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
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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.