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What is the DRIP Incentive Program?
Recorded: Sept. 3, 2025 Duration: 1:01:19Space Recording
Full Transcription
Music Thank you. Music Thank you. Thank you. Thank you. Hello everyone.
Hello, hello.
Hello, hello.
Let me invite some of our speakers.
Hey Matt, can you hear me?
Hey Tom, loud and clear.
Perfect.
it is a good day to talk about arbitram
It is a good day to talk about Arbitrum.
yeah it's a nice start to drip a smooth launch
i'm glad to see some of the inflows from some of the largest lending markets on arbitram like
morfel after drip has launched we have increased the TVO for about 8 million.
It's pretty impressive.
Not too bad.
I think I saw a lot of liquidity come into SUSDS borrowing
those new stable inflows too, if I'm not mistaken. I'll be very, very curious to see like which yield bearing assets are the most performant
because clearly the, you know, stable coin supply is coming.
So now I want to see which ones are going to, you know, suck up that supply.
Which one is your bet?
I can't play favorites,
but I would think that Syrup and Athena
throughout the whole program,
but Spark is off to such a strong start.
We'll see.
Yeah, that makes sense.
I'll bet on Athena as well.
They're one of the largest DeFi-focused stablecoin on Mainnet as well they're one of the largest d5 focused stable coin on mainnet as
well it's funny like i think that maybe the best performing asset will be like susda i and the pts
yeah but i don't even know if they need the incentives like they were already growing so
fast even before drip started right 100 million market cap for USDAI already.
I think they've been hitting the cap every time they add it as well.
Like, I don't think you can even get your hands on the asset.
Right.
Hey, Peter, can you hear me?
I do.
Hello, everyone.
Hello, hello.
Hey, Baptiste. Hello, how are you? hello. Hey, Baptiste.
Hello, how are you?
I'm doing good, what are you?
Doing well. Long day today.
Exactly.
Hey, Reddack,
how do you pronounce your name? Sorry about that.
Yeah, how's it going?
How are you?
It's great to have everyone.
Yeah, likewise.
Thank you very much for joining in. Let's get started. I'm your host today. I'm Tom, head of data entropy.
Today, it is a very exciting day for Arbitrum, especially we have launched the drip and we have seen a lot of developments about Arbitrum from the past several months, starting with Robinhood announcing their Arbitchain deployment on Arbitrum.
And then we've seen a lot of high quality projects launching and starting on Arbitrum, such as boroughs from Pando Finance and then USDA, which is a very promising stablecoin project mixing AI, NFT, stablecoin and DeFi.
And last but not least, we also have Talos, which is a very innovative DeFi project starting on Arbitrum.
But now the most exciting part is we're going to merge everything together and to grow the whole DeFi pie with our drip incentive program.
And we are very happy to have our
speakers today, Matt from Entropy, Baptiste from Merkle, Peter from Marching Labs, Redact
from Arbitrum Foundation. And can you guys please introduce yourself, please, so that
the audiences would know better about you. Matt, do you want to start first?
Back to about you.
Matt, do you want to start with us?
Sure.
Yes, I'm one of the founders of Entropy Advisors.
We are exclusively a service provider to Arbitrum,
and we help out with treasury management,
incentives, data analytics,
and then sometimes with special projects.
So maybe Offchain Labs could ask for help
with a BD effort or something like that.
But DRIP is our first incentives program for arbitrage.
So we're extremely excited to get that off the ground today.
I'm Batiste.
I'm one of the founders of Miracle.
So used to be one of the devs who built the initial Miracle system back when it
was just a side project for Engel.
And now it became much bigger.
And we're super happy to participate in this program.
And yeah, and now I mostly handle BD for the team.
Awesome.
And I'm Peter.
I'm the head of DeFi Partnerships at Offchain Labs.
I've been here for almost four years.
I used to work at Parity and Tendermint.
I'm super excited about DRIP. A ton of work and effort that has gone into the program and
I'm really excited to talk further about it today.
Yes, and I'm the Partnership Manager at the Arbitrum Foundation on the ecosystem team. We lead a lot of the grant and funding efforts
from the Arbitrum Foundation.
And likewise, very excited about seeing Dreamc
get launched and have a big impact
in the Arbitrum DeFi ecosystem.
Wow, we have a really stacked team here.
We have the expert from Arbitrum Foundation,
Off-Train Labs, Miracle, and Entropy Advisors,
which is the designer of the incentive program.
We're going to have a lot of alpha today,
but before we get into the needy, greedy alpha
different opportunities, Matt,
why don't we start off with introducing what is DRIP
and why does Arbitrum need an incentive program right now?
Yeah, so DRIP is a large-scale incentives budget funded by the Arbitrum DAO.
It stands for the DeFi Renaissance Incentive Program.
It's $80 million ARB.
Within that overall DRIP program, it's broken down into four seasons.
And we just kicked off the first season today.
So within each season, it's actually broken down into epochs.
So each two weeks, there will be a different epoch.
The goal is to stay on the same theme and to largely run incentives in a similar manner.
But at the same time, we want to be able to adjust to market conditions.
We want to be able to adjust to potential gamification, which Tom and his data team will be tracking
for us.
So moral of the story, yeah, we have the overall DRIP program broken down into four seasons.
We just kicked off the first season, which is going to run for the next 20 weeks or 10
epochs.
