Team Lampros Labs DAO - LTIPP Research Bounty Reports

Archive LTIPP Bounties
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This research analysis was conducted for the Arbitrum Foundation as part of the LTIPP Research Bounty.

TL;DR

We were selected by the LTIPP Council members to conduct a research analysis for the Long-Term Incentive Pilot Program (LTIPP). We worked on two research topics: Research Report 1 focuses on the Analysis of Incentive Program Effectiveness for LTIPP Participating Protocols on Arbitrum, while Research Report 2 examines the Effects of Growth Incentives on Non-Recipient Protocols. We are submitting an intermediary report for Research Report 1, which includes data and analysis up to August 31, 2024, while Research Report 2 is a complete report. A detailed report for Research Report 1 detailing our findings will be shared next week, covering data up to September 2, 2024. We welcome all delegates and community members to go through the report and share your feedback.

Introduction

The report on Arbitrum’s Long-Term Incentive Pilot Program (LTIPP) focuses on various topics related to user engagement and ecosystem growth in decentralized finance (DeFi). It explores key metrics such as daily and monthly active users, transaction counts, and retention rates across different sectors. The analysis also examines the role of Proprietary Total Value Locked (TVL) strategies, user behavior regarding ARB rewards, and the dynamics of mercenary users within the ecosystem.

Additionally, the study on Arbitrum’s Short-Term Incentive Programs (STIP) from November 2023 to March 2024, along with the STIP Backfund from December 2024 to March 2024, looks at their effects on non-incentivized protocols and the overall impact on various DeFi sectors.

Team -

The team behind this report, Lampros Labs DAO, is dedicated to fostering transparency, decentralization, and inclusivity within the Web3 ecosystem. @Euphoria coordinated the research efforts, ensuring clear communication of insights from complex datasets. @Blueweb analyzed on-chain data and tracked key metrics, which were crucial for evaluating the project’s impact. @ARDev097 specialized in data warehousing and ETL processes, using Dune Analytics to create interactive dashboards that enriched our research. @jason42 applied his statistical analysis skills and econometric modeling to provide critical assessments of the financial mechanisms involved. Together, the team’s collaboration has significantly advanced our research on the Arbitrum ecosystem. For a comprehensive view of our contributions, please visit our Notion page: Lampros Labs DAO | Arbitrum Contributions.

We want to thank Hayden from Blockworks for being there to guide us wherever required.

Below are the topics we have worked on in the report -

Research Project 1

Title: Analysis of Incentive Program Effectiveness for LTIPP Participating Protocols on Arbitrum

  • Sector Growth, User Interaction, and Incentive Effectiveness
    This analysis evaluates trends in user activity, transaction patterns, and Total Value Locked (TVL) across LTIPP protocols, emphasizing the role of Proprietary TVL in liquidity and retention.

  • User Actions with ARB Rewards and Unintended Incentivized Actions
    It examines how ARB reward recipients utilize their tokens—selling, providing liquidity, or earning yields—while addressing issues like quick sell-offs and proposing solutions for healthier ecosystem growth.

  • Funding Mechanisms and Dollar-Cost Average of Incentives & High-Velocity Incentive Systems and Total Value Returned (TVR)
    This analysis evaluates the effectiveness of various incentive strategies during ARB distribution, highlighting their contributions to liquidity, user engagement, and associated costs.

  • Reward/User Ratio and Market Demand
    It assesses the ARB/user ratio among LTIPP protocols and explores how reward distribution affects user engagement, suggesting that long-term retention requires more than just rewards.

  • Mercenary Users and Multi-Protocol Engagement
    This analysis investigates engagement patterns of “mercenary users” across platforms, raising concerns about their governance participation and proposing strategies to enhance stakeholder involvement.

Research Project 2

Title: Effects of Growth Incentives on Non-Recipients Protocol
This report analyzes the unintended effects of growth incentives on protocols that did not receive them, highlighting spillover effects within the ecosystem from programs like the Short-Term Incentive Program (STIP) aimed at boosting user engagement and liquidity across DeFi sectors.

Find the links to the reports below -

Note - Research Report 1 is an intermediate report for feedback purposes, which contains the analysis of LTIPP till August 31, 2024. We will be sharing the complete report in the upcoming week.

We welcome all delegates and community members to go through the report and share your feedback. We will work on any feedback received and update our final report accordingly.

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Are you intending to include any inferential statistical analysis in these papers? As currently presented, the research appears to be strictly descriptive. The bar graphs lack error bars, and there is no application of either frequentist or Bayesian methodologies. In a sense, this is not yet research but data gathering. In the spirit of open science, would you be able to provide your data so others may perform the appropriate analyses?

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Team Lampros DAO - LTIPP Research Bounty Reports - Final Reports and Resources

TL;DR

We are excited to present the final comprehensive reports for the Long-Term Incentive Pilot Program (LTIPP) Research Bounties. Our research spans two major research topics: a detailed Analysis of Incentive Program Effectiveness for LTIPP Participating Protocols on Arbitrum and an examination of the Effects of Growth Incentives on Non-Recipient Protocols.

Research Outputs

1. Research Reports

We have prepared four in-depth research documents that provide comprehensive insights into the Arbitrum ecosystem. Research Report 1 offers a full analysis of incentive program effectiveness, diving deep into the mechanisms and impacts of the LTIPP. The accompanying Statistical Analysis Report 1 provides rigorous statistical evaluation, including T-tests, cluster analysis, correlation analysis, and regression analysis to support our findings.

Research Report 2 explores the dynamics of growth incentives on protocols that were not direct recipients of the incentive program. The accompanying Statistical Analysis Report 2 includes detailed correlation coefficient analysis and synthetic analysis, offering a refined understanding of ecosystem-wide effects.

