[RFC] Pyth Network Arbitrum LTIPP Extension Request

Proposals
1
  • Abstract

This proposal seeks a 12 weeks extension (until November 30) of the Pyth Network’s previously approved LTIPP grant.

Initially, the Pyth Network was allocated 1,000,000 ARB through the LTIPP process. To date, we have utilized approximately 75,042 ARB over the 12-week duration of the program.

We are requesting to retain 174,958 ARB, bringing our total expenditure to 250,000 ARB out of the original 1,000,000, until the new grant programs are established.

  • Motivation

We want to highlight that incentives for infrastructure protocols and public goods, such as the Pyth oracle, typically do not yield immediate results. The impact from making such incentives available to DeFi often unfolds over weeks or even months.

For existing DeFi applications, switching to a new oracle involves significant effort and may require a new audit. Similarly, expanding from other chains to Arbitrum can be more time-consuming than anticipated, as illustrated by the Synthetix case here.

Thanks to the initial LTIPP program, Arbitrum dApps had the ability to build robust oracle systems covering over 500 assets, including cryptocurrencies, FX, stocks, ETFs, and commodities. This advancement has eliminated outdated on-chain price updates and high costs, reinforcing Arbitrum’s position as a premier layer for DeFi. This progress empowers developers to create cutting-edge applications without constraints. This extension aims to keep the momentum and further empower potential new entrants like Synthetix to deliver a best-in-class protocol.

  • Rationale

The proposed extension of the Pyth Network’s LTIPP grant is designed to further cultivate a thriving and innovative DeFi ecosystem on Arbitrum. The LTIPP program has already proven its effectiveness, with Pyth price updates on-chain increasing by 2-3 times and peaking at nearly 10 times the previous levels, reaching over 70,000 updates on July 14.

Before the program began, the total value secured by the Pyth oracle on Arbitrum was just over 43,000 ETH. This figure has since risen to 52,500 ETH, reflecting an increase of more than 20%.

Pyth has also enabled over $16.1 billion in trading volume on various Arbitrum decentralized perpetual exchanges during June and July (with August data pending). This underscores the benefits for applications powered by Pyth Network: protocols using Pyth have experienced, including increased total value locked (TVL), higher trading volumes, and more frequent price updates driven by a growing number of applications utilizing Pyth.

The request for a 12-week extension, with a reduced ARB allocation, is part of our commitment towards responsible resource management commitment to responsible resource management while continuing to support the long-term success of applications built on Arbitrum that leverage Pyth. By covering the gas costs for using the Pyth oracle, the network has enabled more developers to create robust DeFi applications without the burden of high operational expenses.

This strategy strengthens Arbitrum’s position as a premier platform for DeFi innovation, where developers can access over 500 price feeds without financial or technical constraints.

It’s important to understand that the impact of incentives for infastructure protocols and public goods like the Pyth price oracle are not immediate: it often takes weeks or even months to materialize.

Furthermore, it’s important to recognize that the impact of incentives for infrastructure protocols and public goods like the Pyth oracle is not immediate; it often takes weeks or even months to materialize.

This proposal, aims to build on the momentum generated by the initial LTIPP program, ensuring the continued growth and expansion of the Arbitrum ecosystem as new grant strategies are developed and implemented.

  • Key Terms
  1. On-demand or pull oracle: An oracle network where anyone can permissionlessly trigger price updates on-chain by doing an Arbitrum tx
  • Specifications
  1. 13 weeks duration
  2. 175,000 ARB

The proposed extension duration is similar to that of the previous LTIPP program—12 weeks versus 13 weeks (including retroactive rebates for the end of August). However, the amount of ARB tokens requested for gas rebates has increased from 75,000 ARB to 175,000 ARB.

This increase reflects an anticipated rise in activity and associated costs, estimated at approximately 133%. The launch of Synthetix’s Multi-Collateral Perps on Arbitrum is expected to drive a substantial increase in the number of price updates triggered on-chain. For context, Synthetix currently triggers around 1,000 daily updates on Optimism and between 3,000 and 5,000 daily updates on Base—both without additional incentives in place.

  • Steps to Implement

If the Arbitrum DAO approves this extension, no additional work or involvement will be required from the DAO itself. The responsibility for managing the funds and continuing the program would remain entirely with the Pyth Data Association.

As during the initial 12 weeks of the LTIPP, the Pyth Data Association would continue reimbursing dApps for gas costs every two weeks. Additionally, we would maintain our practice of providing bi-weekly updates on the Arbitrum forum to ensure transparency and accountability. Our latest report is available here, and we are open to including even more detailed data and information in these reports if needed.

Since this is an extension of an already approved grant, no additional legal work is necessary. The Pyth Data Association has already completed KYC and signed the grant agreement with the Arbitrum Foundation.

