Arbitrum’s grant war ends: 57 projects share 50 million ARB, a classic case of DAO governance?

Author: Jiang Haibo, PANews
The battle for tens of millions of dollars in grants in the Arbitrum community has come to an end. At 10 a.m. on October 13, the snapshot vote for Arbitrum's short-term incentive plan ended, and 57 of the 97 proposals were passed. Native projects on Arbitrum received the most support, and the proposals that failed were mainly some projects that were not highly relevant to the Arbitrum ecosystem, as well as controversial projects such as Lido. However, the number of ARBs applied for by the proposals that passed was 74.05 million, exceeding the limit of 50 million, and it still needs to be screened based on the number of votes in favor.
According to the voting data compiled by raho.me (detailed voting results can be viewed), all the grant application proposals have met the voting requirements, and whether they can be passed is still reflected in the support rate. From the results, most proposals have been passed, and projects such as Wormhole and Gains Network, which had insufficient votes, have also been passed.
Most supported projects: Camelot, JonesDAO, Dopex, GMX
The data shows that the projects with the most votes of approval are Camelot, JonesDAO, Dopex, and GMX, all of which are native projects on Arbitrum. Camelot is the largest native DEX on Arbitrum, and Arbitrum is one of the most representative derivatives projects. It is not surprising that both of them received high votes. The data of JonesDAO and Dopex are not very ideal, with TVL of only 14.98 million US dollars and 2.78 million US dollars respectively, but both are early projects on Arbitrum and have occupied the front position of the track for a period of time. This also shows that native projects and early projects on Arbitrum have received more support.
Project with the most funding applied for: GMX
The DeFi representative project on Arbitrum, GMX, applied for the most funds, and its TVL has long been ranked first among Arbitrum. GMX applied for a total of 12 million ARB, which will stimulate liquidity and trading volume on GMX V2. After that, Gains Network applied for 7 million ARB, and Mux Protocol applied for 6 million ARB, which are far behind GMX. The indicators considered this time, such as TVL and running time on Arbitrum, are more favorable to GMX.
The most controversial project: Lido
The most controversial project is Lido, which is one of the six projects with more than 200 million ARB votes and the only one that did not pass. As one of the most well-known projects, its support rate in this round of voting has been less than 50% for a long time, and it ultimately failed. Lido hopes to use funds to stimulate the liquidity of wstETH on Arbitrum, and will allow users to mint stETH directly on Arbitrum in the future. However, many users still oppose it. Lido applied for a 4 million ARB grant. Opponents believe that Lido did not pay incentives corresponding to these 4 million ARB on Arbitrum; for a non-Arbitrum project, 4 million ARB is too much; in addition, some people question whether Lido has posed a systemic risk to Ethereum.
Projects with fewer votes in the passed proposals: StakeDAO, UnshETH, Realm, etc.
Passing the Snapshot vote does not necessarily mean that you will receive a grant, as the amount of ARB applied for in this part of the proposal is 74.05 million ARB, which exceeds the limit of 50 million ARB. Among the passed proposals, proposals with fewer votes may still not receive grants. These projects may include: StakeDAO, UnshETH, Realm, Shell Protocol, Wormhole, JOJO, etc.
The community has repeatedly called for incentive programs
Arbitrum began to decentralize after Arbitrum distributed its native token ARB. Arbitrum DAO has decision-making power over Arbitrum One and Arbitrum Nova and their underlying protocols. ARB tokens can be used to vote on Arbitrum DAO's governance proposals (you can also delegate voting rights to representatives or become a representative and accept others' delegation) to determine the future development of Arbitrum. When distributing tokens, the DAO treasury reserved 42.78% of the tokens, so Arbitrum has enough funds to incentivize the ecosystem.
The Arbitrum community has called for an incentive program many times, and this has been promoted and implemented in the past two months.
Initially, team members from Camelot, Gauntlet, GMX, Plurality Labs, Questbook and others formed the Arbitrum Incentive Plan Working Group and held the first working group conference call on August 15.
On September 18, the proposal for Arbitrum’s Short-Term Incentive Plan (STIP) was approved on Snapshot. Among the four options of allocating 0 ARB, 25 million ARB, 50 million ARB, and 75 million ARB, the proposal for Arbitrum DAO to allocate 50 million ARB tokens (equivalent to US$41 million) for short-term incentives was approved. The funds will be distributed before January 31, 2024.
On October 10, the proposal passed an on-chain vote on Tally, and Arbitrum DAO will distribute 50 million ARB to multi-signature wallets.
At 10 a.m. on October 13, the proposals for each project to apply for STIP grants ended voting on Snapshot.
This time, the grants amount to tens of millions of dollars, with the highest amount reaching tens of millions of dollars. It is considered a large amount among all the grant programs on the blockchain, and an invisible war has also been launched over the competition for the grants.
Proposals on Arbitrum usually require two rounds of voting to take effect, first a poll on Snapshot, then an on-chain vote on Tally. However, the funds for this incentive plan have been allocated to multi-signature addresses by a separate proposal through a Tally on-chain vote. The proposal has a approval rate of over 99% and will allocate 50 million ARB to the STIP-ARB 5/9 multi-signature wallet, where the signers in the multi-signature wallet act as the administrator of the grant on behalf of the DAO.
Since the funds have been allocated to the multi-signature wallet by Arbitrum DAO, it means that there is no need to vote on each project on Tally, and the decision can be made on Snapshot based on the results of the on-chain vote. Therefore, the proposal to apply for the Arbitrum grant can be passed if it meets two conditions in the Snapshot vote: more than 50% majority support the proposal; more than 71.51 million ARB (3% of the voting amount) participate in the vote.
The Tally website shows that among the representatives shown in the figure below, the NFT and game project Treasure in the Arbutrum ecosystem has the largest number of ARBs entrusted, with 27.55 million ARBs. Although the data shows that the voting rights of the top representatives are not much different and are relatively decentralized, the requirement is not high because only 3% of the votes are required to pass the proposal, and the top four representatives can meet the requirements.
The ecosystem values ​​project participation time and contribution indicators such as TVL
This short-term incentive proposal is intended to incentivize the use of existing Arbitrum dApps to increase metrics such as transaction volume, users, and liquidity on Arbitrum.
The working group divided the grants into four categories based on the time the project has been running on Arbitrum, TVL, and 30-day trading volume. The highest level of grants can receive more than 2 million ARBs, and requires meeting the following two conditions at the same time: running on Arbitrum for at least 12 months; TVL on Arbitrum exceeds US$30 million or cumulative trading volume of US$200 million in 30 days.
Participants also need to meet a series of additional conditions, such as:
Spending plans and targets must be clearly defined, and the ARB cannot be converted into other assets;
Must commit to providing metrics on allocation, ARB spending, transaction volume, TVL, unique addresses, transaction fees, etc.
Must complete Arbitrum Foundation KYC;
Funds can only be used for incentives, etc. on the Arbitrum network.
The first round of voting for Arbitrum’s short-term incentives has ended, which can also give the project parties some inspiration.
Obviously, native projects receive more support than other projects, so it is also important to prioritize a chain that suits the project. For example, although the current data of JonesDAO and Dopex is not very ideal, they have also received a high number of votes of approval.
In addition to doing a good job in the project, the project party also needs to actively participate in activities in the ecosystem, such as becoming one of the multi-signature representatives who manage funds, becoming a governance representative, participating in the working group, etc. These things may be helpful in the future. In addition, among various indicators, TVL is still a very important indicator, which may be the main reason why GMX applied for the most ARB grants.