An Update From the LTIPP Workstream
The LTIPP workstream, which consists of the 5 Council members @404DAO, @coinflip (GMX), @GFXlabs, @karelvuong, @WintermuteGovernance, 3 Advisors @CastleCapital, @SEEDGov, @JoJo, and the PM @Matt_StableLab has been meeting and will continue to meet bi-weekly to discuss lessons learned from the ongoing incentives plans and develop a plan for a long-term incentive framework, as per our mandate in the LTIPP proposal.
We acknowledge the change in conditions in the DAO regarding what delegates would like to see concerning the scope and timing of future incentive programs. This post will serve to update the community on where we currently stand and what we believe needs to happen in the DAO before future incentive programs can commence.
Changes We Would Like to See in a Future Program
Creation of a Modular System
While we believe that general incentives are important, a one-size-fits-all incentive program has proven limited in flexibility, duration, and effectiveness. For this reason, we believe the focus of future programs should shift towards multiple smaller objective-based incentive programs running concurrently within the larger incentive infrastructure.
We believe this will bring the following benefits:
- Allows program rules tailored to a specific protocol type instead of trying to fit everyone into one box.
- Sub-councils with expertise in a specific objective will lead to more informed decisions about which protocols to fund and will not require a DAO vote for each protocol individually, making the whole process much smoother for protocols and delegates.
- Allows sub-councils to recommend best practices for protocols to achieve the specified goal and enforce certain restrictions to prevent a race to zero between similar protocols
- If we have sub-incentive programs that are specifically marketed to a particular audience, marketing becomes more manageable and targeted.
- It makes the program more adaptable, both in terms of quickly adding new sub-incentive programs for emerging market trends and also allowing us to eliminate incentive strategies that are not working without stopping the entire program.
This modularity might also translate into different incentive programs and further internal differentiations of rules and mechanisms based, for example, on the protocol’s maturity, past achieved results, and other metrics.
Clear Objectives with Clear KPIs
The DAO has never decided what specific goals we are trying to achieve with incentives other than generally growing the Arbitrum Ecosystem. This has made it hard to measure the program’s success and for the council to decide what kind of applicants they should accept. For an overarching incentives framework, we believe it is imperative to have clear objectives so that we can integrate KPIs throughout the program to measure whether we are achieving our goals. This ties in with the definition of Vision, Mission, and Strategy that @Entropy is working on and that we are eager to assess in the optic of having incentive programs as a powerful driver of the above.
Stronger Reporting and Accountability
Since previous incentive programs lacked clear objectives, it can be hard to identify ineffective or malicious actors. In addition to implementing clear KPIs, we envision the establishment of an oversight mechanism to continually evaluate the program’s progress and identify which parts are failing to meet their milestones so adjustments can be made. To accomplish this, we must have live dashboards from the beginning of the incentives and a clear mandate for how we will use this data to alter the incentives framework.
Additionally, a watchdog, on-chain sleuth role is needed to identify any misuse of funds in real-time and present any findings to an oversight council so we can stop these streams as issues arise.
More Emphasis on Marketing
Marketing has never been a part of the program. This led to reduced visibility and awareness of the program from both users and protocols and has stifled our ability to attract new users. The recent addition of the “Rewards” page on the official Arbitrum Portal is a good step towards driving greater awareness. However, we can surely do better to bring more attention to users and protocols. The marketing aspect has to be baked into the proposal to guarantee we have a legitimate marketing strategy bringing users to these incentives.
What Must Happen in the DAO Before the Next Program
A Clear DAO Vision
As a DAO, we need to decide what our goals for the future are. Are we trying to attract the most users, the largest users, new protocols, or existing protocols on other chains? The DAO must reach a consensus on what we are trying to accomplish. This can be achieved either by a team like Entropy or via the DAO as a whole. However, we must have a concrete vision to design a program that works toward this vision accurately. If the DAO cannot produce a complete vision in time for the next program, we must at least have clear objectives the DAO would like to accomplish via incentives so that those overseeing the creation of programs and distribution can properly focus efforts. This will also help us establish clear KPIs and milestones to measure success and hold the incentives program accountable more effectively.
Clarity on How we Can Plug in existing DAO infrastructure into Incentives Programs
Since the last program, the DAO has added the ARDC and is discussing other infrastructure, such as the OpCo. We must figure out how these new additions can best support an incentives program so we can leverage this already-funded talent to support the incentives program with research, analytics, and accountability.
More Data and Analysis Showing What is Working
The LTIPP allowed protocols to experiment more with incentive designs and included the advisor role to help protocols implement exciting new incentive plans. Research into the success of these new designs will be published shortly by OpenBlock and the LTIPP bounties. Additionally, qualitative surveys regarding protocols’ experiences were a part of the STIP.B application. Analyzing this data will be crucial for designing a future program so we can provide recommendations for protocols regarding which mechanisms have been effective in the past.
LTIPP Workstream Plan of Action
We are open to the idea of a detox as we recognize several things must happen before the next program is ready. However, we are unsure if a hard cap on when the following incentive program can start is necessary.
The LTIPP workstream plans to continue designing the basis of a framework for the next incentives program. We want to create the basic structure in the short term so that when additional data and clarity on the topics we mentioned earlier come in, we can easily integrate the findings into the new modular framework.
In the spirit of transparency, we would be happy to start hosting more public calls and encourage feedback from delegates interested in helping with incentives. However, our workstream should continue to drive the design of the next incentives program. Our workstream was elected by the DAO to focus on incentives and is made up of some of the most active members of the community. Working closely with the 100+ active incentives plans has taught us firsthand all the struggles and intricacies required to tackle a large-scale incentives program. Due to this intimate knowledge, we are in the best position to provide the DAO with a clear plan for the future of incentives on Arbitrum.
The end mission for this workstream is to present the DAO with a robust long-term incentive framework that it can implement and benefit from for the foreseeable future.