I hear far and wide that the Ramses team is great! From what I can tell they are also working to test and learn and try to find better ways with ve(3,3), which I think is cool.
In the end, as many have commented above, ve(3,3) projects have not fared very well so far, with Velodrome being perhaps the one exception, due to their somewhat exclusive access to OP incentives.
After much fanfare, Aerodrome on Base seems to be proving the point that it is this exclusive access that is enabling Velodrome to thrive beyond the rest.
Balancer took from ve(3,3) in itâs core pools system that redirects a portion of fees towards bribs. There are many interesting dynamics in ve(3,3). In my opinion the main problem with it tends to be the way these projects launch.
Launches tend to involve an airdrop made almost exclusively to 3 parties:
Lockers of other ve(3,3) fork coins that are down bad (life support)
The team and investors
DAOs that will support the initial liquidity pools.
a. These DAOs seem to often times be locked into secret commitments to continue to pay bribes and not use other DEXes.
Further, revenue tends to come from the DAO locking their own governance tokens and farming rewards alongside other governance participants.
Iâm not a huge fan of the launch dynamic, mostly because it seems quite opaque and over-competitive in a way that it locks DAOs into often subpar liquidity situations.
Iâm pretty unsure about this whole idea of a DAO locking itâs own gov token to farm itâs own revenue. It seems to me like there are better ways to handle fees for operations, but not here to judge on that either.
So⌠With all that being said.
First and foremost, Ram team = gud and should have support
The concerns here about $ARB flowing to veRAM instead of direct to LPâs is quite valid. veRAM holders seem pretty much a group of insiders and I donât think thatâs the idea. Iâd love to see some solidly forks play around with other ways of distributing incentives, something other than the down-only flywheel.
In the end rewards flowing to LPs can also make votes worth more and increase the value of bribes in a robust DEX ecosystem with efficient vote markets. This prevents most the $ARB from flowing to what tends to be a closed circle of launch partners, investors and team. Are there other ways to be more inclusive with the way this $ARB is distributed?
I really suggest that the Ramses team take some time to consider all this feedback, and try doing something new. Maybe you can pave a bright path forward for all of ve(3,3).
As the largest LP on Ramses I would much rather the LPs be directly incentivized where I can just farm and dump ARB, but lets not pretend this is the most efficient way to apply grant incentives. LPs like me are not going to pay the penalty to dump xoram. I will end up locking, which locks in the higher APRs which attracts more TVL, which increases volume/fees/bribes.
But if you want to go about this the dumb way, I have liquidity all over Arbitrum and any LPs that are directly incentivized with ARB on Camelot or Balancer or anywhere else I will just go there and farm and dump ARB. Just being honest.
The grant program suggests that 1/4 of the grant will go to ARB pairs voters, not ARB liquidity, thatâs a major difference. In other words, you will distribute this ARB to veRAM voters that will redirect 25% of RAM emissions if the whole grant is used on other gauges.
Based on Ramses current emissions, that would mean:
170k ARB / month to ARB pools voters
$30k RAM / month of emissions to ARB LPs in return at current price
And as youâre mentioning (this is the major Solidly issue I was pointing out), that is with 80% of the trading fees also going to veRAM. In other words, youâre breaking the working v3 flywheel (cf. how Uniswapv3 performs without incentives) to replace it with a malfunctioning ve one.
Sorry but how can this even be considered as an efficient way to incentivize liquidity?
As Iâve said before, the only way for it to somehow work would be to constantly make the token pump so the ratio becomes more profitable, while having a constant flow of bribes. Thatâs not what grants should be for.
Itâs exactly as if Sushi was asking for millions of ARB for xSushi lockers, justifying it because their holders are more ecosystem-aligned, or some friendly protocols have been airdropped a large part of it.
Super efficient, make my token increase in price, so I can have more expensive emissions to distribute to LPs and everyone will be happy. Sorry but this doesnât make sense.
Are you suggesting ve that are locked for x years and down 95% wonât try to recoup their loss by dumping ARB? Thatâs actually arguably even more probable given that LPs have at least their capital liquid.
Iâm not a great fan of liquidity incentives, but this doesnât solve anything, and is in fact way worse.
Can you prove in any way or form that this incentivization model is âbrokenâ?
Ramses CL is having better volume/tvl ratio than UniswapV3 exactly because of its incentive model promoting tighter ranges because LPers are incentivized to concentrate their rewards. The only way to sustain RAM incentives is exactly because lockers get money, otherwise it would just go to 0 as no one has incentive to lock.