I think when it comes to why Arbitrum needs incentives, it's largely the result of new
activities popping up that we want to accelerate Arbitrum needs incentives. It's largely the result of new activities popping up that we want to
accelerate Arbitrum to help capture. So for instance, this first season, which is focused
on leveraged looping. So the idea that you can take an asset like a wrap-staked Ether, like
Syrup USDC, and either borrow Ether or USDC respectively against those assets to get leveraged
exposure to the yield of the collateral
asset.
When we look at this activity, it largely takes place on mainnet.
And I'll be the first to admit that while Arbitrum is absolutely a market leader and
a ton of different verticals, when it comes to leverage looping, it's actually one that
Arbitrum was a bit weak on.
And we're hoping to fix that with the first season of drip.
So I think that the reason that some ecosystems might perform better, and it's largely Ethereum
mainnet, it's just about liquidity that has been sitting in these lending markets on Ethereum
mainnet for years and years and years.
And what that allows the lending markets to do is set higher LTVs.
It gives the loopers more debt to potentially borrow against it.
So it's not like a result of anything related
to Arbitrum being worse. And actually, if you look at the competitive environment,
Arbitrum actually has a greater market share in looping activity than competitive L2s.
It's just that so much of it takes place on mainnet and we want to help bring over some
of those users to use the cheap, fast and secure chain that is Arbitrum built on top of Ethereum.
and secure chain that is Arbitrum built on top of Ethereum.
Awesome.
This is really well said.
And for the audiences that are not super familiar with the lending landscape, looping means
if you supply a RepStateEath or RepEathEath asset, which is a ETH LST or LLT, you basically
borrow more ETH and then we deposit it via RepState ETH or RepEEDETH to earn more LST or LRT rate on top of that so that you can potentially scale up your LST or LRT yield in a much more exponential basis.
establish what DRIP is and why Arbitrum needs that.
Pisa, can you tell me more about who are the participating protocols
and what is the current DeFi landscape and how can the DRIP
incentive program scale it up in the future?
Yeah, for sure. The first season of DRIP supports
most of the major lending and borrowing protocols
that you're familiar with. So that includes Aave and Fluid,
Morpho, Euler and Dolomite and Silo Finance. The beauty of Arbitrum is that it has all these
under one house, and this is a great opportunity for anybody using those protocols. And so with
respect to the current DeFi landscape here,
you know, outside of Ethereum mainnet, similar to kind of what Matt alluded to, Arbitrum has the
most TVL, you know, in markets like Aave and Fluid, and then, you know, it ranks pretty high
with Dolomite and Silo. And so this, to me, like feels like a great opportunity for Arbitrum to really reinforce its position as the home of DeFi.
And Drip is there to help to make that possible.
This is just one of the first seasons.
There's going to be many more after this, and we're just excited to keep pushing forward here.
Awesome. And to note that there is a list of participating protocols, which are lending
markets, as Pisan mentioned, which are Aave, Morpho, Fluid, Dolomite, Silo, and Euler. And
thank you very much for the protocols are joining the Twitter space. And then we also have a list of eligible assets that are split up into USD-based and ETH-based.
So for the ETH-based assets, it includes the RepStick ETH of the world, which is Lido,
and then we have ETH-ifieds RepEETH, and then KelpDows RSEETH, Renssel EZETH, and then KelpDAO's RSE, Renzel's EZE, and then GMX, GME, so that users can actually
use these as collateral to borrow ETH on different lending markets.
And in the USD asset base of the world, we have lots of different yield bearing stable coins including usde s usde s usds uh susdc rlp repstick usr from different
protocols and etc for more details we can go into the pinned tweet that i pinned in our space here
and then we can go deeper into the exact mechanism of DRIP later on. But now that we have established
more about who are the participating protocols, how can users basically participate in DRIP,
I would love to learn more what are the differences between DRIP and the previous
incentive program that Arbitrum basically have had in the past, which is the short-term incentive program, STIP, and long-term incentive
program, LTIP.
Radha, can you tell me more about what are the differences?
What is your view on that?
Radha Ramanu Yeah, for sure.
I think one of the key differences is that drip is very targeted, one of the outcomes
that we want.
So in the past uh our incentive programs
are a little different where you know throughout one maybe incentive program we were targeting
you know a wide range of verticals through across ltip and and slip itself whereas with drip we have
specific seasons so each season is a very hyper focused uh dedicated area that we are focusing on and
trying to grow an arbitrum kind of like might said you know we're doing very well looping but
ultimately um ethereum one is doing significantly better than this at the moment and we really want
to change that with with uh arbitrary with drip season one so what we're trying to do is have a very hyper-focused area of expertise within the incentives that we're directing to, to different protocols, and essentially grow that vertical. across different verticals. DRIP is within season one, focusing on one specific area
and directing incentives there.
So we can actually focus on it, grow on it
and actually iterate on as
incentives are distributed.
So, you know, it's a very
different approach where
we're actually going to be looking
at how the incentives are distributed
across each epoch and across the whole
season and making sure that across you know every few weeks the the incentives are directed effectively
and making sure that the incentives that we're spending are actually efficient and are doing
what we we actually want so there's some very very big differences to how we're approaching
right now compared to eltip and stip in the the past. I like this approach a lot, not saying because I'm from entropy,
because as everyone may know,
an ecosystem is composed of different sectors and vertical, right?
