Good Morning - Alex from the Velodrome Team here.
I’ve known the Ramses Team for some time, am very familiar the primitive, and know just how impactful it can be when combined with incentives to boost an ecosystem. Figured I’d add some thoughts here especially as much of the conversation here feels like a repeat of what we’ve seen in the OP ecosystem. As a disclosure, I own no RAM or ARB so these are just my own musings fwiw.
Framing Grants
On the Optimism Governance side of things, we’ve learned a lot from going through multiple rounds of grant funding. There are a few things I’d call out as Arbitrum delegates are considering proposals here:
- Prioritize Public Goods: If a project take team fees on the underlying protocol activity and/or is already backed by VCs or outside funding be wary. Support systems that return 100% of the value creation to ecosystem participants.
- Prioritize Native Projects: Multichain projects have different incentives than native ones whose success is 100% tied to that of the chain, some will even ship the value created right off of Arbitrum reducing the impact of the programs. Support focused native projects, they’ll deliver you back multiples more in impact.
- Support Projects Building Actual DeFi: Plenty of projects are willing to take shortcuts, deploying risky upgradable contracts or retaining their teams ability to manipulate things like token emissions. Support projects that deploy permissionless immutable contracts and decentralize protocol control.
- Reward Demonstrated Impact: If protocols already received a large ARB airdrop and are asking for more, make them demonstrate the impact of what they’ve been given to date. If it is marginal or has been misused, be wary of providing more without data to support program efficacy. Take some risks on projects that haven’t received any, but only give them more if they prove impact.
Liquidity Incentives
In the early days of grants on Optimism, a lot of token rewards were granted for direct liquidity incentives. This is now broadly seen as a mistake as they produced marginal impact and distributed the rewards to the single most mercenary group of farmers: Liquidity Providers.
What has found to be far more effective is using rewards to incentivize the investments of other protocols in the ecosystem (through things like voting incentive match programs) and distributing the rewards to groups more likely to be aligned with the long term success of the ecosystem (like veRAM lockers who’ve made a 4y commitment to Arbitrum).
To put this more tangibly, you can give $1 in ARB to rent the $1 worth of TVL from a mercenary farmer (that will be gone the minute the program ends) or you can give $1 in ARB to attract $8 - $10 incentives from other protocols while still return $12 to $3 to LPs… all while ensuring the ARB is going only to those who’ve made multi year commitments to the ecosystem.
This a proven effective approach on Velodrome.
Performance to Date
I don’t think it makes a ton of sense to hold token price or TVL metrics against Ramses when considering a growth experiment such as this. There are plenty or projects and protocols on Arbitrum that are exceptionally well funded and got massive ARB airdrops on top that Ramses has had to compete with… meanwhile, I think there are strong signals in things like their fees / emissions, volume / TVL that suggest that with the kind of support a grant like this could help kickstart a similar flywheel effect to what we’ve seen on Velodrome.
If the size, duration, or current concentration of veRAM supply is an issue for any major delegates I’d encourage the team to find a way to modify the proposal to meet their needs – but I think the DAO should strongly consider making a bet on this team, especially if incumbents and vc backed multichain protocols will be heavily supported, so they can have a fighting chance to prove their potential. Worst case it doesn’t work and you don’t need to give them anymore. Best case, you get a Velodrome style growth explosion on Arbitrum.