[Non-constitutional] Incentives Detox Proposal | proposals.app

posted 2 years ago

Retrospective Analysis: Importance of developing Incentive Goals

STIP (~ Nov 2023 - Feb 2024), STIP.b (~ Dec 2023 - March 2024), and LTIPP (~June 3 - Aug 1 2024) have all now come to a close, distributing on the order of ~100M ARB to participants. A flurry of discussion and data analysis around these programs has been ongoing throughout the forum and key working group calls, including before, during, and after the campaigns.

Retrospective Analysis: Importance of developing Incentive Goals

Vending Machine has been reviewing the various discussions around the campaigns both here on the forum and during the weekly calls, and has gathered that one of the key goals of the DAO going forward for future campaigns is to define clear campaign objectives before the campaign begins, and outline the relevant KPIs to measure them. There has already been great work done in this vain, both during and just after STIP (for example here, here, here, here and here), as well as in and around the LTIPP (for example here and here).

The overall goal of this brief report is to summarise key findings across the comprehensive list of conducted research, and focus on the following:

To give a high level outline of how the setup, organization, design process, parametrization process, operational management, and ongoing monitoring and optimization were conducted throughout the campaigns.
Outline, based on the already completed analyses by OpenBlock (such as here, here, here and here), Blockworks, Team Lampros Lab DAO, and others, the objectives we believe were achieved with these campaigns, and what KPIs were used to measure them. Note that the campaigns’ objectives in some cases lacked a detailed, research informed, iterative process to arrive at clear definition, specificity, and clarity (though this was improved somewhat for LTIPP, where explicit goals such as user engagement, value generation, and protocol growth across various sectors were explicitly outlined).

Setup and Organization

Though it is not perfectly clear how long discussions were ongoing within the DAO surrounding a launch of an incentive campaign, a call for an Arbitrum Incentives Program Working Group was made in August 2023, stating the need for one because “…of the difficult challenge of balancing the urgent desire to fuel network growth via incentives with the equally important need for responsible delegate oversight and community consensus.” A general framework for what a campaign proposal should entail was given.

The associated AIP, the main launchpoint for STIP, was posted to the forum a month later. In this proposal, goals of the campaign were outlined as such:

Support Network Growth
Experiment with Incentive Grants
Find new models for grants and developer support that generate maximum activity on the Arbitrum network
Create Incentive Data

A number of constraints on grantees were outlined, covering data requirements for grantees, contract disclosures, no DAO voting with grants, and general good behavior guidelines.

Additionally, it appears that there were some competing opinions within the DAO. Urgency for incentives was also stressed.

Design Process

It seems Arbitrum DAO members and early working groups surrounding STIP were created around June-August of 2023, and with the finalized AIP being posted in September, it is reasonable to conclude that roughly 1-2 months of deliberation went into the designing of STIP.

There seems to be general consensus that both STIP.b and LTIPP were created in quite a quick fashion, due to pressures from various competing interests. Basing this also around forum discussion, it seems likely that around 1 month of deliberation went into the designing of these programs, perhaps more for LTIPP, though both were created and influenced heavily by STIP’s design.

LTIPP had roughly 1-2 months of public filtering/iteration on the design (with perhaps more privately), with many more months of deliberation and protocol discussion/voting in the forum. A number of temperature check snapshot votes happened during this period as designs were iterated on.

In LTIPP applications, clear grant objectives and KPIs were required from protocols, which is closer to a bottom up approach. Many of the outlined objectives coincided with LTIPP’s higher level outlined goals, which included:

User engagement
Value generation
Protocol growth

Parameterization Process

The total rewards for the campaigns were outlined in forum posts and discussed between participants. They were then approved and iterated on through snapshot votes. The consensus among forum discussion participants originally was that 75M ARB was too much for STIP.

Here it is argued 75M was necessary, and protocols were involved in this recommendation as were delegates. A comparison to Optimism’s spend was given. It is unclear whether there was a strong cap or not, but it was stated “delegates will decide whether an amount is excessive given the scope.”

Eventually, after much discussion in the forum, a Snapshot temperature check included 3 budget options, 25M, 50M, 75M. Ultimately, 50M was decided on through Snapshot. A similar vote on incentive size was conducted for LTIPP.

Operational Management

The operational management and difficulties faced throughout these campaigns have been discussed and outlined extensively as pointed out in the introduction. LTIPP made large strides in a positive direction here, with the introduction of smaller more focused delegate committees, and there have also already been large strides in to how the organizational structure should look in the future. As a rough high level summary, the timeline of the operational flow and various working groups and their responsibilities were as follows:

The Arbitrum incentives Working Group kickstarted discussion around the launch of STIP.
Program Management responsibilities were transferred over to StableLab in September 2023.
Conversations between Arbitrum delegates, protocols, and the DAO were ongoing throughout both campaigns.
ARDC (Blockworks) had some data reporting responsibilities.
OpenBlock also shared much of the data tracking and reporting responsibilities.
Arbgrants in conjunction with OpenBlock seemed to manage the data reporting and tracking responsibilities for LTIPP.
Instead of delegates having to manage many concurring protocol applications and relationships as they did during STIP, more focused committees were developed for LTIPP, which seemed to result in significant operational improvement.

Monitoring and Optimization

Data monitoring, and ensuring funds were being used appropriately, was an explicit priority across all campaigns. Based on discussions in the forum, it was clear many delegates felt overwhelmed by all the responsibility here. Reviewing hundreds of applications and keeping track of nearly just as many protocols quickly became unfeasible.

OpenBlock proposed the framework and to take on responsibility for STIP data monitoring. Throughout STIP, dashboards and bi-weekly updates were provided by OpenBlock. Bi-weekly updates from protocols and final reports from some could be found as well. The same was true for STIP.b.

For LTIPP, protocols were given OBL’s Onboarding Checklist, and protocols were required to comply for the entire life of the program and three months following. Arbgrants was spun up to facilitate this process and to lighten the operational burden that was occurring due to extremely overworked delegates, and to de-clutter the forums. Powerhouse seemed to be the main company behind this development.

Were the Objectives Achieved?

Given the objectives outlined in the launching of the STIP and LTIPP campaigns, we can compare the analysis generated by OpenBlock, Blockworks (ARDC), Lampos, and others against these objectives, to see if and how well they were obtained.

Recall, the stated objectives for STIP were:

Support Network Growth
Experiment with Incentive Grants
Find new models for grants and developer support that generate maximum activity on the Arbitrum network
Create Incentive Data

and the stated objectives for LTIPP were:

User engagement
Value generation
Protocol growth

STIP

1. Support Network Growth (not achieved)

According to ARDC’s “STIP Analysis of Operations and Incentive Mechanisms” report:

“Overall, during the STIP, Arbitrum’s market share growth across major blockchains peaked at ~0% for TVL, ~5% for spot volume, ~12% for perp volume, and ~0% for loans outstanding. The market shares are currently at around September 2023 values, except for TVL, which is down from ~6% to ~4%.”

AD_4nXetdmpSjd_2tpukAASN1f9AQIPa5CgDbqvP7wt3UxFMPowWcnF4tLRfsCCsWCu9Pfyt3heq8_NKh6j3mDkIns_el3gIJ5L9i2mi9Uj6oRp9OPeYcU6TSJZgzx6VecLPjEzr99AhAs5RmB3XEHOgG9vPp6ae|690x426, 100%

AD_4nXcyZ3oqqvfZJHhDz3AaekXHcU9_Z7FxBpSJ7KTkUBZ90X53Cp2UllBB3WpODJAYOowLKTkZl1mF6gY1m8OshbCuNlS52ruA4nmPwZ_WjM9D0Q8qYKgNAhC9B10uL9OXMUh13DPJnjsOl0whZGbpPGD4VHPx|690x426

2. Experiment with Incentive Grants (achieved)

From OpenBlock’s STIP Incentive Efficacy Analysis: 30 protocols were allocated a share of 50 million ARB tokens.

3. Find new models for grants and developer support that generate maximum activity on the Arbitrum network (not achieved)

Though experimental data was generated, based on the variety of post-incentive campaign discussion from Tnorm and others posted on the forum, it is clear that the models used for the STIP campaign were in need of an upgrade.

It can be argued however, that in moving from STIP to LTIPP, new models for grants and developer support were experimented with. However, STIP, STIP.b, and LTIPP all did employ roughly the same template of handing out incentives to protocols.

4. Create Incentive Data (achieved)

This goal was clearly achieved, given the wealth of post-campaign analysis, including dashboards, more formal research reports, and community/forum discussion.

LTIPP

The findings here are picked from Team Lampros Labs DAO LTIPP Report and Open Block’s LTIPP Efficacy Analysis reports.

1. User Engagement (mixed)

Summarizing the report from Team Lampros Labs: The Long-Term Incentive Pilot Program (LTIPP) on Arbitrum had varying impacts on user engagement across sectors, with the "Quests" sector showing the highest growth in Daily Active Users (DAU). Proprietary incentives were the most successful in driving TVL and engagement, particularly in "Options" and "Oracles." However, other sectors like "Perpetual" and "Stables/Synthetics" saw limited growth or declines, highlighting the need for more targeted strategies. A significant portion of ARB rewards (47.8%) was used for selling tokens, with other actions like liquidity provision and lending following behind. Unintended behaviors, such as circular transactions and holding rewards without further action, also undermined the program’s effectiveness. Furthermore, users who participated across multiple protocols for short-term rewards, had low governance involvement, which poses challenges for long-term engagement.

Though user engagement post-campaign was not an explicit goal, by looking at many of the graphs in Open Block’s LTIPP Efficacy Analysis, it is clear most metrics have fallen upon program competition, including a lot of capital outflows (except, interestingly, for stablecoins).

2. Value Generation (mixed)

At the start, this objective seems poorly defined. Assuming value generation corresponds to sequencer fees, we can say that the program increased this revenue during the campaign, but now, post campaign, it has fallen to levels below the start of the campaign. It is also unclear whether this additional revenue was simply due to other market factors and unclear whether it can be attributed to LTIPP directly.

Many of the data reports did not explicitly analyze “value generation”, potentially because of its lack of clear definition. Interpreting it as sequencer fee generation, reports tended to not include data in this regard. From Artemis and Token Terminal:

Arb 3|690x328

arb 4|690x328

3. Protocol Growth (mixed)

Incentivized DEXs showed superior growth in TVL and fees during LTIPP, exceeding expectations based on TVL and fees on other networks. Yield protocols also saw boosts during the campaign.

However, after the campaign finished, the majority of all relevant protocol growth metrics have fallen.

There were some protocols that seemed to maintain their growth, such as Compound. However, this is mainly because protocols were onboarded due to the LTIPP campaign, and would have had zero growth without the campaign (because they would have never been onboarded).

Therefore, the network objectives and whether they were achieved or not can be summarized in the following table:

Objective	Achieved/Not Achieved
Support Network Growth (STIP)	❌
Experiment with Incentive Grants (STIP)	✔️
Find new models for grants and developer support that generate maximum activity on the Arbitrum network (STIP)	❌
Create Incentive Data (STIP)	✔️
User engagement (LTIPP)	mixed
Value generation (LTIPP)	mixed
Protocol growth (LTIPP)	mixed

Moving Forward

arb 5|547x499

(from Arbitrum Incentives Retrospective Presentation)

It is clear from forum discussion, the mixed results of the stated campaign objectives, the lack of standardization around post campaign analyses, and the drop off of KPIs post-campaign, that the stated network objectives may have been misguided.

Going forward, it is clear that more time and effort spent on the development of campaign incentive goals will be needed. As has been observed, the campaign incentive goals shape the campaign design, which shape user behavior, and ultimately, shape the impact of these campaigns on the ecosystem as a whole.

Additionally, with more time and effort spent on developing incentive campaign goals, analyzing their success both during and after the campaign will be easier for the associated research labs. This will allow the Arbitrum DAO, key working groups, and delegates to analyze the success of the campaign more effectively.

Disclosure

Vending Machine was not directly involved in the STIP or LTIPP. The analysis presented is based off of the current public reports - if something in this summary report is inaccurate or misrepresented, we invite the community to reach out so we can update this post and improve its accuracy.

Resources

STIP original program outline

STIP.b original program outline

LTIPP original program outline

Proposal to Improve Future Incentive Programs - teddy-notional

Discussion: Reframing Incentives on Arbitrum

Serious People: Proposed KPIs for Arbitrum Grant Programs (LTIPP)

A New Thesis for Network-Level Incentives Programs

Learnings from STIP: Community Interview Summaries and Notes

[RFC] Thoughts on the End-Game Perpetual Incentives Program

Memories of a (grantor) cow: thoughts about incentives program and what could be next

GMX Bi-weekly STIP.b Reports

LTIPP Application Template

OpenBlock Labs STIP Efficacy + Sybil Analysis (2/24)

OpenBlock’s STIP Incentive Efficacy Analysis

OpenBlock realtime dashboards

OpenBlock Arbitrum LTIPP Efficacy Analysis

ARDC Research Deliverables

STIP Analysis of Operations and Incentive Mechanisms

Team Lampros Labs DAO - LTIPP Research Bounty Reports

Arbitrum Incentives Program - Working Group

Tnorm reply on original STIP proposal

Tnorm on STIP ARB Allocation

Comparison to Optimism’s Incentive Spend

50M ARB STIP spend snapshot vote result

StableLab Engagement

ArbGrants

Arbitrum Incentives Retrospective Presentation

VendingMachine

posted 2 years ago

Retrospective Analysis: Importance of developing Incentive Goals

The overall goal of this brief report is to summarise key findings across the comprehensive list of conducted research, and focus on the following:

To give a high level outline of how the setup, organization, design process, parametrization process, operational management, and ongoing monitoring and optimization were conducted throughout the campaigns.
Outline, based on the already completed analyses by OpenBlock (such as here, here, here and here), Blockworks, Team Lampros Lab DAO, and others, the objectives we believe were achieved with these campaigns, and what KPIs were used to measure them. Note that the campaigns’ objectives in some cases lacked a detailed, research informed, iterative process to arrive at clear definition, specificity, and clarity (though this was improved somewhat for LTIPP, where explicit goals such as user engagement, value generation, and protocol growth across various sectors were explicitly outlined).