2. Interactive Dashboards

To make our research more accessible and interactive, we have developed two comprehensive dashboards. Our Dune Dashboard focuses on sector growth, user interaction, and incentive effectiveness, leveraging the powerful data visualization capabilities of Dune Analytics. This dashboard provides insights into the key metrics that define the Arbitrum ecosystem’s performance.

Accompanying the Dune Dashboard, our Python Dashboard for Research Report 1 and Research Report 2 offers a more comprehensive visualization experience. It encompasses visualizations from all sections of our analysis, providing an intuitive and interactive way to explore our research findings. Each visualization is accompanied by brief descriptions to aid in interpretation.

3. ARB Distribution Tracker

We have created a detailed Google Sheet offering unprecedented ARB token distribution transparency. This comprehensive dataset tracks the journey of ARB tokens across the ecosystem, providing granular details about each protocol’s token allocation. The spreadsheet includes critical information such as total ARB requested and claimed, distribution timelines, and tracking of recipient, intermediary, and distributor addresses.

4. Key Takeaways Document

Understanding that not everyone has the time to dive into lengthy research reports, we’ve synthesized our key findings into a concise document. This Key Takeaways document presents the most important insights from our research, offering a quick yet comprehensive overview of our research and implications for the Arbitrum ecosystem.

Some Key Takeaways from the reports for each question that we want to share are -

1. Research Report 1 -

  • Sector Growth, User Interaction, and Incentive Effectiveness -

    The Long-Term Incentive Pilot Program (LTIPP) demonstrated substantial growth across multiple blockchain sectors, including Wallet, Bridge, RWA, and Gaming/Gambling. The campaign significantly increased daily active users, transaction counts, and transaction volume, with notable variations in user retention rates across different sectors. Sectors like Options and Oracles showed higher user retention, while Stables/Synthetics and Gaming/Gambling experienced lower retention during the incentive period.

  • User Actions with ARB Rewards and Unintended Incentivized Actions -

    Users primarily utilized ARB rewards through selling and trading (over 50%), with diverse strategies across different sectors including lending, liquidity provision, and governance participation. Platforms like Paraswap and Uniswap were predominantly used for ARB reward transactions, revealing complex user behaviors. The analysis identified unintended actions such as circular transactions and immediate sell-offs, suggesting the need for refined incentive mechanisms to encourage more meaningful ecosystem engagement.

  • Funding Mechanisms and Dollar-Cost Average of Incentives and High-Velocity Incentive Systems and Total Value Returned (TVR) -

    The incentive funding mechanisms showed varied effectiveness in generating Total Value Locked (TVL) and user engagement. The Proprietary TVL category emerged as the most successful, achieving $12,509.95 TVL per ARB token and attracting 81.83% of ecosystem users. Volume-based and miscellaneous incentives demonstrated different levels of efficiency, with liquidity incentives through integrated partner protocols showing particularly strong performance in driving ecosystem value.

  • Mercenary Users and Multi-Protocol Engagement -

    Mercenary user behavior was characterized by multi-protocol engagement, with 7.80% of users interacting across different protocols. Dodo and Across emerged as key platforms in users’ strategic interactions, though governance participation remained low at 17.6%. Despite limited governance involvement, mercenary users still influenced proposal outcomes, highlighting the need for sophisticated governance mechanisms to balance short-term reward-seeking behaviors with long-term ecosystem development.

  • Reward/User Ratio and Market Demand -

    The analysis revealed that ARB rewards alone are insufficient for sustained user engagement, showing weak correlations with daily active users and transaction counts. Short-term transaction spikes aligned with reward peaks, but these effects were transient. The findings underscore the importance of developing comprehensive strategies beyond monetary incentives to maintain meaningful and consistent user participation in the blockchain ecosystem.

2. Research Report 2 -

  • Effects of Growth Incentives on Non-Recipients Protocol in STIP & BSTIP -

    Incentivized protocols across various sectors demonstrated significant growth during the Short-Term Incentive Program (STIP). Decentralized exchanges, bridge protocols, and perpetual trading platforms experienced notable increases in Total Value Locked (TVL), user activity, and transaction volumes. Some non-incentivized protocols also showed organic growth, indicating that while incentives are powerful, individual protocol characteristics and intrinsic value play crucial roles in ecosystem development and user attraction.

Team

Lampros DAO remains committed to fostering transparency in the Web3 ecosystem. Our dedicated research team brought diverse expertise to this project. @Euphoria coordinated and managed the research, ensuring clear communication throughout the research bounty. @Blueweb conducted in-depth on-chain data analysis, tracking critical metrics that form the backbone of our research. @ARDev097 specialized in data warehousing and ETL processes, creating interactive dashboards that breathe life into our data. @jason42 applied advanced statistical and econometric modeling to provide critical assessments.

Find the links to the reports and other resources below -

Reports -

  1. Research Report 1 on Analysis of Incentive Program Effectiveness and Value Generation for LTIPP Participating Protocols on Arbitrum.
  2. Statistical Report 1 on Analysis of Incentive Program Effectiveness and Value Generation for LTIPP Participating Protocols on Arbitrum.
  3. Research Report 2 on Effects of Growth Incentives on Non-Recipients Protocol.
  4. Statistical Report 2 on Effects of Growth Incentives on Non-Recipients Protocol.

Other Resources -

  1. Dune Dashboard
  2. Python Dashboard for Research Report 1
  3. Python Dashboard for Research Report 2
  4. ARB Distribution & Tracking for Individual Protocols Sheet
  5. Key Takeaways Doc.

We view this research as a collaborative effort and warmly invite all delegates and community members to review our reports and provide feedback. Your insights are crucial and will help in working on future research projects.

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