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

[tnorm]

@Djinn

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

I’ve largely sat on the sidelines of these conversations but I’m a bit tired of language being taken out of context and being used to support individual goals.

I’ve previously brought up similar incidents with folks misinterpreting text from the Treasury WG.

To clarify:

1. STIP’s mention of potential backfunding or support for future rounds is very clearly presented as a possibility for consideration, it is also clearly NOT an endorsement of (any) specific action.

2. The only characteristic that can be used to define each member of the first STIP working group is that they were active in the DAO community BEFORE the STIP madness and were willing to sacrifice their time and energy to contribute towards a short-term solution on behalf of the Arbitrum ecosystem.

It’s almost impossible to communicate where the community was pre-STIP. The perception that this was somehow a safeguarded, elite group with special interests is absurd and inaccurate. In fact, if you follow the conversations in the original proposal multiple alterations were made throughout the process to make it MORE inclusive.

I will refrain from providing any judgement on this proposal’s merits or quality, but I will continue to object to the manipulation of historical facts or language to bolster personal arguments.

[Ram_Ranchero]

I mean what Dog said is correct. I feel like what we are seeing here is an attempt to actively prevent protocols from having resources to flourish and thus compete. It really is. The votes speak for themselves as to the projects which should be next in line for funding. Not back funding and going to another round is a way for those who were funded in round 1 to have a shot at pushing out smaller projects again - plain and simple.

Its actually absurd that people could claim to care about diveristy in the Arb ecosystem and then not want to fund a list of the projects which (after those which have just received funding) are the most highly voted for among the community.

Its actually sad and breaks my heart. With all due respect Arbitrum still has work in progress on the front of decreasing centralisation (The state of Arbitrum's progressive decentralization | Arbitrum DAO - Governance docs), de/centralisation isnt just about the sequencer, its about the state of the ecosystem,. Those against funding the projects which are 1. The most desired after those already funded and 2. Are highly actively contributing to that ecosytem - clearly demonstrate their intention is not to promote diversity but to infact directly mitigate the risks diveristy might pose to them. Of course, this will be sold under the guise of myriad other excuses which people will desperately try to pull out in an attempt to distract from their actual intentions.

Anyone who doesn’t realise that we only win if we win together is setting themself up for building an ecosystem on stilts which they then frustratedly cast aside when one of the stilts gets knocked out. Funding diversity - which we have a clear, direct, voted for list - is ensuring that a wider range of users are drawn to Arbitrum, and thus to ALL protocols - including those already funded. This is the only way the ecosystem strengthens. If you want to look back in 2 years time and be like “damn, I see what he meant” please consider your perception of other chains and their diversity.

Look at Cardano - even seeing that name makes you cringe - yes, the tech is different and that might be the reason - its decentral but ultimately its because THERE IS NO ECOSYTEM BEYOND A COUPLE OF PROTOCOLS. If it had an ecosystem of 100s of projects, think of how vastly different the perception would be.

Look at BNB - and maybe that doesn’t make you cringe as hard because you might have made money on one of the many projects there - its more DIVERSE but suffers greatly from its lack of decentralisation.

Of course, look at eth. Decentral. Diverse. Loved. Huge – and not going anywhere. Do we really think that Arbitrum in its present form is the be all and end all of Eth-adjacent chains? There will be in future, other competitor chains which appear - at which point, the tech difference between Arbitrum and a competing chain may be little to even negative When that happens - and you are foolish if you think it never will - the reliance will be upon the diversity of the ecosystem to retain users.

Look at the layer 1s, I think QANplatform has a solid case for being a better L1 than eth - and some people (which doesnt include me) would even say SOL or FTM are. Why do we have a good chuckle when we see that? Because we know from BTC/ETH (make no mistake, the BTC ecosystem is highly diverse, just not on chain) that unseating a diverse chain if done in less than a decade would be a fast deseating. We see chains with ecosystems which aren’t diverse be in the top 5 for a little while then drop down to the top 20 as people lose interest. Arb is still only 42. We simply don’t have time to be f***ing around and not building the community as big as possible as fast as possible.

