STIP Overview : Analyzing metrics post STIP, during STIP, and 1 month post STIP
Objective
The objective of this note is to analyze the effect of STIP incentives on Stella, and their efficacy. As part of this analysis, we will be looking into the effect of the STIP incentives pre-STIP, during STIP and 1 month post STIP end date. Also, we will be comparing how Stella fared compared to the KPIs set at the time of STIP voting.
Brief context on Stella
Stella is the top leveraged farming protocol on Arbitrum with 0% cost to borrow. Stella is currently at ~$5M in TVL, with the TVL seeing an 85% increase since the start of the STIP incentives. More than 66% of Leveraged positions on Stella have generated a positive yield at 666% APR on average.
Abstract of the Stella STIP Proposal
- Stella received 186,000 ARB as incentives for the STIP incentives, out of which 120,000 ARB will go towards incentivizing the lending pools, and 66,000 ARB will go towards incentivizing the profitable leveragoors.
- The objective behind the incentives is two fold :
- Help bootstrap lending liquidity on Stella lending pools, to fulfill the borrowing demand, which will in turn bring higher lending APYs, and kickstart a flywheel. The ARB incentives will be directed towards lending pools with higher utilization rates to attract more liquidity and ensure the judicious use of ARB incentives.
- Give additional 20% profits to leveragoors as incentives on their profitable positions only. This will incentivize good behavior on part of the leveragoors, and prevent against any sybil attacks.
Note that both, the leveragoor’s and lenders incentives will be auto deposited in the ARB lending pool as ysARB, and will be vested over 30 days over the start of next epoch. This will ensure that the ARB incentives are not dumped and sell pressure is gradually eased.
TVL growth
KPI set at time of STIP voting : Protocol TVL - Breach $6M in TVL (235% increase from voting date)
The KPI was accomplished quite well :
- TVL at $9.5M (March 15th), and TVL (7 day moving average)
- TVL at $7.1M on 29th March (STIP end date)
Thus, the KPI was met in early December itself, and was maintained even at at STIP end date.
TVL (pre - during - post incentives)
- Pre incentives : TVL was at $2M.
- During incentives : TVL reached ATH of $9.5M (475% that pre-incentives)
- Post incentives : TVL reached $4.1M (205% that pre-incentives)
Thus, the TVL has held up quite decently even post incentives compared to pre-incentives, showing TVL stickiness.
Growth in TVL per claimed ARB amount
Stella was ranked #6th in the growth in TVL per claimed ARB amount, deeming it to be one of the more effective incentives programs per $ARB spent. This is based on the analysis posted by the Openblocks team on OpenBlock Labs STIP Efficacy + Sybil Analysis on Feb 24th.
Total positions on Stella
KPI set at time of STIP voting : Total Positions - 4,000 leveraged positions on Stella (135% increase from time of voting)
Stella had done 5800 leveraged positions by end of STIP date , outperforming the set KPI by 145%. Overall, Stella has managed to increase the total leveraged positions by 193% since the start of STIP.
New Strategy Listing - List 1 new leveraged strategy per month on the integration partner protocols towards the end of STIP
Stella has shipped multiple new integrations in past couple of months :
- Leveraged LPing onto Camelot V3 (only DeFi protocol to enable that)
- Leveraged LPing into Pendle (only DeFi protocol to enable that)
- Leveraged LPing into Penpie (only DeFi protocol to enable that)
- Added new assets like LRTs : EtherFI (eETH), Kelp (rsETH). Stella’s EtherFi airdrop to its users was one of the biggest EtherFi airdrops on Arbitrum DeFi.
- Added support for multiple new assets like $MAGIC, $XAI. $rETH, $wstETH, $wBTC, $GRAIL, $SILO, $NEXT, $LUSD etc. Certain strategies with lower demand were later deprecated.
Cumulative leveragoor real yield - $120,000 cumulative real yield earned by leveragoors on Stella (140% increase from now)
Cumulative leveraged yields at the end of STIP program were at $340k, which outperformed the KPI by 284%. Note that this includes real yields only, and does not include $ARB incentives.
Thus, overall Stella’s metrics responded quite well to the STIP incentives.
Points to improve
We noted that while the borrowing demand (leveraging demand) on Stella was constantly maxxed out, lending was not that attractive.
Thus, to make lending organically more attractive, we have enabled “50% airdrop points sharing” with lenders on Stella. As a result, passive lenders will automatically be eligible for airdrops from LRTs/ Eigenlayer, thus making lending more attractive for users.