How can an idea for bonds belong to Apeswap? This is what I am trying to understand. There’s a proposal for an idea of a “bond program” & now there’s an allegation that Taylor could not leave the DAO & go solo / team up with a separate DAO? He states very clearly that Apeswap has no claim to his ideas or work.

You then have “Bond Protocol” above suggesting they had the idea for bonds and Apeswap forked their contracts to copy them.

What is the actual allegation? Apeswap owns the conceptual idea of bonds? Or that a crypto project like Sushi can’t team up with ex-contributors of DAO’s to pursue projects in crypto?

How does that make sense?

This is why I am asking what has been “stolen”, “infringed”, “violated” to suggest Taylor or Sushi has done something wrong? Or what exists to assert Apeswap has blanket control over ideas for bond programs?

It seems the goalposts have now shifted and the claim has gone from something of value was stolen from Apeswap to our idea to do a bond proposal was copied. I think Taylor has made it pretty clear that he left and his work was his own. Free to take his ideas for proposals with him.

Would you be so kind to point me out where myself or ApeSwap claimed to conceptually own bonds?

I believe you are still missing the point here. This is just a matter if principle, integrity and showing the world what is actually going on behind the scenes.

I would be flattered and proud if Sushi forked my bond contracts, which I proudly derived from Olympus Pro over 18 months ago. I have nothing to hide, and I don't consider myself a clown for forking code or using existing code to create something I consider more fit, most of our industry is built out of this (including Sushi).

If you believe the issue at hand is forking open source code, you are still missing the point. Because Sushi does not even have such product or code, and I would not mind if they did, yet they took the liberty to steal our proposal under the pretext of a joint venture.

Anyway, this is the end of my replies. I am happy to provide more information to the Arbitrum team and delegates as required. I am done partaking on this show and answering random rants from the Sushi team.

Regards.

Hi Neiltbe,

Taylor was paid by ApeSwap and carried out this work as part of his responsibilities for the ApeSwap DAO, along with other team members. As a member of the team, we would not create such a document for each interaction and presentation, it would be covered by an NDA.

Apeguru makes a good point too, this is not about any individual person. SushiSwap knew this work belonged to ApeSwap from our partnership discussions, yet they chose to present it as their own.

I don’t think you or a DAO can conceptually own “bonds”. Or own the idea of “bonds”? How does that make sense? Is there a patent on this? Is there a software license being violated?

If a group of Apeswap contributors leave to go solo & team up with another DAO to sponsor their work — what have they “stolen” from Apeswap? Is there anything being “stolen”? Is there some code that was maliciously taken from your GitHub repo?

The Bond Protocol above mentions that Apeswap forked “bonds” from them?? Where does this clown fiesta of copying allegations end?

I am open to changing my opinion but this looks like simple competition to me. Please do let me know what I am missing.

Neiltbe, I appreciate you created your account just to participate in this thread. I show genuine concern and involvement. Kudos for that.

I believe that it is unlikely that such documentation exists, nevertheless, I do believe you are misinterpreting what is going on, while further proving ApeSwap's point. No one is going after Taylor, or even pointing fingers at him.

What we are pointing out here is the fact that Sushi stole our work. We approached them for a joint venture. We shared our materials, our bonds deck, ARB token traction report, thought them how to sell it, and even produce over 80% of the content of this proposal.

I don't care who is Taylor and whatever his monkey name was when he worked at ApeSwap. I don't care what documents are signed or not signed to protect such IP. The issue is way simpler than this. ApeSwap was working on a joint venture with Sushi to provide a bonding solution to the Arbitrum DAO when Sushi suddenly decided to 'back off' only to post the proposal on their own, even though they don't even have a bonding product or a track record.

Finally I want to point out to the following materials:

• Our liquidity health dashboard: https://apeswap.finance/liquidity-health
• A similar proposal for RADAR token: https://forum.dappradar.com/t/dcp-6-restarting-dappradars-apeswap-treasury-bills-campaign/696

When we put all of this together, it is crystal clear that this is ApeSwaps work, ApeSwaps metrics, reports and all in all way of operating and selling bonds.

I would like to see a valid IP invention assignment doc / agreement that suggests any ideas, work, etc done Is solely the property of ApeSwap/whatever entity Apeswap uses.

Taylor suggests his research, knowledge & ideas are his own free to take with him. You suggest this is not true…please post the relevant provisions in your agreement which entitles you to ownership of his work, thoughts, ideas, developed while he was working with your DAO.

You reference a valid NDA, which could possibly or may not cover this matter. Post the relevant provisions to quash this.

Hi Cliffton,

Thanks for reaching out and for taking this seriously.

What further proof would you like to see? We’re happy to provide anything as long as it doesn’t attack someone personally or cause any problems on what could become a legal matter.

From our perspective, an ex ApeSwap team member acknowledging they took the work believing it belongs to them or Sushi is about as good as any proof we could provide.

Hi Taylor,

Thanks for acknowledging our post. Simply put, that's not how a company-employee relationship works. Being paid to carry out work doesn't entitle the employee to own the product of said work. Furthermore, we have supporting evidence where you expressly agreed to these terms, that we'd be happy to share, but doesn't feel like a great road to go down.

Even though you were indeed part of the team that worked on the proposal before leaving ApeSwap, you were far from working on it alone. Many people involved in this still work at ApeSwap, and it doesn't belong to them either, it belongs to the ApeSwap DAO.

How can an idea for bonds belong to Apeswap? This is what I am trying to understand. There’s a proposal for an idea of a “bond program” & now there’s an allegation that Taylor could not leave the DAO & go solo / team up with a separate DAO? He states very clearly that Apeswap has no claim to his ideas or work.

You then have “Bond Protocol” above suggesting they had the idea for bonds and Apeswap forked their contracts to copy them.

What is the actual allegation? Apeswap owns the conceptual idea of bonds? Or that a crypto project like Sushi can’t team up with ex-contributors of DAO’s to pursue projects in crypto?

How does that make sense?

This is why I am asking what has been “stolen”, “infringed”, “violated” to suggest Taylor or Sushi has done something wrong? Or what exists to assert Apeswap has blanket control over ideas for bond programs?

It seems the goalposts have now shifted and the claim has gone from something of value was stolen from Apeswap to our idea to do a bond proposal was copied. I think Taylor has made it pretty clear that he left and his work was his own. Free to take his ideas for proposals with him.

Would you be so kind to point me out where myself or ApeSwap claimed to conceptually own bonds?

I believe you are still missing the point here. This is just a matter if principle, integrity and showing the world what is actually going on behind the scenes.

I would be flattered and proud if Sushi forked my bond contracts, which I proudly derived from Olympus Pro over 18 months ago. I have nothing to hide, and I don't consider myself a clown for forking code or using existing code to create something I consider more fit, most of our industry is built out of this (including Sushi).

If you believe the issue at hand is forking open source code, you are still missing the point. Because Sushi does not even have such product or code, and I would not mind if they did, yet they took the liberty to steal our proposal under the pretext of a joint venture.

Anyway, this is the end of my replies. I am happy to provide more information to the Arbitrum team and delegates as required. I am done partaking on this show and answering random rants from the Sushi team.

Regards.

Hi Neiltbe,

Taylor was paid by ApeSwap and carried out this work as part of his responsibilities for the ApeSwap DAO, along with other team members. As a member of the team, we would not create such a document for each interaction and presentation, it would be covered by an NDA.

