The previous incentive structure wasn’t delivering the desired outcomes, and I agree that we need a more effective system for driving growth and retention. I appreciate you taking the time to propose actionable steps for improvement.

I especially agree with the idea of incentivizing specific assets and users directly, rather than relying on protocols. This approach not only ensures that incentives are better aligned with ecosystem-wide goals but also reduces the risk of inefficiency or misuse.

It’s expected to see a drop in activity once incentives end, but the real issue lies in how ARB incentive distribution was structured. Arbitrum used to run very long, almost perpetual incentives for a select group of protocols. This caused these protocols to rely heavily on the incentives to maintain their metrics, creating dependency. At the same time, it discouraged new protocols from launching on Arbitrum due to the unfair competition created by these sustained ARB incentives.

In contrast, ecosystems like Uniswap have taken a more strategic approach by distributing time-bounded, one-off UNI incentives focused on specific assets and pools. This model has shown better results, helping with the initial bootstrap while encouraging organic growth in the long term. Adopting a similar system could make Arbitrum a more inclusive and competitive environment, benefiting both established protocols and newcomers.

Ultimately, I agree we should prioritise creating a sustainable incentives framework.

The previous incentive structure wasn’t delivering the desired outcomes, and I agree that we need a more effective system for driving growth and retention. I appreciate you taking the time to propose actionable steps for improvement.

I especially agree with the idea of incentivizing specific assets and users directly, rather than relying on protocols. This approach not only ensures that incentives are better aligned with ecosystem-wide goals but also reduces the risk of inefficiency or misuse.

It’s expected to see a drop in activity once incentives end, but the real issue lies in how ARB incentive distribution was structured. Arbitrum used to run very long, almost perpetual incentives for a select group of protocols. This caused these protocols to rely heavily on the incentives to maintain their metrics, creating dependency. At the same time, it discouraged new protocols from launching on Arbitrum due to the unfair competition created by these sustained ARB incentives.

In contrast, ecosystems like Uniswap have taken a more strategic approach by distributing time-bounded, one-off UNI incentives focused on specific assets and pools. This model has shown better results, helping with the initial bootstrap while encouraging organic growth in the long term. Adopting a similar system could make Arbitrum a more inclusive and competitive environment, benefiting both established protocols and newcomers.

Ultimately, I agree we should prioritise creating a sustainable incentives framework.

Thank you for your input!

Some of these are still open-questions that we will work on, some are answered in the presentation we shared last week https://docs.google.com/presentation/d/1_ARWp9wdkhPdEFzetGERtWNwsOWeBJywhNVfxeGTTNY/edit#slide=id.g319b4bd4642_0_15

The aim of this proposal is not to be egalitarian, the aim is to let Arbitrum win and this is possible only if we listen to the needs of our most valuable users

this is to a large extent aligned with our thinking

as shared in this presentation I think its possible to structure the incentive to be fully protocol agnostic https://docs.google.com/presentation/d/1_ARWp9wdkhPdEFzetGERtWNwsOWeBJywhNVfxeGTTNY/edit#slide=id.g319b4bd4642_0_15

Thanks you @0x_ultra

this could be an interesting idea to explore, the longer you commit your liquidity for the higher boost in "points" collected, but I'm afraid this would be operational nightmare

can you elaborate why you believe that less straightforward incentives are going to be more appealing to the users? any good examples to refer to?

I made a comment on this above, as shared in this presentation https://docs.google.com/presentation/d/1_ARWp9wdkhPdEFzetGERtWNwsOWeBJywhNVfxeGTTNY/edit#slide=id.g319b4bd4642_0_15 I believe there is a way to structure it in a way where its fully protocol agnostic

Thank you for your input!

Some of these are still open-questions that we will work on, some are answered in the presentation we shared last week https://docs.google.com/presentation/d/1_ARWp9wdkhPdEFzetGERtWNwsOWeBJywhNVfxeGTTNY/edit#slide=id.g319b4bd4642_0_15

The aim of this proposal is not to be egalitarian, the aim is to let Arbitrum win and this is possible only if we listen to the needs of our most valuable users

this is to a large extent aligned with our thinking

as shared in this presentation I think its possible to structure the incentive to be fully protocol agnostic https://docs.google.com/presentation/d/1_ARWp9wdkhPdEFzetGERtWNwsOWeBJywhNVfxeGTTNY/edit#slide=id.g319b4bd4642_0_15

Thanks you @0x_ultra

this could be an interesting idea to explore, the longer you commit your liquidity for the higher boost in "points" collected, but I'm afraid this would be operational nightmare

can you elaborate why you believe that less straightforward incentives are going to be more appealing to the users? any good examples to refer to?

