Thetanuts Finance STIP Addendum

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

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

200,000 $ARB.

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

Start Date: 29 January 2024

End Date: 29 March 2024

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

Description Links
Openblocks Dashboard OpenBlock Labs
ARB STIP: 5 Jan Bi-Weekly Update Thetanuts Finance Bi-Weekly Update (5 January 2024)
ARB STIP: 19 Jan Bi-Weekly Update Thetanuts Finance Bi-Weekly Update (19 January 2024)
ARB STIP: 2 Feb Bi-Weekly Update Thetanuts Finance Bi-Weekly Update (2 February 2024)
ARB STIP: 16 Feb Bi-Weekly Update Thetanuts Finance Bi-Weekly Update (16 February 2024)
ARB STIP: 1 Mar Bi-Weekly Update Thetanuts Finance Bi-Weekly Update (1 March 2024)
ARB STIP: 15 Mar Bi-Weekly Update Thetanuts Finance Bi-Weekly Update (15 March 2024)

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

Date Total TVL ($mm) % Change Arbitrum TVL ($mm) % Change
31 Mar 2024 30.388 58.2% 7.875 6.0%
29 Feb 2024 19.214 59.8% 6.789 306.5%
31 Jan 2024 12.025 13.5% 1.670 447.5%
31 Dec 2023 10.599 8.5% 0.305 1,073%
30 Nov 2023 9.773 5.7% 0.026 -21.2%
31 Oct 2023 9.242 n.a. 0.033 n.a.

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

  • Although the STIP incentives have ended, TVL has remained relatively sticky, (~$6.2mm at the time of posting) indicating that a significant portion of users have learnt to embrace options as a trading product on our platform.
  • Being a successful STIP applicant has other benefits, especially from a co-marketing/integration perspective where many other third parties were more willing to work with us.

New Plans for STIP Bridge

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

200,000 $ARB.

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

No.

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

Dissemination of $ARB incentives will change, as we recently launched Pendle PT LRT Vaults on Ethereum and Arbitrum. As recap – Thetanuts Finance has only incentivized users that provided TVL and Trading Volume on our Basic Vaults, Lending Market, and AMM thus far.

As such, we intend to use our $ARB incentives to help market our new Pendle PT LRT Vaults on Arbitrum – on top of incentives to our Basic Vaults, Lending Market, and AMM. We believe that LRTs are solidifying itself as a core DeFi primitive and would help bring vibrancy and innovation to the Arbitrum ecosystem.

We think the following metrics will be a reliable indicator to measure the success of the outcome:

  1. TVL
  2. Lifetime User Interactions
  3. Unique Users
  4. 3-month MAU

We hope to double our growth rates across all metrics by the end of the program.

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?

Multi-sig: 0xc3A48B40b3762924D6fa3af1D957cE78E522497E

Rewards Contracts:

  • Multi-week Claim: 0x6fBfC3ebd5eb478cfD10ff5d86A6E39f5A93Ec12
  • Week 1: 0x9FB3985b1FAD450C2F4742dd29DBA5380ac7dDe1
  • Week 2: 0x8075d95BF16215e356E97eE74A592c675dCc8D65
  • Week 3: 0xE090EAb955aF22f73F9Dc8c977deb520c41f7527
  • Week 4: 0xD3E53a3d747f9BafDe03f13E9819b2Bb32e56fC7
  • Week 5: 0x6b8feA0BA68955AcFEeA7d31f372Df5D57F6559D
  • Week 6: 0xBD96cd512F4d6639A849F4EF504894eb236e5fb7
  • Week 7: 0xb1A6c1d09C7DCFD386e4C7355ADC3de6605aB8C7
  • Week 8: 0xAA70A45c7C5E302c39c6d21D090DF55f3DAa4664

11. 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?

  • Difficult to navigate the Governance process on Arbitrum.
  • Felt that voters in Arbitrum STIP that voted “Abstain” played a bigger role in the process than they should.
1 Like

Hello @Thetanuts_Finance ,

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.

