Research Summary
The report discusses the $41M stimulus by the Arbitrum team into the Arbitrum ecosystem, which is expected to be distributed to eligible projects and eventually reach users through project incentives. The report also compares this with a similar initiative by Optimism, which saw a significant increase in network activity and user engagement. The report further projects a 10% to 90% growth for Arbitrum’s user metrics while the incentives are live.
Key Takeaways
Arbitrum’s Stimulus and its Impact
- Arbitrum’s $41M stimulus: Amidst a challenging bear market, the Arbitrum team is set to inject a $41M stimulus into the Arbitrum ecosystem. This is expected to be distributed to eligible projects and eventually reach users through project incentives.
- Comparison with Optimism: The report compares this initiative with a similar one by Optimism, which saw a significant increase in network activity and user engagement. Following the distribution of $OP tokens to the protocols, the latter half of 2022 witnessed a substantial upswing in user engagement and key performance metrics on the Optimism platform.
- Projected growth for Arbitrum: The report projects a 10% to 90% growth for Arbitrum’s user metrics while the incentives are live. With the $ARB distribution scheduled for Oct 7th and Nov 5th, the Arbitrum ecosystem is poised to benefit from the STIP stimulus through to February 2024.
Challenges and Criteria for Successful STIP Proposal
- Obtaining funds: While the objective of the STIP is to stimulate short-term growth, the most important hurdle is successfully obtaining the funds. After reviewing the results of the Phase 1 of $OP Governance Fund, the report identified a few common denominators between proposals that ended in failure.
- Criteria for successful STIP proposal: The critical criteria for a successful STIP proposal should be the amount of incentives requested. If the requested amount of tokens do not lie within the recommended grant categories, the proposal may likely be rejected by the review committee.
- Grant categories and proposals: As the grant categories are already defined during the voting, proposals from protocols have started flowing in. However, some of these requests may fail due to reasons such as an oversized request allocation not matching the tranche’s TVL and daily volume criteria, and a distribution strategy that is out of scope, directing allocations to their own team.
Actionable Insights
- Monitoring Arbitrum’s STIP: Stakeholders should closely monitor the implementation and impact of Arbitrum’s STIP, especially its effect on user metrics and network activity.
- Understanding successful STIP proposals: Understanding the criteria for successful STIP proposals can provide insights into how to structure future proposals for maximum acceptance.
- Watching out for potential pitfalls: Stakeholders should be aware of potential pitfalls in STIP proposals, such as oversized request allocations and out-of-scope distribution strategies.
