What is this about?

The discussion is centered on a proposal by the Arbitrum STIP Inclusion Working Group to backfund approved but unfunded proposals from the first STIP, with the goal of increasing the total budget from 21.4M to 71.4M ARB and the number of funded projects to 56. This initiative is designed to support emerging builders, promote diversity, and uphold the values of inclusion within the Arbitrum ecosystem. It references AIP-9 and suggests using DAO-owned ARB for incentives while adhering to the timelines and systems of STIP 1, including KYC and reporting requirements. The proposal has been developed with input from various stakeholders and seeks to address concerns about postponing funding in favor of a second round of voting.

How is the community reacting?

The community's response is mixed. Many support the backfunding initiative, highlighting the importance of diversity and inclusivity in the Arbitrum ecosystem and the need to maintain the integrity of the STIP. They also see backfunding as a way to gather essential data for future STIP analysis. However, there are concerns about the market impact of releasing an additional 20M+ ARB and the fairness of focusing only on round 1 applicants, potentially excluding new candidates. Some community members suggest a more flexible approach to allow all deserving projects a chance at funding. The discussion also touches on whether the backfunding proposal would limit or eliminate the possibility of a second round of funding, which some view as more inclusive and meritorious.

Shackler criticizes the idea that certain protocols, like Mux, should be considered as the backbone of Arbitrum derivatives volume, arguing that Mux's TVL and volume are not significant enough to warrant such status and that it should not prevent other exchanges from receiving grants¹³⁰.

Realdumbird raises concerns about the risk of Sybil attacks in the context of STIP incentives and individual protocol proposal voting. They suggest that without Sybil checks by the DAO, bundling proposals could align interests and reduce the likelihood of such attacks. They also note evidence of self-dealing in the first round of STIP and propose that projects should be disqualified based on objective criteria related to security and trust¹³¹.

Plutus has voted against the proposed backfunding approach, citing several reasons for their decision¹³². They argue that the initial voting decisions were made with the understanding of a possible Round 2 extension, and introducing backfunding now could have altered those outcomes. They also mention that protocols tailored their proposals to the initial rules, and changing the approach could negate those efforts. Plutus expresses a preference for reviewing a detailed proposal for Round 2 and its relationship with backfunding before committing DAO funds, especially considering the substantial amount of over 20 million ARB involved. They raise concerns about the potential for proposals to compete for the same resources and the risk of excluding protocols anticipating a second round. They advocate for a system that promotes merit and inclusivity through a separate second STIP round with clear rules and individual voting for each proposal.

The governance team of L2BEAT, which includes Krst and Sinkas, initially had reservations about a proposal discussed during a temp-check. However, after further research and consideration, they have found that their concerns have been addressed. They acknowledge the active efforts of the proposal's team in advancing a STIP Round 2 and have decided to support the proposal in the upcoming on-chain vote¹³³.

Why this is positive?

• Supports emerging builders and enhances diversity within the Arbitrum ecosystem.
• Aligns with community values of diversity and neutrality.
• Provides critical data for future STIP analysis.
• Maintains the integrity of the STIP by addressing the skewed sample size.
• Avoids delays and reduces the burden on delegates.
• Encourages innovation and competition by funding a variety of projects.
• Demonstrates the ecosystem's commitment to neutrality and historical performance.

Why this is negative?

• Potential market impact from the release of an additional 20M+ ARB.
• Concerns about sidelining new candidates who were preparing for a second round.
• Risk of setting a bad precedent by changing parameters post-vote.
• Possibility of undermining the integrity of the previous STIP vote.
• Concerns about the quality of proposals in the backfund bundle and the potential for Sybil-attack strategies.
• Evidence of self-dealing in the first round of STIP, which raises trust issues.

Next actions

The DAO vote on the non-constitutional funding AIP ended on November 24th, with the results being final. A 3-day waiting period was scheduled before initiating on-chain transactions to disburse ARB. Community members are encouraged to review the draft proposal and engage in ongoing discussions to refine the proposal and address concerns.