Setup and Organization

The associated AIP, the main launchpoint for STIP, was posted to the forum a month later. In this proposal, goals of the campaign were outlined as such:

Support Network Growth
Experiment with Incentive Grants
Find new models for grants and developer support that generate maximum activity on the Arbitrum network
Create Incentive Data

A number of constraints on grantees were outlined, covering data requirements for grantees, contract disclosures, no DAO voting with grants, and general good behavior guidelines.

Additionally, it appears that there were some competing opinions within the DAO. Urgency for incentives was also stressed.

Design Process

User engagement
Value generation
Protocol growth

Parameterization Process

Operational Management

The Arbitrum incentives Working Group kickstarted discussion around the launch of STIP.
Program Management responsibilities were transferred over to StableLab in September 2023.
Conversations between Arbitrum delegates, protocols, and the DAO were ongoing throughout both campaigns.
ARDC (Blockworks) had some data reporting responsibilities.
OpenBlock also shared much of the data tracking and reporting responsibilities.
Arbgrants in conjunction with OpenBlock seemed to manage the data reporting and tracking responsibilities for LTIPP.
Instead of delegates having to manage many concurring protocol applications and relationships as they did during STIP, more focused committees were developed for LTIPP, which seemed to result in significant operational improvement.

Monitoring and Optimization

Were the Objectives Achieved?

Recall, the stated objectives for STIP were:

Support Network Growth
Experiment with Incentive Grants
Find new models for grants and developer support that generate maximum activity on the Arbitrum network
Create Incentive Data

and the stated objectives for LTIPP were:

User engagement
Value generation
Protocol growth

STIP

1. Support Network Growth (not achieved)

According to ARDC’s “STIP Analysis of Operations and Incentive Mechanisms” report:

AD_4nXetdmpSjd_2tpukAASN1f9AQIPa5CgDbqvP7wt3UxFMPowWcnF4tLRfsCCsWCu9Pfyt3heq8_NKh6j3mDkIns_el3gIJ5L9i2mi9Uj6oRp9OPeYcU6TSJZgzx6VecLPjEzr99AhAs5RmB3XEHOgG9vPp6ae|690x426, 100%

AD_4nXcyZ3oqqvfZJHhDz3AaekXHcU9_Z7FxBpSJ7KTkUBZ90X53Cp2UllBB3WpODJAYOowLKTkZl1mF6gY1m8OshbCuNlS52ruA4nmPwZ_WjM9D0Q8qYKgNAhC9B10uL9OXMUh13DPJnjsOl0whZGbpPGD4VHPx|690x426

2. Experiment with Incentive Grants (achieved)

From OpenBlock’s STIP Incentive Efficacy Analysis: 30 protocols were allocated a share of 50 million ARB tokens.

3. Find new models for grants and developer support that generate maximum activity on the Arbitrum network (not achieved)

4. Create Incentive Data (achieved)

This goal was clearly achieved, given the wealth of post-campaign analysis, including dashboards, more formal research reports, and community/forum discussion.

LTIPP

The findings here are picked from Team Lampros Labs DAO LTIPP Report and Open Block’s LTIPP Efficacy Analysis reports.

1. User Engagement (mixed)

2. Value Generation (mixed)

Arb 3|690x328

arb 4|690x328

3. Protocol Growth (mixed)

Incentivized DEXs showed superior growth in TVL and fees during LTIPP, exceeding expectations based on TVL and fees on other networks. Yield protocols also saw boosts during the campaign.

However, after the campaign finished, the majority of all relevant protocol growth metrics have fallen.

Therefore, the network objectives and whether they were achieved or not can be summarized in the following table:

Objective	Achieved/Not Achieved
Support Network Growth (STIP)	❌
Experiment with Incentive Grants (STIP)	✔️
Find new models for grants and developer support that generate maximum activity on the Arbitrum network (STIP)	❌
Create Incentive Data (STIP)	✔️
User engagement (LTIPP)	mixed
Value generation (LTIPP)	mixed
Protocol growth (LTIPP)	mixed

Moving Forward

arb 5|547x499

(from Arbitrum Incentives Retrospective Presentation)

Disclosure

Resources

STIP original program outline

STIP.b original program outline

LTIPP original program outline

Proposal to Improve Future Incentive Programs - teddy-notional

Discussion: Reframing Incentives on Arbitrum

Serious People: Proposed KPIs for Arbitrum Grant Programs (LTIPP)

A New Thesis for Network-Level Incentives Programs

Learnings from STIP: Community Interview Summaries and Notes

[RFC] Thoughts on the End-Game Perpetual Incentives Program

Memories of a (grantor) cow: thoughts about incentives program and what could be next

GMX Bi-weekly STIP.b Reports

LTIPP Application Template

OpenBlock Labs STIP Efficacy + Sybil Analysis (2/24)

OpenBlock’s STIP Incentive Efficacy Analysis

OpenBlock realtime dashboards

OpenBlock Arbitrum LTIPP Efficacy Analysis

ARDC Research Deliverables

STIP Analysis of Operations and Incentive Mechanisms

Team Lampros Labs DAO - LTIPP Research Bounty Reports

Arbitrum Incentives Program - Working Group

Tnorm reply on original STIP proposal

Tnorm on STIP ARB Allocation

Comparison to Optimism’s Incentive Spend

50M ARB STIP spend snapshot vote result

StableLab Engagement

ArbGrants

Arbitrum Incentives Retrospective Presentation

Deelabs

posted 2 years ago

We find this proposal to be a well-crafted and strategically important initiative for the Arbitrum ecosystem. It represents a thouhtful approach to how incentive programs are approached, emphasizing the need for analysis and data-driven decision-making.

By devoting more time and resources to analyze past performance and the outcomes garnered, Arbitrum can adopt a more empirical approach to incentive design. This shift towards data-driven strategies is important for the ecosystem's long-term sustainability and efficiency. The proposed pause and reflection period hence promotes a more sustainable growth model, allowing for the identification of inefficiencies in previous programs and the opportunity to optimize resource allocation in future initiatives.

114

While the proposed 3-month pause may raise concerns about short-term growth, we believe the long-term benefits of this approach far outweigh any potential temporary slowdown. The insights gained and the improved strategies developed during this period have the potential to catalyze more sustainable and efficient growth in the future.

A more thoughtful approach to incentive design has the potential to improve the retention of both users and liquidity post-incentives, which we deem to be a critical factor for long-term ecosystem health and sustainability, and potentially a meaningful differentiatior.

Overall, we find this proposal to represent a mature, forward-thinking approach to ecosystem development. It effectievely balances the need for continued growth and the importance of strategic planning and efficient resource allocation.

114

Deelabs

posted 2 years ago

114

duokongcrypto from kuiqian.eth

107.4K TOKEN

posted 1 year ago

The feedback and communication on this proposal have been excellent and eye-opening. Thank you for your proposal; I have learned a lot from it, and I appreciate your attention to these matters.

The proposal is very comprehensive, with a clear and direct direction. I believe there is no need to establish a new working group. Instead, efforts should focus on leveraging ARDC’s research results to optimize the existing framework. At the same time, innovative incentive methods and a shared funding mechanism should be introduced to maintain a competitive edge.

The feedback and communication on this proposal have been excellent and eye-opening. Thank you for your proposal; I have learned a lot from it, and I appreciate your attention to these matters.

ARDC has already conducted extensive research and discussions, and directly utilizing their existing outcomes would be more efficient. Creating a new working group could lead to resource fragmentation and reduced efficiency. It would be better to concentrate efforts on refining ARDC’s existing work.

The previous incentive model, where the DAO entirely subsidized projects, posed high risks and led to resource wastage. Future incentive plans should incorporate a “shared funding mechanism,” requiring protocols to contribute part of the capital to increase their responsibility for project success.

Arbitrum should consider diversifying its incentive approaches, not limiting itself to liquidity incentives, but also exploring innovative methods such as account abstraction and point systems to attract users. Permanent incentive plans should not only focus on user acquisition but also on the long-term value of ArbitrumDAO, including protocol revenue, ecosystem user retention, and the genuine contributions of ecosystem participants to the network.

Future incentive plans should require protocols to contribute a portion of the capital, such as in STIP’s funding ratio, to avoid having the DAO fully bear the costs and to enhance the sustainability of the incentive programs.

Sinkas from delegate.l2beat.eth

10.0M TOKEN

posted 1 year ago

TL;DR

Incentives detox is officially over. We now invite people that have been working on proposal for incentive programs to come forward and propose them to the DAO. We have compiled a list of useful input from the past 14 calls of the ‘Liquidity Incentives Working Group’ that proposal authors are encouraged to incorporate in their design.

TL;DR

This post officially marks the end of the ‘Incentives Detox’ proposal and the period of holding back from trying to implement an incentives program in Arbitrum. From today onward, we encourage individuals, teams, or organizations that want to propose an incentive program design to do so in the forum.

There are already a few proposals being worked on that have been presented and discussed in past calls of the incentives working group. Moving forward, we think that ETH Denver is a good deadline to aim for in terms of being in a position as a DAO to announce the new program. To do so, we need to utilize the next few weeks to make headway in narrowing down the program we want to implement.

To help facilitate the process of incorporating feedback from all participants of the working group over the past 14 calls, we’ve fed the transcripts of the calls into ChatGPT and created a list of suggestions that have been brought up. We then filtered the suggestions to remove duplicate ones and then proceeded to group them together under common themes.

Here’s what we came up with:

KPIs and Monitoring

Design incentive programs with clear goals, such as boosting TVL, attracting protocols, or increasing capital stickiness.
Measure incentive program success using specific KPIs, such as unique users, TVL, or sequencer fees.
Design incentives based on vertical-specific KPIs, such as DEX volume or lending protocol utilization.
Use predictive analytics to adjust reward distributions dynamically based on market conditions.
Monitor incentive programs live to allow for mid-course corrections rather than postmortem adjustments.
Leverage data-driven dashboards to monitor metrics in real time.
Collaborate with analytics firms for real-time compliance monitoring during programs.
Introduce short-term incentive seasons (e.g., three months) to enable rapid iteration and targeted objectives.

Direct incentive distribution

Use retrospective rewards rather than upfront incentives to ensure actual outcomes.
Make use of direct-to-contract incentives that validate user activity on-chain.
Reward liquidity providers directly instead of funding protocols.

Long-term user/capital retention

Explore mechanisms to retain capital, such as rewarding only after users maintain capital within the ecosystem for a defined period.
Incentivize long-term participation through staking tiers, with higher rewards for longer commitments.
Introduce "progressive incentives", where rewards scale with sustained activity over time. Incentivize user retention through reward vesting mechanisms.
Incentivize long-term staking programs to build user loyalty.

Asset / Vertical / Protocol Selection

Incentivize usage of wrapped assets, like wrapped ETH, to grow Arbitrum’s market share.
Prioritize the growth of spot markets as a foundational layer for DeFi.
Limit the scope of rewards to well-established assets or leading categories, avoiding speculative or low-TVL projects.
Target new protocols and users on other blockchains, such as Tron or Binance Smart Chain, to expand the user base.
Focus on protocol-specific incentives for bridges, lending platforms, and DEXs.
Shift toward vertical prioritization, such as focusing on DEX and lending over gaming
Reward protocols based on their innovative incentive mechanisms, such as gamified rewards.
Incentivize behavior-based actions, such as liquidity provision or user engagement, rather than blanket rewards.
Use gas fee reimbursements as a form of user incentive.
Encourage protocols to adopt modular incentive structures that can scale with user activity.
Reward high-value users (e.g., whales) by targeting their preferences, such as deeper liquidity.
Introduce programs focusing on building the deepest liquidity pools for specific assets. Implement granular incentives targeting specific user actions, such as deposits into liquidity pools.

Protocol Collaboration

Incorporate cross-protocol collaboration in incentive design to maximize synergies. Reward cross-chain integrations that funnel activity into Arbitrum. Develop multi-chain incentives to bridge activity between Arbitrum and other chains.
Prioritize protocol partnerships to co-sponsor incentive programs.

Marketing & Operations

Encourage off-chain marketing campaigns targeting non-crypto users, such as forex traders or fintech users.

Sinkas from delegate.l2beat.eth

10.0M TOKEN

posted 2 years ago

Below is the recording of the third call, the call’s transcript, and the chat log. You will also find notes on the topics/questions we discussed and a summary of the views expressed. In the third call, we had Matt from StableLabs present the LTIPP Council’s perspective of incentives.

Links

Recording - Liquidity Incentives Call #3 (4.9.2024) Transcript - Liquidity Incentives Call #3 (4.9.2024) Chat Log - Liquidity Incentives Call #3 (4.9.2024)

Summary

The things that were discussed were:

On operational challenges faced by the advisors and the council, the feasibility of advising 180 protocols with three people was questioned, highlighting the time-consuming nature of the process.
In response, the the variability in the time required to advise protocols, depending on their experience and preparedness was also discussed.
The need for a coordination layer within the DAO to support multiple grant programs and initiatives.
The need for a more holistic approach to support protocols and ensure alignment with DAO objectives.
The need for a smaller, dedicated group to research and propose the new incentives program

From the presentation of Matt from StableLabs, we discussed:

The DAO voted on 95 proposals, leading to chaos and poor incentive design choices.
Operational challenges included KYC delays, lack of clear goals, and ineffective decision-making by the multi-sig team.
The PM was overwhelmed with managing 75 protocols and 70 million ARB
Advisors were added to help protocols design incentives, but protocols missed deadlines and couldn't alter proposals.
KYC delays and fluctuating ARB prices led to misjudged goals and confusion for delegates.
The lack of data funding and a council made it difficult to monitor and approve proposals.
The STIP Bridge program was created to address the disadvantages faced by protocols applying to LTIPP.
Advisors helped with STIP Bridge addendums, but the program had a short incentive period and no guidelines for ARB use.
Delegates were hesitant to post challenges due to unclear past performance metrics.
The lack of objectives, operational structure, marketing, and enough people to manage the programs was highlighted.
Timelines were unclear and too short, leading to delays and shortened incentives periods.
Protocols were unsure about future incentives and faced competition dynamics like a race-to-zero on protocol fees.
Having a single bucket of incentives for all protocols made it hard to create a standardized rubric and guardrails.

In terms of ideas for future programs:

A new program should have specific goals derived from the DAO's objectives, with different programs for different protocol categories.
A marketing team and watchdog should be introduced to improve visibility and monitor for misuse of funds
The program should be iterative, allowing for changes based on feedback and performance.
It was suggested that some tasks, like gathering delegate feedback and defining DAO goals should be handled by a dedicated incentive team.
The need for a one-year program to reduce the rush and improve the process.
The idea of having verified experts as advisors was proposed to improve the quality of advice and reduce the workload for DAO contributors and delegates.
The importance of aligning the program with DAO goals and ensuring clear operational costs and structures.

For next call:

As with previous calls, we encourage participants to prepare for the next one and share their visions and lessons earned with the rest of the working group. If you have an analysis, a report, or other findings to present during one of the upcoming calls, please contact Sinkas on Telegram.

duokongcrypto from kuiqian.eth

107.4K TOKEN

posted 1 year ago

The feedback and communication on this proposal have been excellent and eye-opening. Thank you for your proposal; I have learned a lot from it, and I appreciate your attention to these matters.

Sinkas from delegate.l2beat.eth

10.0M TOKEN

posted 1 year ago

TL;DR

Here’s what we came up with:

KPIs and Monitoring

Design incentive programs with clear goals, such as boosting TVL, attracting protocols, or increasing capital stickiness.
Measure incentive program success using specific KPIs, such as unique users, TVL, or sequencer fees.
Design incentives based on vertical-specific KPIs, such as DEX volume or lending protocol utilization.
Use predictive analytics to adjust reward distributions dynamically based on market conditions.
Monitor incentive programs live to allow for mid-course corrections rather than postmortem adjustments.
Leverage data-driven dashboards to monitor metrics in real time.
Collaborate with analytics firms for real-time compliance monitoring during programs.
Introduce short-term incentive seasons (e.g., three months) to enable rapid iteration and targeted objectives.

Direct incentive distribution

Use retrospective rewards rather than upfront incentives to ensure actual outcomes.
Make use of direct-to-contract incentives that validate user activity on-chain.
Reward liquidity providers directly instead of funding protocols.

Long-term user/capital retention

Explore mechanisms to retain capital, such as rewarding only after users maintain capital within the ecosystem for a defined period.
Incentivize long-term participation through staking tiers, with higher rewards for longer commitments.
Introduce "progressive incentives", where rewards scale with sustained activity over time. Incentivize user retention through reward vesting mechanisms.
Incentivize long-term staking programs to build user loyalty.

Asset / Vertical / Protocol Selection

Incentivize usage of wrapped assets, like wrapped ETH, to grow Arbitrum’s market share.
Prioritize the growth of spot markets as a foundational layer for DeFi.
Limit the scope of rewards to well-established assets or leading categories, avoiding speculative or low-TVL projects.
Target new protocols and users on other blockchains, such as Tron or Binance Smart Chain, to expand the user base.
Focus on protocol-specific incentives for bridges, lending platforms, and DEXs.
Shift toward vertical prioritization, such as focusing on DEX and lending over gaming
Reward protocols based on their innovative incentive mechanisms, such as gamified rewards.
Incentivize behavior-based actions, such as liquidity provision or user engagement, rather than blanket rewards.
Use gas fee reimbursements as a form of user incentive.
Encourage protocols to adopt modular incentive structures that can scale with user activity.
Reward high-value users (e.g., whales) by targeting their preferences, such as deeper liquidity.
Introduce programs focusing on building the deepest liquidity pools for specific assets. Implement granular incentives targeting specific user actions, such as deposits into liquidity pools.

Protocol Collaboration

Incorporate cross-protocol collaboration in incentive design to maximize synergies. Reward cross-chain integrations that funnel activity into Arbitrum. Develop multi-chain incentives to bridge activity between Arbitrum and other chains.
Prioritize protocol partnerships to co-sponsor incentive programs.

Marketing & Operations

Encourage off-chain marketing campaigns targeting non-crypto users, such as forex traders or fintech users.

Sinkas from delegate.l2beat.eth

10.0M TOKEN

posted 2 years ago

Links

Recording - Liquidity Incentives Call #3 (4.9.2024) Transcript - Liquidity Incentives Call #3 (4.9.2024) Chat Log - Liquidity Incentives Call #3 (4.9.2024)

Summary

The things that were discussed were:

On operational challenges faced by the advisors and the council, the feasibility of advising 180 protocols with three people was questioned, highlighting the time-consuming nature of the process.
In response, the the variability in the time required to advise protocols, depending on their experience and preparedness was also discussed.
The need for a coordination layer within the DAO to support multiple grant programs and initiatives.
The need for a more holistic approach to support protocols and ensure alignment with DAO objectives.
The need for a smaller, dedicated group to research and propose the new incentives program

From the presentation of Matt from StableLabs, we discussed:

The DAO voted on 95 proposals, leading to chaos and poor incentive design choices.
Operational challenges included KYC delays, lack of clear goals, and ineffective decision-making by the multi-sig team.
The PM was overwhelmed with managing 75 protocols and 70 million ARB
Advisors were added to help protocols design incentives, but protocols missed deadlines and couldn't alter proposals.
KYC delays and fluctuating ARB prices led to misjudged goals and confusion for delegates.
The lack of data funding and a council made it difficult to monitor and approve proposals.
The STIP Bridge program was created to address the disadvantages faced by protocols applying to LTIPP.
Advisors helped with STIP Bridge addendums, but the program had a short incentive period and no guidelines for ARB use.
Delegates were hesitant to post challenges due to unclear past performance metrics.
The lack of objectives, operational structure, marketing, and enough people to manage the programs was highlighted.
Timelines were unclear and too short, leading to delays and shortened incentives periods.
Protocols were unsure about future incentives and faced competition dynamics like a race-to-zero on protocol fees.
Having a single bucket of incentives for all protocols made it hard to create a standardized rubric and guardrails.

In terms of ideas for future programs:

A new program should have specific goals derived from the DAO's objectives, with different programs for different protocol categories.
A marketing team and watchdog should be introduced to improve visibility and monitor for misuse of funds
The program should be iterative, allowing for changes based on feedback and performance.
It was suggested that some tasks, like gathering delegate feedback and defining DAO goals should be handled by a dedicated incentive team.
The need for a one-year program to reduce the rush and improve the process.
The idea of having verified experts as advisors was proposed to improve the quality of advice and reduce the workload for DAO contributors and delegates.
The importance of aligning the program with DAO goals and ensuring clear operational costs and structures.

For next call:

8th Call

For the 8th call, we had Powerhouse, GMX, and Camelot talk about their experience with and perspective on incentives.

Recording - Liquidity Incentives Call #8 (16.10.2024) Transcript - Liquidity Incentives Call #8 (16.10.2024) Chat Log - Liquidity Incentives Call #8 (16.10.2024)

Summary

The things that were discussed were:

The complexity of prior reporting workflows, with LTIPP having 85 grantees and 510 bi-weekly reports to monitor.
Using forum to provide updates lead to issues with scalability and discoverability, as well as poor UX and data standardization problems.
Powerhouse introduced software workflows to standardize data, using ARB signers for permission and providing a structured data view for program managers. The system allowed for real-time monitoring and compliance, significantly improving efficiency and accuracy.
Key outcomes included 95% of projects creating a document and 86% submitting at least one report, with improved efficiency and accuracy for program managers. User-submitted data was available for export to the ARDC.
The importance of simulating operational workflows in advance and considering software design development margins.
The challenges, including overlapping QA periods with live operations and difficulties with communications and compliance.
For GMX, key highlights of STIP and STIP Bridge included a surge in TVL from $80 million to $400 million, significant liquidity growth, and increased trading volume and market depth.
Key challenges included yield hopping, higher rebates attracting traders dependent on larger budgets, and the impact of declining ARB prices on rebate benchmarks.
Both programs (STIP and STIP Bridge) effectively supported liquidity growth, trader retention, and innovation on v2, despite challenges.
The importance of aligning incentives with core objectives rather than just metrics.
Camelot saw the incentives as more damaging due to the race to zero price wars among protocols, leading to unsustainable practices.
Incentives also facilitated collaboration and creativity among protocols, highlighting the potential positive impacts.

In terms of ideas for future programs:

Recommendations include utilizing software workflows or a consolidated homepage for user experience, automating data sources, and forming an operational team to support large numbers of grantees.
Future programs should be longer and include more time for grantees to complete milestones.
The focus should be on bringing new protocols to the chain, supporting new partnerships, and integrations rather than maximizing metrics.
The importance of involving protocols early in the program design process to ensure alignment with their needs and objectives.
Announcing future programs to increase engagement and participation from protocols.
The need for better communication and collaboration between protocols, the DAO, OCL, and AF to ensure effective program design and implementation.
The importance of setting clear goals and aligning incentives with long-term value rather than just short-term metrics.

For the next call

As with previous calls, we encourage participants to prepare for the next one and share their visions, lessons learned and ideas with the rest of the working group. If you have an analysis, a report, or other findings or ideas to present during one of the upcoming calls, please contact Sinkas on Telegram.

Apologies for the delay on posting the last 2 recordings. Publishing them in a batch in this comment.

Below is the recording of the sixth and seventh call, the calls’ transcripts, and the chat logs. You will also find notes on the topics/questions we discussed in each call and a summary of the views expressed.

6th Call

For the 6th call, we had Darius from Vertex (perp DEX) offer their perspective on incentives as a protocol that received incentives. We also had Coinflip from GMX briefly share their perspective.

Recording - Liquidity Incentives Call #6 (2.10.2024) Transcript - Liquidity Incentives Call #6 (2.10.2024) Chat Log - Liquidity Incentives Call #6 (2.10.2024)

Summary

The things that were discussed were:

Vertex's initial proposal aimed to cut fees and use ARB tokens as collateral for market makers to build liquidity. The proposal was modified due to structural constraints, leading to a less effective version that focused on volume-based incentives.
It was suggested that protocols should have more flexibility in structuring their proposals to better align with DAO goals.
The initial STIP allocation was influenced by the timing and strategy of other protocols, leading to a more adversarial environment.
The execution of the STIP program was generally fair, but the lack of clear DAO objectives made it difficult to compare results across different protocols.
It was suggested that a top-down prioritization from the DAO level could have provided clearer objectives and made the process more efficient.
In Vertex’s case, Darius explained that trading firm integrations were key to long-term stickiness, as these firms tend to trade frequently and pay trading fees. Retail users were less sticky, but incentives contributed significantly to Vertex’s TVL growth.
The value of STIP rewards declined over time due to the decrease in ARB token value, affecting the overall impact of the incentives.
GMX's program included a budget for supporting other protocols, helping them present their case to the DAO and become part of the Arbitrum ecosystem.
The success of GMX's program was partly due to the reduction in available funds for subsequent rounds, indicating a maturing ecosystem.
The integration of large traders and the multiplier effect of their activities were crucial for growth and liquidity.
Less developed ecosystems face significant challenges in attracting capital and liquidity.
The issue of aligning incentives with DAO objectives and the complexity of the current process was raised. There is a challenge in matching the DAO's goals with the specific needs of protocols, making it difficult to design effective incentive programs.
There’s a need for better coordination and signaling from the DAO to guide market demand and support infrastructure development.

In terms of ideas for future programs:

The importance of clear DAO objectives and more autonomy for protocols to design effective strategies was emphasised.
A blended approach with both clear DAO directives and open competitions could balance the need for alignment with the flexibility for innovative strategies
Infrastructure improvements, such as support for native assets and better custodial services, are essential for attracting and retaining liquidity.