Apeguru makes a good point too, this is not about any individual person. SushiSwap knew this work belonged to ApeSwap from our partnership discussions, yet they chose to present it as their own.

I don’t think you or a DAO can conceptually own “bonds”. Or own the idea of “bonds”? How does that make sense? Is there a patent on this? Is there a software license being violated?

If a group of Apeswap contributors leave to go solo & team up with another DAO to sponsor their work — what have they “stolen” from Apeswap? Is there anything being “stolen”? Is there some code that was maliciously taken from your GitHub repo?

The Bond Protocol above mentions that Apeswap forked “bonds” from them?? Where does this clown fiesta of copying allegations end?

I am open to changing my opinion but this looks like simple competition to me. Please do let me know what I am missing.

Neiltbe, I appreciate you created your account just to participate in this thread. I show genuine concern and involvement. Kudos for that.

I believe that it is unlikely that such documentation exists, nevertheless, I do believe you are misinterpreting what is going on, while further proving ApeSwap's point. No one is going after Taylor, or even pointing fingers at him.

What we are pointing out here is the fact that Sushi stole our work. We approached them for a joint venture. We shared our materials, our bonds deck, ARB token traction report, thought them how to sell it, and even produce over 80% of the content of this proposal.

I don't care who is Taylor and whatever his monkey name was when he worked at ApeSwap. I don't care what documents are signed or not signed to protect such IP. The issue is way simpler than this. ApeSwap was working on a joint venture with Sushi to provide a bonding solution to the Arbitrum DAO when Sushi suddenly decided to 'back off' only to post the proposal on their own, even though they don't even have a bonding product or a track record.

Finally I want to point out to the following materials:

• Our liquidity health dashboard: https://apeswap.finance/liquidity-health
• A similar proposal for RADAR token: https://forum.dappradar.com/t/dcp-6-restarting-dappradars-apeswap-treasury-bills-campaign/696

When we put all of this together, it is crystal clear that this is ApeSwaps work, ApeSwaps metrics, reports and all in all way of operating and selling bonds.

I would like to see a valid IP invention assignment doc / agreement that suggests any ideas, work, etc done Is solely the property of ApeSwap/whatever entity Apeswap uses.

Taylor suggests his research, knowledge & ideas are his own free to take with him. You suggest this is not true…please post the relevant provisions in your agreement which entitles you to ownership of his work, thoughts, ideas, developed while he was working with your DAO.

You reference a valid NDA, which could possibly or may not cover this matter. Post the relevant provisions to quash this.

Hi Cliffton,

Thanks for reaching out and for taking this seriously.

What further proof would you like to see? We’re happy to provide anything as long as it doesn’t attack someone personally or cause any problems on what could become a legal matter.

From our perspective, an ex ApeSwap team member acknowledging they took the work believing it belongs to them or Sushi is about as good as any proof we could provide.

Hi Taylor,

Thanks for acknowledging our post. Simply put, that's not how a company-employee relationship works. Being paid to carry out work doesn't entitle the employee to own the product of said work. Furthermore, we have supporting evidence where you expressly agreed to these terms, that we'd be happy to share, but doesn't feel like a great road to go down.

Even though you were indeed part of the team that worked on the proposal before leaving ApeSwap, you were far from working on it alone. Many people involved in this still work at ApeSwap, and it doesn't belong to them either, it belongs to the ApeSwap DAO.

Disclaimer & Introduction - Bond Protocol pioneered bonding-as-a-service for DAOs and originally launched Olympus Pro on Arbitrum in December 2021. Since that time, we have built a fully permissionless bond marketplace with a focus on Ethereum Mainnet and Arbitrum. https://www.bondprotocol.finance

Background - We have worked with 15 projects on Arbitrum, including protocols like GMX, TreasureDAO, Camelot, Pendle, and Y2K. Our contracts have processed more than $20M in Total Bonded Value on Arbitrum from OP to BP. See Dune for TBV stats on BP: https://dune.com/bond_protocol/bond-protocol

We vehemently object to Sushi’s proposal in its current form and encourage Arbitrum projects and delegates to do the same. Scoping and launching a Bond Program requires DAO acknowledgement and general consensus on the priority at hand (POL, Treasury Diversification, Asset Acquisition), a bulletproof strategy to execute a Bond Program aligned with treasury priorities, and ultimately a selection of the best available solution meeting technical and business requirements.

Echoing sentiment shared by DAO participants, our reasons for objecting are as follows:

1. Objective Alignment - Arbitrum DAO has not surfaced POL as a key initiative or focal point in its ecosystem growth plans. A further discussion of POL significance is warranted to acknowledge a problem before being prescribed a solution. The lack of discourse on POL leads us to believe that this is not a priority, but we will gladly participate in a separate discussion on the forum.

2. Evaluation Framework - if Arbitrum DAO decides that POL is a strategy worth pursuing, it should implement a robust framework for evaluating ALL viable options. The evaluation should be open for any and all solutions to pitch their argument so Arbitrum DAO makes a well-informed decision vs a rushed one.

3. Bond Contracts - Sushi has failed to elaborate on their bond contracts and provide any technical resources. Apeswap has alleged that Sushi forked their implementation, which itself is derivative of contracts we developed in 2021.

4. Configuration - We have learned a lot since the early days of bonding and believe the proposed configuration from Sushi is sub-optimal. Most bond issuers choose to bond counter-assets (e.g. ETH, stables, wBTC) instead of LP tokens. Bonding counter-assets directly avoids paying a discount on half of the underlying LP and also improves ROE by reducing the number of transactions. Acquiring $ETH or stables also maintains agnosticism to where POL will be held, which the DAO can decide vs picking a singular DEX based on the configuration.

5. Success Criteria - 80-90% ROE is a really low estimate for Arbitrum DAO, as the ROE tends to increase for larger, more liquid tokens. Based on our experience, a more likely ROE would be 95% or greater based on discount distribution for Bond Programs on Arbitrum (see Dune).

6. Performance Fee - we do not see a 5% fee as justifiable, especially when platforms like Bond Protocol charge NO FEES. This should result in immediate cost savings for Arbitrum DAO or any Arbitrum project.

7. Trust Assumptions - Sushi’s proposed bond program requires a shared multisig for permissioned, manual bond deployment and adjustment of variables. Our platform has evolved past what they’re forking. Bond Protocol abstracts away variable controls such as BCV, allowing protocols to focus more on configuring and monitoring their programs. Issuers can permissionlessly create and cancel their programs in an automated fashion without our intervention or a shared multisig. This proposal is in stark contrast to the values that all DAOs should aspire to.

Ultimately, Sushi’s POL proposal doesn’t align with Arbitrum DAO’s objectives and seems to primarily benefit themselves. They are asking to manually manage millions of dollars via outdated bond contracts for a hefty fee. Meanwhile, we will continue to develop permissionless treasury management solutions for the Arbitrum community 🍸

Honestly, I have to say, I'm not a fan of this. I'm just not convinced this program will work, especially not with such a significant margin, and most importantly not in your hands.

I think before pushing such a program, we should see what other protocols will come up with in light of the recent framework being introduced. I have a feeling that we will see a lot of interesting proposals in the next several days, and most importantly, from much more trustworthy protocols that have fully dedicated themselves to the ecosystem.

Sure, you might be the first to launch on Arbitrum, but Sushi isn't the go-to DEX on Arb. In fact, it's far from it. Besides, Sushi is consistently among the first to launch on newly created chains. (Your actions on Base aren't going unnoticed...)