Going by just the factual analytics, we can say this incentive model works. It is far superior to UniswapV2 model and your beloved Balancer, and currently performing above UniswapV3 ratios. Its fair to assume that TVL:volume ratio wont scale infinitely linear, so lets assume is at least as good as UniV3, the AMM with best volume and fee generation in entire DeFi.
You say giving pool2 rented ARB tokens to LPers in projects like Balancer is perfectly fine (when it does 20x less volume/tvl than Ramses/univ3 model) but using incentives to promote liquidity in this model is completely broken? Itâs becoming hard to take any of these arguments serious at this point. At least provide some analytics to back up your claims.
Thatâs actually a very important point, as this way of distributing incentives would give access to a huge chunk of this ARB grant, not only to this closed circle of launch partners, but also to the team.
The 40 partners list clearly looks great, but how many of them actively bribe on the platform? The last epoch #26 had $12k of bribes, which translates to $48k / month (to which the grant is supposed to add 700k / month, thatâs a 12x).
Iâll also give a friendly reminder: since all partners hold an extremely large part of the ve supply that was airdropped to them, they can get back the large majority of those bribes when voting. So the money really entering the ecosystem is actually way less than that.
This way of distributing grants is predatory and imho should clearly not be approved. Again, I believe it would be fair for Ramses to have a grant, but the amount simply is way too much. And most importantly, as @tritium was suggesting, the Ramses team needs to find a different way to distribute it.
Everyone can participate in the same marketplace and compete for these bribes. Thats the whole point. There is no âinsider clubâ as you want to make it look. Partners that bribe to qualify for the ARB matching are required to not dump any ARB they receive and rebribe it so everything you said makes no sense.
Please, before calling out some project bad words and accusing them of âpredatoryâ Iâd suggest reading thoroughly the proposal and understanding the logic behind it. There is nothing to gain from turning other partners out for the sake of it. This is a positive sum game where all protocols should win. I appreciate the feedback but honestly it seems youâre trying to understand the ve33 model as you speak.
Listen, you Balancer guys coming in here are coming dangerously close to turning this into a Ramses vs Balancer comparison in which Ramses kicks Balancers ass in basically every possible metric. And that could possibly lead to people to looking at how the Balancer OP grant turned out, which wouldnât be too good for the identical Balancer Arb grant proposal currently being reviewed. Just sayinâŚ
I would say most of Balancerâs TVL on arbitrum are not people in the arbitrum community, but people looking for a place to park funds. RAMSES on the other hand is an arbitrum-native protocol and has always been (imo) for the arbitrum community. Unfair to compare. fwiw I didnât even know balancer was on arbitrum until right now.
without digging into how veRAM is distributed I can see why it can be viewed this way, but as is mentioned above and verifiable on chain-- majority of veRAM participants are ecosystem protocols. We airdropped veRAM to partners (and still do to onboard new partners) while also distributing extra rebases to partner protocols to enhance their alignment.
I would be open to agreeing if you could provide some data that goes against Velodromeâs significant amount of time researching and evangelizing to OP governance how this is, in fact, more efficient than direct incentives by a long-shot.
our CL implementation has a fee split of between 1/5-1/4 (20-25%) of swap fees directly to the LPer, not 100% goes to veToken holders-- which is a way to help offset this reliance and has been around since day 0 of our CL implementation.
This fundamentally is an odd assertion since stablepools/tokens are the most efficient emissions to TVL ratio of any pool due to the fact that they require the lowest amount of APR to sustain tvl. It is the only logical outcome of any platform that gives more than just fees to LPers to have stable/LST tokens have the highest TVL share. Our top volume is all blue-chip volatile pairs with only recently (like this last week) being some stable pairings due to our variable/adjustable fee mechanism being enabled. Our ARB/ETH, ARB/USDC, ETH/USDC, etc bluechip pairs have verifiably the best Volume to TVL ratio on the entire chain. This is due to how our system works, and provides tangible benefit to an ecosystem as a DEX.
RAMSES has been around since March and is still alive and well. We are actually increasing in TVL as of late, while our volume has been inclining nonstop. This is all without any outside incentives or airdrops, just pure DEX mechanism alignment.
The argument that a tokenâs value going up (and subsequently TVL going up due to emissions $ value going up), is bad for the ecosystem is defamatory and seems more biased rather than rooted in fact. For example, if a DEX takes a significant cut of swap fees earned on trades to use for protocol buybacks or distribute to the team itself-- LP incentives are a better route for their project to do better, instead of something like a voting incentives flywheel. So subsequently, those types of platforms getting direct LP incentives will increase their token price, yielding a similar âend-result,â just obfuscated through other means. RAMSES does not take any fees from the LPs to pump the token or anything of the sort, there is a coded MAXIMUM of 5% of all swap fees to be redirected to ecosystem incentives (increasing native token liquidity, bribing pairs, etc), and this can be adjusted between 0% and 5% based on protocol health.
