperature check. However, my vote in this case is Against due to the fact that (i) we already had voted for a budget, and amongst the three options, 50M was the one that prevailed and it has already been depleted; (ii) the demand in STIP far exceeded the offer, and, as such, Round 2 ended up not being possible. Backfunding protocols that did not make it in Round 1 without considering the possibility of new entrants that were unable to meet the (rather slim) deadlines of the STIP for a potential Round 2 does not look like the ideal path.

The remaining 26 protocols and builders outlined here that haven’t had the chance to get funding through STIP R1 will most likely get it no matter if this specific proposal passes. As feedback may I suggest considering creating a new proposal that encompasses both protocols who were “approved but not funded” in R1 plus a window for new entrants that were going to apply in R2 and weren’t able to make it since the budget was depleted. This seems the fairier approach enabling better distribution.

[Midgetwhale]

As just a small remark, i feel like the threeway vote should have never happened.
It became de facto a vote for either 25M ARB or more than 25M ARB (represented by the 50M vote)
Because 25M had so much traction early on, more frivolous spenders among the delegates decided to opt for 50M and did not want their support be split among the 50M and 75M options.
The fact that 75M did not win that vote should not be regarded as a vote against 75M ARB in funding in my honest opinion.

[Smith]

The only people voting against seem to be the same who passed the initial cutoff. Such behavior does not go unnoticed. GMX (coinflip) for example gets 12M and now wants to limit others to 500k. They are anti-Arbitrum.

[coinflip]

Grifter is definitely not something i was expecting to be called when I woke up today, probably any day prior to that either.

I’m sorry that you believe my concerns are disingenuous or that I’m seeking to punch down on protocols that was not the intent. Have tried at a personal level to be an advocate for builders in this space, and ensuring that Arbitrum is a welcoming environment especially as new protocols choose their home.

Would hope good people of good nature can have an honest disagreement without resorting to name calling or attacking the messenger instead of the message.

[Lothaen]

Pretty clear this is a defensive position for their investment. Delay the stip to ensure some protocols have a longer runway to utilize what they received while other quality projects have to fight for round 2.

I can’t see any thoughtful reason to force products that made quorum fight for round two other than to stifle and muddy the waters for other projects. A vote no is a vote for self serving interests and not in the best interests of Arbitrum.

[DanThales]

Thanks for always elaborating on your votes.

If I may address the points your raised:

To your first point, while the 50m was indeed the planned budget, many large delegates, potentially yourself included, voted FOR on more proposals than would fit the said budget, thus indicating a realization that more than 50m is needed to support all deserving applications.

Regarding your second point, it strikes me as pragmatical to execute the backfunding for round 1 without much added friction and then have an independent budget for new entries and round 2.

[Djinn]

Good thoughts. Sharing my responses below to your two points against backfunding:

• The DAO implemented its established procedure with a designated budget, and this process led to the current result. Attempting to alter the outcome post-decision could establish an undesirable precedent for future DAO decisions.

@tnorm and other working group members for the original STIP acknowledged that there needed to be options if the funding limit was exceeded because of unknown demand. This information was directly in the official STIP proposal. We can make things right!

Arbitrum's Short-Term Incentive Program (Arbitrum Improvement Proposal)

Note: This proposal has been drafted on behalf of the Arbitrum Incentives Working Group as a result of multiple community calls and workshops between multiple stakeholders. It does not exclude external incentive proposals from outside of the proposed structure.* Abstract This proposal outlines a one-time, community-created consensus framework to distribute up to 50,000,000 ARB of DAO-funded incentives targeting active Arbitrum protocols. Aimed at fulfilling short-term community needs, the progr…

• Protocols preparing for round 2 would be treated unfairly by a ‘round 1.5’, both in terms of equal consideration for funding with projects that didn’t receive funding in round 1, and likely delays to round

Having projects that reached quorum successfully but didn’t get funded because of budgetary issues receive a more immediate funding is not unfair imo. These projects worked their ass off already to get delegate votes and structure a proposal that is relevant for now vs later.