You've had time to demonstrate that the protocol can handle programs like this, but now we find out you essentially copied the entire plan. I mean, come on, that's ridiculous! After the ApeSwap incident, I believe you should scrap this proposal and return with something developed by your team, not someone else's.

Personally, I think you cleverly tried to front-run other protocols on the chain before they post their proposals. With the way the DAO is set up now, I'm pretty confident that liquidity will start flowing back.

Sushi doesn't have anything to back this plan, considering you've never issued a single bond as a protocol. I don't think many delegates will trust you when it comes to the program's effectiveness if you don't have any experience in this field.

Also, the ApeSwap stuff coming to light is truly disappointing. Such a big team with so much experience should be capable of constructing a proposal like this on their own, but you had to steal someone else's work ...

It's a big NO from me!

Hello Leon27, Thank you so much for your response

We are very excited to see that our proposal is encouraging users like you to join the forum and get involved in the discussion. It is our goal to spark discussion and push forward as an ecosystem together. We mirror the urgency that you are feeling and hope that we can implement our solution soon!

1. No comments on how they intend to manage the POL

The management of the POL will ultimately rest with the Arbitrum DAO. It has the authority to decide on its utilization. Whether the DAO opts for active management of the POL, reallocating it to different DEXs, or pursuing any other strategy, the discretion lies with the DAO as the liquidity owner.

2. No details about using v2 or v3

To optimize the clawback rate, we will initially build liquidity following the v2 model. However, we are actively collaborating with Steer Protocol on v3 liquidity management. In the future, we intend to propose having Steer manage a portion of this liquidity to maximize efficiency. We also encourage other v3 management protocols to explore similar proposals once the POL is established.

3. The 5% success fee seems wholly unreasonable to my mind, I do not remember other proposals asking for such a fee

Thank you for this feedback. We believe that there may be some misinterpretation on how this fee works. Sushi makes nothing if this program is not successful. This is a great alignment of incentives between Sushi and Arbitrum. Also, based on what we have seen on other proposals, our fee is extremely modest. With Traditional liquidity mining, the “fee” associated can be viewed as 100% of the tokens used. What this means is that with these proposals, 0 tokens or liquidity will be returned to the DAO treasury. With that, we believe compared to the 100% fee on other proposals, our 5% is extremely modest.

4. Sushi has not been involved in Arbi governance thus far, as far as I am aware, so seems a bit overzealous to be asking for so much with a fee to boot. Feels like Sushi trying to stay relevant on Arbitrum but indeed with not much to back it up

We believe that if you do not have anything of value to add to a discussion, it is not wise to say anything at all. We have focused our attention on our presence on-chain, launching on block 70 as the first DEX on arbitrum, complemented with our cross-chain xSwap, bringing thousands of users to the chain from others. We have used our time to build our DEX infrastructure and analyze the $ARB token so that we could be prepared to propose a sustainable solution to truly benefit the ecosystem. In regards to the size of the ask, at first glance it may seem like a lot of tokens. When you dig in though you will see that the large amount of tokens reflects the large amount of liquidity needed. Additionally, because of the nature of the bonds, if there is no demand, it will not cost ANY tokens meaning that this poses little to no risk to the ecosystem.

5. I remember quite well the vampire attack that set Sushi up, it was not a good look and deserves no credit to my mind, not the kind of history we want to see. Maybe I am not seeing it correctly, so would appreciate some clarity on what others think about that

We acknowledge your perspective but believe that competition is beneficial. It challenges the status quo and, in our case, created a model for liquidity sourcing that has been emulated by countless protocols.

6. Sushiswap is on so many different chains and nowhere near as Arbitrum centric as other Arbitrum DEXs, so why not have a preference for the DEXs we do have that are more focused on the Arbitrum ecosystem and have done more for the cause?

We encourage a broader outlook on the future of web3 and DeFi. The industry is moving toward a cross-chain and multi-chain approach. Our xSwap feature currently spans seven ecosystems, and the upcoming v2 will extend this to over 30, providing Arbitrum with direct access to users across different chains while unifying liquidity. We believe that forming an island on one chain causes isolation and closes Arbitrum off from accessing a large amount of DeFi users.

7. I do not really see this proposal for a bond programme as anything exciting or invigorating for the ecosystem. I understand this is a longer-term proposal and the calculations quite well. Should we not be more focused on something that will ignite the ecosystem and give the boost we so desperately need as soon as possible? Personally, I feel we should, so I’m very interested to hear what others think. I feel we need something more injective and quicker off the bat, something more exciting and attractive for the end user

Our proposal aligns with the recent short-term incentive program, which allocates up to 50M $ARB tokens over the next quarter. Our first sales period aligns with this timeline, requiring a maximum of 12.5M tokens. This leaves room for 37.5M $ARB to be allocated for more "exciting" and "user-attractive" programs. We value your input and invite you to join our townhall on 09/21 @ 17:00 UTC, hosted on Twitter Spaces, to share your thoughts on alternative initiatives.

Hey Kingofsparkles, thank you for the response!

We see that you are a big fan of Arbitrum and are looking for new ways to boost growth, therefore we believe that when you understand the intentions behind our proposal you will be a big fan of it as well! Let me start by addressing your key points.

As the second longest standing DEX in general, and the first to launch on Arbitrum, we clearly have a vested interest in the liquidity on the chain. We have seen many new blockchains gain lots of hype and liquidity, only to lose the majority of both thanks to short term liquidity mining programs. We are true believers in DeFi and plan to continue to offer proven innovation methods to great blockchains like Arbitrum to ensure that they can retain their hype and liquidity in the future. As you have noted, The DEXes on Arbitrum have been losing large amounts of liquidity lately as their incentive tokens have been hit hard by the inflation from the emissions used to source it. This is an issue that we understand very intimately as we have suffered similarly in the past with the same liquidity mining programs. This is why we are so excited to have a solution for the future!

Why the urgency behind this proposal? 1 As stated in “background”, the $ARB token has lost 80% of it’s liquidity on chain in less than 4 months 2 Bonding, unlike liquidity mining, does not attract huge amounts of temporary liquidity instantly. Bonding is a solution meant to slowly build up liquidity over time. While we are confident that we can achieve a healthy amount of liquidity, the sooner the program is started, the more quickly this liquidity foundation can be built.

Can we run a test of this proposal to see its effectiveness? Yes, that is the exact purpose of this proposal and the reason that we have broken it up into 4 quarters with its future only guaranteed by success. Because bonds do not emit tokens if there is no demand, if the program does not work it will cost the DAO nothing as tokens that are not sold will be returned to the treasury.

Kingofsparkles, I assure you that we believe that this proposal is the best possible thing for this ecosystem right now. I know that newer solutions can feel intimidating at first but the fate of the future of this space relies on innovation as it always has! I encourage you and future commenters to share what you believe are the best liquidity solutions on the market right now.

I just wanted to share my thoughts on this proposal. I'm a big fan of Arbitrum, a holder, and a participant in the ecosystem. While I'm all for new ideas to boost liquidity and growth, there are some aspects of this proposal that don't sit right with me.

Some of you may know that SushiSwap started as a Uniswap fork and made waves in the DeFi world with its aggressive ~vampire attack strategy. It tried to lure liquidity away from Uniswap by offering higher rewards, and that tactic wasn't exactly well-received in the community. So, when I see this proposal, it feels a bit like deja vu – another attempt to capture liquidity in a similar way, but this time under a disguise to help the ecosystem.

