Lampros DAO
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This study explores the broader impact of Arbitrum's Short-Term Incentive Programs (STIP) on the DeFi ecosystem, focusing on protocols that still need to receive direct incentives. The STIP was rolled out in two phases: Round 1 (November 2023 - February 2024) and the STIP Backfund (December 2024 - March 2024), both designed to drive growth by providing financial and promotional support to selected protocols.
Our analysis concentrated on four primary sectors: Decentralized Exchanges, Yield protocols, Bridge protocols, and Perpetual protocols. To assess the impact of the STIP, we categorized the protocols into two groups—those that received incentives (incentivized protocols) and those that did not (non-incentivized protocols). For a balanced comparison, We selected incentivized protocols with current TVLs comparable to those of the non-incentivized protocols and vice versa. This segmentation allows us to thoroughly examine and differentiate the effects of the STIP on incentivized protocols versus those that did not receive direct support.
A pie chart is provided to illustrate the breakdown of protocols into these categories, highlighting the significance of each in the STIP process.The STIP program encompassed many protocols, including decentralized exchanges (DEXs), bridge platforms, perpetual contracts, yield aggregators, NFTs, and cross-chain solutions.
The bar chart illustrates the impact of the incentive program on Daily Active Users (DAU) across both incentivized protocols—Camelot, Ramses Exchange, and Trader Joe—and non-incentivized protocols such as Chronos, Curve Finance, and Wombat Exchange, using a 30-day moving average of DAU for a clearer representation of user engagement trends.
The line graph highlights the effect of the incentive program on the total value locked (TVL) in both incentivized protocols—Camelot, Ramses Exchange, and Trader Joe—and non-incentivized protocols such as Chronos, Curve Finance, and Wombat Exchange, using a 7-day moving average of TVL for clearer trend analysis.
The bar chart illustrates the impact of the incentive program on Monthly Active Users (MAU) across both incentivized protocols—Camelot, Ramses Exchange, and Trader Joe—and non-incentivized protocols such as Chronos, Curve Finance, and Wombat Exchange, using a 30-day moving average of MAU for a more consistent view of user activity trends.
The line graph showcases the influence of the incentive program on protocol fees for both incentivized protocols—Camelot, Ramses Exchange, and Trader Joe—and non-incentivized protocols like Chronos, Curve Finance, using a 7-day moving average of fees to provide a smoother view of the trends and changes over time.
This radial chart illustrates user migration rates from non-incentive protocols to recipient protocols during an incentive phase, highlighting how well Camelot, Ramses, and Trader Joe attracted users. It shows the percentage of users who originally engaged with non-incentive protocols (Curve Finance, Wombat Exchange, and Chronos) during the pre-incentive phase and then migrated to these recipient protocols once incentives were introduced.
The graphs compare the average transaction counts of incentivized protocols like Rodeo, StakeDAO and Umami Finance and non-incentivized protocols like Equilibria, Vaultka and Wombex Finance across three phases: Pre-Incentive, Active Incentive, and Post-Incentive.
The line graph highlights the effect of the incentive program on the total value locked (TVL) in both incentivized protocols - Rodeo, StakeDAO and Umami Finance non-incentivized protocols such as Equilibria, Vaultka and Wombex Finance, using a 7-day moving average of TVL for clearer trend analysis.
The radial graph presents a comparison of user retention rates between incentivized protocols like Rodeo, StakeDAO and Umami Finance and non-incentivized protocols such as Equilibria, Vaultka and Wombex Finance.
This radial chart illustrates the movement of users across incentivized protocols—StakeDAO, Umami-Finance, and Rodeo. It specifically focuses on common users who made transactions in the "before incentive" phase on non-incentive protocols and completed their first transaction on an incentivized protocol during the "Active incentive" phase.
The bar chart depicts the effect of the incentive program on Daily Active Users (DAU) for both incentivized protocols—GMX, MUX Protocol, and Vertex—and non-incentivized protocols like Apollox, HMX, and Vela Exchange. A 7-day moving average of DAU is applied to provide a more comprehensive view of user engagement patterns and trends.
The line graph demonstrates the effect of the incentive program on the total value locked (TVL) for both incentivized protocols—GMX, MUX Protocol, and Vertex—and non-incentivized protocols, including Apollox as Apx Finance, HMX, and Vela Exchange. To provide a clearer visualization of trends, a 7-day moving average of TVL has been applied.