7th Call

For the 7th call, we had Kamil from TokenGuard, which focuses on analyzing user behavior and conversion in blockchain systems, present their insights from LTIPP.

Recording - Liquidity Incentives Call #7 (9.10.2024) Transcript - Liquidity Incentives Call #7 (9.10.2024) Chat Log - Liquidity Incentives Call #7 (9.10.2024)

Summary

The things that were discussed were:

Kamil shared his screen and presented an overview of the metrics from two protocols (Across and Delta Prime) that received incentives during LTIPP.
There was a 15% increase in stablecoin inflow to Arbitrum One through Across during LTIPP.
The number of users using Across to move funds from other blockchains to Arbitrum grew eightfold, with interactions increasing threefold.
The average deposit value in Across lowered during LTIP compared to pre-LTIP, resulting in a significant increase in the number of users but a decrease in the average deposit value.
Users acquired through Across were extremely active within the Arbitrum ecosystem, using multiple applications.
The number of unique users and interactions on Delta Prime increased dramatically by 400%, but returned to baseline after the incentive period ended.
The number of deposits in Delta Prime increased threefold, and the average value of a deposit grew by 39%.
Delta Prime’s TVL increased 300% during LTIP but dropped to 150% of its baseline before the program.
Kamil summarized that Across had a better impact on the Arbitrum ecosystem compared to Delta Prime. Across spent 200k ARB, resulting in a direct ROI of 0.1, while Delta Prime spent 400k ARB, resulting in a direct ROI of 0.01. ROI is calculated based on the amount of money invested and the fees generated.

In terms of ideas for future programs:

The importance of measuring claimable rewards to understand which users know about the program was brought up.
Setting long-term goals and segmenting products to design specific rewarding mechanisms for different user groups was discussed.
Brainstorming sample KPIs and goals for future incentive programs was encouraged.
The importance of setting North Stars to define KPIs and judge progress was also mentioned.

For the next call:

Below is the recording of the third call, the call’s transcript, and the chat log. You will also find notes on the topics/questions we discussed and a summary of the views expressed. In the fourth call, we had Tnorm, the man who spearheaded STIP, present his views and learnings.

Recording - Liquidity Incentives Call #4 (11.9.2024) Transcript - Liquidity Incentives Call #4 (11.9.2024) Chat Log - Liquidity Incentives Call #4 (11.9.2024)

Summary

The things that were discussed were:

The importance of having protocol representatives share their perspectives during the calls.
The feasibility of a small grants program, noting the challenges of scaling and the high volume of applications, was questioned.
That the classification of projects requires better definition and that the goals for different types of projects should be clearly stated.
The need for a better definition of "good projects" and the importance of metrics in evaluating project success.

From the presentation of Tnorm, we discussed:

STIP was designed as an emergency program to unlock capital and support the ecosystem. I was set up quickly with stakeholder input and prioritized speed over practicality.
The need to return to first principles and strategic thinking around incentives and incentive programs.
Onchain incentives aim to create actions onchain by making transactions cheaper and/or more attractive. There’s a spectrum of actions that can be incentivized.
Objective-based grants, which can target specific actions like buying, selling, depositing, liquidity provision, and so on.
Direct-to-contract incentives, which could offer granular, targeted incentives at the contract level. (more on this here).
The differences between strategy and tactics in incentive programs, emphasizing the importance of clear goals, KPIs, and objectives.
What three main stakeholder groups that Tnorm identifies are: network stakeholders, application stakeholders, and user stakeholders.
The traditional program structure, where incentives flow from a treasury to decision-makers, who then distribute them to projects.
Insights Tnorm’s interviews with delegates, highlighting the need for clear processes to serve different project buckets.
Three main buckets for project-based incentive grants: small and early-stage projects, scaling projects, and large, established projects.
The challenges of defining small projects and the need for a council to handle high-volume, low-admin grants.
The need for higher oversight and clear KPIs for scaling projects, which aim to support projects with proven product-market fit.
A partnership budget approach for large projects, where the DAO provides strategic support and high-level services.
The importance of objective-based incentive programs, which focus on specific metrics like user incentives and native project support.
The need for sophisticated user segmentation and the potential for targeted campaigns to attract valuable users.
The importance of native token minting and strategic asset support as key objectives for incentive programs.
The concept of network-wide campaigns, which could incentivize actions across multiple protocols and verticals.
The use of service providers to support sophisticated analytics and distribution of incentives, at least for specific verticals.
The need for tooling improvements to support innovative approaches, such as direct-to-contract incentives, which could eliminate the need for protocol-specific grants and support market dynamics.

In terms of ideas for future programs:

The need for a layer of accountability and authoritative power to make decisions on project funding was highlighted.

For the next call:

Please note that the next call will be on Wednesday 25/9 as we'll skip this week's call due to Token2049.

Below is the recording of the second call, the call’s transcript, and the chat log. You will also find notes on the topics/questions we discussed and a summary of the views expressed. During the call, we did a quick review of what was discussed in the first call, and then Hayden from Blockworks Research presented BWR findings on the STIP program from the research they did as a member of the ARDC. You can find a summary of all their research and findings in the comments above.

Links

Recording - Liquidity Incentives Call #2 (28.8.2024) Transcript - Liquidity Incentives Call #2 (28.8.2024) Chat Log - Liquidity Incentives Call #2 (28.8.2024)

Summary

The things that were discussed were:

The importance of determining the goal of an incentive program and agreeing on necessary metrics to monitor its success.
Long-term and short-term successes may conflict, and the program should be monitored continuously to make ongoing adjustments.
The target users should be outside of Arbitrum, preferably from other chains like Tron or Binance Smart Chain.
The success of each protocol distribution should be monitored and measured live for timely adjustments
The need for tangible, organized versions of ideas to facilitate structured discussions.
The need to define strategic objectives and align incentive programs with these objectives.
The need for a clear vision and alignment on strategic objectives before designing incentive programs.
The need for a smaller budget with very specific goals to support protocols

From the presentation of Hayden from Blockworks research, we discussed:

The initial growth of protocols during STIP was driven by liquidity incentives and fee rebates, but usage declined post-incentives.
STIP boosted Arbitrum's market share in major DeFi metrics, but gains largely reverted to baseline costs of capital.
The cost of capital within Arbitrum increased during STIP due to boosted yields and lower fees, leading to user and capital migration.
Protocols with unique mechanisms or new products outperformed others, amplified by incentives.
The cost of capital for verticals converged as users found the correct yield across the vertical.
The cadence of incentive distribution allowed sophisticated users to jump from protocol to protocol

In terms of ideas for future programs:

Suggestions include having a unified incentive framework with application-specific criteria
Emphasis on normalizing incentives per protocol based on metrics like TVL, volume, and sequence of revenue.
The importance of continuous monitoring and immediate feedback to avoid misuse of funds.
A unified incentive program where protocols sign up for specific incentive programs.
Protocols should invest their own money in incentive programs, while the DAO pays for users who stay active. The goal is to ensure protocols use incentives to build value over time, not just to extract incentives.

For next call:

We encourage participants to prepare for the next call and share their visions and lessons earned with the rest of the working group. If you have an analysis, a report, or other findings to present during one of the upcoming calls, please reach out to Sinkas on Telegram.

BlockworksResearch from blockworksresearch.eth

2.00 TOKEN

posted 2 years ago

edited 2 years ago

Per request, here are brief summaries of some of our STIP-related ARDC work. As the DAO contemplates another incentives program, we encourage members of the DAO to carefully review the materials.

Short-form Case Study – GMX

Per request, here are brief summaries of some of our STIP-related ARDC work. As the DAO contemplates another incentives program, we encourage members of the DAO to carefully review the materials.

Short-form Case Study – GMX

Conclusions: The study suggests that future incentive programs should require stronger justification, growth driver analyses, and consistent standards for handling conflicts of interest.

Short-form Case Study – JOJO

Conclusions: The case highlights the need for continuous monitoring, stricter grantee accountability, and better-defined incentive program structures to avoid unrealistic promises and ensure adherence to rules.

STIP-Bridge – Support Material for the Community

Conclusions:
- Some protocols had high sybil ratios, indicating potential misuse of incentives.
- Multiple projects displayed questionable practices in how they utilized ARB incentives
- Many protocols saw sharp declines in usage post-incentives. Reporting quality varied, with some projects failing to provide transparent updates.
- Several projects are adjusting their incentive mechanisms for future rounds, aiming for more targeted and sustainable growth, while others have continued with similar structures despite mixed results.
- Identified misuse of funds per STIP rules by Synapse, who eventually returned 750k ARB back to the DAO in addition to withdrawing their 950k ARB STIP Bridge request. Ultimately saved the DAO 1.7M ARB (~$1.4M at that time)
- Identified misuse of STIP funds by Furocumbo, which led to Arbitrum Foundation seeking the banning of the team of receiving any future incentives

STIP-Bridge (Extended Deadline Applicants) – Support Material for the Community

Additional support material for the community to use when reviewing STIP Bridge applicants who applied after the initial deadline of May 3, 2024 and have thus been automatically put up for a challenge vote on Snapshot.

STIP Retroactive Analysis – Perp DEX Volume

Conclusions:
- STIP impacted trading volumes differently across perpetual DEXs. Vertex and GMX saw significant volume boosts, with Vertex benefiting most per dollar spent.
- The analysis suggests that traditional fee rebates, as used by Vertex, GMX, and MUX Protocol, were more effective than gamified incentives employed by Gains Network and Vela.

STIP Retroactive Analysis – Spot DEX TVL

Conclusions:
- STIP in H2 2023 significantly impacted TVL in spot DEXs, with WOOFi and Camelot seeing the highest gains.
- Balancer and Trader Joe also benefited but with a more modest impact.
- WOOFi excelled in liquidity-specific incentives despite its underperformance in overall TVL impact.

STIP Analysis of Operations and Incentive Mechanisms

Conclusions:
- STIP was likely a reason for why Arbitrum's market share (with respect to certain metrics) didn’t diminish with new competition popping up.
- Major mechanisms included liquidity incentives (~30%) and fee rebates (~25%).
- Most protocols saw initial growth during STIP, but metrics often reverted to pre-STIP levels afterward.
- STIP initially boosted Arbitrum's market share in most major DeFi metrics, but gains largely reverted post-program.
- Market ultimately gravitated towards a baseline cost of capital, meaning future incentives should target ecosystem-wide yield targets
- Protocol incentives should be a function of vertical-specific metrics and not be so open-ended

STIP Retroactive Analysis – Yield Aggregators TVL

Conclusions:
- Targeting LPs directly and uniformly can be effective in boosting TVL.
- Flexibility in incentive strategies, as shown by Umami's pivot to direct ARB emissions, can enhance outcomes.
- A more proportional distribution of incentives may lead to higher efficiency, as evidenced by Solv Protocol's success.

STIP Retroactive Analysis – Sequencer Revenue

Conclusions:
- Statistically attributed STIP to 43% of Arbitrum's revenue between November 2023 and the Dencun upgrade, amounting to $15.2M in sequencer revenue against $85.2M spent on incentives.
- Despite its positive short-term impact, the program resulted in a $60M net loss, highlighting the need for more effective future incentive programs and more attention to long-term sustainability and growth.
- Future programs should focus on better-structured incentives and persistent user metrics to maximize ARB spending.

Sinkas from delegate.l2beat.eth

10.0M TOKEN

posted 2 years ago

Below is the recording of the first call, the call’s transcript, and the chat log. You will also find notes on the topics/questions we discussed and a summary of the views expressed. At the very bottom, there’s a culmination of the key takeaways from the discussion.

Links

Recording - Liquidity Incentives Call #1 (21.8.2024) Transcript - Liquidity Incentives Call #1 (21.8.2024) Chat Log - Liquidity Incentives Call #1 (21.8.2024)

Summary

Why even have incentive programs on Arbitrum?

Incentive programs will help:

Arbitrum remain competitive with other L2s.
Attract new users to the ecosystem.
- Userbase from other chains (e.g. BNB)
- Ultimately, new users might be more valuable than existing users in other chains.
- For other chains, we should focus on non-EVM ones (e.g. Tron)
Attract new protocols to deploy on Arbitrum.
- Builders’ perspective is that Arbitrum will support them.
Attract sticky capital
- ETH in canonical bridge
- Stablecoin TVL across the chain
- Sequencer revenue
Incentivize user behavior for growth.
- Growth in users, protocols, or capital will be accelerated. Incentives will act as marketing.

What should we expect from an incentive program?

Incentive programs should:

Have a very clear and specific objective.
- Growth of users
- Growth of protocols
- Growth of capital
Have their success measured with metrics (KPIs) relative to their objective (e.g. unique users if we’re incentivizing user growth).
- KPIs might be conflicting
Be monitored as they’re running and not retroactively.
- Adjustments should be made as we go and not wait for the program’s end.

Key Takeaways

For an incentive program to work, we need first to determine its goal and agree on the necessary metrics to monitor its success, taking into consideration that the long-term and short-term success might be conflicting.

The target users/protocols/capital should be outside Arbitrum and preferably outside EVM chains. We should target users/protocols from other chains (e.g., Tron or BSC) and people outside of crypto. Growth coming from outside is more valuable.

The success of each protocol’s distribution should be monitored and measured live rather than retroactively so adjustments can be made if needed.