All unused ARB will be returned to the DAO if the grant is proven to not be effective, we are happy to give back ARB tokens if we are not performing like we claim we will. Not all tokens will be distributed since we clearly mentioned we are only using the 75% for vote incentives MATCHING of partners. This means that if only $5k in partner projects is incentivized, we will only match around $5k with ARB. The entire amount will not likely be used unless there are tons of partners (ecosystem projects) chipping in, which is a good thing and ultimately the main benefit of a proposal of such. The grant is distributed based on metrics and outcomes, rather than arbitrary claims of efficiency. This is why we believe this is multiple times more efficient than giving out farm-dump incentives.
If the math/data to back direct LP incentives as more efficient vs vote incentives matching exists, we also have coded a novel rewarder system into our CL gauges which allows us to incentivize with âpool2â rewards, alongside regular emissions. We are equipped to handle any form of incentivization, however people who are involved in the AMM space are mostly aware this is the ideal form of rewards distribution since the numbers do not lie (as Velodromeâs hefty data presentations show undisputedly).
LP incentives mean regardless of performance or metrics, these rewards are given to people to use the platform, whereas our proposal is a direct correlation to ecosystem protocol participation, not tied to assumptions-- this is the critical difference. There is less âriskâ in incentivizing vote incentives matching versus giving away LP incentives which creates significant mercenary and cutthroat capital with zero regards for an ecosystemâs growth.
Once again, appreciate the time you take to read/respond, but my one major ask to you if possible-- would be to display some mathematical/statistical evidence that supports LP incentives prove to be more useful than the vote matching use-case (of which stats were posted here earlier)
It reminds me of the conversation on Vela we had with Dan .
yeah you remember
@Perl, are there any others narratives that you dislike or like, or something you want to convince the readers , on this ongoing conversation ? Please share your thoughts. Appreciate
Thanks for your very detailed answer @Dog, youâve raised some very interesting points!
I donât doubt that Velodrome has spent a lot of time evangelizing that their solution is the best one.
Iâm not a data scientist myself, but if thatâs the case how can you explain the reason why no Solidly fork on Arbitrum (Ramses, Chronos, Solidlizard and many others) has managed to even retain 1/10th of their maximum TVL compared to more classic dexes on the chain after a few months of existence?
Some of them even reached 200m+ TVL, and are now either completely dead or <10m.
TVL might not be an âefficiency-basedâ metrics, but having sticky liquidity for a protocol is key, so thatâs pretty contradictory.
I guess the closest comparison point with you guys would be Camelot as they launched a couple of months before you, curious to hear how you would explain the difference?
Yes itâs not 100% but 80%, my point is still entirely valid since you remove most fees from the LPs to the ve.
Thatâs incorrect, take a look at Sushi, Camelot and Balancer, they donât have a majority of stables or lsts.
Regarding volume thatâs definitely an interesting take, but does it also take into account the fees/TVL ratio?
Zyberswap was once doing incredible volume because they significantly cut down the fees, but in the end it quickly died down because both the protocol and the LPs werenât earning anything from it.
Ultimately, the fees are what will determine how sticky your TVL is, unless youâre artificially and continuously injecting massive incentives, which doesnât seem desirable to me.
More generally I donât really like those discussions as I think every DEX comes with its own metrics, and it can be easily cheated, so it has very little value to argue endlessly about it. At least personally, thatâs not what Iâll first take in consideration when evaluating whether a dex deserves a grant or not. @Tritium was making some great points regarding this in this topic.
v2 vs v3 is important, but I wouldnât spend too much time arguing about whether Uniswap, Ramses, Camelot, or Sushi concentrated liquidity amm is better. They are all based on univ3 anyway, so have all very similar tech.
Itâs a totally biased comparison: the swap fees those dexes will collect would entirely depend on the efficiency of their campaign and underlying product. If they canât bring enough TVL or fees, then they wonât earn much.
In your case, your token is directly incentivized no matter how your platform will perform, since all its holders will get substantial rewards.
Iâm not saying a tokenâs value going up is bad for the ecosystem, Iâm saying it should not be the purpose and condition for the grant to succeed.
If Balancer had asked the same for their ve, or Camelot does it with their xgrail etc⌠Iâd say the same.
I was mainly talking about the underlying discussion here:
You were mentioning that since a lot of the ve is owned by the protocols, they will receive the majority of the bribes in a gauge as part of the process, but they have to put it back in the next bribing session. If I correctly understand, thatâs what you call ârecyclingâ.