I made a comment on this above, as shared in this presentation https://docs.google.com/presentation/d/1_ARWp9wdkhPdEFzetGERtWNwsOWeBJywhNVfxeGTTNY/edit#slide=id.g319b4bd4642_0_15 I believe there is a way to structure it in a way where its fully protocol agnostic

Thanks for your input @TempeTechie

I have strong opinions on this but didn't want to share here to avoid diluting the attention from this proposal.

This extends beyond the scope of our current proposal. Measuring ROI for such activities would be challenging. I believe we should prioritize establishing Arbitrum's dominance in the core crypto market first. Once Arbitrum has cemented its position as the preferred L2 solution for crypto developers, users, and institutions, we can then explore opportunities beyond the traditional crypto ecosystem.

Thanks for your input @TempeTechie

I have strong opinions on this but didn't want to share here to avoid diluting the attention from this proposal.

This extends beyond the scope of our current proposal. Measuring ROI for such activities would be challenging. I believe we should prioritize establishing Arbitrum's dominance in the core crypto market first. Once Arbitrum has cemented its position as the preferred L2 solution for crypto developers, users, and institutions, we can then explore opportunities beyond the traditional crypto ecosystem.

The data reported around GMX is somewhat inaccurate. The incentives were primarily distributed to facilitate the transition from V1 to V2, and as a result, V2 has achieved its highest Total Value Locked (TVL) to date, currently standing at $553 million.

Below are some questions and considerations we have regarding the proposal and its incentives:

1. Strategic Alignment: ◦ How does the proposed KPI-driven rewards framework ensure long-term alignment with Arbitrum's broader ecosystem goals beyond spot market liquidity? ◦ Are there plans to expand incentives to other verticals, such as derivatives or lending, once the spot market reaches maturity?

2. Market Competition: ◦ With competitors like Base, Solana, and Hyperliquid experiencing rapid growth, what differentiates Arbitrum’s strategy to retain projects and liquidity providers? ◦ How does Arbitrum plan to prevent migration to other chains offering comparable or superior incentives?

3. Cross-Chain Bridge Criteria: ◦ Elaborate on security standards and audits required for cross-chain bridge partners to mitigate risks.

4. KPI Definitions: ◦ What specific KPIs will be used to evaluate success in terms of liquidity depth, user retention, and ecosystem growth?

Here are some suggestions to improve the proposal:

1. While liquidity and token diversity are highlighted, user retention mechanisms could be further detailed, such as incentivizing long-term engagement.
2. Create a publicly accessible dashboard for tracking real-time performance against defined KPIs, improving accountability.
3. Include mechanisms to discourage liquidity providers from dumping ARB tokens immediately after receiving rewards and have stickiness post the incentives.

The following reflects the views of GMX’s Governance Committee, and is based on the combined research, evaluation, consensus, and ideation of various committee members.

gm, I broadly agree with the purpose of the iniative. Here are some considerations from my side.

First, the core data analysis probably needs refinement - measuring in USD rather than ETH skews our understanding of real growth and market share trends, and as others have mentioned some pools have actually performed better than described. That said, I agree with the assessment that we're losing ground to competitors and need to act.

I love that this is an initiative with a specific target: whales. Which I should add could be an intermediary step towards a somehow similar group, just one step above: institutions. Their trading patterns clearly show a need for deeper liquidity in blue-chip assets and stablecoins, and we want that activity on Arbitrum.

For implementation, I don't think we should be protocol agnostic. I strongly believe we should focus on Arbitrum-aligned protocols (like Camelot) and those pushing capital efficiency boundaries (like Fluid from Instadapp). Simply throwing capital at high-TVL protocols risks wasting resources without building lasting infrastructure.