Sinkas from delegate.l2beat.eth

10.0M TOKEN

posted 2 years ago

edited 2 years ago

The following reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

With the Snapshot proposal being successful, we’ll begin facilitating the incentives working group as outlined in the proposal. To kickstart the process, we’ll set up a weekly call. We’ll initially facilitate the calls and try to navigate the discussion, but we hope for it to be an open and collaborative process for all participants.

The following reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

For async coordination, we’ll use and repurpose the already-existing “ARB Liquidity Incentive Workgroup” group chat on Telegram, which is already filled with participants and historical context.

Recurring Working Group Calls

Starting this week, we’ve set up a recurring 1-hour call every Wednesday (starting on the 21st of August) at 16:00 UTC (12:00 EST / 00:00 SGT). You can join the call here.

💡 You can add the Arbitrum DAO Governance Calendar to your Google Calendar to see this and all other DAO events.

Presentation of Key Takeaways

As outlined in the original 'Incentives Detox' proposal, several different parties have already conducted and published numerous analyses. We understand the challenge of reading, understanding, and fully comprehending all the key takeaways from the various reports coherently.

To that end, we’ll use the first (few?) calls so different parties can present the key takeaways from their research and analysis and discuss them with the rest of the working group. That way, we’ll hopefully be able to kick things off on the same foot regarding context when we start designing a new perpetual program.

While we’ll be actively reaching out to the authors of some of the reports to invite them to present their findings, we urge everyone who has conducted some sort of analysis on the design or the impact of STIP, STIP Backfund, LTIPP, or STIP Bridge to reach out to us on Telegram so we can schedule time for them to present their findings on the call.

8th Call

For the 8th call, we had Powerhouse, GMX, and Camelot talk about their experience with and perspective on incentives.

Recording - Liquidity Incentives Call #8 (16.10.2024) Transcript - Liquidity Incentives Call #8 (16.10.2024) Chat Log - Liquidity Incentives Call #8 (16.10.2024)

Summary

The things that were discussed were:

The complexity of prior reporting workflows, with LTIPP having 85 grantees and 510 bi-weekly reports to monitor.
Using forum to provide updates lead to issues with scalability and discoverability, as well as poor UX and data standardization problems.
Powerhouse introduced software workflows to standardize data, using ARB signers for permission and providing a structured data view for program managers. The system allowed for real-time monitoring and compliance, significantly improving efficiency and accuracy.
Key outcomes included 95% of projects creating a document and 86% submitting at least one report, with improved efficiency and accuracy for program managers. User-submitted data was available for export to the ARDC.
The importance of simulating operational workflows in advance and considering software design development margins.
The challenges, including overlapping QA periods with live operations and difficulties with communications and compliance.
For GMX, key highlights of STIP and STIP Bridge included a surge in TVL from $80 million to $400 million, significant liquidity growth, and increased trading volume and market depth.
Key challenges included yield hopping, higher rebates attracting traders dependent on larger budgets, and the impact of declining ARB prices on rebate benchmarks.
Both programs (STIP and STIP Bridge) effectively supported liquidity growth, trader retention, and innovation on v2, despite challenges.
The importance of aligning incentives with core objectives rather than just metrics.
Camelot saw the incentives as more damaging due to the race to zero price wars among protocols, leading to unsustainable practices.
Incentives also facilitated collaboration and creativity among protocols, highlighting the potential positive impacts.

In terms of ideas for future programs:

Recommendations include utilizing software workflows or a consolidated homepage for user experience, automating data sources, and forming an operational team to support large numbers of grantees.
Future programs should be longer and include more time for grantees to complete milestones.
The focus should be on bringing new protocols to the chain, supporting new partnerships, and integrations rather than maximizing metrics.
The importance of involving protocols early in the program design process to ensure alignment with their needs and objectives.
Announcing future programs to increase engagement and participation from protocols.
The need for better communication and collaboration between protocols, the DAO, OCL, and AF to ensure effective program design and implementation.
The importance of setting clear goals and aligning incentives with long-term value rather than just short-term metrics.

For the next call

Apologies for the delay on posting the last 2 recordings. Publishing them in a batch in this comment.

6th Call

For the 6th call, we had Darius from Vertex (perp DEX) offer their perspective on incentives as a protocol that received incentives. We also had Coinflip from GMX briefly share their perspective.

Recording - Liquidity Incentives Call #6 (2.10.2024) Transcript - Liquidity Incentives Call #6 (2.10.2024) Chat Log - Liquidity Incentives Call #6 (2.10.2024)

Summary

The things that were discussed were:

Vertex's initial proposal aimed to cut fees and use ARB tokens as collateral for market makers to build liquidity. The proposal was modified due to structural constraints, leading to a less effective version that focused on volume-based incentives.
It was suggested that protocols should have more flexibility in structuring their proposals to better align with DAO goals.
The initial STIP allocation was influenced by the timing and strategy of other protocols, leading to a more adversarial environment.
The execution of the STIP program was generally fair, but the lack of clear DAO objectives made it difficult to compare results across different protocols.
It was suggested that a top-down prioritization from the DAO level could have provided clearer objectives and made the process more efficient.
In Vertex’s case, Darius explained that trading firm integrations were key to long-term stickiness, as these firms tend to trade frequently and pay trading fees. Retail users were less sticky, but incentives contributed significantly to Vertex’s TVL growth.
The value of STIP rewards declined over time due to the decrease in ARB token value, affecting the overall impact of the incentives.
GMX's program included a budget for supporting other protocols, helping them present their case to the DAO and become part of the Arbitrum ecosystem.
The success of GMX's program was partly due to the reduction in available funds for subsequent rounds, indicating a maturing ecosystem.
The integration of large traders and the multiplier effect of their activities were crucial for growth and liquidity.
Less developed ecosystems face significant challenges in attracting capital and liquidity.
The issue of aligning incentives with DAO objectives and the complexity of the current process was raised. There is a challenge in matching the DAO's goals with the specific needs of protocols, making it difficult to design effective incentive programs.
There’s a need for better coordination and signaling from the DAO to guide market demand and support infrastructure development.

In terms of ideas for future programs:

The importance of clear DAO objectives and more autonomy for protocols to design effective strategies was emphasised.
A blended approach with both clear DAO directives and open competitions could balance the need for alignment with the flexibility for innovative strategies
Infrastructure improvements, such as support for native assets and better custodial services, are essential for attracting and retaining liquidity.

7th Call

For the 7th call, we had Kamil from TokenGuard, which focuses on analyzing user behavior and conversion in blockchain systems, present their insights from LTIPP.

Recording - Liquidity Incentives Call #7 (9.10.2024) Transcript - Liquidity Incentives Call #7 (9.10.2024) Chat Log - Liquidity Incentives Call #7 (9.10.2024)

Summary

The things that were discussed were:

Kamil shared his screen and presented an overview of the metrics from two protocols (Across and Delta Prime) that received incentives during LTIPP.
There was a 15% increase in stablecoin inflow to Arbitrum One through Across during LTIPP.
The number of users using Across to move funds from other blockchains to Arbitrum grew eightfold, with interactions increasing threefold.
The average deposit value in Across lowered during LTIP compared to pre-LTIP, resulting in a significant increase in the number of users but a decrease in the average deposit value.
Users acquired through Across were extremely active within the Arbitrum ecosystem, using multiple applications.
The number of unique users and interactions on Delta Prime increased dramatically by 400%, but returned to baseline after the incentive period ended.
The number of deposits in Delta Prime increased threefold, and the average value of a deposit grew by 39%.
Delta Prime’s TVL increased 300% during LTIP but dropped to 150% of its baseline before the program.
Kamil summarized that Across had a better impact on the Arbitrum ecosystem compared to Delta Prime. Across spent 200k ARB, resulting in a direct ROI of 0.1, while Delta Prime spent 400k ARB, resulting in a direct ROI of 0.01. ROI is calculated based on the amount of money invested and the fees generated.

In terms of ideas for future programs:

The importance of measuring claimable rewards to understand which users know about the program was brought up.
Setting long-term goals and segmenting products to design specific rewarding mechanisms for different user groups was discussed.
Brainstorming sample KPIs and goals for future incentive programs was encouraged.
The importance of setting North Stars to define KPIs and judge progress was also mentioned.

For the next call:

Below is the recording of the third call, the call’s transcript, and the chat log. You will also find notes on the topics/questions we discussed and a summary of the views expressed. In the fourth call, we had Tnorm, the man who spearheaded STIP, present his views and learnings.

Recording - Liquidity Incentives Call #4 (11.9.2024) Transcript - Liquidity Incentives Call #4 (11.9.2024) Chat Log - Liquidity Incentives Call #4 (11.9.2024)

Summary

The things that were discussed were:

The importance of having protocol representatives share their perspectives during the calls.
The feasibility of a small grants program, noting the challenges of scaling and the high volume of applications, was questioned.
That the classification of projects requires better definition and that the goals for different types of projects should be clearly stated.
The need for a better definition of "good projects" and the importance of metrics in evaluating project success.

From the presentation of Tnorm, we discussed:

STIP was designed as an emergency program to unlock capital and support the ecosystem. I was set up quickly with stakeholder input and prioritized speed over practicality.
The need to return to first principles and strategic thinking around incentives and incentive programs.
Onchain incentives aim to create actions onchain by making transactions cheaper and/or more attractive. There’s a spectrum of actions that can be incentivized.
Objective-based grants, which can target specific actions like buying, selling, depositing, liquidity provision, and so on.
Direct-to-contract incentives, which could offer granular, targeted incentives at the contract level. (more on this here).
The differences between strategy and tactics in incentive programs, emphasizing the importance of clear goals, KPIs, and objectives.
What three main stakeholder groups that Tnorm identifies are: network stakeholders, application stakeholders, and user stakeholders.
The traditional program structure, where incentives flow from a treasury to decision-makers, who then distribute them to projects.
Insights Tnorm’s interviews with delegates, highlighting the need for clear processes to serve different project buckets.
Three main buckets for project-based incentive grants: small and early-stage projects, scaling projects, and large, established projects.
The challenges of defining small projects and the need for a council to handle high-volume, low-admin grants.
The need for higher oversight and clear KPIs for scaling projects, which aim to support projects with proven product-market fit.
A partnership budget approach for large projects, where the DAO provides strategic support and high-level services.
The importance of objective-based incentive programs, which focus on specific metrics like user incentives and native project support.
The need for sophisticated user segmentation and the potential for targeted campaigns to attract valuable users.
The importance of native token minting and strategic asset support as key objectives for incentive programs.
The concept of network-wide campaigns, which could incentivize actions across multiple protocols and verticals.
The use of service providers to support sophisticated analytics and distribution of incentives, at least for specific verticals.
The need for tooling improvements to support innovative approaches, such as direct-to-contract incentives, which could eliminate the need for protocol-specific grants and support market dynamics.

In terms of ideas for future programs:

The need for a layer of accountability and authoritative power to make decisions on project funding was highlighted.

For the next call:

Please note that the next call will be on Wednesday 25/9 as we'll skip this week's call due to Token2049.

Links

Recording - Liquidity Incentives Call #2 (28.8.2024) Transcript - Liquidity Incentives Call #2 (28.8.2024) Chat Log - Liquidity Incentives Call #2 (28.8.2024)

Summary

The things that were discussed were:

The importance of determining the goal of an incentive program and agreeing on necessary metrics to monitor its success.
Long-term and short-term successes may conflict, and the program should be monitored continuously to make ongoing adjustments.
The target users should be outside of Arbitrum, preferably from other chains like Tron or Binance Smart Chain.
The success of each protocol distribution should be monitored and measured live for timely adjustments
The need for tangible, organized versions of ideas to facilitate structured discussions.
The need to define strategic objectives and align incentive programs with these objectives.
The need for a clear vision and alignment on strategic objectives before designing incentive programs.
The need for a smaller budget with very specific goals to support protocols

From the presentation of Hayden from Blockworks research, we discussed:

The initial growth of protocols during STIP was driven by liquidity incentives and fee rebates, but usage declined post-incentives.
STIP boosted Arbitrum's market share in major DeFi metrics, but gains largely reverted to baseline costs of capital.
The cost of capital within Arbitrum increased during STIP due to boosted yields and lower fees, leading to user and capital migration.
Protocols with unique mechanisms or new products outperformed others, amplified by incentives.
The cost of capital for verticals converged as users found the correct yield across the vertical.
The cadence of incentive distribution allowed sophisticated users to jump from protocol to protocol

In terms of ideas for future programs:

Suggestions include having a unified incentive framework with application-specific criteria
Emphasis on normalizing incentives per protocol based on metrics like TVL, volume, and sequence of revenue.
The importance of continuous monitoring and immediate feedback to avoid misuse of funds.
A unified incentive program where protocols sign up for specific incentive programs.
Protocols should invest their own money in incentive programs, while the DAO pays for users who stay active. The goal is to ensure protocols use incentives to build value over time, not just to extract incentives.

For next call:

BlockworksResearch from blockworksresearch.eth

2.00 TOKEN

posted 2 years ago

edited 2 years ago

Per request, here are brief summaries of some of our STIP-related ARDC work. As the DAO contemplates another incentives program, we encourage members of the DAO to carefully review the materials.

Short-form Case Study – GMX

Per request, here are brief summaries of some of our STIP-related ARDC work. As the DAO contemplates another incentives program, we encourage members of the DAO to carefully review the materials.

