Thread by @blockworksres

1/ Starting in November 2023, @arbitrum's Short-Term Incentive Program (STIP) distributed around 71M ARB to boost usage and generated 6149.3 ETH in return.

In this analysis, we aimed to assess the STIP’s overall effect on the network by examining its impact on sequencer revenue.

2/ The goal of the STIP was to attract users and grow activity to the recipient protocols and the broader ecosystem. An increase in sequencer revenue would indicate a successful program, where the costs of ARB incentives are at least partially offset by sequencer revenue in ETH.

3/ We employed the Synthetic Control method, a statistical technique that estimates causal effects by creating an artificial time series from a control group including other L2 networks to account for external market trends and assess the isolated impact of STIP on Arbitrum.

4/ To evaluate the total cumulative impact, we calculate the area under the curve, which totals $15.2M. Comparing this to the total revenue of $35.1M during the period, we conclude that 43% of the revenue is attributable to the STIP.

5/ However, the total spent on the STIP was 71M ARB, equating to $85.2M at an average price of $1.2 per ARB.

The loss of $60M is considerable and these insights should inform future programs to minimize losses and maximize the effectiveness of ARB spending.

6/ In separate analyses, we looked at STIP and its impact on the perp DEX, spot DEX, and yield aggregator verticals with respect to key metrics.

You can find these reports starting here in our delegate communications thread:

forum.arbitrum.foundation/t/stip-analysi…

7/ To view the general STIP analysis on sequencer revenues and its methodology by @GoldDefi, please visit this post.

forum.arbitrum.foundation/t/stip-analysi…