Vertex STIP-Bridge Incentive Round: Final Report Overview
We are pleased to share the comprehensive final report for the Vertex STIP-Bridge incentive round, detailing key objectives, methodologies, and outcomes of the program. Although this report comes slightly later than intended, we appreciate your patience and commitment to our shared goal of enhancing the Arbitrum ecosystem.
The report outlines the incentive allocation across Vertex trading rewards, Elixir Fusion Pools, and SkateFi Vaults, with a total distribution of 1,362,193 ARB.
Key takeaways include sustained trading volumes, notable liquidity contributions, and valuable insights into operational challenges and strategic adjustments moving forward.
The report reviews and provides clarity on the distribution processes, impact metrics, and lessons learned, forming a robust foundation for refining future incentive structures and partnerships on Vertex and the broader Arbitrum ecosystem.
Your feedback and engagement are welcome as we continue to strengthen the protocol and our ecosystem collaborations.
Vertex STIP-Bridge Final Report
Objectives
- Grow trading liquidity, TVL, and users on Vertex.
- Drive on-chain activity and more users to Arbitrum.
Incentive Allocation and Distribution
Planned Allocation
- Vertex Trading Incentives: 1,200,000 ARB
- Elixir Liquidity Incentives: 150,000 ARB
- SkateFi Vault Incentives: 150,000 ARB
Realized Distribution
- Vertex Trading Incentives: 1,196,193 ARB
- Elixir Liquidity Incentives: 150,000 ARB
- SkateFi Vault Incentives: 16,000 ARB
Total = 1,362,193 ARB
Leftover = 137,807 ARB
***All leftover ARB was returned to the DAO Treasury.
Distribution Methodology
The Vertex distribution method was similar to our original STIP program. We incentivized trading and liquidity provision across 3 areas:
1. Trading Rewards
2. Elixir LP Pools
3. Skate Liquidity Vaults
Trading Rewards
Trading rewards were calculated based on the trading fees paid by participants (takers-only), with a maximum of 75% of the taker fee paid returned as ARB rewards.
However, this percentage may be lower if the fees paid exceed 133% of the dollar amount of allocated weekly incentives (approximately $200k initially).
In such cases, incentives were distributed proportionally to the fees paid. Conversely, if the fees paid are less than 133% of the dollar amount of allocated weekly incentives, then the full allocated amount was not utilized. The unused portion was then carried over to the following week.
The mechanism for distribution of Trading Rewards during the STIP-Bridge remained the same as the original STIP incentives round on Vertex.
Elixir LP Fusion Pools
In addition to trading rewards, a portion of the ARB was allocated to Elixir’s Fusion Pools on Vertex, allowing users to supply USDC collateral to build up the orderbook’s perpetual futures as well as spot pairs on the exchange.
Elixir Fusion Pool APYs on Vertex had a baseline APR of 15% in ARB on their assets. ARB tokens were allocated on top of the existing maker rewards and subsidized APYs on Vertex.
Similar to the Trading Rewards category, the mechanism for the STIP-Bridge rewards for Elixir’s Fusion Pools were the same as the original STIP incentives.
Skate Liquidity Vaults
Skate’s integration with Vertex focused on introducing LP vaults on top of major perpetual markets listed on Vertex. Known as “The Majors” vault on Vertex, this allowed users to LP the vault and earn yield – supplemented by ARB incentives.
Similar to Elixir’s incentives this round, incentives were distributed pro-rata on the basis of trading volume facilitated, with the goal of helping drive liquidity and TVL to the protocol with an efficient liquidity provision mechanism.
Vertex Trading Rewards
Distribution of ARB trading rewards remained fairly even across all 12 epochs, with marginal variance in rewards distributed each epoch throughout the STIP-Bridge program.
| Epoch | Amount (in ARB) |
|---|---|
| 1 | 99,379 |
| 2 | 99,526 |
| 3 | 99,444 |
| 4 | 99,781 |
| 5 | 99,474 |
| 6 | 100,000 |
| 7 | 100,000 |
| 8 | 99,568 |
| 9 | 99,708 |
| 10 | 99,573 |
| 11 | 99,735 |
| 12 | 100,000 |
Elixir Liquidity Incentives
Distribution of ARB incentives to the Elixir Fusion Pools also were even across each epoch of the program.
| Epoch | Amount |
|---|---|
| 1 | 12,500 |
| 2 | 12,500 |
| 3 | 12,500 |
| 4 | 12,500 |
| 5 | 12,500 |
| 6 | 12,500 |
| 7 | 12,500 |
| 8 | 12,500 |
| 9 | 12,500 |
| 10 | 12,500 |
| 11 | 12,500 |
| 12 | 12,500 |
Skate Vault Incentives
Distributions to the SkateFi vaults were much lower than originally expected during the program, with limited uptake and more variance during each epoch.
| Epoch | Amount |
|---|---|
| 1 | 517 |
| 2 | 1123 |
| 3 | 1456 |
| 4 | 1061 |
| 5 | 1187 |
| 6 | 1890 |
| 7 | 1116 |
| 8 | 1184 |
| 9 | 1196 |
| 10 | 1267 |
| 11 | 1067 |
| 12 | 1063 |
Results
Vertex Trading Rewards
Over the length of the STIP Bridge program, Vertex’s daily trading volume on Arbitrum fluctuated widely, primarily ranging between $200 million and $400 million.
