Motivation
As part of the Arbitrum token launch Balancer DAO was allocated ~3M ARB tokens . While spending some to accelerate our growth certainly makes sense I believe it’s prudent to retain the majority as a long term bet on Arbitrum’s future. Balancer has seen promising early signs of momentum on Arbitrum like the launch of wstETH, rETH, Aave v3 boosted pools, and the adoption of ve8020 by two Arbitrum native projects (y2k and Radiant). Future catalysts like Aura going multichain, bridging over more rate providers like cbETH, and gyroscope’s ECLP put us in a strong position to potentially become the top DEX on Arbitrum.
I suggest allocating 1M ARB towards direct LP incentives as this is the most direct growth mechanism in my view.
The USD amount of bribes placed has fallen significantly in line with the decline in BAL & AURA prices. If we use ARB to bribe I believe we’ll only accelerate the reduction in 3rd party bribing activity as we push the ROI closer to 1:1. I’d argue this leads to no gain at all for voters and would be a waste of 1M ARB.
Directly emitting ARB on the pools seems to be a better option as that increases the amount of emissions up for grabs, thus pushing the ROI for bribers up rather than down. Of course this program is limited to incentivizing Arbitrum pools so it is fair to say only the ROI for Arbitrum bribers goes up - more Arbitrum bribers pushes down the ROI for everyone else and these two things cancel each other out to a large extent. Bottom line is more total emissions should lead to more bribes given we’re effectively pushing 1:1 ROI lately.
I’ll propose the following rule set:
- 10 round duration, aligning with Aura’s two week cycle of voting incentive allocations.
- Max of 100k ARB per round. Any unspent ARB simply returns to the treasury.
- Each pool can have a max possible allocation of 10k ARB per round to prevent one or two pools from taking the majority share of this program.
- On each Wednesday/Thursday after Aura’s gauge voting snapshot, ARB will be allocated to each Arbitrum pool according to bribes placed in the most recent round on a 1:1 USD basis, subject to ARB caps mentioned above.
- This ARB will be emitted over a two week period
- All voting markets are included - projects can choose where to bribe at their discretion. Bribes placed by Balancer under BIP-19 also count.
- Balancer Maxis will publish a spreadsheet detailing the ARB allocation every two weeks and allow at least 24h for community feedback before execution. We’ll make a forum thread for this purpose.
- This would not begin until the first Aura voting round after Aura is deployed and ready to emit AURA rewards.
For the remaining 2M ARB I suggest deploying protocol owned liquidity in combination with Aura by pairing it 33/33/33 with BAL and AURA.
Aura recently passed AIP-25 to signal their support for this. Fry (aura contributor) has deployed an escrow contract to hold the BPT which has been reviewed by Balancer’s integrations team.
This creates TVL, volume, and revenue that we don’t need to spend incentives on. By increasing BAL & AURA liquidity on Arbitrum we make it easier for second order integrations like autocompounders to support Balancer pools. If another use case for ARB presents itself like participating in governance or another incentives program the liquidity can always be withdrawn.
Specification
If approved, the DAO Multisig eth:0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will interact with the official Arbitrum bridge at https://bridge.arbitrum.io/ using the wallet connect app in gnosis safe.
Based on current market prices and factoring in a ~5% cushion, 500k BAL will be bridged and should be sufficient for LP. Any remaining BAL will be held in the DAO multisig on Arbitrum. The destination address will be arb1:0xaF23DC5983230E9eEAf93280e312e57539D098D0 the Arbitrum Balancer Treasury. A small test transaction will be executed before the majority of the funds are sent in the multisig execution the week following the test.
Once Aura lets us know they’re ready to send AURA to the escrow contract the Arbitrum Treasury arb1:0xaF23DC5983230E9eEAf93280e312e57539D098D0 will transfer 2M ARB and some amount of BAL up to the 500k max, based on current market prices, to 0x8D803f7f7e26E586ee90E5A872cf7830e21f7727. Aura’s multisig will then call init() and join().
For the 1M ARB incentives program, the Arbitrum Treasury arb1:0xaF23DC5983230E9eEAf93280e312e57539D098D0 will transfer 100k ARB on a bi-weekly basis to the Maxi LM Multisig arb1:0xc38c5f97B34E175FFd35407fc91a937300E33860. Any funds unused in each bi-weekly period will be returned to the treasury immediately. The first transfer should take place June 19th.