As I understand it Pyth adds alot of value to perpetualDEXs (which is reflected in their user base on Arbitrum) thanks to their pull model and have done a great job in the launch of their token which was airdropped to hundreds of builders in the community. Overall, of course supporting Pyth adds value to the Arbitrum DeFi community and having additional oracles in the ecosystem is net positive.
However this one off large reward, whilst not supporting other oracles such as Chronicle who also was in the LTIPP, actually creates an unfair playing field and thus will have the opposite effect of supporting oracles. As I understood the LTIPP the allocation of ARB is intended for liquidity attraction so the support for Pyth within this seems to be a somewhat spontaneous allocation from a program focused on DeFi.
If the objective is Oracle Diversity an initiative dedicated to Oracles should be considered. You could easily argue that allocating 1m to an incumbent is counter intuitive to Oracle Diversity. Additionally the trade-offs of certain oracle designs from a technical standpoint should be understood through a dedicated process.
This all said I feel it is unfair to comment on Pyth’s application post and by no means should this be overturned. I am for supporting Pyth. But I would be interested in a wider discussion around oracles and would welcome you to input onto this thread: Oracles and LTIPP