In this case, could you clarify those points:
What will happen for the ve of protocols that donât bribe? Is there a mechanism to prevent protocols with large ve allocations, to vote for other gauges and get large ARB rewards from the grant in the process?
What about the team? Since they also have large ve allocations, they would naturally be able to get large amounts from the grant just by voting
Is the ârecyclingâ requirement the same for the matched part of the bribes? If not, thatâs actually not matching.
Whatâs going to happen for the recycled ARB in the hands of your partners at the end of the 3 months?
The other issue with 4 is that it doesnât really match with the requirements of the program, as the entirety of the incentives need to be spent within this timeframe. I could be wrong though, maybe @Matt_StableLab can clarify that part.
Sorry if thatâs just very basic maths but those points seem to make sense to me:
Even if your ask is âup toâ 700k itâs completely disproportional. ^
Whilst I also understand the need for statistical evidence, Velodrome is one Solidly fork among hundreds of them, and using its success and numbers without taking into account the whole context seems at best extremely biased. Ramses isnât Velodrome, Arbitrum isnât Optimism, and its dex landscape is very differentâŚ
Your critical thinking and attention to detail are evident, and itâs valuable to have community members like you who scrutinize proposals to ensure the best use of resources.
Regarding the success and retention of TVL (Total Value Locked) in Solidly forks on Arbitrum compared to more established DEXes, youâve highlighted a crucial point. The DeFi ecosystem is dynamic and competitive, and factors influencing TVL can be multifaceted. Itâs essential to consider the unique features, strategies, and user bases of each project when making these comparisons. Your mention of different projects like Ramses, Chronos, and Solidlizard having varying levels of TVL retention is indeed thought-provoking and requires a deeper examination.
Youâve also brought up the fees/TVL ratio as a key factor in determining the stickiness of TVL. You rightly point out that liquidity providers and protocols should benefit from their participation, which is vital for the sustainability of the ecosystem.
Your concerns about fairness in grant distribution and the potential for certain projects to benefit disproportionately are valid. Itâs crucial for grant programs to be transparent, equitable, and aligned with the best interests of the broader ecosystem. The questions youâve raised about recycling and the roles of protocols and teams in the process are also important considerations.
In terms of the relevance of Velodromeâs success to other projects, youâve rightly noted that each project operates in a unique context, and success canât always be directly replicated. We should assess grant proposals based on their individual merits and potential to contribute to the Arbitrum ecosystem.
Your feedback on the allocation of funds and the efficiency of pools is appreciated. Balancing the distribution of grants to maximize ecosystem growth is a complex task, and your input helps us fine-tune these decisions.
In conclusion, your insights are valuable for our ongoing discussions and evaluations. We encourage you to continue participating in the community discourse and helping us make well-informed decisions regarding grants and incentives.
If you have any further questions or insights, please feel free to share them. Weâre committed to fostering a collaborative and transparent environment in our grant evaluation process.
Thank you once again for your thoughtful contributions. @Perl is was nice to read you.
Goodbye Perl
TVL has actually stabilized. A more important observation is that Ramses is doing twice the volume of Balancer despite having only 9% of the TVL. And they accomplished this without any previous ARB grant. Imagine what they could do with larger pool depth and proper stimulation of the solidly flywheel.
âAnother point is just they are going to be 100 protocols trying the same tired, direct LP bribes to the same five pools that Optimism has already figured out is the stupidest way to go about things⌠So, even if you are skeptical of Ramses, you might as well try something different and measure the results.â
Would really like to know the official response to these key points. I am concerned that these incentives are being âloopholedâ to end up in the pockets of the team and partners at the expense of Arbitrum.
Protocols that do not recycle the ARB incentives will be effectively disqualified from future participation in the program. This is a very simple, verifiable, and effective way of tracking such.
This is a good point but needs to be granularized to distinguish protocol vs team members. Protocol (Team multisig/treasury) will not be keeping any ARB from this, and will be recycling it the same way any participant would be. We always vote on blue-chips with our protocol NFT anyway, so the ARB we earn, if any, will go to the exact same pools they came from. Team members who have positions locked their vest of their own volition, versus converting it to profit or another token. For example, the vast majority of my team vest was locked into veRAM because I believe in the long-term viability of our project, and saw no reason to âmake a quick buckâ and extract value. Since our team does not get paid from any other factors, anyone who sold their allocation has 0 skin in the game and frankly wouldnât benefit from veRAM rewards increasing. This is all a personal choice thing each team member was able to make for themselves. My co-founder and I personally chose to lock the overwhelming majority of our tokens to maintain some skin-in-the-game, and directly align protocol performance to our potential revenue-- since we work full-time on this and left our IRL jobs to do this.
