Trader Joe Proposes $1.83 Million ARB Sponsorship for Arbitrum DAO

By 0xGorki 09/26/23 7:40 AM

Trader Joe, the leading decentralized exchange (DEX) on the Avalanche blockchain, has submitted a groundbreaking sponsorship proposal to Arbitrum DAO, seeking a generous sum of $1.83 million worth of ARB tokens. This funding, if approved, will be channeled into several key areas aimed at fostering growth and innovation within the Arbitrum ecosystem.

The Ambitious Goals of Trader Joe’s Funding Proposal

Trader Joe’s proposal outlines a clear roadmap for utilizing the $1.83 million ARB sponsorship, with a focus on the following objectives:

Supporting Arbitrum Developers: A significant portion of the grant will be directed towards aiding and incentivizing developers actively working on projects within the Arbitrum network.
Attracting Multichain-Compatible Developers: Trader Joe aims to draw developers from various multichain-compatible platforms to contribute to the burgeoning Arbitrum ecosystem, fostering interoperability and collaboration.
Onboarding New Developers: The proposal aims to attract new developers into the Arbitrum ecosystem, thereby expanding its talent pool and spurring innovation.
Enhancing User Experience: A portion of the grant will be dedicated to improving the overall user experience within the Arbitrum protocol, making it more accessible and user-friendly.

Strategic Allocation of Funds

The $1.83 million ARB grant will be thoughtfully distributed to maximize its impact. Trader Joe’s execution strategy involves dividing the funds across various initiatives and liquidity mining incentives over a span of 84 days, equivalent to 12 weeks. These incentives will be disbursed through a unique approach exclusive to the Trader Joe platform, emphasizing efficiency, sustainability, and accessibility.

The distribution breakdown is as follows:

Market Maker Incentives: 68.85%
Auto-Pool Yield Farms: 21.31%
New to Arbitrum Builder Allocation (Market Maker Incentives): 9.84%

A Deeper Look into the Distribution Phases

The allocation strategy further divides the distribution across three phases, each with a specific focus:

Phase 1: 34.70%
Phase 2: 34.70%
Phase 3: 30.60%

This phased approach ensures a consistent and balanced distribution of incentives throughout the grant period, promoting a fair and sustainable growth trajectory.

Liquidity Book Rewards Program

Trader Joe’s proposal introduces the Liquidity Book Rewards program, a novel incentive mechanism designed to enhance liquidity provider efficiency and trading fee earnings. This program incorporates a competitive scoring system called the ‘MakerScore,’ incentivizing liquidity providers to manage their assets efficiently. A higher MakerScore translates to a larger portion of available rewards.

The program spans 14-day epochs, with each phase containing two epochs. Rewards are distributed over seven days, vested through smart contracts, and can be claimed directly from the liquidity pool page.

Trader Joe’s Growing Influence on Arbitrum

Trader Joe’s impact on the Arbitrum network is evident in its active participation since December 2022. The DEX has reached an impressive $59 million USD Total Value Locked (TVL) on Arbitrum, with a substantial user base of 473,000 wallets on-chain.

In related developments, Arbitrum DAO recently recovered 69.4 ARB tokens (equivalent to $56.5 million USD) from unclaimed tokens resulting from an airdrop in March. This asset recovery has significantly bolstered Arbitrum DAO’s treasury, now valued at approximately 3.59 billion ARB, or roughly $2.92 billion USD at current exchange rates.

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