Here's the thing: when I look at the current state of Sushi on Arbitrum, it's not exactly thriving. The TVL on their platform has been shrinking, and it hasn't been the go-to place for liquidity providers or key builders for a while now. Some may argue that the TVL across the entire Arb ecosystem has decreased, and yes, that is true. However, when it comes to sushi, the impact is particularly noticeable. So, this proposal feels like an attempt to rescue a sinking ship, and that ship isn't Arbitrum - it's SushiSwap or at least its position on Arbitrum.

Arbitrum needs a strong incentive program, no doubt about it. But the one proposed by Sushi feels a bit rushed and not entirely in the best interest of our ecosystem. Plus, I can't help but wonder about the loyalty factor. Has SushiSwap really shown dedication to the Arbitrum? I'm not so sure, even considering the fact that Sushi has been operating on Arbitrum since its early days, the reputation among the Arbitrum communities is not so great, and that is not a secret.

I think it's also worth mentioning the recent hack involving SushiSwap's router. Around 1000 ETH went missing in that incident... It makes me worry about the security of a bond program if something like that could happen.

I don't think we need a bond program right now, at least not the way it currently stands. And even if we do go that route, I think SushiSwap should only be a part of it if they can prove that the program actually works. Perhaps, they could first use a portion of their arb airdrop to demonstrate effectiveness of the program before putting forward a proposal

So, in my humble opinion, I'm leaning towards a NO on this proposal. It feels like Sushi is trying to save itself from drowning and falling completely behind other protocols that are more advanced on the chain. I think we should focus on solutions that genuinely benefit our ecosystem rather than injecting some life into a protocol that hasn't really proven its loyalty to the ecosystem and is happy to deploy to any new chain that comes into existence.

Just my two cents on the matter. Thanks for listening!

First, let me say thank you for taking the time to read through the proposal 🙏

Now, I'd like to take a moment to address each of your questions.

1. Sushi is well-known for being a multi-chain protocol. Whilst this isn’t inherently a bad thing, it makes one wonder how Suhsi has shown its commitment to Arbitrum so far? From what I have seen, Sushi is more actively pursuing Base and a multitude of other chains, hence my lack of confidence that Sushi is the best placed protocol to serve solely the Arbitrum ecosystem.

Sushi has a long standing history of supporting networks at their earliest stages. We were the very first DEX to launch on Arbitrum, all the way back in block 70 (https://arbiscan.io/tx/0x8d0a67317d0f3996ce544776afa7c503e8c33d0475a0660e08748d1a8cad14a5). In addition, our presence as a cross-chain protocol has benefited Arbitrum greatly due to our cross-chain swapping capabilities. More than one-third of our cross-chain swap volume is made up of users going from an origin chain to Arbitrum. This cross-chain swap feature was actually one of the very first bridges that was put in place on the network, which greatly contributed to Arbitrum's early growth by allowing users to seamlessly enter into the ecosystem.

2. I do not wish to criticise Sushi as a protocol, but objectively speaking there are several DEXs on Arbitrum that have higher efficiency, more ecosystem focus, better offerings etc. These DEXs have made significantly more progress in establishing deep liquidity for $ARB, whilst Sushi is amongst one of the lowest actively used venues for $ARB trading. What makes Sushi the best placed DEX to do this? Looking at objective metrics would place Sushi relatively low in the ranking of DEXs. Sushi’s current volume for $ARB is almost non-existent compared to Uniswap.

Your opinion here is appreciated! Before getting to your question it’s important to note that there are multiple ways to interpret “higher efficiency” and “better offerings,” so we’ve done our best to answer accordingly. We would love to understand more specifically what you are referring to.

With that said, we encourage examining historic volume, TVL, etc. and it will become quickly apparent that up until fairly recently, Sushi was the second-highest volume DEX on Arbitrum. However, to answer your specific question about what makes Sushi the best place to do this,there are several factors that come into play.

1. As one of the oldest DEXs in Web3, we have a large and loyal user base. Earlier, you mentioned that we are a cross-chain protocol, and we have built our infrastructure in such a way that we are able to seamlessly bring our community from the multiple networks we are available on over to Arbitrum. Our xSwap feature is currently available on seven chains, but in the near future, v2 will be released and 30+ networks will be added, making Sushi the perfect home for deep $ARB liquidity as users from those networks gain access to the xSwap feature

In other words, having a central liquidity hub that is inherently multi- and cross-chain directly feeds the Arbitrum network and its liquidity providers.

2. Sushi's recent drop in liquidity on Arbitrum can be easily attributed to mercenary liquidity miners taking their LPs to other protocols that are early on in their distribution curves. This actually strengthens the need for this proposal rather than weakens it. $ARB's on-chain liquidity profile is currently beholden to the whims of mercenary liquidity providers, as opposed to being steadfast with a permanent liquidity foundation owned by the DAO.

3. Sushi still commands a significant liquidity presence on ETH mainnet, which is Arbitrum's greatest conduit for scale and trading activity. Having dedicated liquidity pools for settlement at the protocol level on Sushi, coupled with the xSwap v2 product (and aforementioned metrics), makes a significant case for deploying on us.

We would argue that it is better to have composability and interconnectivity with other ecosystems, especially as an EVM compatible L2 of ETH, interconnectedness to the ecosystem at large is part of the purpose of the chain. We believe that the entire industry is moving towards that thesis, and are attempting to usher others along in that direction.

3. This proposal grossly overestimates the need for $ARB liquidity. Please can you clarify the sources for the data that justify this rather huge amount of $ARB from the treasury?

• Uniswap itself has significant liquidity depth for Arbitrum, and when taking into all of the other sources of liquidity on the chain it is more than sufficient.

• This proposal also does not take into account the CEX liquidity profile, in which $ARB has multiple professional market makers.

To answer this question we’d point back at the "Motivation" section of the proposal. There we explain that the price of $ARB has dropped by 33% since June of 2023, but the on-chain liquidity has dropped by 80%. If the only factor at play was the drop in price, the liquidity would have decreased by a smaller amount due to impermanent loss softening the depreciation. However, seeing as how the liquidity has decreased by more than twice the percentage of the decrease in price, it is clear that liquidity providers are taking their capital elsewhere. This proposal would remove the need for these mercenary liquidity providers in the first place by replacing them with liquidity that is owned by the DAO itself.

To address the comment on CEX liquidity - we do take into account the fact that there is CEX liquidity for the token, It can be a great way to bring traditional finance and institutional investors into the space, and therefore does provide value. That being said, similar to you, we also believe in decentralization, so running a decentralized blockchain backed entirely by centralized liquidity would be counterintuitive. As we have stated in the proposal, $ARB has lost 80% of its decentralized liquidity in the last three and a half months. Most of the liquidity that there is for the token is not owned by the DAO, and can be removed by mercenary miners at any time. We look to offer a solution for Arbitrum to replace that liquidity in an efficient way, while diversifying the treasury into yield-bearing assets.

4. Please could you explain what the optimal amount of onchain $ARB liquidity is? As mentioned above, per my own calculations, there is already sufficient liquidity on the chain (even in a market that has a lack of liquidity in general).

For our estimates, please refer to the end of the background section. We would love to see your estimates and calculations on liquidity if you can share.