For example, DeFi specifically, you already have bridges,
perps, taxes, lending markets, so on and so forth.
And given the budget is limited,
we can't spend it on every single pillar or sector, right?
If not, it would just be basis point differences
for the yield that users are getting.
So in order to have a more effective yield
to attract users,
it seems like DRIP is taking a more opinionated approach
so that we understand what is the most important aspect
that Arbitrum can grow.
And then we take it for the season one and grow it very focused.
And the season one basically is about looping on the lending markets.
And therefore, what is the differences between DRIP and STIB or LTIP, as Radek mentioned,
is the opinion that we are taking and the more focused approach on incentive allocation.
Just to add one thing in there.
So STIP had some great lessons learned from it.
And one of the most important things I think that we really tried to hone in on
when designing DRIP was the ability to actually evaluate results.
So when we were doing like when
Arbitrum DAO did STIP and LTIP and all the protocols basically got grants to distribute
incentives in different way, it created like a very inorganic environment on Arbitrum that made
it close to impossible to like evaluate the efficacy of those incentives. And the DAO actually
spent quite a lot of money on, you know, Castle Labs, DeFi Lama,
Castle Chaos Labs, Blockworks Research, like all these amazing research shops to do great research into it.
And we did learn a lot.
But at the end of the day, it was one of the learnings was it was close to impossible to
actually evaluate.
So very happily, you know, going into the very happy that going into this, we thought
about that ahead of time and actually kind of know exactly what we want out of the program as far as market share
growth of our lending markets versus other L2s. We care a lot about market share growth of the
target asset list that Tom mentioned earlier. So we'll be tracking all these things to see exactly
how effective the program is and not just the program holistically, but also at an individual
basis so that, you know, we know how effective one lending market is versus another, one asset versus another and stuff of that nature.
Awesome. And speaking of which, we are also going to pin another tweet in our space later on so
that people can have more information about Drip as a program and why we are launching DRIP as a whole.
And let's move to the next section, which is how does DRIP work? So that as a user perspective,
they can know better how they can participate, what action they can do. Matt, can you continue
to share a little bit more on how does DRIP work in terms of like the budget allocation mechanism?
What is the timeline?
What does user need to interact with different protocols in order to get an entitled for the incentive?
Yep, for sure.
So the incentive started today and the first two epochs or the first four weeks, which runs through September 30th or through the end of the month, is what we call a discovery phase.
So the first epoch, which started today, which runs for the next two weeks, was 800,000 ARB. And the second epoch, which will start in two weeks,
is an additional 1.6 million ARB. So we're actually doubling the budget in the second epoch.
But this whole period, we're considering a discovery phase where we're kind of trying
out a couple different things before we nail down on the exact mechanics of every different
campaign we'll be running. Overall,
the campaigns will still reward the same assets, the same markets. We don't plan on changing
anything like that, but rather we're testing a few different things. So anyways, on Euler and Silo,
as well as on Fluid, we're testing out straight supply side incentives, meaning anyone who goes
and supplies stable coin liquidity to those
to those platforms will get, you know, the ARB incentives on Morpho.
We're trying out a bit of a different approach, and it's somewhat a result of Morpho's unique
model as a as a lending market where only assets that are lent to vaults who supply
liquidity to a specific set of assets will actually get the incentives.
In reality, it looks pretty similar. We have a robust list of assets, so pretty much all the
vaults do allocate liquidity to those assets, meaning that it does end up looking something
like supply-side incentives, but it's an important nuance in the distinction between the way that
we're running the incentives on Morpho versus on Euler, Fluid, and Silo. Now on Dolomite, it's actually a bit of a different model additionally. So there
we're doing ETH borrow incentives. So anyone who just straight up borrows ETH, whether it's against
wrap-staked ETH or another asset, they also receive their share of incentives on Dolomite.
And finally on Aave, we're purely focused on ETH and we're doing both supply and borrow side
incentives. So whether or not,
whether you supply ETH or borrow it against a whitelisted set of collateral assets,
you'll receive your incentives. And sorry, I know that was very complicated, but if you look at the
arbitramdrip.com campaigns page, it's clear when it's in front of you, or at least I hope it is.
Perfect. So basically there are two key actions.
The first one is simple supply,
which is supplying RepEath or SimpleEath
or USDC into a earn vault.
So basically once you're supplying to that site,
you can't really earn the incentive
if you use it as a collateral.
And the second action that you can do
is supply the
eligible asset as collateral and then borrow either USDC or MoE to do the looping essentially.
That are the two overarching ideas of how users can participate in Drip. And Matt, I'm curious
because this looping model is quite different from in the past.
There's a lot of lending market incentives that are just focusing on throwing incentive into supply side only.
What are the differences and why do you choose doing an incentivize looping strategy?
Yeah, so this really just comes down to targeted action.
Yeah, so this really just comes down to targeted action.
The problem with straight supply-side incentives,
meaning just incentivizing people to deposit like USDC or Tether
or ETH or whatever into a lending market,
is you don't necessarily know where those assets will flow.
And maybe they're going to flow into something
that you don't consider sustainable.
So for instance, maybe a user is like borrowing USDC
against their USDT in order to like farm the incentives, right?
That's something that at least like from our perspective
at Entropy, we don't want to incentivize.
It's not really an activity that we think is sustainable.
Whereas when we think about these interest rate arbitrages
or like the people who are looping their SUSDE
or their CERP syrup USD or whatever,
take your pick of any of the assets.