The bar chart illustrates the impact of the incentive program on Monthly Active Users (MAU) across both incentivized protocols—GMX, MUX Protocol, and Vertex—and non-incentivized protocols like Apollox, HMX, and Vela Exchange, using a 30-day moving average of MAU for a more consistent view of user activity trends.
The line graph showcases the influence of the incentive program on protocol fees for both incentivized protocols— GMX, MUX Protocol, and Vertex and non-incentivized protocols like HMX, using a 7-day moving average of fees to provide a smoother view of the trends and changes over time.
This radial chart depicts the migration rates of users from non-incentive protocols to recipient protocols during the incentive phase, emphasizing the effectiveness of GMX, MUX Protocol, and Vertex in attracting users. It represents the users who initially interacted with non-incentive protocols (HMX, Vela Exchange, and Apollox) during the pre-incentive period and later transitioned to these recipient protocols after the introduction of incentives.
The radar chart illustrates the transaction count trends across four protocols—Synapse, tBTC, Wormhole, and XY Finance—throughout three distinct phases: the Pre-Incentive phase (Jun 2023 - Oct 2023), the Active Incentive phase (Nov 2023 - Mar 2024), and the Post-Incentive phase (Apr 2024 - Aug 2024).
The bar graph compares the user retention rates of four protocols—xy_finance, wormhole, tBTC, and synapse—between the pre-incentive phase and the active incentive phase. The x-axis represents the user retention rate in percentage, and the y-axis lists the protocols.
The graph shows the Total Value Locked (TVL) comparison between the incentivized protocol Synapse and the non-incentivized protocol Xy Finance across three phases: Before Incentive, During Incentive, and After Incentive.
This analysis calculates the Pearson correlation coefficient to assess the relationship between Daily Active Users (DAU) and Total Value Locked (TVL) for each protocol, distinguishing between incentivized and non-incentivized protocols. The coefficient (r) ranges from -1 to 1, indicating:
Expected Outcomes
Correlation Coefficient relation between Daily Active Users(DAU) and Total Value Locked(TVL) across Protocols in DEX
Correlation Coefficient relation between Total Value Locked(TVL) and Transaction count(TC) across Protocols in Yield
Correlation Coefficient relation between Daily Active Users(DAU) and Total Value Locked(TVL) across Protocols in Perpetuals
Correlation Coefficient relation between Total Value Locked(TVL) and Transaction Count(TC) across Protocols in Bridge
This analysis uses synthetic control methods to assess how incentive programs influence Total Value Locked (TVL) in protocols. Daily TVL data from both incentivized and non-incentivized protocols will be collected across Pre-Incentive, Active Incentive, and Post-Incentive phases. A synthetic control, constructed to mirror the pre-incentive trends of the treated (incentivized) protocol, will serve as a benchmark. By comparing the post-incentive TVL of the real and synthetic protocols, we can measure the incentive program's effectiveness in boosting liquidity.
This graph provides a synthetic control analysis of Total Value Locked (TVL) for Camelot, Ramses Exchange, and Trader Joe across Pre-Incentive, During Incentive, and Post-Incentive phases. By constructing counterfactuals, it highlights how TVL trends might have evolved without incentives, showing the impact and sustainability of these mechanisms on protocol performance.
This graph provides a synthetic control analysis of Total Value Locked (TVL) for yield protocols like Rodeo and Umami Finance across Pre-Incentive, During Incentive, and Post-Incentive phases. By constructing counterfactuals, the analysis illustrates how TVL trends might have evolved in the absence of incentives, showcasing the true impact and the potential longevity of these mechanisms on protocol growth.
This graph showcases a synthetic control analysis of Total Value Locked (TVL) for perpetuals protocols such as GMX, MUX Protocol, and Vertex across the Pre-Incentive, During Incentive, and Post-Incentive phases. By creating counterfactual scenarios, this analysis demonstrates how TVL trajectories might have developed without the presence of incentives. This method reveals the genuine influence of incentive programs on TVL changes and assesses their long-term effectiveness in sustaining protocol performance.
This graph presents a synthetic control analysis of Total Value Locked (TVL) for the bridge protocol Synapse, observed through the Pre-Incentive, During Incentive, and Post-Incentive stages. By generating counterfactuals, this analysis helps illustrate how TVL trends would have unfolded without incentive interventions. This approach highlights the real impact of these strategies on TVL growth and evaluates their capacity to sustain gains over time.