  • Timeline

The LTIPP program officially ended on August 26, and until this extension proposal is approved, the Pyth Data Association has paused reimbursing the gas costs incurred by dApps during this period.

If approved, the extension would be applied retroactively, starting from the end of the LTIPP program on August 26. This means that, depending on the timing of the Snapshot vote, there could be up to 2-3 weeks of retroactive gas rebates.

The proposed extension would conclude on November 30, 2024.

  • Overall Cost

The cost to the Arbitrum DAO can be seen as an opportunity cost of 174,958 ARB, or potentially even less. Originally, the DAO approved a grant of 1,000,000 ARB—funds that were effectively budgeted and allocated—of which only 75,042 ARB was utilized during the 12-week LTIPP period.

We are now requesting to retain 174,958 ARB from the initial allocation to continue offsetting costs for DeFi applications that use Pyth’s on-demand price feeds. The remaining 750,000 ARB will be returned to the Arbitrum DAO as previously agreed under the LTIPP program. Furthermore, if any funds remain unspent before the outlined timeline concludes, Pyth Data Association will promptly return those ARB tokens to the DAO.

  • Additional Context

We have been actively seeking feedback and advice from @Matt_StableLab to determine the best approach for moving forward with this extension request.

Our interest in extending the LTIPP grant was initiated in the original LTIPP discussion here.

Currently, we plan to submit this extension request on Snapshot by Thursday, September 5, with support from Wintermute. This timeline allows ample opportunity to gather feedback on the proposal and make any necessary adjustments based on input from the DAO.

Please note that Wintermute will merely be sponsoring the proposal as a delegate which is separate from their role as an LTIPP Council member.

7 Likes
2

Incentives for infrastructure protocols and public goods such as Pyth prophetic machines usually don’t have an immediate effect, agreed. pyth as the leading infrastructure, the ARB ecosystem needs your long term builds. in fact why not think about 1 million ARB of funding to consider giving a portion of the incentive to pledge users as a way of encouraging pledge users of PYTH

1 Like
3

I fully support the extension of the LTIPP for Pyth Network. The initial program has already demonstrated substantial value with significant improvements in access to price feeds. As a core contributor to Pingu Exchange, which has benefited from the program, I believe that extending the grant will allow the momentum to continue.

1 Like
4

I support the extension, oracle diversity is much needed in our space and Pyth has shown constant professionalism in the years.
I think this is particularly important on a chain like Arbitrum which is the main DeFi hub between L2s.

2 Likes
5

I welcome the continued funding of Pyth
and understand that the financial expenditure here differs from standard protocols,
which themselves can increase the size of incentives.

1 Like
6

This proposal is reasonable, as oracles-just like the Pyth nethwork, being infrastructure protocols, are essential for the development of the DeFi ecosystem, cause the prices of assets is of crucial importance in any network. The effectiveness of the initial 12-week LTIPP has already been smoothly demonstrated, and the allocated funds have been used appropriately. Since the impact of building infrastructure protocols takes time to manifest, so extending the program for another 12 weeks is justified.

7

Hi @KemarTiti
How does this extension align with the long-term vision for Pyth Network on Arbitrum? Are there other strategic initiatives you’re considering to further integrate Pyth within the Arbitrum ecosystem?

2 Likes
8

gm @0xTALVO.ETH_MTY

As for any oracle (or infrastructure provider), success is measured by the success of those who depend upon it. The initial LTIPP program granted to the Pyth oracle has already shown a great success in increasing key metrics for Arbitrum DeFi apps such an increase in TVL, trading volume (for perpetual protocols) and a significantly greater availability of freely available price updates onchain (reminder that reading Pyth prices onchain is free, only writing incurs costs).

By extending the program, Pyth Network aims to build on this momentum, ensuring that Arbitrum remains a leading layer for DeFi innovation.

For the latter question, the first thing that comes to mind is the support of the tentative/upcoming stARB token with a Pyth price feed. This would enable all Arbitrum dApps (money-market to perpetual protocols) to integrate and support this asset that is likely to get a significant traction given its properties.

A positive side-effect outside of Arbitrum is that a Pyth stARB price feed would also be automatically available on all the other chains (70+) Pyth supports - and here Arbitrum Orbit chains could also greatly benefit from that as the Pyth oracle expands there.

And as a matter of fact, the Pyth oracle has been deployed on XCHAIN, a brand new Orbit chain for IDEX, an omnichain perpetual protocol.

1 Like
9

Thanks for the quick response @KemarTiti

The initial LTIPP program’s success is evident in the increased metrics and enhanced price feed availability. I think extending the program will undoubtedly build on this momentum and solidify Arbitrum’s position in DeFi. I trust the Pyth Network to continue driving this growth effectively.

