THALES PROTOCOL STIP Addendum

# Information about STIP/STIP Backfund

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

https://forum.arbitrum.foundation/t/thales-final-stip-round-1

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

500,000 ARB

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

Thales STIP incentive program started on December 27th and lasted until April 3rd at which the final rewards round closed.

  1. Could you provide the links to the bi-weekly STIP performance reports and Openblocks Dashboard?
  • Thales Protocol Biweekly Updates
  • Thales Protocol OpenBlock Page
  1. 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:

Monthly Notional Volume

| Month | Amount | MoM Change % |

|— | — | — |

|Oct-23 | 1.7mil | - | | |

|Nov-23 | 1.9mil | 11.7% | | |

|Dec-23 | 1.8mil | -5.2% | | |

|Jan-24 | 5.7mil | +211.11% | | |

|Feb-24 | 4.6mil | -19.2% | | |

|Mar-24 | 6.8mil | +47.8% | | |


Monthly Total Buy-Ins

| Month | Amount | MoM Change % |

|— | — | — |

|Oct-23| 624.7k| - |

|Nov-23 |789.9k | +26.44% |

|Dec-23| 767.4k |-2.85%|

|Jan-24 | 2.5mil | +225.78%|

|Feb-24 | 1.8mil | -28.00%|

|Mar-24 | 2.6mil | +44.44%|


Monthly Transaction Count

| Month | Amount | MoM Change % |

|— | — | — |

|Oct-23 |4369| -|

|Nov-23 |4680 |+7.12%|

|Dec-23| 3821| -18.35%|

|Jan-24 |16161 |+322.95%|

|Feb-24 |13614 |-15.76%|

|Mar-24| 19984| +46.79%|


Total Monthly Unique users

| Month | Amount | MoM Change % |

|— | — | — |

|Oct-23 |368| -|

|Nov-23| 344 |-6.52%|

|Dec-23| 263| -23.55%|

|Jan-24 |2349 |+793.16%|

|Feb-24| 1833| -21.97%|

|Mar-24 |5803 |+216.58%|


Weekly Volume Per Network comparison


Weekly User Count Per Network comparison

Growth metrics visible above are achieved due to presence of ARB rewards across multiple constant buckets and focused events. By having efficient ARB rewards, people were drawn to try the products and earn ARB. This caused high user retention and helped lift the Thales Arbitrum deployments to notable adoption, still thriving even after the rewards dried up.

Most notable spikes were the Superbowl night and the March Madness event which drove the most volume and user acquisition for the Thales Sports Markets.

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

  • Even with highly efficient incentives that have a kickback rate that barely covers the user fees, making riskless mercenary farming impossible, users still value these rewards and are motivated to use the products more with high retention rate.

  • We learned that our users like gamified engagements, in the likes of fun tournaments such as March Madness Bracket Minting. By having token rewards, you capture their initial attention while they stay because they are having fun and actually come to like the product.

  • Direct Usage Incentives were based on direct biweekly reward distribution to users pro-rata based on volume driven for specific buckets. Every individual bucket had a specific ARB amount to be split after two week round ends. These isolated buckets included ITM and OTM DIgital Options buyers, Sports Markets buyers, Parlay buyers, Speed Markets volume and Chained Speed Markets volume. The rewards were monitored to be highly efficient with most barely covering the fee cost after every round but effectively increasing the number of users and volume driven due to improved UX.

  • Event incentives mostly revolved around targeted rewards for various notable sporting events/leagues volume driving such as NFL, NBA, Australian Open, March Madness etc. With event campaigns historically being very effective as a marketing tool and user acquisition tool for the Sports Markets platforms, we saw the same success. These rewards had the greatest impact out of all other buckets which is notable when reviewing the timing of usage spikes with notable promoted sports events.

# New Plans for STIP Bridge

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

We are requesting 200,000 ARB for this STIP Bridge proposal.

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

Parts of incentives will be used in the same fashion as Section 3 of previous STIP proposal, other parts will be used for novel distribution buckets due to novel features and releases.

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

Novel distribution buckets will use ARB tokens to incentivize Social Login Account Abstraction users across Thales-using applications, using ARB tokens as limited gas sponsorship for VIP users via paymaster SDK and fee rebates.

Gas Sponsorships (planned 25% of grant) revolve around account abstraction implementations, where users will be able to have sponsored gas fees to some predetermined limits and thresholds, paid in ARB tokens from grant-funded gas tank contracts. This bucket massively improves the UX of supported Thales Protocol products and provides a Web2-like experience, now finally feasible due to Dencun lowering gas cost for ERC4337 implementations. This will promote Account Abstraction use case for the wider Arbitrum ecosystem and potentially onboard new retail users to Arbitrum.