We think of that as a more sustainable activity
and something that we actually want to attract and be able to grow in Arbitrum 1.
So we don't just care about TVL.
Like we don't just that if we could give up temporary TVL
in order to attract more sustainable or what we believe will be more sustainable activity,
we'll take that choice any day of the week, right?
Like that matters much more to us
than a vanity metric or a chart where we get to tweet,
yay, we got $100 of TVL per dollar spent.
Much less important to us than six months from now,
being able to look back at the program and say,
we actually made tangible differences to Arbitrum DeFi and the
ability to do these interest rate or carry rate trades on Arbitrum.
Awesome. So basically what we expect is that incentivized looping, which are more meaningful
action body users, could potentially avoid the mercenary liquidity issue that we have seen in
the past that a lot of capsule just left or left the
ecosystem right after the incentive has ended. So that is not, it can pump up the TVL in a short
period of time, but in the long term, it would just be a lost cost or lost spend that you have
spent on incentive, but the TVL is not able to retain in the ecosystem. And Baptiste, given you are the expert in incentive,
Merco has been working with a lot of different protocols,
different chains up to 20 plus chain, 30 plus protocols,
including all of your favorite blue chip,
DeFi protocols like SushiSwap,
Aave, Morpho, Uniswap, Puffer, so on and so forth.
Given the experiences that you have had, can you tell me more about how is DRIP different
from a point of view, not just comparing across DRIP Fest as our historical incentive program,
but how is DRIP different from the incentive program in other ecosystem and other protocols?
Okay, so this is a very good question.
It's actually different in many different fashions.
I think the first thing they did, it sounds obvious,
but you can see when you look at the program that Entropy and Arbitrum,
they really looked at the other incentive programs that we ran and that other
providers ran.
And you can see that the first thing they did is they kept everything that they know
works well.
They kept the app so that they can give partner protocols distribution on top of giving them
extra APRs.
They also made sure that everything was available everywhere.
Like on Morpho, you can see the APRs.
On the app, you can see it.
And then they kept the epoch to give them the flexibility to double down
on what works and what doesn't work but so that's like the the basic and they kept all of this
but then the main first difference is that unlike many of the programs we run they start on the
chain that has 3.3 billion tvl and so usually when you're a smaller chain with a smaller tvl
you can throw money at the problem and you can see results, right?
Because people are going to arbitrage the APRs, right?
If they see that they can make quick money on a chain, they'll go there and you're going to get, you know, 30, 50, 100 million TVL very quickly.
What's much harder is that in this case, they actually need to shape all of this TVL.
is that in this case, they actually need to shape
all of this TVL.
And so that's why they have like, you know,
they mentioned they needed the targeted approach
and that's exactly why.
And now to be maybe a bit more technical,
it's like the main difference is in the programming hacks.
Entropy and off-chain labs, they really pushed us this time.
We had to spend several weeks of
death to to make some of the stuff they asked possible but uh we're super happy about it
because i think it's pushing defiant incentives in the right direction and i think that the main
thing i'm taking away from this is usually uh incentives are very targeted because you know
before like a few years ago you couldn't really
do like cross asset incentives right um and like on most programs we ran actually on all programs
we ran before it was uh you know allocate uh let's say a thousand arb to lending on this more for
market uh a thousand arb to lending on this other uh more for market and what would happen is the
the lps are smart,
right? They can look at APRs, they know how, like where they can make the most money.
And what they would do is they would basically arbitrage every opportunity. And you wouldn't
really have clear winners in assets or anything because people are just trying to make the most
money at a given time. And Matt, when he spoke, he said something very interesting. He said,
take your pick on any of the assets.
And this is super interesting because what we're doing here is not only are we targeting
different protocols, but when we target a protocol, we're targeting tens of like on
Morpho, we're targeting more than 10 different markets.
And so here, if the community trusts one asset more than the other, or wants to use one asset more than the other, they're never like, they never have to stop because they know that the more TVL is in this asset, the more incentives are going to flow to this asset.
And so you get a more native and like, like what you get is people who use the assets they want to use, not people who just look for the highest API and are going to stop all at once. And I think the last thing is embracing looping. Like it's the first time I
see a program so focused on looping. And I think it's super smart. First, because that's how the
protocols are meant to be used. And so that's what's going to keep the liquidity sticky. And
it's creating supply, not only it's creating demand on top of creating
supply. And it's much stickier as well, because, you know, once you loop enough, it takes a bit
more time to unwind your position. I know, for example, I'm a bit lazy. So when I'm looped,
I will take a bit more time to remove my position because I know I have to spend 30 minutes
with my ledger, just going back and forth. And that's one of the many things that's different.
Thanks, Baptiste. We really appreciate the kind words there and the explanation. And I want to
lean into that point around loop whatever you want, because that was something that I cared a
lot about when we were designing the program. Like I didn't want to give, we saw in the past
incentives programs run by Arbitrum that sometimes one protocol or asset
or whatever had a significant advantage versus another. And it wasn't a structural advantage
that was sustainable. Rather, it was just an advantage while the incentives were on. And we
really wanted to avoid that same outcome. So for instance, if you look at the way that like the
Morpho borrow rewards work, it's actually a variable rate shared across all of the assets. So it doesn't matter if
you loop SUSDE or Syrup or SUSDS from Sky, as long as it's one of the eligible assets,
you actually receive the same share. What that does at like a granular level is it makes sure
that the assets that are being looped with more liquidity are the ones that, you know, receive a greater share of that epoch's incentives.