1 Like
10

We support the program’s current success and strongly agree that Pyth should continue to receive funding to contribute to the Arbitrum ecosystem.

There’s just one point we’d like to suggest for improvement. Regarding your bi-weekly reports, would it be possible to include your own analysis and insights? The current reports primarily consist of basic numerical data, and we believe it would be valuable if you could provide context on what factors influenced changes in these numbers.

1 Like
11

FYI the proposal went live on Snapshot today

https://snapshot.org/#/arbitrumfoundation.eth/proposal/0xb761aeef86e9c7a12a7c7326f28cb10bd0d9d94a83041624dc5d03628c3f5c94

1 Like
12

Hey @Tane

Definitely, happy to do so!

Have you seen some analysis/insights shared in the past you liked? Both content and structure? Whether within the Arbitrum DAO or elsewhere?

13

Supportive of different oracle provider and happy to support Pyth here. Hoping for longterm alginment with Arbitrum.

1 Like
14

We find this report (and suggestions included as a proposal, which is not relevant for this case) made for Uniswap interesting: [RFC] Proposal to active 2, 3, 4 bps fee-tiers on Base - Proposal Discussion - Uniswap Governance. It has covered not only metrics and numbers, but insights and explorations as well.

Reviewing your report, we believe Average daily TVL, Average daily transactions, Usage per day & Usage per contract are important in your reports. Structurally, it’s crucial to have not only the numbers, but also their details and possible reasons for fluctuations.

By sharing such information with the community, the DAO can better understand how Pyth utilizes the incentives provided by Arbitrum and what it learned from the experiment.

1 Like
15

The FranklinDAO / Penn Blockchain Team voted FOR this proposal on Snapshot. We appreciate Pyth’s responsible use of the LTIPP funds. We are excited to see the growth of Synthetix multi-collateral perps and see how usage will stack up against other perps platforms like Hyperliquid and GMX.

Regarding the weekly reports, we would like to see the Dune Dashboard for usage per contract label each wallet address for ease of understanding.

1 Like
16

Pyth submitted their extension application request early, similar to Synthetix, and thus we should honor the request for similar reasons we posted in the Synthetix proposal. Though, we do think that Pyth can certainly be evaluated on its performance by some metric, what are the total number of protocols they service, etc.

As we had said in the Synthetix thread, we would like to know if there is anything that the DAO can do to better prepare protocols for possible delays. What could be a possible communication channel to relay this information better or minimize the amount of extension requests to hit the DAO forums for decision making? Should the LTIPP council have been given the proper clearance to push an extension or does this belong to some oversight body separate from the general DAO body.

It’s worth noting that while Pyth received 1M in ARB for incentives, only 75,000 had been used by the end of the LTIPP. This could indicate an unintentional oversight in fund allocation. Moving forward, it would be helpful to reassess how we distribute funding to ensure we’re aligning with actual needs and optimizing ARB resources.

1 Like
17

LTIPP has significantly contributed to Pyth’s development, which is evident to all. It is entirely reasonable for Pyth to apply for an extension of the LTIPP, especially since the budget is not excessively large, which is commendable. I always believe that for a business organization to succeed, it must strive to control costs—achieving more with less has always been my guiding principle. Therefore, I fully support this proposal.

1 Like
18

Just voted in favor of this proposal on Snapshot. Oracles like Pyth are essential to DeFi, providing the accurate and timely data that keeps everything running smoothly. This extension, along with the Synthetix LTIP extension, go hand-in-hand as they work together to support DeFi incentives on Arbitrum—something we really need in this tough market.

1 Like
19

educated and wild guess on my side, the application was crafted and evaluated with pre dencun metrics. This has been one of the (several) challenges for both protocols and advisors during LTIPP program. Since in the PYTH reporting there is no mention of specific delay in integration, I might just be right here but happy to have more details. Also, the byproduct of this result for future program could be that for infra projects a pre-allocated budget might not be the way to got.

Going back to the snapshot, as for the synthetix application, I am, unfortunately, voting against it, as well as the other extention requests in Arbitrum. To quote my previous answer:

In here we have a different situation, which is a potential usage of funds for an infra product, so I could see the merit of the extention. But the mix of the detox proposal + the fact that most of the leftover funds are tied, in my understanding, to lower costs than expected, means that the only real reason to keep Pyth in an extention would be to facilitate his role in Arbitrum. This is something we could advocate for Synthetix and Aave as well, even if their role is different. Again, the vote of the DAO for the detox proposal is more important, and should just be respected by participants.

1 Like
20

In favour of this proposal, pyth, as the leading prophecy predicator protocol, is the infrastructure for many network protocols and has a very important place in the arb ecology as well, and as it takes time for the infrastructure to be updated and developed, this extension makes sense.

1 Like