Short-form Case Study – GMX

Conclusions: The study suggests that future incentive programs should require stronger justification, growth driver analyses, and consistent standards for handling conflicts of interest.

Short-form Case Study – JOJO

Conclusions: The case highlights the need for continuous monitoring, stricter grantee accountability, and better-defined incentive program structures to avoid unrealistic promises and ensure adherence to rules.

STIP-Bridge – Support Material for the Community

Conclusions:
- Some protocols had high sybil ratios, indicating potential misuse of incentives.
- Multiple projects displayed questionable practices in how they utilized ARB incentives
- Many protocols saw sharp declines in usage post-incentives. Reporting quality varied, with some projects failing to provide transparent updates.
- Several projects are adjusting their incentive mechanisms for future rounds, aiming for more targeted and sustainable growth, while others have continued with similar structures despite mixed results.
- Identified misuse of funds per STIP rules by Synapse, who eventually returned 750k ARB back to the DAO in addition to withdrawing their 950k ARB STIP Bridge request. Ultimately saved the DAO 1.7M ARB (~$1.4M at that time)
- Identified misuse of STIP funds by Furocumbo, which led to Arbitrum Foundation seeking the banning of the team of receiving any future incentives

STIP-Bridge (Extended Deadline Applicants) – Support Material for the Community

Additional support material for the community to use when reviewing STIP Bridge applicants who applied after the initial deadline of May 3, 2024 and have thus been automatically put up for a challenge vote on Snapshot.

STIP Retroactive Analysis – Perp DEX Volume

Conclusions:
- STIP impacted trading volumes differently across perpetual DEXs. Vertex and GMX saw significant volume boosts, with Vertex benefiting most per dollar spent.
- The analysis suggests that traditional fee rebates, as used by Vertex, GMX, and MUX Protocol, were more effective than gamified incentives employed by Gains Network and Vela.

STIP Retroactive Analysis – Spot DEX TVL

Conclusions:
- STIP in H2 2023 significantly impacted TVL in spot DEXs, with WOOFi and Camelot seeing the highest gains.
- Balancer and Trader Joe also benefited but with a more modest impact.
- WOOFi excelled in liquidity-specific incentives despite its underperformance in overall TVL impact.

STIP Analysis of Operations and Incentive Mechanisms

Conclusions:
- STIP was likely a reason for why Arbitrum's market share (with respect to certain metrics) didn’t diminish with new competition popping up.
- Major mechanisms included liquidity incentives (~30%) and fee rebates (~25%).
- Most protocols saw initial growth during STIP, but metrics often reverted to pre-STIP levels afterward.
- STIP initially boosted Arbitrum's market share in most major DeFi metrics, but gains largely reverted post-program.
- Market ultimately gravitated towards a baseline cost of capital, meaning future incentives should target ecosystem-wide yield targets
- Protocol incentives should be a function of vertical-specific metrics and not be so open-ended

STIP Retroactive Analysis – Yield Aggregators TVL

Conclusions:
- Targeting LPs directly and uniformly can be effective in boosting TVL.
- Flexibility in incentive strategies, as shown by Umami's pivot to direct ARB emissions, can enhance outcomes.
- A more proportional distribution of incentives may lead to higher efficiency, as evidenced by Solv Protocol's success.

STIP Retroactive Analysis – Sequencer Revenue

Conclusions:
- Statistically attributed STIP to 43% of Arbitrum's revenue between November 2023 and the Dencun upgrade, amounting to $15.2M in sequencer revenue against $85.2M spent on incentives.
- Despite its positive short-term impact, the program resulted in a $60M net loss, highlighting the need for more effective future incentive programs and more attention to long-term sustainability and growth.
- Future programs should focus on better-structured incentives and persistent user metrics to maximize ARB spending.

Sinkas from delegate.l2beat.eth

10.0M TOKEN

posted 2 years ago

Links

Recording - Liquidity Incentives Call #1 (21.8.2024) Transcript - Liquidity Incentives Call #1 (21.8.2024) Chat Log - Liquidity Incentives Call #1 (21.8.2024)

Summary

Why even have incentive programs on Arbitrum?

Incentive programs will help:

Arbitrum remain competitive with other L2s.
Attract new users to the ecosystem.
- Userbase from other chains (e.g. BNB)
- Ultimately, new users might be more valuable than existing users in other chains.
- For other chains, we should focus on non-EVM ones (e.g. Tron)
Attract new protocols to deploy on Arbitrum.
- Builders’ perspective is that Arbitrum will support them.
Attract sticky capital
- ETH in canonical bridge
- Stablecoin TVL across the chain
- Sequencer revenue
Incentivize user behavior for growth.
- Growth in users, protocols, or capital will be accelerated. Incentives will act as marketing.

What should we expect from an incentive program?

Incentive programs should:

Have a very clear and specific objective.
- Growth of users
- Growth of protocols
- Growth of capital
Have their success measured with metrics (KPIs) relative to their objective (e.g. unique users if we’re incentivizing user growth).
- KPIs might be conflicting
Be monitored as they’re running and not retroactively.
- Adjustments should be made as we go and not wait for the program’s end.

Key Takeaways

The success of each protocol’s distribution should be monitored and measured live rather than retroactively so adjustments can be made if needed.

Sinkas from delegate.l2beat.eth

10.0M TOKEN

posted 2 years ago

edited 2 years ago

The following reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

Recurring Working Group Calls

Starting this week, we’ve set up a recurring 1-hour call every Wednesday (starting on the 21st of August) at 16:00 UTC (12:00 EST / 00:00 SGT). You can join the call here.

💡 You can add the Arbitrum DAO Governance Calendar to your Google Calendar to see this and all other DAO events.

Presentation of Key Takeaways

CastleCapital

169.2K TOKEN

posted 2 years ago

We at Castle Capital acknowledge the importance of pausing the current incentive programs to create a robust and effective framework moving forward. We believe this is a crucial step to ensure the sustainability and efficiency of our initiatives.

Comments

No Hard Deadlines on Detox: We recommend against imposing strict deadlines for the detox process. Instead, let’s focus on thorough analysis and strategic planning to guide our next steps effectively.
Establish a Fast-Acting Working Group: Paid WG Lead and Data Analysis Teams: To expedite this process, we propose the formation of a dedicated working group led by a paid WG lead and supported by paid data analysis teams. This will ensure that our efforts are focused and we can move swiftly and efficiently.
Seamless Transition from LTIPP Workstream to New WG: The transition of responsibilities from the LTIPP Workstream to the new working group should be handled rapidly. This will ensure continuity and leverage the existing knowledge and data in collaboration with ARDC and other relevant bodies.
Consolidated DAO Goals and Vision: A unified vision and set of goals for the DAO are paramount. These should guide the direction of all incentive programs and ensure alignment across the community.

Future Steps

Define DAO Vision and Goals: Establish a clear and shared vision for the DAO, along with specific goals that our incentive programs aim to achieve.
Data Compilation and Analysis: Gather and analyze all existing data from previous programs such as STIP, LTIPP, and STIP bridge. Assess their effectiveness and impact in alignment with our newly defined vision and goals.
Report and Recommendations: Compile a comprehensive report detailing the lessons learned from qualitative and quantitative data. This should include actionable recommendations for future programs.

In conclusion, we favor pausing the current incentive programs to create a more structured and effective framework. However, we caution against setting hard deadlines and emphasize the importance of thoroughly analyzing previous initiatives. By defining a common DAO vision and goals, we can ensure that future incentive programs are aligned and effective.

We look forward to collaborating with the community on this important initiative.

Camelot

12.5M TOKEN

posted 2 years ago

Camelot is voting FOR this proposal.

Contrary to popular belief, not all protocols want incentives to be indiscriminately funneled into the chain; they want it done in a way that is fair and beneficial for all participants. We believe that more specific and tailored rules should be created to better serve users, meet the economic and growth goals of the DAO, and avoid secondary detrimental effects on protocols.

Camelot is voting FOR this proposal.

Specifically, any incentive program should avoid fostering mechanisms where protocols in the same category start a race to the bottom on fees, rebates, or other economic parameters. This situation is generally unsustainable and unrealistic, as the costs are effectively subsidized by the grant itself and thus by the DAO. It also creates an environment where protocols deployed on non-Arbitrum chains can maintain a revenue stream while driving our chain’s portion to zero. In this sense, we appreciate, for example, the gentleman’s agreement for perpetual protocols where the rebating of fees was capped at 75% across all protocols. We should aim for similar rules for several categories of protocols.

There is also an overarching need to read and reflect on data reports. Blockworks is doing a great job analyzing the first STIP results, and we hope every member of the DAO with an opinion on incentive programs will take the time to read the reports, even if they are complex. We need to incorporate all of these findings into future programs. We also need to be aware that receiving this type of data months after a program has closed, while positive, can have a limited impact compared to having data analyzed during the different phases of the program, including when it is live.

CastleCapital

169.2K TOKEN

posted 2 years ago

Comments

No Hard Deadlines on Detox: We recommend against imposing strict deadlines for the detox process. Instead, let’s focus on thorough analysis and strategic planning to guide our next steps effectively.
Establish a Fast-Acting Working Group: Paid WG Lead and Data Analysis Teams: To expedite this process, we propose the formation of a dedicated working group led by a paid WG lead and supported by paid data analysis teams. This will ensure that our efforts are focused and we can move swiftly and efficiently.
Seamless Transition from LTIPP Workstream to New WG: The transition of responsibilities from the LTIPP Workstream to the new working group should be handled rapidly. This will ensure continuity and leverage the existing knowledge and data in collaboration with ARDC and other relevant bodies.
Consolidated DAO Goals and Vision: A unified vision and set of goals for the DAO are paramount. These should guide the direction of all incentive programs and ensure alignment across the community.

Future Steps

Define DAO Vision and Goals: Establish a clear and shared vision for the DAO, along with specific goals that our incentive programs aim to achieve.
Data Compilation and Analysis: Gather and analyze all existing data from previous programs such as STIP, LTIPP, and STIP bridge. Assess their effectiveness and impact in alignment with our newly defined vision and goals.
Report and Recommendations: Compile a comprehensive report detailing the lessons learned from qualitative and quantitative data. This should include actionable recommendations for future programs.

We look forward to collaborating with the community on this important initiative.

Camelot

12.5M TOKEN

posted 2 years ago

Camelot is voting FOR this proposal.

I am voting FOR this proposal.

When the STIP Bridge proposal was launched, I strongly opposed its implementation.

https://forum.arbitrum.foundation/t/double-down-on-stip-successes-stip-bridge/22353/27?u=pedrob

The data on the STIP results was not available, and the distribution of incentives for the LTIPP had not yet begun. There was no data-based justification (and there still isn't) for renewing the STIP by 50%. This was approved, even with allowed incentives criteria different from those applied by the LTIPP Council to approve or reject proposals.

The main justification for its approval was that we had to compete against other L2s that also offer incentives. I think there was also a fear of internal competition among protocols because the beneficiaries of the LTIPP were not the same as those of the STIP.

Now we have an analysis and conclusions from @BlockworksResearch report on the STIP performance, which I invite everyone to read:

Quoted from BlockworksResearch

Most spot and perp DEX STIP recipients’ top-line metrics fell notably after the STIP ended and are currently around levels seen in September 2023. There are a few outperformers, generally younger, differentiated protocols that outgrew the market during the STIP and have successfully managed to maintain activity and capital in the long term.
Excluding the outperformers, the absolute change in TVL/Volume achieved per ARB utilized to increase these metrics directly has widely converged between protocols in the same verticals.
Overall, during the STIP, Arbitrum’s market share growth across major blockchains peaked at ~0% for TVL, ~5% for spot volume, ~12% for perp volume, and ~0% for loans outstanding. The market shares are currently at around September 2023 values, except for TVL, which is down from ~6% to ~4%.

jump to post →

Also, after B.STIP was approved, the LTIPP also faced criticism and questioning in its process. As part of the workstream, we identified along the way some design flaws that could have improved the experience for applicants. However, to conduct a thorough analysis, we need to wait until the process is complete and we have all the data available.

As I stated when opposed to STIP bridge, now we need to wait for the data from the B.STIP and LTIPP to become available and require the cooperation of incentive recipients -reports and final reports- in their analyses to build the appropriate program:

Quoted from BlockworksResearch

Many protocols missed several bi-weekly reports or didn’t post them at all. Around 35% of all STIP recipients didn’t post a final report. For the bi-weekly reports, only a handful of projects discussed protocol-related events and developments that might have explained growth that had materialized. Instead, it was more usual that projects would only present some high-level KPIs and how they planned to use incentives in the coming two weeks across different allocation buckets, meaning that it was sometimes difficult to understand drastic changes in figures purely based on information provided on the forum.

jump to post →

For this reason, I believe the use of the word "detox" is appropriate. It is not a detox from using incentives as a mechanism for growth, diversification of the treasury, and competition against other L2s. What has been done so far has had value and provides us with sufficient data to move forward.

It is a detox from the hasty deployment of incentives without proper analysis, and an acknowledgment that we need time to understand how to prepare an appropriate system.

Finally, I agree with other comments that it is not necessary to set a specific deadline. We should take whatever time is needed to gain clarity on the data and the path forward.

