Full wrap up for the STIP Grant: Link to proposal
Objectives
- To grow and support the liquidity of native Arbitrum builders
- To grow and support the liquidity of multi-chain builders that are Arbitrum-aligned
- Onboard new builders to the Arbitrum ecosystem
- Increase user discovery of Arbitrum protocols
Key Performance Indicators
Grow TVL for Incentivized LPs and retain that TVL post incentives
- Weekly average (rolling 7 day period) for each incentivized liquidity pool sees a 4x growth during incentivization period
- Weekly average (rolling 7 day period) for each incentivized liquidity pool retains at least a 1x growth in the following 28 day period after incentivization
New builders onboarded to Arbitrum
- Target to bring to Arbitrum 4 new builders/protocols/tokens via use of ARB rewards for Liquidity Pools
Summary
Trader Joe has been successful in growing liquidity and attracting new users on Arbitrum
- Increased Total Value Locked (TVL) by 75% to $45.6 million.
- Increased Average Daily Trading Volume by 470% to $57 million, generating $5.6 billion in total volume and $2.8 million in fees.
- Incentivized 16 key liquidity pools, with an average growth of 18x during the incentives period and 13x 28 days after incentives ended
- Successfully retained target liquidity in 9 pools for up to 28 days post incentives, although longer durations saw the self-sustaining effect diminish due to heighted ecosystem yield competition
- Onboarded 6 new builders/tokens to Arbitrum, exceeding the target of 4
- Top 3 in Sequencer Revenue change which shows TJ more than proportional value contribution to Arbitrum’s Ecosystem relative to its growth
Key Performance Indicators (High Level)
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Liquidity Growth and Retention
- Sixteen long-tail pools were incentivized with the target to grow and retain liquidity post incentives (28D)
- Four pools required $JOE tokens to retain target liquidity
- Three pools had $JOE tokens added due to high performance of liquidity
- Nine pools retained target liquidity post incentives
- An average of 13x growth was achieved across all 16 pools post incentives
- This was a sustainability test focused on aggressive liquidity growth during incentives and then testing retention over the same period of time, without any incentives.
- Sixteen long-tail pools were incentivized with the target to grow and retain liquidity post incentives (28D)
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New Builders/Tokens
- Target to onboard four New-To-Arbitrum tokens, in total seven new tokens were introduced to Arbitrum, with Trader Joe playing a key role in that onboarding process
- Offering access to a wider selection of tokens only strengthens Arbitrum’s value proposition as the home of DeFi
Other Key Metrics (High Level)
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Total Value Locked
- Liquidity Book had a modest injection of TVL but more keenly, this TVL has contributed to significant uplifts in volume detailed below
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User Activity / New users
- In total over 200,000 wallets interacted with the Trader Joe DEX over the course of the STIP campaign
- Over 32,500 new users performed a swap with Liquidity Book on the first day they bridged into Arbitrum.
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Volume growth
- 6x growth in volume compared to pre incentive period
- Proportional fee growth
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Sequencer Revenue Change
- Proven value return relative to growth as the 3rd Highest Network Fee Change + Network Fee Change (Normalized) per OpenBlock Labs Efficacy Report (linked below)
KPI: Liquidity Growth and Retention
The STIP for Trader Joe aimed to boost liquidity pools with incentives over 28 days and assess retention in the following 28 days. The hypothesis was that initial high rewards could elevate liquidity to self-sustaining levels post-incentive. Overall, the data indicates that while liquidity levels remained satisfactory in most pools immediately after the incentive period, only four pools failed to meet the targeted KPIs. However, in the absence of further incentives and facing increased yield competition, most pools saw diminished activity over the extended period post incentives.