Notable peaks occurred in early July and August, with volume briefly surpassing $600 million, signaling intense trading bursts. Overall, volume remained stable, with a gradual decline in the program’s final third, interrupted by occasional surges likely linked to specific events or broader market trends.
Vertex saw an initial increase in liquidity early in the STIP-Bridge program. Following an initial elevation of available trading liquidity, however, the total liquidity declined by the end of the program.
The total liquidity (in USD) began at $78M on June 24th, peaked at $85M on July 15th, and ended at around $61M on September 16th.
In part, we can attribute some of the fluctuations in liquidity to broader market conditions and progressively declining on-chain derivatives volume in DeFi over the relevant period.
However, while liquidity, open interest, and trading volumes for core perpetual markets (e.g., BTC and ETH) remained relatively consistent, demand and activity on the DEX for altcoin perpetual markets were not as strong as the original STIP round.
| Event | Date | Vertex Liquidity | Total Crypto Mkt Cap | Total Onchain Derivatives Volume |
|---|---|---|---|---|
| STIP Start | 11/8/2023 | 23,411,484 | 1,392,524,660,947 | 5,403,000,000 |
| STIP End | 3/31/2024 | 70,186,718 | 2,837,692,766.058 | 9,208,000,000 |
| ATH Liquidity | 5/17/2024 | 92,015,782 | 2,527,749,628,551 | 4,602,000,000 |
| STIP Bridge Start | 6/24/2024 | 78,129,564 | 2,348,776,563,488 | 6,452,000,000 |
| Peak Liquidity during STIP Bridge | 7/15/2024 | 85,172,700 | 2,499,452,525,080 | 8,461,000,000 |
| STIP Bridge End | 9/16/2024 | 61,226,048 | 2,117,082,212,092 | 5,055,000,000 |
Daily Trading Volume
Between June 24th and September 16th, Vertex’s daily trading volume on Arbitrum oscillated significantly, mostly within the $200 million to $400 million range.
There were a few prominent peaks, notably in early July and early August, where the volume spiked beyond $600 million, indicating brief periods of intense trading activity.
Overall, the trading volume maintained a relatively stable baseline, gradually declining towards the latter third of the STIP-Bridge program – marked by occasional surges likely tied to specific events or broader market conditions.
Source – https://defillama.com/derivatives/vertex-edge
However, Vertex ranked as the leader in daily notional trading volumes for on-chain derivatives over the relevant STIP-Bridge period for native Arbitrum DEXs deployed on-chain.
Source – Token Terminal
Spreads & Funding Rates – Core Markets (BTC & ETH)
ETH-PERP
The charts for ETH-PERP on Vertex between late June and mid-September indicate a generally low and stable funding rate alongside tightly constrained spread percentages, suggesting consistent market efficiency and liquidity.
Source – Vertex Protocol Hub | TheLaughingMan | Flipside
A significant outlier occurs on August 5th, with the annualized funding rate briefly spiking above 75% and spreads reaching over 1.25%, both corresponding to a period of significant market volatility.
Post-event, both the funding rate and spread percentages quickly reverted to baseline levels, underscoring the resilience of ETH-PERP’s market structure on Vertex, with minimal enduring impact from the volatility spike. This pattern highlights the platform’s ability to maintain stable conditions even amid temporary disruptions.
BTC-PERP
The BTC-PERP data on Vertex from late June to mid-September reveals a more volatile funding rate, oscillating frequently between positive and negative values within a range of approximately -15% to +10% annualized.
Source – Vertex Protocol Hub | TheLaughingMan | Flipside
The fluctuation suggests ongoing shifts in trader sentiment and demand imbalance for long versus short positions. Unlike the ETH-PERP, the funding rate volatility is less significant for the BTC-PERP on August 5th.
Instead, the rate shows a series of moderate peaks, pointing to recurring, albeit less severe, market recalibrations.
In contrast, the spread percentage remains consistently low, with a singular spike slightly above 1% around early August, likely correlating with broader market volatility at the time.