As others highlighted, the vesting mechanics need careful consideration. Incentives are short term, no matter how you frame them, but the LTIPP has generated some good ideas to improve the dynamics, and there are solutions already in the market that can help. Ex:

• Dolomite has a form of vested ARB
• Royco and Merkle help to seamlessly distribute incentives to users directly.

As the slides highlighted, two critical questions remain unanswered:

1. What additional APR threshold makes supply truly elastic?
2. How do we measure and achieve genuine long-term retention?

Thanks and will be following the development of the program as these details are clarified.

This proposal echoes what many of us have been discussing in the last months. The data presented here confirms that Arbitrum has been losing ground to other competitors in the space. I agree we need a structured approach like this one to stay competitive.

I also agree that we should not be funding protocols individually in hope of ecosystem growth but actually building sustainable liquidity depth. This is like building a city selecting random places for buildings instead of having a proper infrastructure and urban planning.

However I believe this proposal lacks more information for a complete assessment by the delegates. How much ARB will be allocated for liquidity categories? The proposal states the need for "higher rewards" and "deepening liquidity", what APY ranges are we targeting? How much volume should be captured in order to qualify the incentive scheme as a success?

I believe @GensDAO makes a good point on the need to build upon a communication strategy. Base and Solana are doing this in their own way and Arbitrum should do something that reflects our core values. It could be time to consider a broader repositioning that highlights Arbitrum's maturity and that would differentiate us from the crypto casino perception of other chains.

Hello,

Thank you for the proposal. I appreciate you bringing in the data to support your proposal. I agree that we need a more fair and efficient design of incentive programs—and more importantly, a sustained one.

An ongoing incentive program with well-defined rubrics will build trust among builders. So far, Arbitrum has only had fragmented efforts at incentive distribution, and even some of those programs have received negative feedback.

The reason OP Stack has been winning this race is because of the incentives it promises to the superchains and, of course, the narrative around it.

While I agree with this, another important—albeit clichéd—aspect is the UI of any DeFi platform. Case in point: Hyperliquid. It won so many users because of the ease of use it provided. Some platforms I’ve seen on Arbitrum lack that ease. As a community, we should also delve into this aspect, and DeFi platforms eager to grow should be given constructive feedback to improve.

Lastly, coming back to the point of sustained incentives, we need programs running regularly, as well as a retroactive factor. We should not hesitate to implement programs that have proven successful in other ecosystems.

Thanks again for the proposal. This is a strong starting point but still high-level. I’m hoping to see a more detailed plan with specifics in place to get this proposal up and passed.

The proposal highlights key concerns around the effectiveness of past incentive programs and proposes a strategic pivot to deepen blue-chip liquidity and expand token diversity. While we agree with some aspects, there are critical areas that require refinement, clarification, and community alignment.

1. Evaluation of Past Incentives

We agree that past incentive programs have shown mixed results; however, there were clear success stories for particular protocols that should not be overlooked. Accurate assessments of these outcomes are necessary to refine future strategies. For instance, GMX performance has been incorrectly framed —their V2 pools incentivized during Arbitrum’s programs are at ATHs and continue to grow.

2. Strategic Shift

A focus on deeper blue-chip liquidity is worth exploring, but ensuring those assets remain post-incentives is critical. The proposed self-adjusting mechanisms for incentives are promising, but the program’s design should also consider modular, multi-pronged approaches. These additional approaches could include:

• TVL and usage bootstrapping for new protocols.
• Retroactive rewards for users, protocols, and communities.
• Targeted support for native, innovative projects with proven product-market fit.
• Chain abstraction strategies to onboard users.

3. Community Engagement

Effective program design requires feedback from stakeholders with direct experience in previous initiatives. We encourage input from delegates like @404DAO, Wintermute, @JoJo, @SeedLatam, and Blockworks, as well as other service providers involved in incentive implementation.

4. Additional Positives

We appreciate the inclusion of Kaito for mapping and understanding mindshare of assets for data-driven incentive adjustments, which could lead to more efficient allocation and better ecosystem alignment. This collaboration could also serve a dual purpose if an Arbitrum Yap Leaderboard was created.

The data reported around GMX is somewhat inaccurate. The incentives were primarily distributed to facilitate the transition from V1 to V2, and as a result, V2 has achieved its highest Total Value Locked (TVL) to date, currently standing at $553 million.