In summary, while the strategy successfully attracted liquidity, maintaining liquidity without incentives past a 28 day period proved to be a challenge in the context of competitive yield opportunities elsewhere. This outcome validates the original hypothesis to some extent—that retaining liquidity is feasible without incentives over a period of time. However, that period of time largely depends on the dynamics of yield competition across the ecosystem. These are valuable learnings, moving forward.
| Token | Liquidity Pre Incentives | Peak TVL During Incentives | Average TVL During Incentives | (Average)TVL 28 days Post Incentives | Total Incentive Duration (wks) | Total ARB Incentive |
|---|---|---|---|---|---|---|
| VRTX | $18K | $141K | $103K | $60K | 4 | 20000 |
| WINR | $12K | $225K | $134K | $36K | 4 | 30000 |
| GRAIL | $10K | $620K | $480K | $106K | 4 | 90000 |
| GMX | $205K | $3.08M | $1.72M | $439K | 6 (4+2) | 120000 |
| LODE | $17K | $318K | $223K | $90K | 4 | 50000 |
| MAGIC | $8K | $1.06M | $716K | $388K | 12 (4+8) | 92500 |
| ALP | $165K | $351K | $215K | $330K | 4 | 10000 |
| SVY | $23K | $50K | $41K | $18K | 4 | 7000 |
| LBR | $66K | $190K | $163K | $107K | 4 | 17500 |
| RDNT | $576K | $1.52M | $1.12M | $1.05M | 4 | 60000 |
| PENDLE | $17K | $993K | $661K | $745K | 12 (4+8) | 80000 |
| ALPHA | $17K | $47K | $33K | $21K | 4 | 6000 |
| CTX | $228 | $26K | $18K | $16K | 8 | 2000 |
| GMLP | $179K | $225K | $204K | $248 | 4 | 7500 |
| WOO | $908K | $1.11M | $1.05M | $1.20M | 4 | 30000 |
| GNS | $13K | $193K | $151K | $347K | 4 | 22500 |
Source: TJ STIP Flipside Dashboard
TVL % Change till Post-Incentives: TVL is measured up to the point of when Incentives are fully stopped.
TVL Growth pre, during and post incentivization, highlighting the dynamic change of liquidity based on incentivization.
Sustained TVL Gain per ARB Incentive
TVL % Change 28 days after incentives. Pools with under -75% were distributed JOE tokens for incentives, as part of the KPIs proposed to retain liquidity.
KPI: New Builders
A primary goal of the STIP grant for Trader Joe was to facilitate the onboarding of at least four new projects, tokens, and builders to Arbitrum, thereby significantly contributing to the ecosystem’s growth. Since the beginning of November, six tokens have been successfully onboarded using ARB incentives to bootstrap initial liquidity. Trader Joe has played a crucial role in this process, directly contributing to the integration of these tokens into the ecosystem.
Key Metrics
Since the 3rd of November:
- Total Value Locked has climbed by +75%
- Over 200,000 Unique Wallets have used the DEX
- $5.6bn volume has been generated
- $2.8m total fees generated
Total Value Locked
- 3rd November: Daily Rolling Average TVL (30d): $26m
- 31st March: Daily Rolling Average TVL (30d) $45.6m
- Uplift of +75%
Total Volume
- 3rd November: Daily Rolling Average Volume (30d): $10m
- 31st March: Daily Rolling Average Volume (30d) $57m
- Uplift of +470%
Total Fees
- 3rd November: Daily Rolling Average Fees (30d): $11.8k
- 31st March: Daily Rolling Average Volume (30d) $59.5k
- Uplift of +400%
Daily Active Users
- 3rd November: Daily Rolling Active Users (30d): 1.7k
- 31st March: Daily Rolling Active Users (30d) 3.95k
- Uplift of +135%
Sequencer Revenue
- 3rd Highest Network Fee Change + Network Fee Change (Normalized)
The increase across all key metrics is further evidenced by the growth in sequencer revenue generated for Arbitrum. Trader Joe demonstrated one of the highest normalized fee changes among all STIP candidates, further reinforcing its value contribution to the Arbitrum Ecosystem.
Wrapping up
Trader Joe offers a unique approach to concentrated liquidity with its novel Liquidity Book protocol that helps traders save more on their swaps and helps to boost profitability for Liquidity Providers. Looking ahead, the focus remains steadfast: to expand the novel product stack offered and to reinforce Arbitrum’s status as the leading Layer 2 scaling solution for Ethereum.
Trader Joe has established itself as a key multi-chain positioned builder within the ecosystem that can serve as a gateway for users to explore and engage with tokens and projects. If receiving incentives as part of future campaigns, such as the STIP-Bridge or Full LTIP, Trader Joe will continue to build incentive programs that aim to promote discovery, prioritize sustainability, and boost efficiency.
Produced in collaboration with the Trader Joe Governance Council