Shell Protocol STIP Addendum

[aleezagroks]

Information about STIP/STIP Backfund

1. Can you provide a link to your previous STIP proposal (round 1 or backfund)?

[Shell Protocol] [FINAL] [STIP - Round 1]

SECTION 1: APPLICANT INFORMATION Applicant Name: Cowri Labs Project Name: Shell Protocol Project Description: Shell Protocol is the frontend of DeFi. It’s a developer platform and composability solution that lets you make atomic transactions that can combine any set of primitives, like LPing, lending/borrowing, bridging, or token and NFT swaps, and more. Enjoy powerful one-click transactions, unbeatably capital-efficient AMMs, and a modular developer experience. Team Members and Qualification…

Note: Previous STIP incentive program was deferred (no funds were used). We were advised to submit this addendum in order to start our stream along with the Bridge program. More detail below.

2. How much, in the previous STIP proposal, did you request in ARB?

750,000 ARB

3. What date did you start the incentive program and what date did it end?

N/A — Previous STIP incentive program was deferred.

The STIP grant delay was primarily due to the KYC process. We were simultaneously applying for a grant from the Arbitrum Foundation. Both the DAO and Foundation use the same KYC provider. We completed the KYC for the Foundation, under the impression that would also be sufficient for the DAO. That turned out to not be the case.

Nonetheless, we finished the DAO KYC process and were ready to receive the grant; however, the STIP Multisig advised that we formally reapply through the STIP bridge program—that way there would be more time to fully deploy the grant.

4. Could you provide the links to the bi-weekly STIP performance reports and Openblocks Dashboard?

N/A

5. Could you provide the KPI(s) that you deem relevant for your protocol, both in absolute terms and percentage change, month over month, for the first of each month starting from October 2023 until April 2024, including the extremes? If you don’t know what KPI might be relevant for you or how to properly define them, please refer to the following document:[Arbitrum DAO] OpenBlock Labs Incentive Onboarding Spec

N/A — Previous STIP incentive program was deferred.

Month	Trade Volume	Transaction Count	Unique Wallets
Feb	$2,234,018	10,556	2,192
Mar	$2,035,442	12,962	2,109
Apr	$1,827,630	19,438	1,297
Total (past 3 months)	$6,097,091	42,956	5,598

Note: At the moment we’re having some issues updating Shell charts from v2 to v3 on DeFi Llama, however you can view live charts for volume/users on the Explore screen in the Shell app.

Understanding current metrics:

Shell Protocol is the first DeFi super dapp. Access as many DeFi protocols as you want, without connecting to a hundred different dapps. Instead, use just one dapp for every protocol (like Beefy, Aave, Uniswap, Curve, Balancer, and Pendle). Wrong chain? Zap into any protocol from other EVM chains in one click. Best of all, Shell is open source and permissionless—any developer can connect their protocol or build their dapp on the platform.

This version (Shell v3) went live on January 22, and cross chain DeFi zaps (one click to bridge + LP) just went live on May 2. We have spent the first few months since launch building out integrations with external DeFi pools. The most important metrics to track in this version of Shell are volume and TVL added to protocols through the Shell dapp.

Success metrics: Our goal is to 5x all of our KPIs.

These are the KPIs to be tracked:

• Trading Volume (broken down by different DeFi protocols)
• Bridge Volume Into Arbitrum
• Daily Active Users (unique wallets)
• Daily User Growth
• Daily Transaction Count
• Daily DeFi Interactions (for bundled transactions)
• TVL added to protocols via Shell dapp (broken down by different DeFi protocols)

6. [Optional] Any lessons learned from the previous STIP round?

N/A

New Plans for STIP Bridge

7. How much are you requesting for this STIP Bridge proposal?

375,000 ARB

8. Do you plan to use the incentives in the same ways as highlighted in Section 3 of the STIP proposal? [Y/N]

N

9. [Only if answered “no” to the previous question] How will the incentive distribution change in terms of mechanisms and products?

Our incentive distribution mechanism was modified to be in line with other successful STIP programs.

100% of the grant will be distributed as LP rewards, valid for any pool that users deposit into via the Shell super dapp. In other words, if a user LPs in a Balancer pool via Shell Protocol, they will earn ARB rewards on the total amount that they deposit via Shell.