Below are some questions and considerations we have regarding the proposal and its incentives:

1. Strategic Alignment: ◦ How does the proposed KPI-driven rewards framework ensure long-term alignment with Arbitrum's broader ecosystem goals beyond spot market liquidity? ◦ Are there plans to expand incentives to other verticals, such as derivatives or lending, once the spot market reaches maturity?

2. Market Competition: ◦ With competitors like Base, Solana, and Hyperliquid experiencing rapid growth, what differentiates Arbitrum’s strategy to retain projects and liquidity providers? ◦ How does Arbitrum plan to prevent migration to other chains offering comparable or superior incentives?

3. Cross-Chain Bridge Criteria: ◦ Elaborate on security standards and audits required for cross-chain bridge partners to mitigate risks.

4. KPI Definitions: ◦ What specific KPIs will be used to evaluate success in terms of liquidity depth, user retention, and ecosystem growth?

Here are some suggestions to improve the proposal:

1. While liquidity and token diversity are highlighted, user retention mechanisms could be further detailed, such as incentivizing long-term engagement.
2. Create a publicly accessible dashboard for tracking real-time performance against defined KPIs, improving accountability.
3. Include mechanisms to discourage liquidity providers from dumping ARB tokens immediately after receiving rewards and have stickiness post the incentives.

The following reflects the views of GMX’s Governance Committee, and is based on the combined research, evaluation, consensus, and ideation of various committee members.

gm, I broadly agree with the purpose of the iniative. Here are some considerations from my side.

First, the core data analysis probably needs refinement - measuring in USD rather than ETH skews our understanding of real growth and market share trends, and as others have mentioned some pools have actually performed better than described. That said, I agree with the assessment that we're losing ground to competitors and need to act.

I love that this is an initiative with a specific target: whales. Which I should add could be an intermediary step towards a somehow similar group, just one step above: institutions. Their trading patterns clearly show a need for deeper liquidity in blue-chip assets and stablecoins, and we want that activity on Arbitrum.

For implementation, I don't think we should be protocol agnostic. I strongly believe we should focus on Arbitrum-aligned protocols (like Camelot) and those pushing capital efficiency boundaries (like Fluid from Instadapp). Simply throwing capital at high-TVL protocols risks wasting resources without building lasting infrastructure.

As others highlighted, the vesting mechanics need careful consideration. Incentives are short term, no matter how you frame them, but the LTIPP has generated some good ideas to improve the dynamics, and there are solutions already in the market that can help. Ex:

• Dolomite has a form of vested ARB
• Royco and Merkle help to seamlessly distribute incentives to users directly.

As the slides highlighted, two critical questions remain unanswered:

1. What additional APR threshold makes supply truly elastic?
2. How do we measure and achieve genuine long-term retention?

Thanks and will be following the development of the program as these details are clarified.

This proposal echoes what many of us have been discussing in the last months. The data presented here confirms that Arbitrum has been losing ground to other competitors in the space. I agree we need a structured approach like this one to stay competitive.

I also agree that we should not be funding protocols individually in hope of ecosystem growth but actually building sustainable liquidity depth. This is like building a city selecting random places for buildings instead of having a proper infrastructure and urban planning.

However I believe this proposal lacks more information for a complete assessment by the delegates. How much ARB will be allocated for liquidity categories? The proposal states the need for "higher rewards" and "deepening liquidity", what APY ranges are we targeting? How much volume should be captured in order to qualify the incentive scheme as a success?

I believe @GensDAO makes a good point on the need to build upon a communication strategy. Base and Solana are doing this in their own way and Arbitrum should do something that reflects our core values. It could be time to consider a broader repositioning that highlights Arbitrum's maturity and that would differentiate us from the crypto casino perception of other chains.

Hello,

Thank you for the proposal. I appreciate you bringing in the data to support your proposal. I agree that we need a more fair and efficient design of incentive programs—and more importantly, a sustained one.

An ongoing incentive program with well-defined rubrics will build trust among builders. So far, Arbitrum has only had fragmented efforts at incentive distribution, and even some of those programs have received negative feedback.

The reason OP Stack has been winning this race is because of the incentives it promises to the superchains and, of course, the narrative around it.