We match incentives they provide that are not from the recycling-- not matching the recycle itself. ARB will not be matched with ARB, as this will create confusion and difficulty tracking.
they will be asked to either LP bribe (pool2 emissions) to their pair (so there is no vote recycling), or alternatively they can return the ARB to the incentives DAO, like our team will do. The former is the most logical and fits in line with other traditional LP incentivization proposals. Essentially we are holding partners and ourselves accountable with a âmoney-back guaranteeâ of sorts. There are bi-weekly updates as specified in the proposal template, and these can easily be used as ways to cut-off misappropriation of funds or overall extraordinary inefficiencies in change due to the grants.
As an aside, something I mentioned before that we are more than happy to oblige by, is distributing the ARB grant in a method identical to other DEX proposals (in an emissions/pool2 manner) if that is what the consensus of governance believes is a more appropriate method to test efficiency of AMMs toe-to-toe. I am confident that if we went this route that the data between all the AMMs will speak for itself. Our LP incentives infrastructure is an on-chain rewards distribution that incentivizes based on the most efficient positions, and updates per second. This is permissionless and also can be viewed as a CL incentive distribution public good, as we take no fee/cut from any of this. Cheers.
Sorry if it wasnât clear enough, that wasnât my question. I get that they will be disqualified from the ARB incentives program, but will they be able to earn ARB by voting with their ve?
For instance, if a protocol X owning 10m ve doesnât participate to the program, can he still vote with its large airdropped partner allocation and earn ARB from other gauges?
From the link shared above, you and @North both hold ~5% of the total ve supply. That means if you were to distribute 2m of ARB, you would both directly get at least 100k in 3 months from it.
I totally respect your work and donât doubt your commitment, but thatâs not how the grant should be used, as this program shouldnât pay for operational costs or to fund the team as it was stated many times.
It would make sense if you were lping in a regular liquidity incentives program, but here you donât bring any additional value justifying this.
So if 70% is recovered by the protocol on its own gauge at every epoch, both the ARB and the matched incentives, but only the ARB is recycled or re-bribed, doesnât that mean only 30% is matched in reality?
There are bi-weekly updates, but if some protocols misappropriate funds that should be recycled at the end of the program, what can the DAO do?
And once again, that would extend the program to more than 3 months.
Thatâs something I would personally like to see, and I would definitely support it if the amount is more reasonably adjusted. That being said, Iâve been very vocal but Iâm only expressing my own opinion, and the rest of the DAO might have a completely different one.
The intent of my comment below was not to stifle innovation. Thatâs why I ended with a question about how you could innovate something interesting.
The specifics of how you plan to pay out the $ARB is not super clear in the proposal. Are you saying that no(or very little) $ARB will flow to veRAM lockers who are not DAOs committed to recycling their earnings? In the end does that mean that most of the $ARB should eventually flow out to a wide set of DeFi users and not concentrate with veRAM voters?
Maybe an example distribution or a bit more details about what you have in mind would make it easier to think about. It sounds like it could be a cool thing, but thereâs some details missing to make a strong case if it is.
The comments are a lot to grok, but it wasnât clear how this recycling thing worked and/or exactly where the $ARB would be flowing in your proposal text itself. Thereâs just been some conversation that popped up that is maybe making false assumptions.
Maybe adding some more details in a clear and structured, and most of all non-conversational manner would help.
To add on, metrics like TVL and market cap are also very misleading, and shouldnât be used a large contributing factor to any grant decision. FTT (FTXâs token) currently hovers around an FDV of about $400M. Now, this would usually be an impressive figure, but what would repel people from investing into FTT is the fact that FTX is now defunct. What matters in an investment is the fundamentals, and the Arbitrum DAO should be looking to propel projects like RAMSES, projects with good fundamentals that may not have the most impressive TVL, or market cap, because those are the ones that will flourish and provide the best ROI for the DAO.
Of course, they can do nothing if the protocol starts to vote for other liquidity options. But at this point, they have another solution, for example, blacklisting the gauge. So, if someone hacks a protocol and deposits on Balancer for arbitrage farming, and then dumps the tokens, the Balancer team canât do anything about it. The answer is no.
Regarding the team allocation, I donât see a problem at all. Every team member having their own token supply is reasonable, especially if they havenât dumped them on regular users yet. And, of course, they will receive a portion of the arbitrium grant based on their token supply and the votes they cast.
All the discussion seems like a reaction to what happened to Velo in the past, where LP bribes didnât provide any value from a ecosystem point .
Meanwhile, bribe matching maded velo become the top dex on OP.