As for Sushi, we came to our conclusion through extensive market research comparing tens of thousands of tokens to normalize a score for metrics such as market capitalization, total liquidity, owned liquidity, decentralized and CEX liquidity, emissions, time on main net, network, etc. This was done in order to better estimate the amount of liquidity that we expect each protocol should have. I agree with you that liquidity in the market is lacking. We believe that right now, this is the best solution to this market wide problem.

5. Taking a 5% success fee is incredibly high considering that Sushi would be getting “free liquidity” from the DAO, in which it would earn even further fees. If anything, Sushi should be paying considerable sums to the DAO in order to acquire such a large amount of ARB tokens, even if treated as a loan.

The liquidity being built will be owned by the Arbitrum DAO, and the LP fees will be collected by them. It is important to note that Sushi does not own this liquidity, nor does the user providing it, once they have purchased a bond. With Arbitrum as the LP provider, 83.3% of the fees go directly back to the Arbitrum foundation.

Also, it is important to mention that these fees are only collected upon the successful sale of each bond. In other words, if no users end up buying a bond, we do not collect any fees, and no $ARB tokens enter into circulation.

6. Your criticism of traditional liquidity incentives is incorrect and hyperbolic - to call it a “death spiral” is far from fair. By using PoL, you are not necessarily attracting new users, new builders, or any further ecosystem growth; you are simply promising deeper liquidity for $ARB itself. This in turn does not necessarily result in further value generated for the ecosystem. On the other hand, incentives have a proven track record of distributing the token which increases decentralisation and growth.

We really appreciate your summary of liquidity mining, as we believe it is a reflection of the lens through which many users view liquidity mining. Liquidity mining was created to offer protocols a way to deepen their liquidity without needing to supply lots of blue-chips and stablecoins directly, as they are very expensive. If the only metrics that you are looking at are distribution and decentralization, the best thing that you could do is airdrop tokens into as many wallets as possible. The issue with that is it would completely ignore many other factors, most notably, inflation.

The more tokens that are given away to users for free, the more sell pressure this puts on the rest of the tokens and drags down the price. This is the reason we look at metrics like return on emissions (ROE) when discussing emitting tokens. Each token emitted should bring tangible value back to the ecosystem. Deeper liquidity for $ARB, stablecoins, and blue-chips means that there are more efficient trading routes for anyone on the network. This means a better trading experience for users, as they’ll suffer less from slippage and price impact. This method also does a great job of distributing tokens, which in this case are vested to users. However, unlike liquidity mining, these are not the same handful of “mercenary miners” quickly migrating their liquidity positions to the next best opportunity.

In addition, the term "death spiral" was originally coined by Messari - a leading research firm in web3. We take a data driven approach to everything we do and have therefore been monitoring the efficacy of liquidity mining since we invented it in 2020. Truth be told, it is a brilliant tool for bootstrapping liquidity, but it is incredibly inefficient at capturing any long-term value for the protocols that participate in it.

Furthermore, bonding has a higher probability of helping with user acquisition than traditional liquidity mining. Bonds are purchased throughout the whole duration of the sales period, whereas with traditional liquidity mining the majority of the LPs will be added at the beginning of the farm, and then removed as soon as the farm is over.

7. Have you actively been engaged with the ecosystem governance? This proposal coincides with the current “Short term incentive framework”. From what I understand, Sushi has not actively been involved with Arbitrum governance thus far.

In preparation for this proposal, we have spent several months studying the $ARB token, the overall Arbitrum ecosystem, and as the market as a whole in order to figure out how to best support the goals and needs of the DAO. We are very confident that the plan we have put forward, including its built-in safeguards, is the perfect vehicle to help the Arbitrum DAO in its continued evolution.

8. Please could you confirm what Sushi has done with the $ARB airdrop it received? From what I recall you received over 4,000,000 tokens.

We have held it securely and plan to be an active participant in governance going forward.

9. Would Sushi be willing to use its ARB airdrop to prove a pilot of this proposal? Even if the community/DAO supported such a proposal, agreeing to hand over such a large amount of tokens should not take place without the necessary checks in place. I would like to see Sushi show commitment to the DAO and use its ARB to prove the efficacy of this programme before making a formal proposal.

There is no need to use our airdrop, because there is little to no risk for the DAO in this proposal. The allocation will be tranched out, with performance milestone KPIs built in to monitor and safeguard the tokens, and no tokens enter circulation if there are no bond sales. Additionally, that wouldn't solve the large challenge brought forth in this proposal, which is that Arbitrum would again be counting on third parties for its liquidity strength.

Additionally, we plan to use our airdrop to participate in governance, as mentioned above.

Disclaimer & Introduction - Bond Protocol pioneered bonding-as-a-service for DAOs and originally launched Olympus Pro on Arbitrum in December 2021. Since that time, we have built a fully permissionless bond marketplace with a focus on Ethereum Mainnet and Arbitrum. https://www.bondprotocol.finance

Background - We have worked with 15 projects on Arbitrum, including protocols like GMX, TreasureDAO, Camelot, Pendle, and Y2K. Our contracts have processed more than $20M in Total Bonded Value on Arbitrum from OP to BP. See Dune for TBV stats on BP: https://dune.com/bond_protocol/bond-protocol

We vehemently object to Sushi’s proposal in its current form and encourage Arbitrum projects and delegates to do the same. Scoping and launching a Bond Program requires DAO acknowledgement and general consensus on the priority at hand (POL, Treasury Diversification, Asset Acquisition), a bulletproof strategy to execute a Bond Program aligned with treasury priorities, and ultimately a selection of the best available solution meeting technical and business requirements.

Echoing sentiment shared by DAO participants, our reasons for objecting are as follows:

1. Objective Alignment - Arbitrum DAO has not surfaced POL as a key initiative or focal point in its ecosystem growth plans. A further discussion of POL significance is warranted to acknowledge a problem before being prescribed a solution. The lack of discourse on POL leads us to believe that this is not a priority, but we will gladly participate in a separate discussion on the forum.

2. Evaluation Framework - if Arbitrum DAO decides that POL is a strategy worth pursuing, it should implement a robust framework for evaluating ALL viable options. The evaluation should be open for any and all solutions to pitch their argument so Arbitrum DAO makes a well-informed decision vs a rushed one.

3. Bond Contracts - Sushi has failed to elaborate on their bond contracts and provide any technical resources. Apeswap has alleged that Sushi forked their implementation, which itself is derivative of contracts we developed in 2021.

4. Configuration - We have learned a lot since the early days of bonding and believe the proposed configuration from Sushi is sub-optimal. Most bond issuers choose to bond counter-assets (e.g. ETH, stables, wBTC) instead of LP tokens. Bonding counter-assets directly avoids paying a discount on half of the underlying LP and also improves ROE by reducing the number of transactions. Acquiring $ETH or stables also maintains agnosticism to where POL will be held, which the DAO can decide vs picking a singular DEX based on the configuration.

5. Success Criteria - 80-90% ROE is a really low estimate for Arbitrum DAO, as the ROE tends to increase for larger, more liquid tokens. Based on our experience, a more likely ROE would be 95% or greater based on discount distribution for Bond Programs on Arbitrum (see Dune).

6. Performance Fee - we do not see a 5% fee as justifiable, especially when platforms like Bond Protocol charge NO FEES. This should result in immediate cost savings for Arbitrum DAO or any Arbitrum project.