While I agree with this, another important—albeit clichéd—aspect is the UI of any DeFi platform. Case in point: Hyperliquid. It won so many users because of the ease of use it provided. Some platforms I’ve seen on Arbitrum lack that ease. As a community, we should also delve into this aspect, and DeFi platforms eager to grow should be given constructive feedback to improve.

Lastly, coming back to the point of sustained incentives, we need programs running regularly, as well as a retroactive factor. We should not hesitate to implement programs that have proven successful in other ecosystems.

Thanks again for the proposal. This is a strong starting point but still high-level. I’m hoping to see a more detailed plan with specifics in place to get this proposal up and passed.

The proposal highlights key concerns around the effectiveness of past incentive programs and proposes a strategic pivot to deepen blue-chip liquidity and expand token diversity. While we agree with some aspects, there are critical areas that require refinement, clarification, and community alignment.

1. Evaluation of Past Incentives

We agree that past incentive programs have shown mixed results; however, there were clear success stories for particular protocols that should not be overlooked. Accurate assessments of these outcomes are necessary to refine future strategies. For instance, GMX performance has been incorrectly framed —their V2 pools incentivized during Arbitrum’s programs are at ATHs and continue to grow.

2. Strategic Shift

A focus on deeper blue-chip liquidity is worth exploring, but ensuring those assets remain post-incentives is critical. The proposed self-adjusting mechanisms for incentives are promising, but the program’s design should also consider modular, multi-pronged approaches. These additional approaches could include:

• TVL and usage bootstrapping for new protocols.
• Retroactive rewards for users, protocols, and communities.
• Targeted support for native, innovative projects with proven product-market fit.
• Chain abstraction strategies to onboard users.

3. Community Engagement

Effective program design requires feedback from stakeholders with direct experience in previous initiatives. We encourage input from delegates like @404DAO, Wintermute, @JoJo, @SeedLatam, and Blockworks, as well as other service providers involved in incentive implementation.

4. Additional Positives

We appreciate the inclusion of Kaito for mapping and understanding mindshare of assets for data-driven incentive adjustments, which could lead to more efficient allocation and better ecosystem alignment. This collaboration could also serve a dual purpose if an Arbitrum Yap Leaderboard was created.

I have to say that the current large-scale grant incentives are a failed experiment. I support shifting the direction and strategy.

At present, the incentives have not brought a more prosperous ecosystem to Arbitrum. Instead, as the benefits fade away, a severe decline has occurred. The Arbitrum DAO should directly allocate some incentives to users, such as launching a new Odyssey program to create more rewards for ordinary users. As for spending on ecosystem projects, due to the lack of real-name authentication for EVM wallets, nobody knows where these ARB tokens ultimately go, leading to excessive fake transactions and artificial prosperity. Without the official participation and initiatives from Arbitrum, it is difficult for users to gain tangible benefits.

Establishing longer-term incentive goals and plans, as well as cautious spending, is a responsible approach for ARB token investors and will help the DAO build a positive reputation for future prosperity and development.

I have to say that the current large-scale grant incentives are a failed experiment. I support shifting the direction and strategy.

At present, the incentives have not brought a more prosperous ecosystem to Arbitrum. Instead, as the benefits fade away, a severe decline has occurred. The Arbitrum DAO should directly allocate some incentives to users, such as launching a new Odyssey program to create more rewards for ordinary users. As for spending on ecosystem projects, due to the lack of real-name authentication for EVM wallets, nobody knows where these ARB tokens ultimately go, leading to excessive fake transactions and artificial prosperity. Without the official participation and initiatives from Arbitrum, it is difficult for users to gain tangible benefits.

Establishing longer-term incentive goals and plans, as well as cautious spending, is a responsible approach for ARB token investors and will help the DAO build a positive reputation for future prosperity and development.

iosg is a very good investment fund. Thanks for providing this detailed program，I fully agree with the proposal’s direction, especially focusing on the spot market and liquidity depth, which are indeed key to retaining users. However, the execution needs to be simplified. Rewarding liquidity providers directly instead of projects is an excellent improvement, but fairness for smaller users must be addressed, such as setting caps on rewards for large players or providing extra incentives for smaller LPs.

