The ARB Milkshake Theory

Beethoven X
Balancer Protocol
Published in
4 min readJun 21, 2024

What happens when the Balancer network coordinates a consortium of protocols with ARB grants, introduces new AMM primitives, and supplies the whole ecosystem with a vote-based ARB boost?

Liquidity gets slurped up.

TLDR:

  • The Balancer DAO’s ARB STIP package will pay out 50k ARB per week for 12 weeks based on veBAL voting for pools on Arbitrum.
  • Pools have a boost factor, with ARB distributed to pools based on their relative boosted weight.
  • Boost includes a fixed boost granted to incentive Yield-bearing initiatives and a variable boost based on the efficiency of the pool (fees/emissions)
  • The Balancer DAO has coordinated with external protocols that will also deploy their own ARB grants on top of their respective liquidity pool.
  • The primary objective of the Balancer STIP program is to expand the presence of yield-bearing liquidity on Arbitrum.
  • Balancer will introduce novel Yield Bearing AMM tech to Arbitrum, such as Elliptical Concentrated Liquidity (Built by Gyroscope)

STIP Details

This STIP will distribute 50k ARB every week for the next 12 weeks in relation to the voting incentives that external protocols place on the veBAL voting markets, plus an underlying boost.

veBAL Vote Market

For any protocol / DAO that receives votes on their pool via veBAL voting markets, the Balancer DAO will boost pools with ARB incentives in ratios that depend on an underlying boost factor. This means that on top of the portion of BAL incentives (and Aura if placed on vlAURA markets) protocols participating in this voting market receive, the Balancer DAO will emit additional ARB Liquidity Mining incentives.

How is the boost calculated?

The boost is based on 2 factors.

  1. A fixed boost granted to incentivize Yield Bearing initiatives
  2. A variable boost based on the efficiency of the pool (fees/emissions)

To calculate the total boost the following equation is used:

Total Boost = Fixed Boost + Variable Boost — 1

Fixed Boost

100% Yield Bearing Pools (1.5x)

  • Yield Bearing Tokens that pair their asset with another YB asse such as wstETH, sDAI, or sFRAX (or another partner LST)

Yield Bearing Token Mintable on Arbitrum (1.75x)

  • To encourage a more native LST environment on Arbitrum, Balancer will offer a 1.75x boost to projects that enable native minting/burning of their LST on Arbitrum.

Major Yield Bearing marketing campaign (2x)

  • In cases where everything is aligning and we have a partner who is also committed, we may consider providing a short-term high boost or fixed incentives to help get things started.

Variable Boost (1–3x)

  • Variable Boost = Fees earned/value of BAL emitted + 1
  • The variable boost is capped at 3 and has a minimum of 1.

Initial Partnerships

The Balancer STIP program’s primary objective is to expand yield-bearing liquidity on Arbitrum and introduce novel Yield-bearing AMM tech, such as Elliptical Concentrated Liquidity Pools (Built by Gyroscope).

As such. for the next 12 weeks, the Balancer DEX will showcase a cross-pollination between Yield-Bearing technology, ARB grants, and Arbitrum protocols.

To kick things off, the program will launch with the following launch partners:

EtherFi | Gyroscope | Lido

EtherFi is the leading Liquid Restaking Token protocol with over $6.13B in TVL. In collaboration with Gyroscope and Lido, the protocol has deployed a weETH | wstETH E-CLP position to optimize LP capital efficiency without requiring the constant management of tick parameters. This LRT | LST pool will serve as a focal liquidity source for expanding LRT liquidity on Arbitrum.

Pool Features:

  • 100% Yield Bearing (LRT | LST )
  • Plugged into veBAL incentive flywheel (BAL)
  • Plugged into vlAURA incentive flywheel (AURA)
  • Receiving a 1.5x Yield Bearing Pools ARB boost
  • Receiving Ether Fi ARB Grant
  • Receiving Gyroscope ARB grant

Kelp DAO

rsETH is a liquid restaking token backed by ETH, stETH, sfrxETH, and ETHx, with over $1b in liquidity staked within the rsETH token. This rsETH | wETH LP will also serve as a focal liquidity source for expanding LRT liquidity on Arbitrum.

Pool Features:

  • Plugged into veBAL incentive flywheel (BAL)
  • Plugged into vlAURA incentive flywheel (AURA)
  • Receiving a 1.5x Yield Bearing Pools ARB boost
  • Receiving Kelp DAO ARB Grant

How can you join?

  1. Configure a pool
  2. Apply for an Arbitrum gauge
  3. Place a voting incentive / vote on any veBAL voting market.

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