7. Trust Assumptions - Sushi’s proposed bond program requires a shared multisig for permissioned, manual bond deployment and adjustment of variables. Our platform has evolved past what they’re forking. Bond Protocol abstracts away variable controls such as BCV, allowing protocols to focus more on configuring and monitoring their programs. Issuers can permissionlessly create and cancel their programs in an automated fashion without our intervention or a shared multisig. This proposal is in stark contrast to the values that all DAOs should aspire to.

Ultimately, Sushi’s POL proposal doesn’t align with Arbitrum DAO’s objectives and seems to primarily benefit themselves. They are asking to manually manage millions of dollars via outdated bond contracts for a hefty fee. Meanwhile, we will continue to develop permissionless treasury management solutions for the Arbitrum community 🍸

Honestly, I have to say, I'm not a fan of this. I'm just not convinced this program will work, especially not with such a significant margin, and most importantly not in your hands.

I think before pushing such a program, we should see what other protocols will come up with in light of the recent framework being introduced. I have a feeling that we will see a lot of interesting proposals in the next several days, and most importantly, from much more trustworthy protocols that have fully dedicated themselves to the ecosystem.

Sure, you might be the first to launch on Arbitrum, but Sushi isn't the go-to DEX on Arb. In fact, it's far from it. Besides, Sushi is consistently among the first to launch on newly created chains. (Your actions on Base aren't going unnoticed...)

You've had time to demonstrate that the protocol can handle programs like this, but now we find out you essentially copied the entire plan. I mean, come on, that's ridiculous! After the ApeSwap incident, I believe you should scrap this proposal and return with something developed by your team, not someone else's.

Personally, I think you cleverly tried to front-run other protocols on the chain before they post their proposals. With the way the DAO is set up now, I'm pretty confident that liquidity will start flowing back.

Sushi doesn't have anything to back this plan, considering you've never issued a single bond as a protocol. I don't think many delegates will trust you when it comes to the program's effectiveness if you don't have any experience in this field.

Also, the ApeSwap stuff coming to light is truly disappointing. Such a big team with so much experience should be capable of constructing a proposal like this on their own, but you had to steal someone else's work ...

It's a big NO from me!

Hello Leon27, Thank you so much for your response

We are very excited to see that our proposal is encouraging users like you to join the forum and get involved in the discussion. It is our goal to spark discussion and push forward as an ecosystem together. We mirror the urgency that you are feeling and hope that we can implement our solution soon!

1. No comments on how they intend to manage the POL

The management of the POL will ultimately rest with the Arbitrum DAO. It has the authority to decide on its utilization. Whether the DAO opts for active management of the POL, reallocating it to different DEXs, or pursuing any other strategy, the discretion lies with the DAO as the liquidity owner.

2. No details about using v2 or v3

To optimize the clawback rate, we will initially build liquidity following the v2 model. However, we are actively collaborating with Steer Protocol on v3 liquidity management. In the future, we intend to propose having Steer manage a portion of this liquidity to maximize efficiency. We also encourage other v3 management protocols to explore similar proposals once the POL is established.

3. The 5% success fee seems wholly unreasonable to my mind, I do not remember other proposals asking for such a fee

Thank you for this feedback. We believe that there may be some misinterpretation on how this fee works. Sushi makes nothing if this program is not successful. This is a great alignment of incentives between Sushi and Arbitrum. Also, based on what we have seen on other proposals, our fee is extremely modest. With Traditional liquidity mining, the “fee” associated can be viewed as 100% of the tokens used. What this means is that with these proposals, 0 tokens or liquidity will be returned to the DAO treasury. With that, we believe compared to the 100% fee on other proposals, our 5% is extremely modest.

4. Sushi has not been involved in Arbi governance thus far, as far as I am aware, so seems a bit overzealous to be asking for so much with a fee to boot. Feels like Sushi trying to stay relevant on Arbitrum but indeed with not much to back it up

We believe that if you do not have anything of value to add to a discussion, it is not wise to say anything at all. We have focused our attention on our presence on-chain, launching on block 70 as the first DEX on arbitrum, complemented with our cross-chain xSwap, bringing thousands of users to the chain from others. We have used our time to build our DEX infrastructure and analyze the $ARB token so that we could be prepared to propose a sustainable solution to truly benefit the ecosystem. In regards to the size of the ask, at first glance it may seem like a lot of tokens. When you dig in though you will see that the large amount of tokens reflects the large amount of liquidity needed. Additionally, because of the nature of the bonds, if there is no demand, it will not cost ANY tokens meaning that this poses little to no risk to the ecosystem.

5. I remember quite well the vampire attack that set Sushi up, it was not a good look and deserves no credit to my mind, not the kind of history we want to see. Maybe I am not seeing it correctly, so would appreciate some clarity on what others think about that

We acknowledge your perspective but believe that competition is beneficial. It challenges the status quo and, in our case, created a model for liquidity sourcing that has been emulated by countless protocols.

6. Sushiswap is on so many different chains and nowhere near as Arbitrum centric as other Arbitrum DEXs, so why not have a preference for the DEXs we do have that are more focused on the Arbitrum ecosystem and have done more for the cause?

We encourage a broader outlook on the future of web3 and DeFi. The industry is moving toward a cross-chain and multi-chain approach. Our xSwap feature currently spans seven ecosystems, and the upcoming v2 will extend this to over 30, providing Arbitrum with direct access to users across different chains while unifying liquidity. We believe that forming an island on one chain causes isolation and closes Arbitrum off from accessing a large amount of DeFi users.

7. I do not really see this proposal for a bond programme as anything exciting or invigorating for the ecosystem. I understand this is a longer-term proposal and the calculations quite well. Should we not be more focused on something that will ignite the ecosystem and give the boost we so desperately need as soon as possible? Personally, I feel we should, so I’m very interested to hear what others think. I feel we need something more injective and quicker off the bat, something more exciting and attractive for the end user

Our proposal aligns with the recent short-term incentive program, which allocates up to 50M $ARB tokens over the next quarter. Our first sales period aligns with this timeline, requiring a maximum of 12.5M tokens. This leaves room for 37.5M $ARB to be allocated for more "exciting" and "user-attractive" programs. We value your input and invite you to join our townhall on 09/21 @ 17:00 UTC, hosted on Twitter Spaces, to share your thoughts on alternative initiatives.

Hey Kingofsparkles, thank you for the response!

We see that you are a big fan of Arbitrum and are looking for new ways to boost growth, therefore we believe that when you understand the intentions behind our proposal you will be a big fan of it as well! Let me start by addressing your key points.

As the second longest standing DEX in general, and the first to launch on Arbitrum, we clearly have a vested interest in the liquidity on the chain. We have seen many new blockchains gain lots of hype and liquidity, only to lose the majority of both thanks to short term liquidity mining programs. We are true believers in DeFi and plan to continue to offer proven innovation methods to great blockchains like Arbitrum to ensure that they can retain their hype and liquidity in the future. As you have noted, The DEXes on Arbitrum have been losing large amounts of liquidity lately as their incentive tokens have been hit hard by the inflation from the emissions used to source it. This is an issue that we understand very intimately as we have suffered similarly in the past with the same liquidity mining programs. This is why we are so excited to have a solution for the future!

Why the urgency behind this proposal? 1 As stated in “background”, the $ARB token has lost 80% of it’s liquidity on chain in less than 4 months 2 Bonding, unlike liquidity mining, does not attract huge amounts of temporary liquidity instantly. Bonding is a solution meant to slowly build up liquidity over time. While we are confident that we can achieve a healthy amount of liquidity, the sooner the program is started, the more quickly this liquidity foundation can be built.