That said, there are some questions: 1. How will specific KPI targets, such as liquidity depth, trading volume, or user growth, be determined? Could overly high targets make them hard to achieve, or overly low targets waste resources? 2. While rewarding LPs is great, large players may dominate. Will smaller LPs get enough rewards, and is there a subsidy mechanism for them? 3. Should adjustments happen monthly or quarterly? If too frequent, users and projects may struggle to keep up; if too slow, opportunities could be missed. 4. While adding non-EVM assets has potential, will it dilute resources? Should efforts prioritize strengthening existing assets instead?

Additionally, some personal suggestions: 1. Start with stablecoins and blue-chip assets as a pilot to address liquidity shortages, ensuring these core assets are deep and stable. 2. Simplify the reward mechanism to make it easy for users and the community to understand, using trading volume and liquidity depth as primary indicators. 3. Regularly assess incentive effectiveness. Reduce rewards if targets are met, and optimize strategies if not, to avoid resource waste.

Can you expand on this, as I saw another poster (@Euphoria - if you want to answer too) also agreed on this issue. I'm mainly interested in the following:

If the concern is established protocols having disproportionate influence, have they indicated what would change their mind? I guess my question is if that is the stigma based on past actions, are these relationships salvageable? We have done a detox period, effectively stopping grant programs for the moment, and I think as a general vibe of the forums people agree that the grant programs are not working as effectively as we hoped.

I'm wondering if we're trying to chase down projects with ideologies we simply can't change their minds on regardless of method. Or possibly even worse only will have their minds changed if we make it fair by throwing money at them.

I'm also curious if this is a large group of projects? And if this is a primary feedback or simply one of many feedbacks that just happens to be relevant to this specific proposal. As a layman, I guess this sounds like odd decision making. Where your forgoing launching on the relevant platform (ie, has the most liquidity) over concerns about not being able to have as much influence. And why they wouldn't just launch on both platforms or something.

iosg is a very good investment fund. Thanks for providing this detailed program，I fully agree with the proposal’s direction, especially focusing on the spot market and liquidity depth, which are indeed key to retaining users. However, the execution needs to be simplified. Rewarding liquidity providers directly instead of projects is an excellent improvement, but fairness for smaller users must be addressed, such as setting caps on rewards for large players or providing extra incentives for smaller LPs.

That said, there are some questions: 1. How will specific KPI targets, such as liquidity depth, trading volume, or user growth, be determined? Could overly high targets make them hard to achieve, or overly low targets waste resources? 2. While rewarding LPs is great, large players may dominate. Will smaller LPs get enough rewards, and is there a subsidy mechanism for them? 3. Should adjustments happen monthly or quarterly? If too frequent, users and projects may struggle to keep up; if too slow, opportunities could be missed. 4. While adding non-EVM assets has potential, will it dilute resources? Should efforts prioritize strengthening existing assets instead?

Additionally, some personal suggestions: 1. Start with stablecoins and blue-chip assets as a pilot to address liquidity shortages, ensuring these core assets are deep and stable. 2. Simplify the reward mechanism to make it easy for users and the community to understand, using trading volume and liquidity depth as primary indicators. 3. Regularly assess incentive effectiveness. Reduce rewards if targets are met, and optimize strategies if not, to avoid resource waste.

Can you expand on this, as I saw another poster (@Euphoria - if you want to answer too) also agreed on this issue. I'm mainly interested in the following:

If the concern is established protocols having disproportionate influence, have they indicated what would change their mind? I guess my question is if that is the stigma based on past actions, are these relationships salvageable? We have done a detox period, effectively stopping grant programs for the moment, and I think as a general vibe of the forums people agree that the grant programs are not working as effectively as we hoped.

I'm wondering if we're trying to chase down projects with ideologies we simply can't change their minds on regardless of method. Or possibly even worse only will have their minds changed if we make it fair by throwing money at them.

I'm also curious if this is a large group of projects? And if this is a primary feedback or simply one of many feedbacks that just happens to be relevant to this specific proposal. As a layman, I guess this sounds like odd decision making. Where your forgoing launching on the relevant platform (ie, has the most liquidity) over concerns about not being able to have as much influence. And why they wouldn't just launch on both platforms or something.