But it also means that a user doesn't have some weird incentive to go loop the asset
they don't want to loop just because there's more incentives thrown at it.
We wanted to give the users maximum flexibility to, you know, do what they saw fit.
This is perfect. Super insightful. to do what they saw fit.
This is perfect. Super insightful.
To summarize what Matt and Baptiste both mentioned is Drip program is incentivizing real usage.
We target to incentivize not artificially creating a new market for the existing users.
But instead, we see an existing market for those activities being
looping and then we try to incentivize and bring the users on Arbitrum so that they can feel more
comfortable and build a friendly environment for them to do looping easily and what we are seeing
in drip program as well is it is really reflexive, meaning that
once we have passed the first epoch, which is two weeks time or four weeks time after two epochs,
the DRIP program managers are able to tweak the incentive allocation in the future so that
you look at the actual demand of each eligible asset and action so that we can adjust accordingly
to the allocation so from some of the other programs in the ecosystem it could be a set
in stone allocation for a certain period of time but drip what is different here is it is more
reflexive so if we see more borrowing activities or looping activities in the if assets more
allocation can potentially be allocated uh for this type of actions for the EVE asset part.
And conversely, if more actions are happening on the USD asset part, we can also route some
of the incentive to allocate to the USD part as well.
So that is the beauty of the program.
And now that we've talked a lot about the mechanism,
let's talk about what do we expect from Arbitrum perspective,
from the program designer perspective,
what do you think DRIP can fit into the overall growth of Arbitrum?
And what else can we look forward to apart from DRIP for Arbitrum?
I believe this question would be best for Pisa and Redact to answer,
given you guys are the Arbitrum experts in the panel here. Yeah, sure. Happy to start out there.
You know, what I'd say is like the goal for Arbitrum the past four years has been to win
DeFi. And we've worked really, really hard as a team to, you know, try to get
every major protocol and team building within the Arbitrum ecosystem. And like, even if we don't
have them building within the Arbitrum ecosystem, you know, Arbitrum is still the main bridge for
Hyperliquid. It's kind of becoming the central hub, you know, with the USDT zero integration.
So it's in a really great spot.
But right now I'd say the goal is even broader.
The goal isn't just to win DeFi.
The goal is to win all of finance.
And so Drip, to me, it fits perfectly with that
in that it makes Arbitrum very competitive
by offering these premium assets
with the top lending and borrowing markets,
starting with the first season of Drip here. But it also complements really well with where we're
going. So if Entropy wants to run a future season that's based on RWAs or something like that,
I think that could make a ton of sense. To the second part of the question with respect to what else can we
look forward to, you know, besides Drip, I think a lot of people are kind of aware of the Robinhood
partnership that we announced earlier. And I think this is like really key. One of the biggest
criticisms of Arbitrum has been, you know, this lack of distribution. I think this is why we've seen
base has done so well in having that type of Coinbase integration. And now, like the fact
that Offchain Labs has partnered, you know, more closely with the Robinhood team, we're effectively
working on closing that gap. So not only are we working more closely with the, you know, top team for equities for
users to get access to these assets, but they also have, you know, a beautiful interface and
they're really thinking about it really thoughtfully. So that's starting with tokenized
equities that they're already doing on Arbitrum 1 today, but opening that up more broadly to tokenized equities that
can actually be self-custodial that you can use within Robinhood chain. So what that really
translates to is if you're a DeFi protocol that's building on Arbitrum, you do have distribution
options that are going to be available to you.
And so now you can actually get closer to that vision of reaching, you know, millions of users.
And to us, like this is kind of the broader goal and kind of what we see is actually helping
crypto to, you know, cross the chasm to reach more folks.
And so the Drip program to me just like fits perfectly with that vision.
And that's why I'm excited about it.
Awesome. Thank you very much, Peter.
So what we are really excited about is not just on the DeFi side,
but also on the other verticals in the Arbitrum ecosystem.
Specifically, we can also look forward to
is the RWA sector.
RWA has been a heated competition
in the space right now.
We are seeing a lot of different
institutional asset managers
launching on Arbitrum.
First, we're seeing Bodo
from BlackRock and Securitize.
We're also seeing Franklin Templeton, WisdomTree,
Wellington Management, so on and so forth.
And the most exciting part is definitely the Robinhood chain,
because what they are planning to do or have already done is
they first tokenized some of their stocks on Arbitrum One, which includes lots of different
popular stocks that are available in their Robinhood app, but also some of the private equities like
OpenAI's private equities. So that is super cool as it can potentially increase the distribution of
these private shares that are not accessible by a lot of people in the space.
And what is very exciting in the future for Robinhood chain is that they're not just going
to launch a chain and then do a lot of DeFi-native stuff. What they're planning to do is to actually
adopt blockchain technology and move their whole trading or application infrastructure towards a blockchain ecosystem.
And that's what excites me most as well.
Yeah, just while we're on the RWA front,
like I think one interesting thing
that we're definitely going to be targeting
a little bit later in the first season is,
well, potentially is RWA loops.
So it's like a very new industry, I would say.
Like, I don't think there's more than probably 10 million TVL in these trades across all
chains.
