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My background is in sales and marketing, so I was intrigued when I read this proposal. I think it’s great and a nice, fresh approach brought into this space. Here are my thoughts:
I think this proposal addresses the issue of bringing new users (non-crypto) on-chain. Since you are using channels like Google Ads, etc., I think this is the awesome. To incentivize crypto projects to go for non-crypto users.
I like that the whole proposal is very metric-driven. I think this is the only way to approach this. In case the proposal would pass, I expect strict metrics for all participating projects.
I do have a few questions:
From the project perspective, this initiative makes sense. They get funds (budget) to run these campaigns. The issue might be that currently, projects have small marketing teams (sometimes even no marketing team at all). Who will pick up the workload? It might be an issue since the project would have to hire new people. What would be a solution here? Offer services by outside marketing agency?
You mentioned you contacted 40 protocols to fill out the survey, and 19 filled the survey. Which protocols shared interest? Did you pitch them this idea already? What was the feedback? Can you name the protocols that showed interest?
With a $3M budget, you expect to serve 10-20 projects. So, a $150k-$300k budget per project. How long would the experiment take before you could do the analysis and show results?
Thanks for your proposal. It helps to answer a part of the “how to get more users” question that was not dealt with by the DAO yet.
I have a few questions:
When the DAO is trying to provide an answer to “how to get more users”, IMO it does not make sense to tackle only one part of the issue. As you mentioned that the proposals are complimentary, why not present it together and provide a complete answer to it?
Without having this “holistic” approach, as a standalone proposal, it helps to get more insight and see how this approach would work, but does not solves the issue.
By laying down the metrics like this, what happens when 2 protocols of the same category, but with different sizes, apply to the program? Larger protocols would get an advantage in the way the KPIs are presented:
For example, for DeFi, I would suggest to introduce a % increase instead of only absolute numbers. It is usually the smaller and newer protocols that need more help with user acquisition.
Still regarding this point:
It would be interesting to see a more diverse set of actors judging this, to provide additional context regarding Arbitrum and Web3 in general.
Regarding this point:
As it is today, it is a little bit the other way around, no? If the protocols, by their own means (including money), achieve the KPIs they proposed, then the “Incentive” is paid (looks more like a rebate system). If, by our survey, they don’t do it, or don’t know how to measure, how can them apply for the incentive program with correct/realistic KPIs? How is the program helping them to enhance their strategies? What I see here is a well-defined tracking proposal that will reward protocols that perform well by themselves.
On LTIPP, for example, there were teams (facilitators) helping the protocols to define/enhance their proposals. Is this going to happen here?
Thanks in advance!
@Tekr0x.eth thanks for your comments! Answering your questions:
Most teams already have team members responsible for growth / community tasks. We expect most of the workload to be done by teams, however, an external help from marketing specialist(s) will be needed. We’re yet to decide how to structure this and talks with teams to understand their capacities are in progress.
We didn’t pitch it but all projects that have responded to our survey were positive about the idea - both big protocols as well as smaller ones. Bottom line here is that conducting an open call might be difficult as responsiveness varies significantly. Can’t share the names as it’s too early and we only outreached to gather insights - these are not final choices.
The whole campaign would take up to 3 months but we expect to have first shareable insights / results after 1 month
@jameskbh thanks for your comments! Please find answers beow:
This proposal is a part of this ‘holistic’ approach you mentioned - meaning we had numerous calls and discussions within ARB Liquidity Incentives group within the last few months. There are currently 3-4 proposals being worked on, each tackling a specific challenge. Posting all of them as a single proposal would overcomplicate things and make decision-making much harder for Delegates.
Thanks for the idea! The bottom line of this proposal is to understand ROI behind user acquisition - both for protocols as well as for the DAO that pays for it. That said, we will experiment with projects of different size.
Yes, we’re now discussing about including external specialists into the program.
Great catch @jameskbh! Category KPIs we proposed are usually already being measured - many of them were covered in LTIPP. What is not measured is CAC, LTV & ROI from campaigns and the goal is that by the end of the program, they’re measured by projects too. Our role is to cover this measurement.
Hi!
Thanks for the proposal.
Something to consider in your analysis is that during the STIP and LTIPP, the recipients of the incentives were not allowed to use those funds for marketing campaigns. Instead, the ARB had to go directly to the users. This should explain why they didn’t engage in off-chain marketing.
I think it’s a good idea to try off-chain campaigns targeting new users. I have the following questions:
Thanks for the proposal!
Our team also has some concerns regarding the proposed budget. It seems that applicants determine the portion of the budget they will use. How will you ensure that the requested amounts are not excessive? Is there a maximum allocation allowed per protocol?
Perhaps setting a fixed number of beneficiaries, along with a maximum budget allocation per applicant, could provide greater clarity and structure to the budget.
We also believe that starting with a smaller number of beneficiaries would help assess the success of this proposal with a lower budget before scaling up to support more dApps and protocols.
Lastly, it would be valuable if the Patterns team were not the sole evaluators of all applications. Involving community members with marketing expertise in this process could bring additional perspectives and strengthen the evaluation process.