The quick reversion of the spread to near-zero levels indicates robust liquidity and efficient order matching, despite occasional volatility-driven disturbances. Overall, the BTC-PERP data suggests a market marked by active funding adjustments but maintains tight spreads, reflecting strong liquidity and resilience under shifting market conditions.
Monthly Total Value Locked (TVL)
Between June 24th and September 16th, the cumulative USD inflows / outflows on Vertex showed a net gradual decline in total value locked (TVL) – from approximately $78 million to roughly $60.5 million by the end of the program.
The liquidity composition during this period was dominated by wBTC and wETH, with USDC.e maintaining a significant proportion as well – represented in blue.
While there were small fluctuations in inflow and outflow levels, the overall trend leaned toward a decrease in cumulative liquidity, indicating a net outflow or reduction in asset contributions to the platform over the STIP-Bridge period.
Notably, the percentage of wBTC increased relative to both USDC.e and wETH in the latter half of the STIP-Bridge program.
Source – https://dune.com/frijoles/vertex
Monthly USD Inflows / Outflows
Between June 24th and September 16th, daily USD inflows and outflows on Vertex demonstrated high variability, with inflow and outflow values fluctuating between approximately $-10 million to $10 million.
The pattern shows frequent and sharp swings around the zero line, indicating balanced but volatile liquidity movements on a daily basis. These fluctuations suggest a dynamic trading environment, with users actively moving funds in and out, likely in response to short-term market conditions or trading opportunities on the platform.
The consistency of these oscillations highlights a robust but reactive liquidity profile over the relevant period.
Source – https://dune.com/frijoles/vertex
Monthly User Metrics
Between June 24th and September 16th, the daily active users on Vertex showed moderate fluctuations, typically ranging between 200 and 500 users, with occasional peaks exceeding 500 – especially towards the end of July.
This period indicates a fairly stable level of engagement, with spikes in user activity that may correlate with specific platform events, market listings, or broader market trends and volatility.
New user numbers, represented by the black bars, remained relatively consistent at lower levels than the average active user set, with a handful of spikes in new users on several days in July 2024. New users onboarded to Vertex peaked on August 5th, 2024, equating to almost 600 new users on the platform that day.
Otherwise, daily new users ranged in a broad band of roughly 15 - 40 users per day on average (with notable variance) before tapering off in the final 3 weeks of the STIP-Bridge program. The pattern suggests that the platform’s user base growth was gradual, with the majority of daily activity consistently driven by returning users relative to new sign-ups.
Source – https://dune.com/frijoles/vertex
Elixir Fusion Pools
The Elixir Fusion Pools on Vertex demonstrated sustained performance throughout the STIP-Bridge program, contributing to liquidity depth and trading volume across multiple pairs.
By allowing users to supply stablecoin collateral, the Fusion Pools enabled a broad base of liquidity, effectively supporting Vertex’s order book for perpetual futures and spot pairs.
Total Trading Volume Data (June 24 – September 16): The trading volume chart highlights a cumulative trading volume of roughly $211 million across the board, showcasing how ARB incentives can drive trading activity on Vertex through Elixir pools.
While experiencing a lower cumulative trading volume than the original STIP round, Elixir’s performance can be similarly attributed to differing market conditions and lower ARB incentives over the relevant period. Elixir’s performance also broadly mirrors the decline in total Vertex platform liquidity over the same latter half of the STIP-B program.
TVL Trend Analysis: The TVL data over the relevant period reflects a brief spike followed by a gradual decline in total TVL contributed by Elixir – peaking at almost $25 million in the first month before declining to less than $10 million by the end of the STIP-Bridge program. This trend supports the observation that initial TVL on Vertex rose, reaching a peak at the mid-period, and then experienced a drop-off.
The decline suggests that despite the ARB incentives offering a 15% APR baseline and maker rewards for Elixir Fusion Pools, sustaining long-term liquidity was more challenging, particularly as external market conditions or user activity waned.
TVL by Asset Breakdown: The TVL chart by pairs highlights that USDT was the dominant contributor to liquidity, maintaining higher levels compared to other assets.
Liquidity Stability: Despite the decline noted towards the latter half of the program, the data underscores the sustained contribution of Elixir Fusion Pools to liquidity depth, often performing in line with the broader Vertex platform’s liquidity.
The APYs and incentive structures likely attracted liquidity providers at the start, but reduced inflow in later stages indicates that ongoing engagement was sensitive to market sentiment and broader DeFi trends.
SkateFi “The Majors” Vault
SkateFi’s “The Majors” Vault, introduced as a new liquidity initiative on Vertex, encountered mixed results. Although preliminary testing suggested potential with over $250 million in trading volume from a small capital pool, sustained traction did not materialize as expected during the STIP-Bridge period.