But it is just interesting to see because I think it's one of the first times we're
seeing RWAs ported over into DeFi, or at least somewhat successfully ported over into
DeFi.
So I think we saw it like there was a Securitize Apollo fund that yields nine and a half, 10%,
something like that.
And we actually saw some activity for that fund on Morpho.
So we've definitely, and this is like maybe a little bit of alpha that I probably shouldn't
be sharing, but like been in deep talks about trying to get some of those trades done on
Arbitrum One, I guess just on that front, like as we started the exploration of what
went wrong, why were these RWAs only able to get low seven figs and total TVL?
Why was there not a lot of interest from crypto LPs and putting them on?
We're learning a lot about structural problems that need to be fixed.
But I would just put that on people's radar that we're actively working with some of these
issuers and lending markets to see if we can fix those problems and make Arbitrum the home
to that trade within the looping sector as well.
Awesome.
Let's get Reddick back on.
Can you hear me, Reddick?
While we are waiting for Reddick,
just a quick thing to point out,
another alpha for you guys is that we also have one of the eligible asset LWA from Season 1, which is the TH Bill by Theo Network.
In case anyone didn't see, it is part of the USD-based asset universe.
you know usd based asset universe so aside from a lot of the yield bearing stable coins so
th bill is also part of the stable coin or usd based asset universe it is backed by the delta
uh tokenized us treasury which is by issued by the wellington management company
redac uh can you hear me? Is Redak back on?
Yeah, sorry, I think I got disconnected now.
Perfect.
Yeah, I mean, I think it's very similar to what Peter mentioned in the past regarding the overall growth and how it fits into the strategy.
Like, we're very excited to be onboarding a lot of new projects, right?
large incentives is kind of a hidden truth that you know it does definitely attract a lot of
different a lot of different projects we're very excited to be onboarding many different projects
so just adding on to what Peter said it's great to be diversifying the project portfolio that we currently have
in the Arbitrum ecosystem and growing the pool, so offering different structured products
within DeFi and not just DeFi itself, but also finances as we're trying to capture that.
On what we're trying to do in the future, of course, that's still TBD and I'm sure Matt has
a lot of opinions on the future seasons that we're going to be running. But I think we're
going to reflect on the success of season one, which we're very expecting to do very well. I'm
very excited about all the different loops that will be available and definitely trying to push
for what products Arbitrum is doing very well at, such as RWAs and Stables, where really trying to push for what products Arbitrum is doing very well at,
such as RWAs and stables,
where really trying to push the total usage within DeFi as well.
So just adding a little bit more to what Peter said,
and yeah, very excited to what's coming.
Of course, it's very dependent on how Season 1 pans out,
but the beauty of this project is that
we're going to be reflecting on the performance of Drip and Season 1 itself and take it from there.
Absolutely. We're really excited to see how Season 1 unfolds. Baptiste, can you give us some sneak peek on what is your point of view or what is
your expectation on drip season one how would it perform in terms of different metrics using your
experiences from like other incentive program in the past yes of course so i mean in terms of metrics
um to be honest i have not done not done as much research as entropy has.
So I think Matt might be the best person.
But from a high level, I think we can expect a lot of looping.
I mean, that comes to no surprise to everyone.
But the main thing is what this looping will create, right?
This, in turn, will create a lot of native yield.
And that will make people stay.
One of the most important things, and I
think we mentioned it quite a bit, and Matt also said this,
like we're going to measure the success of the program
to how sticky the liquidity is six months after the program,
not to what we get to when we finish the ARB incentives.
And one of the things I also forgot to mention earlier,
and that's actually quite interesting too,
is even users that are not,
like we mentioned that looping could be hard
and that it was not potentially accessible to everyone.
But one of the things we're doing super well here as well
is we're actually working with concrete
to help smaller or less advanced
or people who don't want to spend as much time monitoring everything
basically delegate their tokens to Concrete
and let them manage their liquidity.
And hopefully they come in initially for the ARB rewards,
but quickly they'll realize that they're actually making a good native yield
and they can just leave their money there and they'll keep earning.
And if people make a lot of native yield,
we'll generate a lot of protocol fees.
And in turn, we're just going to create a positive flywheel
and create a sustainable ecosystem
that will in turn lead to staked liquidity
and more and more users.
And hopefully, of course, more TVL.
We're big differentiated yield source fans.
If you're an asset issuer and you think you have a differentiated yield source, meaning something other than just the T-bill rate, you should definitely hit us up because that's at the end of the day, I think what will set Arbitrum apart, having deep liquidity, large ability to access and menu large menu of assets to access that have
differentiated yield sources perfect and that as the designer of the program uh what is your
expectation of drip of course we need to be optimistically bullish about the program given
for the designer and what are the metrics that you suggest or in the future,
how can we track the growth, adoption, and the success of this program?
Tom, I think you should talk about that one.
I would love to, but Matt, do you want to go ahead to share a little bit about details here?
Sure. So Entropy will be standing up dashboards so that anyone in the crypto community can actually go and transparently track the quantitative metrics associated with DRIP.
So for instance, some stuff we care about. We care a lot about the access to markets that these assets have.
So we want to make sure that lending markets actually list the assets so that loopers can go to their choice.
They don't have to go to, say, Aave or have to go to Morpho in order to do it.
They can do it where they want to do it.
We care a lot about the actual parameters associated with these assets.