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

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gm sers. We at @SEEDGov are very interested in receiving your input on the STIP process and aim to streamline things this time around. We hope you can join us in Discord so we can discuss what you mentioned and review your application :slight_smile:

We have dmed in the discord group!

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.

Regarding Tethanuts their KPIs were:

According to the metrics reported by OBL, the numbers are very encouraging:

They achieved considerable growth in TVL, fees, and DAU, all of which have remained above their levels prior to the start of incentive distribution.It is particularly striking how they have managed to maintain very high levels of TVL.

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With the addendum incentives they plan to keep the same path + incentivize their new Pendle PT LRT Vaults on Arbitrum. We agree that the LRT narrative is strong and it’s worth investing in it.

A positive aspect for the addendum is that they set measurable goals for the DAO for future measure of the success:

Conclusions

The results shown during the incentive distribution are very positive, with the applicant having achieved the objectives set for the STIP. Therefore, it makes sense for them to propose continuing with the execution of their plan, while also incentivizing the new LRT narrative.

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.

“Seems that project might have farmed ARB incentives through deployed POL. Decent TVL growth during program that has sustained quite well after program ended, with decent other KPIs as well, although these might be somewhat misleading compared to other projects since Thetanuts is currently distributing incentives.”

Thank you for reviewing our STIP Addendum application and giving us this opportunity to address the concerns raised.

As a DeFi Options protocol, we need to have a minimum amount of Protocol-owned Liquidity (“POL”) as part of the liquidity process for market making on our option vaults. We disclosed this in our original Arbitrum STIP application, which can be found here: [Thetanuts Finance] [FINAL] [STIP - Round 1]. We further specified that any rewards attributable to the protocol would be later distributed through additional incentive programs.

This is the relevant section from our original Arbitrum STIP application:

We intend to perform a 1:1 matching of the ARB grant received, with this matching amount to be used as Protocol-Owned Liquidity (“POL”) for our Basic Vaults, AMM, and Lending Market. We will acquire these assets (either ARB or ETH) through open market operations.

The initial breakdown of this 1:1 POL will be as follows:

  • Basic Vaults (Sell-side): ARB (12.5%) & ETH Call Vaults (22.5%)
  • AMM (Buy-side): ARB-Call / ARB Pool (20%), ETH-Call / ETH Pool (30%)
  • Lending Market (Short Options): 10%
  • Borrowing Market (Long Options): 5%

Grant Breakdown:

  • 100% of grant proceeds will be used for the Thetanuts Finance v3 deployment for TVL incentives.
  • TVL Incentives are expected to be distributed to LPs in the Basic Vaults, AMM, and Lending Market – in order to bootstrap liquidity and kickstart the v3 flywheel.
  • The incentives will be split linearly across 3 months until 31 Jan 2024. Distribution of rewards for the AMM and Lending Market will commence upon deployment at a later date (estimated launch of Oct 2023).
  • All incentives from POL will be used for a future incentive program.

During the STIP, we farmed a total of ~15,761 ARB through our POL at this address: Address 0x4a4c7c5549359b9fff0137bb3ec4d48c4aa79cc7 | Arbiscan. We also created API endpoints for reference. The breakdown is as follows:

1st Week - 0 $ARB (https://thetanuts.finance/v3/incentives/ARBITRUM_USER_INCENTIVE_DATA_JAN_29_FEB_02.proof.json)

2nd Week - 0 $ARB (https://thetanuts.finance/v3/incentives/ARBITRUM_USER_INCENTIVE_DATA_FEB_02_FEB_09.proof.json)

3rd Week - 2925.135053336962 $ARB (https://thetanuts.finance/v3/incentives/ARBITRUM_USER_INCENTIVE_DATA_FEB_09_FEB_16.proof.json)

4th Week - 2691.997527338879 $ARB (https://thetanuts.finance/v3/incentives/ARBITRUM_USER_INCENTIVE_DATA_FEB_16_FEB_23.proof.json)

5th Week - 2628.988826947951 $ARB>
(https://thetanuts.finance/v3/incentives/ARBITRUM_USER_INCENTIVE_DATA_FEB_23_MAR_01.proof.json)