ARB Vouchers (planned 25% of the grant) will allow people to place trades on Thales Protocol products using ARB vouchers as collateral that can be exclusively used only for placing trades, without ARB being directly transferable from the voucher. This bucket helps with user acquisition and marketing while efficiently focusing the ARB grant for maximal effectiveness. Vouchers will be distributed as activity rewards and incentives and will only be usable for buying positions on the platform.

  1. 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?

Thales Arbitrum Multisig: 0x2902E381c9Caacd17d25a2e008db0a9a4687FDBF

  1. Could you share any feedback or suggestions on what could be improved in future incentive programs, what were the pain points and what was your general evaluation of the experience?

Having a strict fixed distribution deadline for all grant recipients forces teams to have inefficient incentive programs that have no organic results. Having flexibility to properly execute incentive programs without deadline overhead helps the projects and the network have the best possible incentive results.

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Hello @padzank ,

Thank you for your application! Your advisor will be Castle Capital @CastleCapital @Atomist.

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.

Following the ARDC recommendation, we believe that this proposed addendum requires further review by the DAO. Therefore, we challenge its optimistic approval so that the delegates can form an opinion on the merit of renewing the incentives received during the STIP.

We are publishing the review conducted by Blockworks for greater visibility and advice to the applicant to provide an explanation for the concerns raised.

“Protocol allocated a substantial amount of incentives to programs meant to incentivise usage related to major sports events. Wallets associated with these focus programs still hold 110K ARB. Post-incentives, the number of monthly unique wallets has stayed accelerated. Details on the exact new incentive mechanism structure have not been given, but new buckets include gas sponsorships and ARB vouchers. The latter can only be used as collateral to trade and distributed as activity rewards, meaning that this seems to lead to a situation where trading volume increases but likely in an inorganic way.”

Thank you for your feedback!

To further clarify the mentioned concerns:

Wallets holding 110k ARB are already allocated for incentive programs during the STIP timeline, but the distribution itself is executed on season end of major sports events in question, some of which have ended in the last few days (Soccer leagues), with rewards already dispersed, and some of which are ending soon (NBA, NHL seasons).

Gas sponsorships and ARB vouchers are explained in detail on the addendum itself. The distribution of those incentives will be determined as we approach the full implementation of account abstraction and the V2 architecture deployment of planned vouchers. ARB vouchers can only be used to execute a trade and nothing else. They will be rewarded to users by certain conditions still to be determined. The amount of ARB in a specific voucher will determine the size of the “free trade. The sizes will never cross sizable amounts per user and are completely up to us to distribute under our terms. Such concepts are widely used in web2 (mostly known as free bets) and are a norm for organic onboarding, attracting and retaining of users. Once a voucher is used, the funds go either to the end user, or liquidity providers, depending on the outcome of the bet/prediction, so it’s not factually true that the funds remain locked within the system.

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On behalf of the Arbitrum community members who delegated their voting power to us, we’re voting For this proposal.

Thales Protocol demonstrated strong and sustained growth across key metrics during their initial 500K ARB STIP program from December 2023 through early April 2024. Monthly notional volume increased 278%, buy-ins grew 239%, transactions rose 423%, and most impressively, unique monthly users skyrocketed from 263 to 5,803 - a over 20x increase.

Notably, Thales began outpacing its Optimism deployment in weekly volume and users in the latter half of the STIP period, suggesting the incentives were effective in driving adoption of their Arbitrum offerings specifically. Major spikes in activity during the Super Bowl and March Madness campaigns underscore the power of strategically-timed event-based rewards.

The learnings around small, breakeven-boosting incentives still being effective in spurring usage and the success of gamified tournaments bode well for the sustainability of this traction. Users drawn in by rewards appear to be sticking around for the product experience itself.

For the 200K ARB bridge round, the proposed split between continuing proven reward structures and funding novel gas sponsorship and trading voucher initiatives seems well-balanced. Dedicating half the allocation to social login account abstraction to eliminate gas friction for VIP users and ARB trading vouchers that can’t be directly withdrawn should efficiently focus resources on active participation rather than pure mercenary farming.

We’re encouraged to see Thales take a thoughtful approach to optimizing their incentive schemes based on prior results while still experimenting with new methods to deepen user engagement and market to new audiences like retail. Targeting account abstraction as a key unlock for adoption is forward-thinking and could have positive spillover effects for the broader Arbitrum DeFi ecosystem.

The fact that Thales is requesting just 200K ARB, 60% less than their initial 500K allocation, demonstrates a responsible mindset and strong confidence in their ability to maintain growth with less capital. We also agree with their feedback that more flexibility on redemption deadlines, rather than one-size-fits-all windows, could help maximize the organic impact of each project’s unique incentive strategy.

Given Thales’ proven ability to convert STIP funding into sustained protocol traction and their innovative yet measured proposal for the bridge round, we believe this is a very worthwhile investment to continue accelerating a key player in Arbitrum’s DeFi ecosystem.

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