So we care that the lending markets are giving favorable terms and the ability to loop with the same level of leverage and everything else as any other
network, if not more, on Arbitrum One.
We care a lot about the ability to get in and out of the trade in size, so the DEX liquidity.
Unfortunately, that's not something we're incentivizing actively in Drip Season One,
but at the same time, we're paying close attention to it.
Of course, we care a lot about the market share growth of
our lending markets. So we want to see that the Aave instance on Arbitrum and that the Euler
instance on Arbitrum are growing versus the competitive ecosystem, meaning growing versus
Bass and Sonic and wherever else these lending markets might be live. And then finally, of
course, we care about the total market size or TVL on Arbitrum 1.
I purposely left that one for last. And even though it is an extremely important metric,
we think that when you just track TVL, it kind of sets a perverse incentive, right? Where it's like,
I just want to get as much TVL as possible. And sometimes that's actually at the expense
of sustainable TVL. In other words, sometimes it's possible to attract higher levels
of TVL while incentives are on at the expense of that TVL sticking around after the incentives are
over. So that's why I mentioned TVL as the last metric, just because we think some of those,
you know, more differentiated, more structural changes to the Arbitrum DeFi ecosystem will
actually end up with more retained TVL at
the end of the program, which is obviously the end goal, retained high quality TVL.
This is perfectly covered.
The reason why I'm forcing Matt to talk about this point is I'm testing him to see if he
has checked out our dashboard yet.
But of course, he has shared all the points perfectly.
And just a huge shout out is to the data team, Ali and Phil.
They have built a really amazing dashboard.
So the Drup Analytics program,
we're going to announce three different dashboards
in the coming two days so that everyone in the community,
the industry can track the adoption, the progress,
and the effectiveness of the program as well.
And for the three dashboards that we're launching, we will look at the program in two different
lenses. The first one is on the lending market perspective, how much of the market size has
grown, how much asset has been borrowed. And the other angle that we're looking into is the asset
base angle. So we look into particularly the ETH-based asset
and the USD-based assets,
how much it has grown on Arbitrum
and what is the market share of Arbitrum
compared to other networks as well.
So stay tuned.
A lot of the insights in the alpha will be unpacked
when we launch those dashboards.
Overall, Tom, just to hop in on that for a second, I think
one interesting thing that I've realized, like when doing a lot of research into different
incentives programs, but different ecosystems, arbitrage pass incentives programs, app incentives
programs is that it's a lot harder to evaluate the performance of an incentives program on an
ecosystem than it is on an app level. So it's like a very, maybe like in the weeds comment, because I think that maybe it wouldn't
be as important to most people.
But I just want to also shout out the data team at Entropy, because I think they've done
a very good job of thinking it through at a holistic level around the ecosystem rather
than at the app level.
And that that's a bit of an innovative approach, I guess, rather
than maybe ways that other incentive programs are more traditionally measured.
Thank you for the summary, Matt.
And as a summary, it is a super exciting day for Arbitrum.
We're launching DRIB, one of the long-awaited incentive programs,
really well thought out and designed, aimed to incentivize real usage on Arbitrum. The first
season is about looping USD and E-based assets. And the key idea here is that what we want to
incentivize is not matinee capital. And in the meantime, want to incentivize sustainable growth on Arbitrum and using incentive as a mean to onboard more DeFi protocols on Arbitrum as well.
And so far, we have successfully onboarded different DeFi protocols, blue chip DeFi assets as well, including Syrup, USDC, Morpho, Euler, Resolve Protocols, RepStick, USR, and RLP, so on and so forth.
So there's a lot of different exciting movements that are happening on Arbitrum, and that's why it makes DeFi really exciting on Arbitrum in the upcoming months as well.
And now that we have covered a lot of different parts about Drip, we're going to open the floor
for any questions from the audiences.
So if you have any question, feel free to raise your hand
and to request to speak in our preview.
Anyone about Drip, it's a perfect opportunity okay we have one noah i have approved you to speak can you hear us
hello hello hey noah hey what's going on guys guys? Can you hear me? Yep, perfect. Yeah, I'm excited to see this. Quite a bit of my net worth on the Arbitrum Layer 2, and I was excited to see that Aave Lending was part of the questions I had was how you guys came up with the APRs for each respective protocol,
as well as why you guys chose not to include the Arbitrum token or WBTC, for example, in the DRIP program.
Thank you, Noah. Matt, do you want to take this one?
For sure. Coming up with the incentivization levels per lending market was something that is like a near impossible task.
That's one of the main reasons that we've decided to do this four-week discovery phase where, you know, we started off with a, I guess you could call it like a guesstimate of what a proper incentivization level was per lending market that we could then work off of when we got to the actual performance
phase so we can see how different lending markets are performing in order to justify the allocations
more holistically. So that's all just to say that the actual total amount of incentives that's
driven to any given lending market throughout the entirety of the season or the entirety of the 20
weeks is likely to vary from the starting levels that we see today.
When you incentivize something like Silo, which had extremely low TVL in the vault that we're
incentivizing on Arbitrum 1, like close to zero at the start of the program, it's obviously,
it requires extremely lower amounts of incentives compared to incentivizing an asset like
Ethonave with high hundreds of millions in TVL. For context, we are incentivizing liquidity already on Arbitrum as well. So like,
let's say you already just had ETH supplied in AVE, you're still eligible for the incentives.