Can we run a test of this proposal to see its effectiveness? Yes, that is the exact purpose of this proposal and the reason that we have broken it up into 4 quarters with its future only guaranteed by success. Because bonds do not emit tokens if there is no demand, if the program does not work it will cost the DAO nothing as tokens that are not sold will be returned to the treasury.

Kingofsparkles, I assure you that we believe that this proposal is the best possible thing for this ecosystem right now. I know that newer solutions can feel intimidating at first but the fate of the future of this space relies on innovation as it always has! I encourage you and future commenters to share what you believe are the best liquidity solutions on the market right now.

I just wanted to share my thoughts on this proposal. I'm a big fan of Arbitrum, a holder, and a participant in the ecosystem. While I'm all for new ideas to boost liquidity and growth, there are some aspects of this proposal that don't sit right with me.

Some of you may know that SushiSwap started as a Uniswap fork and made waves in the DeFi world with its aggressive ~vampire attack strategy. It tried to lure liquidity away from Uniswap by offering higher rewards, and that tactic wasn't exactly well-received in the community. So, when I see this proposal, it feels a bit like deja vu – another attempt to capture liquidity in a similar way, but this time under a disguise to help the ecosystem.

Here's the thing: when I look at the current state of Sushi on Arbitrum, it's not exactly thriving. The TVL on their platform has been shrinking, and it hasn't been the go-to place for liquidity providers or key builders for a while now. Some may argue that the TVL across the entire Arb ecosystem has decreased, and yes, that is true. However, when it comes to sushi, the impact is particularly noticeable. So, this proposal feels like an attempt to rescue a sinking ship, and that ship isn't Arbitrum - it's SushiSwap or at least its position on Arbitrum.

Arbitrum needs a strong incentive program, no doubt about it. But the one proposed by Sushi feels a bit rushed and not entirely in the best interest of our ecosystem. Plus, I can't help but wonder about the loyalty factor. Has SushiSwap really shown dedication to the Arbitrum? I'm not so sure, even considering the fact that Sushi has been operating on Arbitrum since its early days, the reputation among the Arbitrum communities is not so great, and that is not a secret.

I think it's also worth mentioning the recent hack involving SushiSwap's router. Around 1000 ETH went missing in that incident... It makes me worry about the security of a bond program if something like that could happen.

I don't think we need a bond program right now, at least not the way it currently stands. And even if we do go that route, I think SushiSwap should only be a part of it if they can prove that the program actually works. Perhaps, they could first use a portion of their arb airdrop to demonstrate effectiveness of the program before putting forward a proposal

So, in my humble opinion, I'm leaning towards a NO on this proposal. It feels like Sushi is trying to save itself from drowning and falling completely behind other protocols that are more advanced on the chain. I think we should focus on solutions that genuinely benefit our ecosystem rather than injecting some life into a protocol that hasn't really proven its loyalty to the ecosystem and is happy to deploy to any new chain that comes into existence.

Just my two cents on the matter. Thanks for listening!

First, let me say thank you for taking the time to read through the proposal 🙏

Now, I'd like to take a moment to address each of your questions.

1. Sushi is well-known for being a multi-chain protocol. Whilst this isn’t inherently a bad thing, it makes one wonder how Suhsi has shown its commitment to Arbitrum so far? From what I have seen, Sushi is more actively pursuing Base and a multitude of other chains, hence my lack of confidence that Sushi is the best placed protocol to serve solely the Arbitrum ecosystem.

Sushi has a long standing history of supporting networks at their earliest stages. We were the very first DEX to launch on Arbitrum, all the way back in block 70 (https://arbiscan.io/tx/0x8d0a67317d0f3996ce544776afa7c503e8c33d0475a0660e08748d1a8cad14a5). In addition, our presence as a cross-chain protocol has benefited Arbitrum greatly due to our cross-chain swapping capabilities. More than one-third of our cross-chain swap volume is made up of users going from an origin chain to Arbitrum. This cross-chain swap feature was actually one of the very first bridges that was put in place on the network, which greatly contributed to Arbitrum's early growth by allowing users to seamlessly enter into the ecosystem.

2. I do not wish to criticise Sushi as a protocol, but objectively speaking there are several DEXs on Arbitrum that have higher efficiency, more ecosystem focus, better offerings etc. These DEXs have made significantly more progress in establishing deep liquidity for $ARB, whilst Sushi is amongst one of the lowest actively used venues for $ARB trading. What makes Sushi the best placed DEX to do this? Looking at objective metrics would place Sushi relatively low in the ranking of DEXs. Sushi’s current volume for $ARB is almost non-existent compared to Uniswap.

Your opinion here is appreciated! Before getting to your question it’s important to note that there are multiple ways to interpret “higher efficiency” and “better offerings,” so we’ve done our best to answer accordingly. We would love to understand more specifically what you are referring to.

With that said, we encourage examining historic volume, TVL, etc. and it will become quickly apparent that up until fairly recently, Sushi was the second-highest volume DEX on Arbitrum. However, to answer your specific question about what makes Sushi the best place to do this,there are several factors that come into play.

1. As one of the oldest DEXs in Web3, we have a large and loyal user base. Earlier, you mentioned that we are a cross-chain protocol, and we have built our infrastructure in such a way that we are able to seamlessly bring our community from the multiple networks we are available on over to Arbitrum. Our xSwap feature is currently available on seven chains, but in the near future, v2 will be released and 30+ networks will be added, making Sushi the perfect home for deep $ARB liquidity as users from those networks gain access to the xSwap feature

In other words, having a central liquidity hub that is inherently multi- and cross-chain directly feeds the Arbitrum network and its liquidity providers.

2. Sushi's recent drop in liquidity on Arbitrum can be easily attributed to mercenary liquidity miners taking their LPs to other protocols that are early on in their distribution curves. This actually strengthens the need for this proposal rather than weakens it. $ARB's on-chain liquidity profile is currently beholden to the whims of mercenary liquidity providers, as opposed to being steadfast with a permanent liquidity foundation owned by the DAO.

3. Sushi still commands a significant liquidity presence on ETH mainnet, which is Arbitrum's greatest conduit for scale and trading activity. Having dedicated liquidity pools for settlement at the protocol level on Sushi, coupled with the xSwap v2 product (and aforementioned metrics), makes a significant case for deploying on us.

We would argue that it is better to have composability and interconnectivity with other ecosystems, especially as an EVM compatible L2 of ETH, interconnectedness to the ecosystem at large is part of the purpose of the chain. We believe that the entire industry is moving towards that thesis, and are attempting to usher others along in that direction.

3. This proposal grossly overestimates the need for $ARB liquidity. Please can you clarify the sources for the data that justify this rather huge amount of $ARB from the treasury?

• Uniswap itself has significant liquidity depth for Arbitrum, and when taking into all of the other sources of liquidity on the chain it is more than sufficient.

• This proposal also does not take into account the CEX liquidity profile, in which $ARB has multiple professional market makers.

To answer this question we’d point back at the "Motivation" section of the proposal. There we explain that the price of $ARB has dropped by 33% since June of 2023, but the on-chain liquidity has dropped by 80%. If the only factor at play was the drop in price, the liquidity would have decreased by a smaller amount due to impermanent loss softening the depreciation. However, seeing as how the liquidity has decreased by more than twice the percentage of the decrease in price, it is clear that liquidity providers are taking their capital elsewhere. This proposal would remove the need for these mercenary liquidity providers in the first place by replacing them with liquidity that is owned by the DAO itself.

