Prepare Urgently Before Arbitrum’s First Incentive Pumping

Arbitrum officially stands before the ecosystem’s first simultaneous Incentive pump, thereby helping the ecosystem grow strongly. So what do we as retail investors need to prepare before this first injection of Incentive ARB? Everyone, let’s find out an overview of the Arbitrum Short-term Incentive Program in the article below.

To better understand the article, people can refer to some of the documents below:

• What is Arbitrum (ARB)? Arbitrum Cryptocurrency Overview
• What is Layer 2? Complete Guide to Layer 2 Solutions

Overview of Arbitrum Short-term Incentive Program

Motivation for proposals

Arbitrum’s Arbitrum Short-term Incentive program is expected to end on January 31, 2024 and be implemented immediately when the proposal is approved. It appears that the ineffectiveness of the DAO Airdrop led to today’s proposal from the Arbitrum Foundation. Some expected movements created from the Arbitrum Short-term Incentive Program include:

• Drive Incentive distribution for Arbitrum Protocols & DApps to drive network and ecosystem growth.
• Testing the Incentive strategy to increase user engagement on the chain, increase transaction volume, number of transactions as well as ecosystem liquidity.
• Look for new Incentive models to optimize costs.
• Generate data on the effectiveness of Incentive injections and continue to create new Incentive Programs in the near future.

It can be seen that even in deploying Incentive to the ecosystem, the Arbitrum Foundation also has a relatively cautious approach and also wants to find more effective ways to deploy Incentive like the way Optimism is implementing.

Roadmap of Arbitrum Short-term Incentive Program

The roadmap of the Arbitrum Short-term Incentive Program will take place as follows:

• Week 1 (September 1, 2023): Post a community consultation article on the Forum.
• Week 2 (September 9, 2023): Deploy Snapshot Vote.
• Week 3 (September 16, 2023): Deploy Onchain Vote at the same time that projects will apply and be evaluated by the community.
• Week 4 (September 23, 2023): Deploy Onchain Vote at the same time that projects will apply and be evaluated by the community.
• Week 5 (September 30, 2023): Voting will be implemented for suitable projects.
• Week 6 (October 7, 2023): Money will be disbursed for phase 1 projects and phase 2 projects will continue to apply.
• Week 7 (October 14, 2023): Phase 2 projects will be evaluated by the community.
• Week 8 (October 21, 2023): Phase 2 projects will be evaluated by the community.
• Week 8 (October 28, 2023): Phase 2 projects will be voted on by the community.
• Week 8 (November 4, 2023): Money is disbursed for phase 2 projects.

Currently, the following 4 options will be voted on in the community proposal:

• Spend 25M ARB to do Incentive until January 31, 2024.
• Spend 50M ARB to do Incentive until January 31, 2024. At the time of writing, it is likely that Incentive Program will have a total value of 50M ARB. The proposal will run until September 18, 2023.
• Spend 75M ARB to do Incentive until January 31, 2024.
• Resist the suggestion.

Requirements for participating projects

Some requirements for participating parties include:

• Grantees (Sponsored Persons/Projects) must keep ARB and cannot convert it to other assets. (Lessons from DAO Airdrop).
• Grantees does not launch its own Incentive Program on its own.
• Grantees must have an outline plan in the application form that includes goals, Incentive plans, achieved results, etc.
• Grantees must provide complete data on TVL, Active Users, Volume, Fees,… 30 days before and after implementing Incentive through Dune Analytics. If not, Arbitrum Foundation reserves the right to stop Incentive at any time.
• Grantees makes its wallet address public.
• Do not use Incentive to participate in the DAO.
• Grantees are required to KYC with Arbitrum Foundation to receive the funds.

Note: Projects can only participate in one Incentive round. Projects that fail in round 1 can return to round 2.

Some of the Grants awarded

It can be seen that with Beacon Grants and Siren Grents, there will be quite a few projects achieved on the Arbitrum ecosystem. Let’s quickly take a look at which projects are suitable for each Grant level. However, because there are some parameters that cannot be checked such as cumulative volume, this table is provided for reference purposes only:

• Beacon Grants: Plutus DAO, Convex Finance, Lyra Finance,…
• Siren Grents: Vesta Finance, KyberSwap, Dopex, Jones DAO, Vela Exchange, Silo Finance, Hyperliquid, Vertex Protocol,…
• Lighthouse Grants: Camelot, Pendle Finance, Trader Joe, Curve Finance, Sushiswap, Gains Network,…
• Pinnalce Grants: GMX, Uniswap, Radiant Capital, AAVE V3 and Stargate

Strategies for Joining the Arbitrum Short-term Incentive Program

Prepare financially and have a little planning

In my opinion, the strategy of the Arbitrum Short-term Incentive Program event will be similar to Optimism’s Incentive program in the past. We will need to prepare some personal factors. Financial first:

• Incentive will be given to projects. Projects will use Incentive to give users and providers liquidity of the protocol. For example: Trading receives ARB, Lending & borrowing receives ARB, Providing liquidity on AMM receives ARB,… Therefore, we need to determine in advance which segments projects can receive Grants based on. on TVL, Construction Time and Cumulative Volume.
• Prepare some popular assets such as USDC, USDT, DAI (Stablecoin), ETH, BTC and especially don’t forget ARB (who knows, AMMs may encourage supply to pairs related to ARB).
• Bring assets in different Blockchains into 1 Arbitrum so that when Incentive is deployed, you must participate immediately.

The next step is to follow the news closely. We need to read all proposals to filter out which proposals have many supporters to know the strategy of the protocol, thereby making more careful preparations.

• Projects will post discussions here (Forum) before being posted to Snapshot.
• For official voting, you can follow here.

Note: Tracking sometimes not only helps you find where to make a profit through Incentive, but also direct growth from the successful grant project itself. In the past, when Velodrome successfully applied for a grant on Optimism, it grew many times.

Carry your backpack and go

Once the project proposal has been posted from the Forum to Snapshot, you can monitor the process and evaluate whether the proposal is approved or not? If the proposal is approved, quickly check factors such as:

• Which segment does the project belong to?
• How much ARB is the project asking for?
• For what user activities will the project deploy ARB?
• When does it take place?

Note: Pay attention to how projects use ARB and choose the project that best suits you. Don’t be too greedy about providing liquidity for the biggest projects because sometimes there are too many people depositing into GMX, leading to low returns.

Therefore, the project is not necessarily bad. Smaller projects have fewer participants and less competition, leading to higher profits. Make a wise decision.

What to do with the profits?

Your profit is likely to be ARB, of course there will be 2 options: sell or not sell, this depends on each person’s decision because each person will participate with different goals. However, there are a few points you need to note as follows:

• Before and during Incentive, ARB prices may increase because Incentive is based on ARB. If ARB prices increase, Incentive will become more attractive in the eyes of users and LPs. The more the price increases, the more users and LPs will have FOMO to participate in the event.
• During and after the Incentive, the price of ARB will likely decrease in the context that liquidity providers will dump ARB upon receiving it. We will have 50M ARB from now until January 31, 2024. At the current price, it is equivalent to about $40M which is a relatively large number.

There will still be two-way projections, so everyone needs to plan ahead before participating. If you are too hesitant because you want to hold ARB until the next cycle, you can sell 1/2 and keep 1 /2.

Summary

We are facing the first small opportunity with the Arbitrum ecosystem since the project launched Native Token ARB. If you want some Mid-Autumn & Christmas gifts, don’t miss it!