Thanks for your questions, @BristolBlockchain
- Detailed Allocation Plan
We take a quantitative approach to determining which pools should be incentivized. We use a simulation that predicts the changes in a pool’s liquidity and volume market share across competing DEXes for a given level of incentive spend. Our active management would optimize the choice of pools and incentives for each pool to maximize net protocol benefit as determined by the Uniswap Objective Function. We will integrate Uniswap V3’s Arbitrum deployment into our incentive recommendation engine, resulting in pool recommendations. Integration and analysis ensure the pools selected offer the most ROI for the incentive program.
Using a fixed distribution plan over the 8-month campaign would be suboptimal. As we’ve done for other partners, we will actively manage and dynamically update both the overall incentive budget as well as allocations. This will be done on a weekly basis. In addition to providing incentive recommendations, Gauntlet will proactively monitor the impact and usage of the incentives program via internal real-time alerting to identify and mitigate unintended use or abuse.
- Performance Evaluation Metrics
The KPIs based on our outlined goals primarily focus on potential protocol revenue. Although the fee switch has yet to be activated, focusing on monetization should be the long-term north star of any campaign like this. However, in the interim, we will focus on what’s tangible/achievable, such as additional LP fee generation, additional volume, and growing overall TVL. We will benchmark the program from Day 0 to the conclusion of the campaign and share the results both through our mid-point analysis as well as our final retroactive impact analysis.
As we’ve identified in our recent LM Analysis, when proper bootstrapping/incentivization occurs, it has positive effects on the pools long term (liquidity and volume), even after incentives are deprecated. Our goal is to identify, attract, and retain “sticky” liquidity during this program so that the positive effects of running this incentive campaign continue beyond it. There will always be certain LPs that withdraw liquidity once they stop earning incentives. Our program seeks to mitigate this, and we will note in our final retroactive impact analysis the projected impact on incentivized pools after this campaign has ended.
- Timelines and Milestones
Our total ask is 2M ARB. 1.7M ARB will be spent on incentives during this 8-month campaign, and 300K ARB (from the overall 2M) will fund a dedicated team focused on instantiation (including pre-launch analysis), active management of incentive allocations (weekly updates), the external facing dashboard, and the aforementioned mid-point and final retroactive impact analyses.
Our timeline is somewhat dependent on the approved governance proposal. However, here’s an illustrative timeline, including milestones, to provide further insight:
