Arbitrum (ARB) Incentives Program

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Hi Aave community,

I am reaching out as an active Aave user and community member. I was going over the incentive grant proposals on the Arbitrum foundation (Grants Discussions - Arbitrum) and I saw that Aave hasn’t applied.

The deadline for the first of two rounds is today Wednesday 27 at 11:59PM EST. The Arbitrum Foundation is distributing a total of 50 million ARB tokens to protocols through the end of January 31, 2024. The Arbitrum’s forum discussion panel evaluation guidelines for protocols applications puts Aave on the “Lighthouse Grant” tier, making the protocol eligible for up to 2 million ARB incentive tokens.

Applications for the first round need to be submitted by Wednesday 27th, but there is a review period of one week in which edits to the proposal can be made. Since there is high demand from protocols for the incentive program it could be beneficial to apply today as details for round two remain unclear. The application template can be found (STIP Application Template - Incentive Framework (Round 1) - Arbitrum).

In terms of allocation, it would make sense to incentivize the ETH market on the supply side. This would make it more attractive for users to lend their ETH on Aave, and adds limited risks since ETH has substantial liquidity on Arbitrum and still hasn’t reached its supply cap.

Asset DEX Estimated Liquidity
ETH Uniswap $110M-$120M
ETH Balancer $8M-$12M
ETH Camelot $8M-$12M
ETH Curve $2M-$3M

Another potential use-case would be to incentivize the Aave pool for native USDC on Arbitrum, which is not exposed to bridge risk as USDC.e currently is. The liquidity there is not as high yet, but with upcoming stablecoin incentives from Balancer and Curve, the liquidity for native USDC is expected to increase, decreasing the risk of bad debt from this market.

Finally, I know that the DAO previously voted (Snapshot) to allocate the ARB airdrop to a “mixed option”, and that incentivizing GHO on Arbitrum was discussed. That being said, it seems premature to incentivize GHO at this time as it remains competitive already with its low borrowing rate, and it is probably better to first establish a strong peg on mainnet.

I would appreciate community feedback regarding the plan to apply to the ARB STIP program and the best way to allocate it. Tagging some frequent contributors of the Aave community, who can help push this forward @MarcZeller @bgdlabs

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Aave participate in this program, Our application is in review and will be public shortly.

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Good to hear! Tried clarifying this over Discord a couple of days ago, but there was no clear answer from moderators there

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Is it possible that because the final status hasn’t been changed from Draft to Final, that the DAO is now not recognized for the grant in this round?

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I think you are right. The application seems to be failed.
ACI submitted the STIP on the day of the application deadline, and the quality of this STIP was also very poor, with many mistakes. For example, it mistakenly stated that the incentive period was 12 months, which received criticism from the Arbitrum community. What’s even more frustrating is that ACI did not make adjustments in a timely manner based on the suggested changes, resulting in missing the application deadline. This could make Aave missed hundreds of thousands or even millions of ARB grants. In contrast, Radiant made thorough preparations for the application：
https://forum.arbitrum.foundation/t/radiant-final-stip-round-1/16929

That is so sad.
It is not up to the standards of Aave, and the question remains as to who should be held responsible for the potential loss of millions in grants？
Should we simply brush it aside as if nothing has happened?

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