6th Week - 2655.08734776001 $ARB>
(https://thetanuts.finance/v3/incentives/ARBITRUM_USER_INCENTIVE_DATA_MAR_01_MAR_08.proof.json)

7th Week - 2452.826848962343 $ARB
(https://thetanuts.finance/v3/incentives/ARBITRUM_USER_INCENTIVE_DATA_MAR_08_MAR_15.proof.json)

8th Week - 2407.5659568001565 $ARB
(https://thetanuts.finance/v3/incentives/ARBITRUM_USER_INCENTIVE_DATA_MAR_15_MAR_22.proof.json)

All POL rewards have been redirected into our incentive program which began after March 31 (i.e. the end of Arbitrum STIP). We have been running this program for 7 weeks thus far. We plan to end this program after 3 additional weeks, with the final day being 7th June 2024.

We have been distributing 5,000 $ARB per week to our Arbitrum users, totalling 35,000 $ARB — meaning that we have exceeded the amount farmed through our POL.

To ensure we have sufficient $ARB throughout the program, we have been using market-bought $ARB out of our own treasury. We believe that this is a show of our commitment to the Arbitrum community and to our users on Arbitrum.

Once our incentive program concludes, any leftover unclaimed $ARB (including from our own POL) will then be swept and redistributed one last time to active users, thereby fulfilling our obligations under the STIP.

Moving forward, if the incentive distribution structure of our original proposal remains a concern, we will be happy to exclude our POL from receiving $ARB rewards for the STIP Bridge should we pass.

Thank you.

1 Like

I voted to approve funding on this STIP addendum because of strong performance in the first round of STIP. I think the team’s plan to address the POL issue is credible.

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

Thetanuts Finance demonstrated very strong results during the initial 200K ARB STIP, with total TVL growing 186% from $10.6M to $30.4M and Arbitrum-specific TVL skyrocketing 2,488% from $305K to $7.9M between December 2023 and March 2024. Importantly, TVL remained sticky around $6.2M even after incentives ended, suggesting genuine product/market fit was achieved.

We appreciate Thetanuts’ transparency around farming 15.8K ARB via protocol-owned liquidity during STIP. The fact that 100% of these POL rewards were redirected to post-STIP user incentives, with the team contributing additional treasury funds to maintain robust rewards, demonstrates strong commitment to the Arbitrum ecosystem. The plan to redistribute any unclaimed ARB to active users and openness to excluding POL from future rewards are also positives.

For the bridge round, expanding the incentives scope to include the new Pendle PT LRT vaults on Arbitrum is a sensible evolution. LRTs are indeed emerging as a core DeFi primitive, and fostering this category on Arbitrum should attract new users and liquidity to the broader ecosystem.

Setting clear targets of doubling TVL, user interactions, unique users, and 3-month MAU shows Thetanuts is focused on the right growth metrics. While aggressive, these goals appear achievable given the momentum from the first STIP and the allure of the LRT vault offerings.

We concur with the Advisor assessment that Thetanuts’ TVL retention and overall KPIs are impressive, even accounting for the ongoing incentive program. The applicant has demonstrated an ability to convert STIP funding into sticky adoption and now has a credible plan to double down on this traction.

Thetanuts’ constructive feedback on the challenges of navigating Arbitrum governance and the disproportionate influence of “abstain” votes is noted. The DAO should reflect on ways to streamline processes and promote more decisive voter participation going forward.

In conclusion, Thetanuts’ performance in the initial STIP, proactive efforts to optimize and sustain user incentives, and compelling proposal to support the growth of the LRT vault category make a strong case for renewing their 200K ARB allocation. We are eager to see how the next phase unfolds and believe Thetanuts is well-positioned to continue driving meaningful adoption and innovation on Arbitrum.

We vote to approve funding the STIP addendum for Thetanuts Finance. The STIP incentives were clearly effective as TVL has been stable after the program, the expansion of the incentive use makes sense, and the concerns from the challenge have been surely addressed by the team.