BlockworksResearch from blockworksresearch.eth

2.00 TOKEN

posted 2 years ago

edited 2 years ago

After examining the conversation further, we would like to question the notion of creating a new working group for the DAO to conclude new incentive design/approaches. Our ARDC work has extensively discussed this, and we would like to ask all to review the work already published (we have an included TLDR section for those that are busy). In light of this, we think that it may be somewhat excessive to create a new working group rather than simply taking a break for 3 months, pushing for new treasury management initiatives, and discussing to new incentive compliance rules, etc. Given the work that the ARDC has already done, this might be best left as an ARDC deliverable rather than spawning a new working group.

There is definitely a noticeable uptick in L2 traction from other competitors that we have seen in the past year, with incentive programs being launched as we speak (Linea with its points program, etc). There are also ecosystem players elsewhere that are focusing on other verticals to onboard users (account abstraction, etc) that may be worth incentivizing in some way as well.

Additionally, in reference to a possible perpetual incentive program, it may be better to allocate the feasibility/operational analysis of that to the ARDC and then examine preexisting incentive mechanisms and then issue a new compliance ruleset accordingly. Some other things that we may need to consider is whether there should be some incentive program allocation matching. If a protocol applies for STIP, maybe they should be required to put up some of their capital as well so that the risk is not entirely on the DAO. It might not be best practice for the DAO to completely subsidize activity. Finally, if we are to discuss a perpetual incentive program, it may be time to open a greater conversation on what ArbitrumDAO and Arbitrum receive beyond acquired users.

We have a greater deliverable on our findings with STIP/revenue coming soon, and we will revisit this forum discussion once published. Here’s what we can say right now: there is some evidence that revenue was attributable to STIP, though there should be an operational overhaul regardless.

Here are some of the incentive designs we witnessed and their percentage of STIP allocation:

standard liquidity incentives (30% of total allocation)
fee rebates (25% of total allocation)
points/usage-based programs (12% of total allocation)
native token liquidity incentives (8% of total allocaiton)
liquidity incentives with long-term locking (8% of total allocation)

STIP Operational Report Retroactive STIP Analysis

JoJo from jojothecow.eth

2.6M TOKEN

posted 2 years ago

Requires for sure a comment.

Is ok imho to be working on a program, as a collective, that is "better" than previous ones.

I only see one problem which I already stated loud in other communications channels:

106

Requires for sure a comment.

Is ok imho to be working on a program, as a collective, that is "better" than previous ones.

I only see one problem which I already stated loud in other communications channels:

"better" doesn't mean anything if we don't know the specific metric; at the cost of pounding the table, I am really looking for the vision article and temp check from @Entropy; will help us not only in properly sizing future programs and structures, but also to understand how an incentive program can be a facilitator of any vision we decide to have
(this comes from the previous experience) whatever design we will choose for the program, we need way more people than the one currently involved working on this, especially on the data analysis side that has to run IN REAL TIME during the program and not only after, and for the "advisors". Not saying we will have advisors as we had in ltipp and stip.b, but we have seen the benefit of guiding protocols vs leaving them on their own, and I would see renouncing to these figures as a step back and not forward
i am strongly convinced we can't have a one size fit all program; while, likely, bootstrap programs can be subsidized by Questbook, Thrive and Foundation, for incentive program we really need to start making a differentiation. Not all protocols are equal in term of maturity, and that means that protocols with different maturities can drive the ecosystem toward specific kpi(s), or even different ones, in several ways.

Would also like to point out that the LTIPP council, advisors and PM are still working on possible future iterations of the program, even if at a slower pace compared to the initial plan.

Finally, a consideration. This is what was written in the Stip bridge proposal, and was a specific request from delegates who didn't want to bother on having to do too many discussions at the time of renewal of the program. immagine|690x162 While making a 3 months pause goes in the opposite direction of what was previously stated, even if just as a possibility, I am glad we can take the time to improve the program(s) in a way that make sense for both the DAO, the Protocols and the Users. Our goal is to understand what each of these stakeholders want, and find a common ground. Let's make Arbitrum Grant Programs something that other DAOs have never even dreamt of.

106

gauntlet

9.3M TOKEN

posted 2 years ago

Thanks @Sinkas for putting together this proposal. We largely agree with the sentiment and substance of the proposal.

Reasons to Support:

140

Thanks @Sinkas for putting together this proposal. We largely agree with the sentiment and substance of the proposal.

Reasons to Support:

Data Analysis/Impact: It's imperative to collect liquidity/retention data for STIP/LTIP grantees both before, during, and without incentives to understand how incentives impact adoption and retention. This is especially true for less dominant protocols where the DAO should measure organic retention before expanding grants.
Working Group Continuation: It's been a year since the initial working group began and revisiting incentives program design is long overdue. It's concerning that discussions, conversations, and ambitions to improve upon existing programs have either a) been relegated to private Telegram chats or b) been abandoned in favor of extensions with marginal improvements.
Quality Assurance: We generally would love to see a higher threshold of quality for DAO operations and programs. We think it's reasonable for delegates to take a stand against poor program design while still supporting Arbitrum builders. The process of hosting "working groups" and "community calls" should not be mistaken as an indicator of quality.

A Few Worries:

Perception/Image: We recognize the sentiment that Arbitrum is somewhat vulnerable to PR backlash from competitors hyperbolizing this if it becomes a formal proposal. It’s possible a formal proposal is not entirely necessary here.
A delay /= A solution: We see a possibility of getting to the end of three months and Arbitrum projects revert to pushing for more bad programs because "the DAO didn't do its job". We would prefer to see higher standards for large incentives proposals rather than an arbitrary time period to halt new programs.
Execution: Is a party is responsible for collecting, analyzing, and publishing takeaways during this period? Is this something Entropy, the ARDC, or another entity will oversee?

When the Arbitrum Incentives Working Group was paused, there was interest from multiple parties to continue the working group meeting with rotating leadership. However, we also agree with @DisruptionJoe that this role is best serviced by a paid and directly accountable individual.

SEEDGov from cattin.seedlatam.eth

7.8M TOKEN

posted 2 years ago

Hello @Sinkas

As advisors in LTIPP and STIP Bridge, we support 100% this proposal.

140

Hello @Sinkas

As advisors in LTIPP and STIP Bridge, we support 100% this proposal.

We have seen protocols that have managed to retain users and even grow post-incentives, others that without incentives don't seem to get traction, and some that have even distributed ARB among a few. The important thing is that as a result of these experiences, we can establish clear guidelines both for assigning incentives and for measuring the performance of a campaign. Just to mention one thing, during LTIPP priority was given to protocols that distribute incentives directly to users. While this makes sense in most cases, some protocols may well generate benefits to the ecosystem without necessarily distributing ARBs directly to their users. An example of this is the Bridges, most of which ended up being guided to propose to subsidize gas, when in reality there are sometimes slippage or solver costs that are significantly higher for the user. This is why the next program needs a clear, broad, and flexible framework to avoid force distribution mechanisms with little impact. It is also important to establish appropriate monitoring so that timely action can be taken, without which we are limited to taking action when it is too late.

While it is true that incentives are important for the growth of protocols and the ecosystem, this should not imply that the DAO must continually spend funds without obtaining a conclusion (positive or not) from those expenditures.

Even though significant progress has been made with LTIPP, we not only see this ‘detox’ as an opportunity to regroup and launch a robust program that brings together all the lessons learned so far, but will also allow us to assess the retention of both capital and users in sufficient time so that we can conclude whether a protocol or the ecosystem itself grows organically or not after incentives.

SEEDGov is willing to be part of the working group and urges other interested parties to do the same.

I am voting FOR this proposal.

When the STIP Bridge proposal was launched, I strongly opposed its implementation.

https://forum.arbitrum.foundation/t/double-down-on-stip-successes-stip-bridge/22353/27?u=pedrob

Now we have an analysis and conclusions from @BlockworksResearch report on the STIP performance, which I invite everyone to read:

Quoted from BlockworksResearch

Most spot and perp DEX STIP recipients’ top-line metrics fell notably after the STIP ended and are currently around levels seen in September 2023. There are a few outperformers, generally younger, differentiated protocols that outgrew the market during the STIP and have successfully managed to maintain activity and capital in the long term.
Excluding the outperformers, the absolute change in TVL/Volume achieved per ARB utilized to increase these metrics directly has widely converged between protocols in the same verticals.
Overall, during the STIP, Arbitrum’s market share growth across major blockchains peaked at ~0% for TVL, ~5% for spot volume, ~12% for perp volume, and ~0% for loans outstanding. The market shares are currently at around September 2023 values, except for TVL, which is down from ~6% to ~4%.

jump to post →

Quoted from BlockworksResearch

jump to post →

It is a detox from the hasty deployment of incentives without proper analysis, and an acknowledgment that we need time to understand how to prepare an appropriate system.

Finally, I agree with other comments that it is not necessary to set a specific deadline. We should take whatever time is needed to gain clarity on the data and the path forward.

BlockworksResearch from blockworksresearch.eth

2.00 TOKEN

posted 2 years ago

edited 2 years ago

Here are some of the incentive designs we witnessed and their percentage of STIP allocation:

standard liquidity incentives (30% of total allocation)
fee rebates (25% of total allocation)
points/usage-based programs (12% of total allocation)
native token liquidity incentives (8% of total allocaiton)
liquidity incentives with long-term locking (8% of total allocation)

STIP Operational Report Retroactive STIP Analysis

JoJo from jojothecow.eth

2.6M TOKEN

posted 2 years ago

Requires for sure a comment.

Is ok imho to be working on a program, as a collective, that is "better" than previous ones.

I only see one problem which I already stated loud in other communications channels:

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Requires for sure a comment.

Is ok imho to be working on a program, as a collective, that is "better" than previous ones.

I only see one problem which I already stated loud in other communications channels:

"better" doesn't mean anything if we don't know the specific metric; at the cost of pounding the table, I am really looking for the vision article and temp check from @Entropy; will help us not only in properly sizing future programs and structures, but also to understand how an incentive program can be a facilitator of any vision we decide to have
(this comes from the previous experience) whatever design we will choose for the program, we need way more people than the one currently involved working on this, especially on the data analysis side that has to run IN REAL TIME during the program and not only after, and for the "advisors". Not saying we will have advisors as we had in ltipp and stip.b, but we have seen the benefit of guiding protocols vs leaving them on their own, and I would see renouncing to these figures as a step back and not forward
i am strongly convinced we can't have a one size fit all program; while, likely, bootstrap programs can be subsidized by Questbook, Thrive and Foundation, for incentive program we really need to start making a differentiation. Not all protocols are equal in term of maturity, and that means that protocols with different maturities can drive the ecosystem toward specific kpi(s), or even different ones, in several ways.

Would also like to point out that the LTIPP council, advisors and PM are still working on possible future iterations of the program, even if at a slower pace compared to the initial plan.

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gauntlet

9.3M TOKEN

posted 2 years ago

Thanks @Sinkas for putting together this proposal. We largely agree with the sentiment and substance of the proposal.

Reasons to Support:

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Thanks @Sinkas for putting together this proposal. We largely agree with the sentiment and substance of the proposal.

Reasons to Support:

Data Analysis/Impact: It's imperative to collect liquidity/retention data for STIP/LTIP grantees both before, during, and without incentives to understand how incentives impact adoption and retention. This is especially true for less dominant protocols where the DAO should measure organic retention before expanding grants.
Working Group Continuation: It's been a year since the initial working group began and revisiting incentives program design is long overdue. It's concerning that discussions, conversations, and ambitions to improve upon existing programs have either a) been relegated to private Telegram chats or b) been abandoned in favor of extensions with marginal improvements.
Quality Assurance: We generally would love to see a higher threshold of quality for DAO operations and programs. We think it's reasonable for delegates to take a stand against poor program design while still supporting Arbitrum builders. The process of hosting "working groups" and "community calls" should not be mistaken as an indicator of quality.

A Few Worries:

Perception/Image: We recognize the sentiment that Arbitrum is somewhat vulnerable to PR backlash from competitors hyperbolizing this if it becomes a formal proposal. It’s possible a formal proposal is not entirely necessary here.
A delay /= A solution: We see a possibility of getting to the end of three months and Arbitrum projects revert to pushing for more bad programs because "the DAO didn't do its job". We would prefer to see higher standards for large incentives proposals rather than an arbitrary time period to halt new programs.
Execution: Is a party is responsible for collecting, analyzing, and publishing takeaways during this period? Is this something Entropy, the ARDC, or another entity will oversee?

SEEDGov from cattin.seedlatam.eth

7.8M TOKEN

posted 2 years ago

Hello @Sinkas

As advisors in LTIPP and STIP Bridge, we support 100% this proposal.

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Hello @Sinkas

As advisors in LTIPP and STIP Bridge, we support 100% this proposal.

SEEDGov is willing to be part of the working group and urges other interested parties to do the same.

The following reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

First of all, we want to thank everyone who has taken the time to read our proposal and provide feedback or express their opinion. To us, an important aspect of the proposal itself is to drive constructive discussion and get as many stakeholders as possible involved in creating a perpetual incentive program.

Quoted from gauntlet

Perception/Image: We recognize the sentiment that Arbitrum is somewhat vulnerable to PR backlash from competitors hyperbolizing this if it becomes a formal proposal. It’s possible a formal proposal is not entirely necessary here.

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While we understand the narrative that could emerge should such a proposal go to Snapshot and become ‘formal’, we do not think that the perception will be as negative. If anything, the narrative could be that ‘Arbitrum is working on a perpetual incentives program based on the lessons learned from incentives programs so far’.