ARB rewards will be applied to all DeFi protocols connected to the Shell Protocol network and supported by the Shell super dapp. These rewards will be additive with any additional ARB rewards and protocol-specific incentives. Supported protocols will include (but won’t be limited to): Aave, Balancer, Curve, Pendle, Beefy, and Shell-native protocols such as the Proteus AMM. More pools and protocols may be included as integrations are built out.

A big goal for this STIP grant is to incentivize users to bridge their tokens from other L2s directly into Arbitrum DeFi. Not only will using Shell remove the pain point of needing to find a cross chain bridge, it will also improve their APY as a result of the grant.

ARB incentive allocations will be weighted roughly according to each DeFi protocol’s TVL, with relatively more incentives per dollar for smaller protocols, analogous to quadratic voting. Additional weight will be given to Arbitrum-native tokens. This will encourage the adoption of native Arbitrum tokens into DeFi.

Shell dapp currently supports 49 pools across 6 DeFi protocols. More protocols and pools will be added at regular intervals. It is difficult to predict the exact timing of each pool and protocol. Therefore, because we cannot commit to specific rewards for specific pools, it is better to state general principles.

First, STIP incentives should be large enough to make an impact on the pool’s APY. There is little upside to sprinkling small amounts of tokens that do not effectively change user behavior.

Second, total STIP incentives should not be so large as to boost the pool’s TVL to a clearly unsustainable level. This includes STIP grants provided by other projects (e.g. Balancer) to their own pools.

Third, allocations for each pool can be adjusted on a weekly basis as new pools and protocols are added.

10. Could you provide the addresses involved in the STIP Bridge initiative (multisig to receive funds, contracts for distribution, and any other relevant contract involved), and highlight if they changed compared to the previous STIP proposal?

Multisig: Safe{Wallet} – Dashboard

No change from update posted to the forum on March 7: Notice: New multisig wallet for STIP fund management (Shell Protocol)

[Matt_StableLab]

Hello @aleezagroks ,

Thank you for your application! Your advisor will be SeedLatam Gov @SEEDGov

Please join the LTIPP discord and ping your advisor in the general chat so they can create a new channel and start communicating with you.

[SEEDGov]

Hi @aleezagroks we are waiting for you in the discord !

[SEEDGov]

Following feedback on the proposal to establish the STIP Bridge, it was agreed to involve the LTIPP Advisors in this process with the mission to “help applicants gain insights into their proposals. This not only guides applicants through the process but also ensures that the DAO will review better proposals.”

Despite the inclusion of Advisors, this process does not involve the Council, leading us to believe that this addendum places a significant burden on the delegates who must review all the proposals. One of the reasons for the LTIPP was precisely to avoid this excessive burden. Moreover, the optimistic model adopted in this phase could raise concerns about the real control the DAO will have over these proposals, as reviewing six months of data for each applicant is time-consuming.

For this reason, we decided to accompany each application we reviewed with a brief report. We ask the delegates not to take this as an in-depth or definitive basis for deciding your vote, but rather as a guide that can potentially raise questions for your own analysis.

As indicated in the proposal, due to a mix-up with the KyC they did not receive funding from the STIP Backfund as explained in the application:

@aleezagroks

3. What date did you start the incentive program and what date did it end?

N/A — Previous STIP incentive program was deferred.

The STIP grant delay was primarily due to the KYC process. We were simultaneously applying for a grant from the Arbitrum Foundation. Both the DAO and Foundation use the same KYC provider. We completed the KYC for the Foundation, under the impression that would also be sufficient for the DAO. That turned out to not be the case.

Nonetheless, we finished the DAO KYC process and were ready to receive the grant; however, the STIP Multisig advised that we formally reapply through the STIP bridge program—that way there would be more time to fully deploy the grant.

To provide a point of comparison, we asked the Shell team to publish the metrics achieved to date without incentives so that delegates could evaluate them. We also asked them to include more detail in the proposal.

Given these circumstances and the conversations we had with the Shell protoocol team in the public discord, we believe that the proposal is missing some details:

• It would improve the proposal to define quantifiable KPIs, the targets Shell wants to achieve with the requested amount of ARB tokens.
• More detailed selection criteria for pools to be incentivized. We recommend not to incentivize pools that include the SHELL token or derivatives.
• Token distribution criteria for LPs

Conclusions

We believe that this application should be evaluated based on historical data that can be presented by Shell explorer, defillama or any other metrics website.