To address the comment on CEX liquidity - we do take into account the fact that there is CEX liquidity for the token, It can be a great way to bring traditional finance and institutional investors into the space, and therefore does provide value. That being said, similar to you, we also believe in decentralization, so running a decentralized blockchain backed entirely by centralized liquidity would be counterintuitive. As we have stated in the proposal, $ARB has lost 80% of its decentralized liquidity in the last three and a half months. Most of the liquidity that there is for the token is not owned by the DAO, and can be removed by mercenary miners at any time. We look to offer a solution for Arbitrum to replace that liquidity in an efficient way, while diversifying the treasury into yield-bearing assets.

4. Please could you explain what the optimal amount of onchain $ARB liquidity is? As mentioned above, per my own calculations, there is already sufficient liquidity on the chain (even in a market that has a lack of liquidity in general).

For our estimates, please refer to the end of the background section. We would love to see your estimates and calculations on liquidity if you can share.

As for Sushi, we came to our conclusion through extensive market research comparing tens of thousands of tokens to normalize a score for metrics such as market capitalization, total liquidity, owned liquidity, decentralized and CEX liquidity, emissions, time on main net, network, etc. This was done in order to better estimate the amount of liquidity that we expect each protocol should have. I agree with you that liquidity in the market is lacking. We believe that right now, this is the best solution to this market wide problem.

5. Taking a 5% success fee is incredibly high considering that Sushi would be getting “free liquidity” from the DAO, in which it would earn even further fees. If anything, Sushi should be paying considerable sums to the DAO in order to acquire such a large amount of ARB tokens, even if treated as a loan.

The liquidity being built will be owned by the Arbitrum DAO, and the LP fees will be collected by them. It is important to note that Sushi does not own this liquidity, nor does the user providing it, once they have purchased a bond. With Arbitrum as the LP provider, 83.3% of the fees go directly back to the Arbitrum foundation.

Also, it is important to mention that these fees are only collected upon the successful sale of each bond. In other words, if no users end up buying a bond, we do not collect any fees, and no $ARB tokens enter into circulation.

6. Your criticism of traditional liquidity incentives is incorrect and hyperbolic - to call it a “death spiral” is far from fair. By using PoL, you are not necessarily attracting new users, new builders, or any further ecosystem growth; you are simply promising deeper liquidity for $ARB itself. This in turn does not necessarily result in further value generated for the ecosystem. On the other hand, incentives have a proven track record of distributing the token which increases decentralisation and growth.

We really appreciate your summary of liquidity mining, as we believe it is a reflection of the lens through which many users view liquidity mining. Liquidity mining was created to offer protocols a way to deepen their liquidity without needing to supply lots of blue-chips and stablecoins directly, as they are very expensive. If the only metrics that you are looking at are distribution and decentralization, the best thing that you could do is airdrop tokens into as many wallets as possible. The issue with that is it would completely ignore many other factors, most notably, inflation.

The more tokens that are given away to users for free, the more sell pressure this puts on the rest of the tokens and drags down the price. This is the reason we look at metrics like return on emissions (ROE) when discussing emitting tokens. Each token emitted should bring tangible value back to the ecosystem. Deeper liquidity for $ARB, stablecoins, and blue-chips means that there are more efficient trading routes for anyone on the network. This means a better trading experience for users, as they’ll suffer less from slippage and price impact. This method also does a great job of distributing tokens, which in this case are vested to users. However, unlike liquidity mining, these are not the same handful of “mercenary miners” quickly migrating their liquidity positions to the next best opportunity.

In addition, the term "death spiral" was originally coined by Messari - a leading research firm in web3. We take a data driven approach to everything we do and have therefore been monitoring the efficacy of liquidity mining since we invented it in 2020. Truth be told, it is a brilliant tool for bootstrapping liquidity, but it is incredibly inefficient at capturing any long-term value for the protocols that participate in it.

Furthermore, bonding has a higher probability of helping with user acquisition than traditional liquidity mining. Bonds are purchased throughout the whole duration of the sales period, whereas with traditional liquidity mining the majority of the LPs will be added at the beginning of the farm, and then removed as soon as the farm is over.

7. Have you actively been engaged with the ecosystem governance? This proposal coincides with the current “Short term incentive framework”. From what I understand, Sushi has not actively been involved with Arbitrum governance thus far.

In preparation for this proposal, we have spent several months studying the $ARB token, the overall Arbitrum ecosystem, and as the market as a whole in order to figure out how to best support the goals and needs of the DAO. We are very confident that the plan we have put forward, including its built-in safeguards, is the perfect vehicle to help the Arbitrum DAO in its continued evolution.

8. Please could you confirm what Sushi has done with the $ARB airdrop it received? From what I recall you received over 4,000,000 tokens.

We have held it securely and plan to be an active participant in governance going forward.

9. Would Sushi be willing to use its ARB airdrop to prove a pilot of this proposal? Even if the community/DAO supported such a proposal, agreeing to hand over such a large amount of tokens should not take place without the necessary checks in place. I would like to see Sushi show commitment to the DAO and use its ARB to prove the efficacy of this programme before making a formal proposal.

There is no need to use our airdrop, because there is little to no risk for the DAO in this proposal. The allocation will be tranched out, with performance milestone KPIs built in to monitor and safeguard the tokens, and no tokens enter circulation if there are no bond sales. Additionally, that wouldn't solve the large challenge brought forth in this proposal, which is that Arbitrum would again be counting on third parties for its liquidity strength.

Additionally, we plan to use our airdrop to participate in governance, as mentioned above.

Hey @ApeSwap , there are some serious allegations surfaced here that @Sushi has infringed on the IP that the Apeswap DAO owns. As per the community guidelines, could you provide additional evidence to back up your claims and arguments in addition to the blog post you provided?

If there is sufficient proof that this proposal by Sushi violates the intellectual property rights of ApeSwap, then we will flag this and remove the post. The burden of proof has to be higher to make such claims.

In the meantime, I'd request for everyone chiming in to be respectful, respect other forum members, their opinions, and their rights to express themselves. Do not use offensive or derogatory language, personal attacks, or hate speech. The forum moderators reserve the right to remove any posts or comments that violate these guidelines or are deemed inappropriate.

The purpose of this forum is to foster productive and respectful discussions related to governance. We encourage everyone to contribute their ideas and perspectives, and to learn from each other.

Hey @ApeSwap , there are some serious allegations surfaced here that @Sushi has infringed on the IP that the Apeswap DAO owns. As per the community guidelines, could you provide additional evidence to back up your claims and arguments in addition to the blog post you provided?

If there is sufficient proof that this proposal by Sushi violates the intellectual property rights of ApeSwap, then we will flag this and remove the post. The burden of proof has to be higher to make such claims.

In the meantime, I'd request for everyone chiming in to be respectful, respect other forum members, their opinions, and their rights to express themselves. Do not use offensive or derogatory language, personal attacks, or hate speech. The forum moderators reserve the right to remove any posts or comments that violate these guidelines or are deemed inappropriate.

The purpose of this forum is to foster productive and respectful discussions related to governance. We encourage everyone to contribute their ideas and perspectives, and to learn from each other.