When it came to the target asset list and like, why not WBTC? You know, there's probably a bunch
more high quality assets that could have been included but weren't we wanted to stay really targeted so we wanted to be able to measure the outcomes
of the program and we saw that with these yield bearing tokens it was a much more
measurable asset it was a more it was something that we could we wouldn't spray the incentives
too far across the ecosystem so that we weren't able to be as purposeful with
what's working, what's not working. And I think when you start to get into uncorrelated assets,
it starts to become a lot harder. So that's why we kind of have the ETH campaigns very separate
from the USD campaigns so that that way we could see that with more clarity. Additionally,
why ETH and USD and not Bitcoin? We just aren't
sure that the yield sources on the Bitcoin assets today are necessarily sustainable.
But that's not to say that in the future, we won't also do something that's more focused on
Bitcoin assets. We just thought that we had to start somewhere and that this was in an opinionated
manner where we thought we were going to have the best bang for our buck.
Yeah, that makes sense.
And I appreciate the answer, Matt.
I'm curious, though, still, why not the Arbitrum token?
It's the native token.
It's not the gas token, but it's the native token of the layer two.
And I suppose it would make sense to have that be part of the program.
Maybe I'm missing something, though.
So candidly, we don't see so much appetite for borrowing against the ARB token or borrowing the ARB token today,
specifically borrowing the ARB token more than anything else, but also borrowing against it.
It's not maybe the biggest market.
So we wanted to make sure the things that we were doing
weren't just going to be available on Arbitrum,
and then people were going to bring the money in
just for the period of time incentives were on,
all back to this retained TVL as our primary goal,
making DeFi structurally better than it is today on Arbitrum 1.
So yeah, we just weren't sure that that specific utility
would have that same result.
I guess I would just add that within the Entropy company, we think a lot about utility on that token. But maybe
just we have other ideas compared to using it as a yield-bearing asset or as yield-bearing collateral.
Yeah, that's actually understandable. And so the token claims will happen automatically on the
dashboard. Do we need to do anything on the DRIB
website? Or if we're already lending on Aave, borrowing on Aave, that's good enough?
That's a great question. So you are required to actually go claim the ARB tokens or claim
your rewards through the arbitramdrip.com front end. Rewards don't expire anytime soon. So they'll
be live for at least three months after the end of
the season meaning pretty much you know upwards of six months from now but at the same time it
is important that everyone knows that and we can make sure to highlight that in future communications
too because it's a good flag we should make sure everybody knows that and last question how long
do you plan on this season lasting for and are you able to give us any sneak peeks into season two?
Yeah, so this season is set to last for 10 epochs or 20 weeks from today.
When it comes to the actual distribution, funnily enough, this is kind of the lightest epoch.
So we're planning on, you know, i guess giving significantly more rewards come four five
six seven eight weeks from now so i think that's something that maybe we haven't highlighted enough
either but yeah moral of the story uh this is kind of just the start and for season two it's
definitely still in the works i think that peter gave a little bit of alpha on this uh earlier in
the call just in the front that like rwas is something that's at top of mind for us additionally we care a lot about our perps and dex ecosystem so we'll see if there's stuff there
but yeah like overall i'll just leave it at it's still in in the works thank you matt and
thank you very much noah for the amazing questions as a user these are really good points to bring up to understand a little bit more on
when we are distributing the incentive, why we're not including some of the popular asset in this
space. Thank you very much, Noah, for bringing that up. And we are really close to ending our
Twitter space. But before we end it, I would love to have some hot text from everyone in the speaker panel here to
understand a little bit better.
From your point of view, which are the most promising asset or protocols that will be
the most popular or having the most demand throughout drip seasons?
Matt, do you want to start fast?
Oh, you're asking a tough question.
You're getting me in trouble with asset issue.
Like everybody.
I'm super excited to see USDA's growth
because it's already, even without any incentives being on,
just been growing at such a exponentially fast pace.
And I'm very hopeful that Syrup USD
and that Athena are assets that we see a lot.
Like those are huge, you know, assets.
Those are on their own just giant assets that have a lot of activity on other ecosystems.
So I'm really hoping that we can port some of that over.
But I'm definitely not keeping any of the LRTs or Spark or anybody else out of the race as well.
We'll have to see how it plays out.
Awesome. What about you peter
i think matt covered it well uh well look at that gotcha what were you redneck and baptiste
yeah likewise i think uh might cover it pretty comprehensively.
I don't know if Abhishek has any other thoughts.
No, no, no. I'm good. I'll leave it at that.
Awesome. I think we have a really high quality list of eligible USD and ETH-based assets.
So I'm expecting most of the LRTs, LSTs, or even liquidity ETH token like GM ETH tokens will continue to grow aggressively on Arbitrum 1 given the incentives going on.
So hopefully we can see a lot of interesting and promising stats that will be coming out
from Entropy's account and from Arbitrum accounts in the coming weeks. Overall,
from Entropy's account and from Arbitrum accounts in the coming weeks.
Overall, thank you very much for joining our space.
Thank you, Matt, Pisa, Redak, and Baptiste for joining and sharing a lot of insights.
Hope to see you guys soon, and we'll be hosting more Twitter space in the future
with different NSAID issuers, protocols to talk more about Drip.
Stay tuned and talk to you guys soon.
Bye-bye.
Thanks, folks. Thanks a lot guys thank you bye