In total, the SkateFi “The Majors” vault settled approximately $28.7 million in trading volume by the end of the STIP-Bridge round with $145.71k in TVL.
Source – Skate “The Majors” Vault
The Vault’s pro-rata incentive distribution aimed to facilitate efficient liquidity provision, yet uptake remained limited, with distributed incentives totaling just 16,000 ARB out of an allocated 150,000 ARB. Challenges in communication and operational coordination likely contributed to this shortfall.
Additionally, the Vault’s strategy of maintaining delta-neutral exposure through funding rate arbitrage may have appealed to a narrow subset of users, which impacted broader adoption.
The experience suggests that while the Vault model has potential, future iterations might benefit from enhanced marketing and clearer alignment with user incentives to achieve consistent engagement and utility.
Gas Metrics
Vertex continued to be a major contributor to Arbitrum’s gas revenue, ranking as the third highest gas consumer over the 90-day STIP-Bridge period and accounting for approximately 3.64% of total gas usage – only behind GMX and an MEV operator.
The sustained gas usage is indicative of Vertex’s high transaction volume and active user engagement, reinforcing the platform’s role in supporting Arbitrum’s economic ecosystem.
Frequent state updates and trade settlements likely drove this high gas consumption, highlighting Vertex’s operational scale and its impact on the layer-two network’s revenue model.
By generating consistent gas fees, Vertex not only added value to Arbitrum but also demonstrated the effectiveness of ARB incentives in fostering sustained on-chain activity. This sustained gas demand underscores the protocol’s engagement within the ecosystem and reinforces its strategic importance to the broader Arbitrum infrastructure.
Source – https://dune.com/vrtxc/arbitrum-gas-usage
Query Available Here
Challenges
The STIP-Bridge program revealed several operational and structural challenges that impacted Vertex’s incentive distribution and partner collaboration. While Vertex successfully executed its trading rewards and Elixir Fusion Pool incentives, minor logistical hurdles emerged, especially in coordinating with partner protocols.
A fundamental challenge lay in the manual distribution process for partner rewards, which exposed hurdles in communication, precision, and timing. Without a standardized check-in procedure, the team faced minor difficulties in tracking distribution amounts and ensuring timely transfers.
A lack of a formalized system led to occasional discrepancies, including instances where partners received different amounts than intended, as well as misrouted transactions that mistakenly sent ARB tokens to the contract address instead of the designated recipient This amount was repurchased and returned to the DAO in full later. These errors, though unintentional, highlighted the need for clearer processes and automated controls in managing rewards for future programs.
Instituting standardized checkpoints, verifying amounts, and automating transfers could help mitigate these operational inefficiencies and reduce the potential for future distribution errors.
Furthermore, the SkateFi partnership illuminated a broader lesson in strategic alignment and partnership management.
While SkateFi’s contribution to trading volume was initially promising, maintaining engagement proved challenging without a continuous feedback loop and adaptive reward mechanisms.
A more integrated approach could help Vertex better align partner incentives with user behaviors, ultimately enhancing program outcomes and increasing the likelihood of sustained, long-term impact.
Lessons
The STIP-Bridge program offered Vertex valuable insights into optimizing its incentive structure and operational processes.
One clear takeaway is the potential exploration of a more refined distribution mechanism for rewards. While the taker fee-based model proved effective for trading rewards due to its simplicity and inherent sybil resistance, it may benefit from creative enhancements in future campaigns. Introducing variations or additional reward structures could make the model more attractive and inclusive, particularly by catering to a broader range of participant behaviors.
Syncing with other projects and DAO members to explore more flexible or layered incentive mechanisms could add nuance to the reward model, balancing simplicity with appeal.
Another critical insight was the potential advantage of incentivizing makers more heavily in future campaigns. For example, Vertex plans to adjust its native VRTX maker rewards soon by increasing the weighting for VRTX trading incentives from 50% to 75%, recognizing the value of maker liquidity in enhancing order book depth and stability.
Building on this approach, future ARB incentive programs could prioritize maker incentives further, reinforcing the liquidity foundations of Vertex’s markets. This shift would likely encourage a greater volume of passive liquidity provision, strengthening the DEX’s resilience against volatility and contributing to a more stable trading environment.
Lastly, the program highlighted the importance of robust integration and consistent communication with partner protocols. Challenges underscored the need for a more structured and transparent coordination framework, ensuring that both Vertex and its partners are aligned on reward distribution, performance expectations, and operational logistics.
Establishing regular check-ins and clear communication channels could preempt discrepancies and ensure smoother execution. By fostering stronger partnerships and proactive communication, Vertex can maximize the effectiveness of collaborative efforts in future incentive rounds.