Firstly, thank you for presenting this well-considered proposal and your enthusiasm for the Arbitrum ecosystem.
Introduction and Rationale
The proposal aims to enrich Arbitrum’s liquidity through a range of partnerships and incentives. Specifically, you’re asking for a grant between 750K and 1.5M ARB, which is 1.5-3% of the 50M ARB available. The technology, which is a solid fork native to Arbitrum, has shown a fivefold improvement in volume to TVL ratio, making it capital efficient. Despite its recent deployment in March 2023 and a modest number of weekly users, the protocol has a respectable TVL of $7.4M and has generated substantial revenue. We appreciate the innovative matching requirements for partners and believe this proposal has the potential to positively impact Arbitrum’s ecosystem by onboard new partner protocols and increasing liquidity.
Major Concerns
Efficacy and Scope
- Limited TVL, Volume, and users raise questions about the scale of impact
- Less-than-optimal incentives for partners to engage meaningfully
- Our recommendation for change: We suggest opting for Option B to focus on capturing more retail liquidity providers rather than partner protocols.
Funding Request
- The amount requested seems disproportionally high given RAM’s market cap of 261K and FDV of 4M
- Our recommendation for change: We suggest reducing the incentive amount, possibly to around 250k ARB.
Minor Concerns
- The risk of voting weight skewing toward partners rather than core pools under Option A
- Our recommendation for change: Again, we suggest opting for Option B to maintain balanced voting weights.
Summary
Castle Capital appreciates the innovative approach of your proposal and the potential it holds for increasing liquidity and partnering with native protocols. However, in its current form, we do not fully support the proposal moving forward. We believe the concerns regarding the efficacy and the high funding request need to be addressed.
Our recommendations can be summarized as follows:
- Opt for Option B to better capture retail liquidity
- Consider reducing the requested ARB grant to a more proportionate amount, such as 250k ARB
We hope our feedback is seen as constructive and helpful for fine-tuning your proposal for the benefit of the broader Arbitrum ecosystem.