Furthermore, the reason we want this to be a Snapshot proposal and not just a type of verbal agreement is that we want it to act as a commitment from delegates and other contributors to participate in the discussion and relevant working group.

Quoted from gauntlet

A delay /= A solution: We see a possibility of getting to the end of three months and Arbitrum projects revert to pushing for more bad programs because “the DAO didn’t do its job”. We would prefer to see higher standards for large incentives proposals rather than an arbitrary time period to halt new programs.

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The timeline is indeed arbitrary and doesn’t guarantee anything other than that we’ll have a predetermined window of time to focus on moving the needle toward creating a perpetual incentives program. Given that the whole proposal is mostly a social agreement, the timeline can be shorter or longer as needed. The reason we proposed 3 months is that it takes approximately that much to realistically move something in a meaningful way through the governance process.

Quoted from gauntlet

Execution: Is a party is responsible for collecting, analyzing, and publishing takeaways during this period? Is this something Entropy, the ARDC, or another entity will oversee?

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As noted in the original post, there have already been multiple efforts to collect, analyze, and publish takeaways from the different incentive programs so far. Our opinion of what the working group should do now is to focus on discussing those takeaways and distilling the insights into an actionable program.

Quoted from CU-ManicUnicorn

Quick clarification, in the context of the detox, do we mean that this proposal includes any additional non-constitutional incentive proposal that may be posted during the period + the renewal of existing ones?

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Correct, the detox is about any and all incentive programs/proposals, be it new ones, or the renewal of existing ones.

Quoted from cp0x

However, it is worth considering gathering a team of delegates to discuss now, rather than waiting until September 17th.

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The goal, as stated in the proposal, is to put together the working group if and when this proposal passes. We’re planning on going to Snapshot on Thursday 1st of August, which means that if the proposal garners the necessary support, we’ll start gathering the working group on August 8th - more than a month before LTIPP/STIP-Bridge end.

Quoted from JoJo

“better” doesn’t mean anything if we don’t know the specific metric; at the cost of pounding the table, I am really looking for the vision article and temp check from @Entropy; will help us not only in properly sizing future programs and structures, but also to understand how an incentive program can be a facilitator of any vision we decide to have

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The proposed break from incentives will give us an opportunity to take things like that into account when creating a future perpetual program. With quantitative data now in hand, we can shift our discussion on interpretation of that data from a qualitative standpoint.

Quoted from BlockworksResearch

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We’d be happy for the existing incentives working group to lead this discussion, but it seems that it has become inactive after the last incentive programs (LTIPP/STIP-Bridge) were introduced. A testament to that is that they didn’t engage with our post sharing our thoughts on a perpetual incentives program. Furthermore, even if they are active, they do not seem to interface as much as we feel is needed with the DAO. Instead, if the group is indeed active, they operate behind closed doors.

As far as the ARDC is concerned, there’s simply not enough time to undertake leading the conversation around the creation of a perpetual incentives program, given that the ARDC’s mandate concludes at the start of October (if not sooner because of the situation around funding). The ARDC has carried out a lot of research that the working group can refer to, and perhaps it can remain involved until it concludes.

Quoted from Matt_StableLab

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Our idea for reviving the working group was that we’d facilitate its kickstart, and then someone else would take the lead while we remain involved in our capacity as delegates. Our main concern is making the working group open & transparent, and enabling more people to get involved in different relevant areas.

L2BEAT Office Hours

We're more than happy to discuss this proposal further during our Arbitrum Office Hours this Thursday 1st of August at 3pm UTC in this link.

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An Update From the LTIPP Workstream

The LTIPP workstream, which consists of the 5 Council members @404DAO, @coinflip (GMX), @GFXlabs, @karelvuong, @WintermuteGovernance, 3 Advisors @CastleCapital, @SEEDGov, @JoJo, and the PM @Matt_StableLab has been meeting and will continue to meet bi-weekly to discuss lessons learned from the ongoing incentives plans and develop a plan for a long-term incentive framework, as per our mandate in the LTIPP proposal.

We acknowledge the change in conditions in the DAO regarding what delegates would like to see concerning the scope and timing of future incentive programs. This post will serve to update the community on where we currently stand and what we believe needs to happen in the DAO before future incentive programs can commence.

Changes We Would Like to See in a Future Program

Creation of a Modular System

While we believe that general incentives are important, a one-size-fits-all incentive program has proven limited in flexibility, duration, and effectiveness. For this reason, we believe the focus of future programs should shift towards multiple smaller objective-based incentive programs running concurrently within the larger incentive infrastructure.

We believe this will bring the following benefits:

Allows program rules tailored to a specific protocol type instead of trying to fit everyone into one box.
Sub-councils with expertise in a specific objective will lead to more informed decisions about which protocols to fund and will not require a DAO vote for each protocol individually, making the whole process much smoother for protocols and delegates.
Allows sub-councils to recommend best practices for protocols to achieve the specified goal and enforce certain restrictions to prevent a race to zero between similar protocols
If we have sub-incentive programs that are specifically marketed to a particular audience, marketing becomes more manageable and targeted.
It makes the program more adaptable, both in terms of quickly adding new sub-incentive programs for emerging market trends and also allowing us to eliminate incentive strategies that are not working without stopping the entire program.

This modularity might also translate into different incentive programs and further internal differentiations of rules and mechanisms based, for example, on the protocol's maturity, past achieved results, and other metrics.

Clear Objectives with Clear KPIs

The DAO has never decided what specific goals we are trying to achieve with incentives other than generally growing the Arbitrum Ecosystem. This has made it hard to measure the program's success and for the council to decide what kind of applicants they should accept. For an overarching incentives framework, we believe it is imperative to have clear objectives so that we can integrate KPIs throughout the program to measure whether we are achieving our goals. This ties in with the definition of Vision, Mission, and Strategy that @Entropy is working on and that we are eager to assess in the optic of having incentive programs as a powerful driver of the above.

Stronger Reporting and Accountability

Since previous incentive programs lacked clear objectives, it can be hard to identify ineffective or malicious actors. In addition to implementing clear KPIs, we envision the establishment of an oversight mechanism to continually evaluate the program's progress and identify which parts are failing to meet their milestones so adjustments can be made. To accomplish this, we must have live dashboards from the beginning of the incentives and a clear mandate for how we will use this data to alter the incentives framework.

Additionally, a watchdog, on-chain sleuth role is needed to identify any misuse of funds in real-time and present any findings to an oversight council so we can stop these streams as issues arise.

More Emphasis on Marketing

Marketing has never been a part of the program. This led to reduced visibility and awareness of the program from both users and protocols and has stifled our ability to attract new users. The recent addition of the "Rewards" page on the official Arbitrum Portal is a good step towards driving greater awareness. However, we can surely do better to bring more attention to users and protocols. The marketing aspect has to be baked into the proposal to guarantee we have a legitimate marketing strategy bringing users to these incentives.

What Must Happen in the DAO Before the Next Program

A Clear DAO Vision

As a DAO, we need to decide what our goals for the future are. Are we trying to attract the most users, the largest users, new protocols, or existing protocols on other chains? The DAO must reach a consensus on what we are trying to accomplish. This can be achieved either by a team like Entropy or via the DAO as a whole. However, we must have a concrete vision to design a program that works toward this vision accurately. If the DAO cannot produce a complete vision in time for the next program, we must at least have clear objectives the DAO would like to accomplish via incentives so that those overseeing the creation of programs and distribution can properly focus efforts. This will also help us establish clear KPIs and milestones to measure success and hold the incentives program accountable more effectively.

Clarity on How we Can Plug in existing DAO infrastructure into Incentives Programs

Since the last program, the DAO has added the ARDC and is discussing other infrastructure, such as the OpCo. We must figure out how these new additions can best support an incentives program so we can leverage this already-funded talent to support the incentives program with research, analytics, and accountability.

More Data and Analysis Showing What is Working

The LTIPP allowed protocols to experiment more with incentive designs and included the advisor role to help protocols implement exciting new incentive plans. Research into the success of these new designs will be published shortly by OpenBlock and the LTIPP bounties. Additionally, qualitative surveys regarding protocols’ experiences were a part of the STIP.B application. Analyzing this data will be crucial for designing a future program so we can provide recommendations for protocols regarding which mechanisms have been effective in the past.

LTIPP Workstream Plan of Action

We are open to the idea of a detox as we recognize several things must happen before the next program is ready. However, we are unsure if a hard cap on when the following incentive program can start is necessary.

The LTIPP workstream plans to continue designing the basis of a framework for the next incentives program. We want to create the basic structure in the short term so that when additional data and clarity on the topics we mentioned earlier come in, we can easily integrate the findings into the new modular framework.

In the spirit of transparency, we would be happy to start hosting more public calls and encourage feedback from delegates interested in helping with incentives. However, our workstream should continue to drive the design of the next incentives program. Our workstream was elected by the DAO to focus on incentives and is made up of some of the most active members of the community. Working closely with the 100+ active incentives plans has taught us firsthand all the struggles and intricacies required to tackle a large-scale incentives program. Due to this intimate knowledge, we are in the best position to provide the DAO with a clear plan for the future of incentives on Arbitrum.

The end mission for this workstream is to present the DAO with a robust long-term incentive framework that it can implement and benefit from for the foreseeable future.

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The following reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

Quoted from gauntlet

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Quoted from gauntlet

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Quoted from gauntlet

Execution: Is a party is responsible for collecting, analyzing, and publishing takeaways during this period? Is this something Entropy, the ARDC, or another entity will oversee?

jump to post →

Quoted from CU-ManicUnicorn

jump to post →

Correct, the detox is about any and all incentive programs/proposals, be it new ones, or the renewal of existing ones.

Quoted from cp0x

However, it is worth considering gathering a team of delegates to discuss now, rather than waiting until September 17th.

jump to post →

Quoted from JoJo

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Quoted from BlockworksResearch

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Quoted from Matt_StableLab

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L2BEAT Office Hours

We're more than happy to discuss this proposal further during our Arbitrum Office Hours this Thursday 1st of August at 3pm UTC in this link.

104

An Update From the LTIPP Workstream

Changes We Would Like to See in a Future Program

Creation of a Modular System

We believe this will bring the following benefits:

Allows program rules tailored to a specific protocol type instead of trying to fit everyone into one box.
Sub-councils with expertise in a specific objective will lead to more informed decisions about which protocols to fund and will not require a DAO vote for each protocol individually, making the whole process much smoother for protocols and delegates.
Allows sub-councils to recommend best practices for protocols to achieve the specified goal and enforce certain restrictions to prevent a race to zero between similar protocols
If we have sub-incentive programs that are specifically marketed to a particular audience, marketing becomes more manageable and targeted.
It makes the program more adaptable, both in terms of quickly adding new sub-incentive programs for emerging market trends and also allowing us to eliminate incentive strategies that are not working without stopping the entire program.

Clear Objectives with Clear KPIs

Stronger Reporting and Accountability

Additionally, a watchdog, on-chain sleuth role is needed to identify any misuse of funds in real-time and present any findings to an oversight council so we can stop these streams as issues arise.

More Emphasis on Marketing

What Must Happen in the DAO Before the Next Program

A Clear DAO Vision

Clarity on How we Can Plug in existing DAO infrastructure into Incentives Programs

More Data and Analysis Showing What is Working

LTIPP Workstream Plan of Action

The end mission for this workstream is to present the DAO with a robust long-term incentive framework that it can implement and benefit from for the foreseeable future.

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[Non-constitutional] Incentives Detox Proposal

[Non-constitutional] Incentives Detox Proposal

[Non-constitutional] Incentives Detox Proposal

TL;DR

Abstract

Motivation

Rationale

Specifications

Steps to implement

Timeline

Overall Cost

[Non-constitutional] Incentives Detox Proposal

[Non-constitutional] Incentives Detox Proposal

[Non-constitutional] Incentives Detox Proposal

TL;DR

Abstract

Motivation

Rationale

Specifications

Steps to implement

Timeline

Overall Cost

TL;DR

Abstract

Motivation

Rationale

Specifications

Steps to implement

Timeline

Overall Cost

TL;DR

Abstract

Motivation

Rationale

Specifications

Steps to implement

Timeline

Overall Cost

[Non-constitutional] Incentives Detox Proposal

[Non-constitutional] Incentives Detox Proposal

[Non-constitutional] Incentives Detox Proposal

[Non-constitutional] Incentives Detox Proposal

[Non-constitutional] Incentives Detox Proposal

[Non-constitutional] Incentives Detox Proposal

Retrospective Analysis: Importance of developing Incentive Goals

Retrospective Analysis: Importance of developing Incentive Goals

Setup and Organization

Design Process

Parameterization Process

Operational Management

Monitoring and Optimization

Were the Objectives Achieved?

STIP

LTIPP

Moving Forward

Disclosure

Resources

Retrospective Analysis: Importance of developing Incentive Goals

Retrospective Analysis: Importance of developing Incentive Goals

Setup and Organization

Design Process

Parameterization Process

Operational Management

Monitoring and Optimization

Were the Objectives Achieved?

STIP

LTIPP

Moving Forward

Disclosure

Resources

12th Call

11th Call

10th Call

KPIs and Monitoring

Direct incentive distribution

Long-term user/capital retention

Asset / Vertical / Protocol Selection

Protocol Collaboration

Marketing & Operations

13th Call