The Arbitrum ecosystem is gradually heating up with a lot of beneficial information from both external forces like the Cancun Upgrade to internal factors like the Stylus upgrade. In addition, one of the important factors that help Arbitrum get even hotter is is Short-Term Incentives Program. So what is the Arbitrum Short-Term Incentives Program? Join Weakhand to learn more about the program in this article.
To better understand the Arbitrum ecosystem, people can refer to the following articles from Weakhand:
- What is Arbitrum (ARB)? Arbitrum Cryptocurrency Overview
- What is Stylus? All About Arbitrum Stylus Update
What is Arbitrum Short-Term Incentives Program?
Context is born
Let’s go back to the beginning of 2023, the Arbitrum ecosystem is now growing very strongly with different narratives, causing strong cash flow from other ecosystems. The peak was when the Arbitrum Foundation announced the launch of the ARB token, accompanied by an airdrop, the TVL of the entire ecosystem reached a peak with an increase of 160% since the beginning of 2023.
However, after this period of time, other Layer 2 ecosystems began to emerge extremely strongly with the pioneering name zkSync when everyone was Fomo because the project could be airdropped in the future. The next Layer 2 name, Base, also attracts strong cash flow in a way quite similar to Arbitrum when the cash flow flows here thanks to narratives such as BALD, Aerodrome, Friend.tech,…
It is the extremely strong emergence from other Layer 2 ecosystems that has caused the cash flow on Arbitrum to be withdrawn. If counted from the peak, up to $900M TVL has left this ecosystem. Faced with the above problems, the Arbitrum Foundation team and Arbitrum DAO cannot stand still and must have incentives for the ecosystem to develop.
What is Arbitrum Short-Term Incentives Program?
Arbitrum Short-Term Incentives Program (STIP) is a program organized by Arbitrum DAO with the purpose of sponsoring projects operating on Arbitrum. Projects that receive funding will need to use that ARB to incentivize liquidity and attract as many users to the ecosystem.
A total of 50,000,000 ARB has been approved by the DAO to be used for this bar incentive program that lasts until January 31, 2024. The initial number given was 75,000,000 ARB, but it was too large when compared to a short-term program so DAO decided to reduce it to 50M.
What Is The Goal Of STIP?
The main goals of the Short-Term Incentives Program set by Arbitrum DAO include:
- Support network growth: Accelerate incentive distribution for protocols operating on Arbitrum and promote network and ecosystem growth.
- Test grants and incentives: Test the distribution of grants with a variety of new liquidity incentive strategies that increase user engagement and increase trading volume and liquidity across the entire Arbitrum ecosystem.
- Looking for new models: Seek new models for funding and development support to maximize activity on the Arbitrum network.
- Data statistics: Generate data on the effectiveness of distributed grants to inform the design of better incentive programs in the future.
Requirements for Projects Participating in STIP
Projects participating in STIP need to comply with the following requirements set forth by Arbitrum DAO:
- Projects receiving funding will need to retain distributions as ARB without conversion to other asset classes.
- Projects cannot farm their own incentive program.
- Projects must outline spending plans and clearly state the goals of the incentive.
- Projects must commit to providing data on distribution, all ARB spend transactions, and key metrics such as daily TVL, transactions, volume, addresses, and transaction fees.
- Projects must agree to share all smart contract addresses being used for incentive distribution.
- Projects must disclose incentivized smart contracts and indicate any contracts from external projects are being incentivized.
- Projects can only use incentives for smartcotracts on the Arbitrum network.
- Grants will not be used to participate in Arbitrum DAO governance.
- Sponsored projects will not encourage or participate in forum attacks that affect the community.
- Projects receiving grants must agree to KYC by Arbitrum DAO.
- Projects must submit proposals according to a provided layout.
Arbitrum DAO’s Multisig will have the right to suspend sending funding to received projects if:
- The project uses a grant received that is different from that described in the application.
- Failure to fully meet the requirements for reporting data or posting information to the forum after December 15, 2023.
