Proposal: Add 1.93M Airdropped $ARB Tokens to Protocol-Owned Liquidity (POL) to Support Growing Trading Demand

Proposal
1

Background

MUX was honored to be one of the Arbitrum DAO airdrop recipients, and the 1.93M $ARB tokens reflect MUX’s dedication to the ecosystem. Therefore, it is crucial to effectively utilize the airdrop to boost MUX’s growth and contribute to the Arbitrum ecosystem.

After launching the $ARB market in March, MUX has witnessed a notable increase in trading volume and TVL. However, we are currently running into liquidity constraints to keep up with market demand. Increasing MUXLP pool TVL is our #1 priority to keep up with user demand.

The community discussions about the $ARB airdrop utilization can be mainly summarized into two directions:

  1. Use the $ARB airdrop as trading incentives
  2. Use the $ARB airdrop to help increase MUXLP pool TVL.

#1 is less of a problem today. All major markets frequently reach open interest caps and traders frequently don’t have enough liquidity to trade.

Proposal

MUX contributors want to propose adding the 1.93M $ARB airdrop to the Protocol-Owned-Liquidity for the following reasons:

  1. Increasing MUXLP pool TVL is essential for the protocol growth flywheel: Higher TVL → Higher Trading Volume → Higher Protocol Income → Faster Protocol Growth.
  2. Adding $ARB directly to the POL is the most straightforward approach to increase TVL.
  3. Despite having a 50-70% APR in real yield, the MUXLP pool continues to face headwinds in growing liquidity. Therefore, we believe increasing POL is a much more effective way to grow our pool size long term vs adding $ARB incentives to our pool.
  4. The $ARB airdrop was granted to the MUX DAO, the governor of MUX POL. Since increasing POL can help to grow governance token holders’ income share, adding the airdrop to POL aligns the interest between protocol governors and protocol growth.
  5. By holding the airdropped $ARB tokens in the POL, MUX can become a more prominent delegated governor as a protocol in the Arbitrum ecosystem.

Next Steps

  • Community discussion surrounding this proposal
  • Community members vote to approve/disapprove this proposal
3 Likes
2

I believe one of the most important thing to attract more TVL is integrating with other vaults. However MuxLP’s current omni-chain design making things hard for protocols who want to build an autameted vault or DN vault. I suggest to concern this as top priority.

Integrating with LayerZero for our omnichain liquidity might solve our problem and also give more exposure to Mux.

Getting back to context. I think APR or incentives aren’t the problem to get more liquidity but hedging it seems more problematic rn from protocols or users.

Still supporting this idea to adding DAO airdroped ARB as POL to the MuxLP but i think some portion should be used for trading competition at least to attract new users.

New users would came to farm that ARB and might stay later when they see how Mux and it’s aggregators works.

3 Likes
3

Updated Proposal: Allocate 50,000 $ARB From the Airdrop for the 1st Trading Competition and Reserve the Remaining for Future Plans

Background

MUX contributors previously proposed adding 1.93M airdropped $ARB tokens to protocol-owned liquidity (POL) to support growing trading demand and relieve liquidity shortage.

However, based on community feedback, the previous plan wouldn’t be practical for increasing MUX’s marketing exposure. Also, since the MUXLP pool size had risen from $25M when the proposal was created to almost $33M, the liquidity shortage issue isn’t as urgent anymore.

Since the airdropped $ARB emblems a protocol’s contribution and dedication to the Arbitrum ecosystem, the tokens must be thoughtfully utilized to boost protocol and ecosystem growth.

Proposal

Based on community suggestions, MUX contributors plan to utilize the airdropped $ARB in various campaigns to help increase protocol influence. However, to avoid creating unnecessary selling pressure for $ARB, the portion of $ARB incentives allocated for each campaign should be relatively conservative. In addition, MUX will provide $MUX token rewards to pair with the $ARB incentives.

For the first campaign, MUX contributors propose to allocate 50,000 airdropped $ARB for the first MUX trading competition and reserve the remaining for future plans and discussions. MUX will also supply $MUX tokens as rewards; the total reward pool of the first trading competition is expected to be $100,000, and the prizes will be distributed in 50% $ARB and 50% $MUX.

If the allocated 50,000 $ARB tokens aren’t fully utilized after the trading competition ends, the remaining will return to the reserve. In addition, the reward $MUX tokens come from previous campaigns’ unused airdrop reservations that can be reimbursed by the previously-approved marketing budget and won’t dilute the total supply.

The unused $ARB airdrop tokens will remain reserved unless further discussions and proposals occur in the community.

MUX contributors will share a more detailed structure of the trading competition in the community for further discussions.

Next Steps

  • Community discussion surrounding this proposal
  • Community members vote to approve/disapprove this two proposal
2 Likes
4

Really happy to see MUX contributors taking in stakeholder feedback to revise initial proposal.

Also happy to see MUX contributors signalling DAO airdrop will be used conservatively and diversely to spur activity and growth. I think this will be to our advantage down the line as it enables us to acquire key intel on other DAO strategies and their performances.

Fully in support of current proposal.

3 Likes
5

Proposal Update:

Changed

“In addition, the reward $MUX tokens come from previous campaigns’ unused airdrop reservations and won’t dilute the total supply.”

to

“In addition, the reward $MUX tokens come from previous campaigns’ unused airdrop reservations that can be reimbursed by the previously-approved marketing budget and won’t dilute the total supply.”

for budget clarity purposes. Reference: Allocating the Annual Marketing Budget From POL

2 Likes
6

Since the feedback on the proposal regarding allocating 50,000 $ARB for the trading contest has been mostly positive in Discord, MUX contributors have opened the voting process on Snapshot for next steps.

https://snapshot.org/#/muxvote.eth/proposal/0xf5cfa5e65122919f5e44ddabf881fd3f5f5af029c13e413943b6cba360034332

Due to unknown issues currently occurring on Snapshot, the proposal content had to be shortened and the options has been substituted into 1 = For, 2 = Against. Sorry about this. But the original forum discussion link is attached for clarity.

1 Like