We can backfund AND make a concerted effort to push forward an equitable round 2 structure ASAP.

Check out the Sushiswap V2 STIP working group proposal: V2 Incentives Program - Working Group (STIP Round 2) - #2 by Djinn

[blazedbison]

How about instead of focusing on the name calling (which I don’t condone) you comment on the relevant points others are making. Round 2 is still in play and there’s a working group (which I see you’re part of) set up to discuss.

You can’t be the top dog and eat all the meat off the bone if you want a vibrant ecosystem on Arbitrum imo

What new protocol is going to build on arb after seeing this STIP governance play out. Rewarding the largest protocols, and leaving the smaller, new projects out to dry (even though they majority passed and met quorum), which is the exact opposite of the intent of the STIP in the first place…

Make it make sense.

[thedevanshmehta]

@coinflip

Would hope good people of good nature can have an honest disagreement without resorting to name calling or attacking the messenger instead of the message.

This is a valid point, although I do hope you will address the substance of the message. Bigger protocols like yours & @Camelot have eaten the lion’s share of STIP money and are now voting against its extension to smaller projects in a timeframe where they can compete with you. This is terrible optics (esp when most of the smaller voters have supported the backfill).

I did have some problems with STIP in the 1st place as they act like government subsidies. What’s even worse than that is when those receiving this subsidy are now using their market power to prevent smaller competitors from enjoying the same benefit

I appeal to bigger delegates to vote FOR, even if they planned not to, just for counteracting the votes of dapps like GMX & Camelot that are abusing their market power to stifle competition

[blazedbison]

@coinflip

This new proposal removes the nuance of any review and asks us to simply fund all of them in full on the basis of a backfill.

How does it remove nuance of any review, when the Round 1 STIP was the time to review them individually AND all the projects in this backfunding proposal PASSED with majority AND met quorum.

Everyone can see what is really happening here…

[Djinn]

Guys, let’s put away the guns and sit back down lol.

I am as stressed as anyone else, it takes alot of work to get a proposal from draft to a completed vote.

This backfund is important because it solves multiple problems with some of the least drawbacks compared to other options.

The most common rebuttals have been around @abeltherebel 's comments, but I think we have shared enough context on why those drawbacks aren’t necessarily waterproof:

1. 50m was an arbitrarily selected budget with very little demand data to know if that was the correct amount to allocate AND the working group for STIP 1 acknowledged this flaw and had backup plans, INCLUDING A BACKFUND

2. Backfunding does not mean that a round 2 does not happen. In fact, many members of STIP round 1 have been working really hard to make sure round 2 happens asap.

My main bone to pick is that the first STIP round 1 working group did not include a diverse selection of working group members:

@tnorm

To date, this group has comprised stakeholders such as @Myrddin (Camelot), @Matt_Gauntlet (Gauntlet), @raho, @ameeradmi , @coinflip (GMX), @DisruptionJoe (Plurality Labs), @saurabh (Questbook), and more.

We invite @stonecoldpat @cliffton.eth and other Arbitrum Foundation members to attend.

Notice the participants and how the STIP round 1 format and budgeting favored certain projects.

We are doing our best to ensure that round 2 will include more voices to structure the next STIP so that it is inclusive and fair.

BUT - in the meantime, let’s get the projects who worked their ass off to reach quorum and have been waiting weeks now a solution.

Backfunding is an easy, less than perfect but better than alternatives, path that was already considered in the original STIP 1 proposal. Let’s get it done.

[Dog]

@Djinn

AND the working group for STIP 1 acknowledged this flaw and had backup plans, INCLUDING A BACKFUND

@Djinn

path that was already considered in the original STIP 1 proposal.

I can’t echo these points enough. I do not believe doing a backfund is “altering the passed vote.” In fact, it’s the most logical thing since there was a clause for it. Anyone claiming otherwise really makes me question a lot of things. If someone voted “FOR” passing the STIP AIP, then using the above argument to vote Against the backfund means they do not agree with the original STIP AIP and are now backtracking.