Principles for Evaluating Projects
There will be 2 different rounds where Arbitrum DAO can award grants, however projects can only receive funding from 1 round. In addition, projects rejected in the first round can register and participate in the next round.
Beacon Grants
Beacon Grants will allow projects to receive up to 200,000 ARB when they meet the following conditions:
- Deploy on Arbitrum for a minimum of 2 months.
- Has more than $1.5M TVL.
- Have more than $2M Volume in the last 30 days.
Siren Grants
Siren Grants will allow projects to receive up to 750,000 ARB when they meet the following conditions:
- Deploy on Arbitrum for a minimum of 4 months.
- Has more than $4M TVL.
- Have more than $40M Volume in the last 30 days.
Lighthouse Grants
Lighthouse Grants will allow projects to receive up to 2,000,000 ARB when they meet the following conditions:
- Deploy on Arbitrum for a minimum of 6 months.
- Has more than $15M TVL.
- Have more than $100M Volume in the last 30 days.
Pinnacle Grants
Pinnacle Grants will allow projects to receive unlimited ARB when they meet the following conditions:
- Deploy on Arbitrum for a minimum of 12 months.
- Has more than $30M TVL.
- Have more than $200M Volume in the last 30 days.
How STIP Works
STIP’s roadmap will work as follows:
- September 1, 2023: Suggestions posted on the forum.
- September 10, 2023: Vote on Snapshot.
- September 20, 2023: On-Chain Voting.
- September 20, 2023-October 12, 2023: Start STIP Round 1.
- October 12, 2023-October 9, 2023: Start STIP Round 2.
Each Rounde will last for 3 weeks with the specific time as follows:
- Project submits proposal: First 7 days.
- ArbitrumDAO reviews the proposal: Next 7 days.
- Voting from the community: Last 7 days.
Featured Recommendations
GMX
GMX is currently the largest protocol on the Arbitrum ecosystem if we consider any aspect such as TVL, transaction volume, users,… Therefore, it is proposed that GMX is also the largest on the market. This ecosystem applied for 14M ARB (accounting for 28%) to implement the incentive program.
GMX will divide its incentive into 3 parts as follows:
- 6M ARB: Used for trading incentives through contests on GMX V2.
- 6M ARB: Used to encourage liquidity on GMX V2.
- 2M ARB: Used to support GMX V2 liquidity integration protocols that cannot receive a grant from the STIP program.
All funding received from Arbitrum DAO will be used by GMX within 4 consecutive months starting from October 23, 2023 to January 24, 2024. Since this allocation is huge and distributed over a short period of time, we can expect to earn profits from farming on GMX as well as integrated platforms.
Camelot
Camelot is currently one of the largest native DEXs on the Arbitrum ecosystem in terms of TVL alone. This protocol has requested from a minimum of 1.87M ARB up to a maximum of 3.09M ARB from Arbitrum DAO to launch its own incentive program.
Camelot will use its allocation over 3 months across 6 different Epochs to incentivize liquidity pools on the platform. In addition, the majority of the allocation will be used by Camelot for its liquidity pools such as Pendle, Plutus,…
Pendle
Pendle is the most successful yield trading development protocol at the moment with about $160M TVL, of which more than $47M comes from Arbitrum. Pendle has applied for a 2M ARB grant to be used through January 31, 2023 and distributed as follows:
- 55% (1.1M ARB): Will be allocated to PENDLE liquidity pools on Arbitrum to enhance liquidity.
- 40% (800K ARB): Will be allocated to campaigns aimed at increasing Pendle’s trading volume on Arbitrum.
- 5% (100K ARB): Will be allocated to ecosystems that are integrating Pendle on Arbitrum.
Summary
Above is the detailed information that everyone needs to understand to understand what the Arbitrum Short-Term Incentives Program is as well as the outstanding STIP participating projects. Weakhand hopes that this article has brought everyone useful information for the research and investment process.