I think anyone against backfunding is failing to consider this. If you want to retain users when another chain comes along, you need many reasons for people to stay, not just a couple. The long term consequences will truly be upon the entire chain to bear whether voters realise it or not.

[Djinn]

Thanks for the clarification.

Regarding your points:

1. STIP’s mention of potential backfunding or support for future rounds is very clearly presented as a possibility for consideration, it is also clearly NOT an endorsement of (any) specific action.

Yes you are correct, and the possibility is what we are presenting here in this proposal. Nowhere did I mention that this was the defacto option. It was ONE option.

2. The only characteristic that can be used to define each member of the first STIP working group is that they were active in the DAO community BEFORE the STIP madness and were willing to sacrifice their time and energy to contribute towards a short-term solution on behalf of the Arbitrum ecosystem.

This I have to push back on.

In the essence of speed, it makes sense how things turned out. Could more protocols have joined the working group calls and shaped the STIP to favor a wider variety of projects? Absolutely - that’s an unfortunate lesson many teams are now just understanding. You can’t just build and expect the DAO to work in your favor. You have to be part of shaping the DAO itself.

However, the working group structured the proposal with an unlimited pinnacle grant cap and left out considerations for verticals including gaming because of who just happened to be most involved.

This is not bashing the ‘elite’ but more acknowledging that the protocols that happened to be the most engaged in the original STIP shaped it to favor them.

Like I said, a very important lesson for projects. You have to make things happen and be engaged or be left with little control of the DAO’s destiny.

[bflynn]

Would just like to say as someone who supports this proposal, @coinflip has been nothing but supportive to the ArbitrumDAO by showing up consistently to the community calls and voicing his opinion on multiple proposals. There’s no reason to be calling him a grifter, and we need to do better than namecalling on governance forums and instead respect delegates who put the time in to vote and express their reasoning thoughtfully.

[wavebender]

If they wanted to be fair and inclusive they could have distributed the first round proportionally to every project that passed quorum.

[litocoen]

While I am in support of fostering diversity in the Arbitrum ecosystem I am not in favour of this “backfund” approach.

As a delegate I would like to assess the merits of each project individually.

I would support a Round 2 where projects who didn’t get R1 funding (and others) can apply again or a more streamlined, continuous process with a Collective overseeing grant requests.

[Bob-Rossi]

I will be voting — somewhat reluctantly — “For” this STIP Backfund. I think there is a lot to learn from the how this initial STIP proposal went, and for future STIP’s I am hoping many of the issues are addressed. I also think approving this starts to set a precedent that grants can be retroactively altered, which is why I’m reluctant to vote for this…

As for cost, the initial STIP was 75 million, dropped to 50 million. This effectively brings it back to the originally proposed amount. Which I don’t want to just dismiss that, I also think it’s fair to say we could never reasonably predict the number of applicants. Dropping from 75 to 50 in a way felt like lowering the cap for the sake of feeling financially prudent, as I wonder if the original amount was 100 million the 75 may have passed due to the initial ask setting a target.

With that said, it’s ultimately not really the fault of the projects in this proposal so no sense in punishing them for that. So my vote is one that aims to satisfy the ‘spirit’ of the initial STIP proposal, with a strong caveat that this will be a one time thing from me. As ultimately this looks to be the most effective ‘fix’ for the growing pains as a young DAO, but is not something we should look to do each round.

[Camelot]

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.

[tnorm]

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:

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

Hello @jpatten, Thank you for your thoughtful comments. Hopefully I can clarify a few points here: Recommendations vs. Requirements: In the Evaluation Guidelines, the criteria regarding TVL and Volume were updated from “requirements” to “recommendations”. This change ensures they serve merely as guidelines for delegates when determining grant sizes. Our intention is for future programs to outline clearer requirements, which will indeed encompass game-specific projects and initiatives. Data…

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.

[blazedbison]

@litocoen

As a delegate I would like to assess the merits of each project individually.

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.

[cliffton.eth]

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.

[realdumbird]

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

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.

[krst]

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.

[DoomedCapital]

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.

[Ram_Ranchero]

“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.

[hsuanting]

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.

[SeriousTaylor]

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.

[Michigan_Blockchain]

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.

[dk3]

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)

[dansco8]

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.