Hey @pedrob, thanks for questions!
Yes, we have a similar view on this - marketing campaigns weren’t covered in STIP / LTIPP so most protocols didn’t run them. However, this doesn’t mean that they’re ineffective.
Assuming a $50k budget per project for a month, $3m would be enough to test this approach with 4-5 projects per category - 2 bigger ones, 3 medium & smaller ones (20 overall). This is enough to gather ROI insights across the whole ecosystem. We’re discussing increasing this number to speed up the whole process, however, we don’t want to overspend as (in my opinion) it happened in LTIPP.
Measurement of new users will happen through Patterns tool (first interaction with dApp / ecosystem) and will be cross-checked with off-chain trackers. Since most of the funds will not be disbursed directly at users, we expect no mercenary / farming behavior - meaning regular average user retention. Some of the KPIs are already focused on retention (eg. minimizing outflow of funds through bridges).
That exactly how we’re approaching this Although mid-term metrics will also be available.
@Argonaut - good points! Thanks.
You’re right, we’re going to introduce a budget limit per project - although please note that we’re going to choose projects based on their KPI <> budget ratio. The higher the budget, the higher KPIs need to be delivered and if they’re delivered partially - the funds are disbursed partially too. This requires projects to set design these budgets reasonably.
Yes, we’re already discussing engaging an external specialist or someone from the Arbitrum Ecosystem to validate these strategies with us
The following reflects the views of the Lampros DAO governance team, composed of Chain_L (@Blueweb), @Euphoria, and Hirangi Pandya (@Nyx), based on our combined research, analysis, and ideation.
Thank you for putting forward this detailed proposal.
This proposal takes an interesting approach to tackling user acquisition by combining off-chain marketing with measurable on-chain incentives. The performance-based funding model ensures that funds are used efficiently, and the focus on tracking CAC and LTV is a necessary shift for long-term ecosystem growth.
Similar problems were highlighted in our LTIPP Research Bounty reports, which also indicate that short-term user boosts from reward increases show that rewards alone are insufficient to sustain long-term user engagement.
There are a few areas where further clarification would help understand how this will be implemented effectively.
Since funding is directly linked to KPI achievements, how will the Patterns team verify the accuracy of these metrics? Will there be measures in place to prevent projects from inflating their numbers artificially? For instance, certain metrics like DAU/MAU ratios or on-chain interactions could be gamed through non-organic activity.
If selection is based purely on KPI-to-budget efficiency, larger protocols with existing user bases may have a significant advantage over newer projects. We suggest incorporating percentage-based growth metrics instead of absolute numbers to ensure fair participation for smaller dApps. Ensuring a mix of both well-established and emerging protocols could provide deeper insights into what works best for different segments of the ecosystem.
We echo with other delegates as many early-stage projects lack dedicated marketing teams, will this program offer any guidance or resources to help them structure their campaigns effectively? While providing funding is crucial, teams with limited marketing experience may struggle to execute high-ROI campaigns.
In LTIPP, application advisors assisted projects in refining their proposals. Will there be a similar support mechanism here to ensure that protocols make the most of the funding they receive?
Who are the team members from Patterns that will be assessing these applications? Can you please share the evaluation process which will be used to assess the applications?
Overall, this proposal presents a structured and results-oriented framework for funding user acquisition in Arbitrum, which is a much-needed evolution from previous broad-based incentive models. However, ensuring that KPIs are not manipulated, tracking long-term retention, and supporting smaller teams will be critical factors in making this a truly impactful program.
Looking forward to hearing more details on these aspects.
I see potential issue here. Giving a project $150k-$300k budget and give them 3 months window to use. It not enough time. Finding and optimizing channels takes time. A, B, C… testing. Adjusting. Optimizing.
Since this will be the first time for many of these projects to try User Acquisition strategy I would not ask them to rush it. It could results in burning budget on channel that doesn’t work. And project might just do that since its not “their” money, but from DAO. What would be a possible solution here?
We appreciate the initiative and overall support of the focus on improving user acquisition through both on-chain and off-chain strategies. Encouraging protocols to run simultaneous off-chain marketing campaigns is indeed a valuable approach to match on-chain incentives.
However, one key aspect that should be explored further is why many protocols are not already implementing these off-chain strategies. It could be that they lack the expertise, resources, or guidance to execute such campaigns effectively. Simply requiring projects to define KPIs, budgets, and measurement tools (sections 1.2, 1.3, and 1.4) in their applications without addressing potential blockers might not yield the best results. Understanding these limitations could help structure a more effective support system rather than just mandating compliance.
For instance:
Given the $3M budget, we believe a portion should be allocated to actively assisting teams in overcoming these challenges, rather than structuring the program in a way that assumes compliance will automatically lead to success. By helping protocols address their specific gaps—whether educational, strategic, or financial—the initiative could achieve much stronger and more sustainable results.
Do you think these considerations could be added to the proposed framework?
Hey @Euphoria, thanks for your thoughts, I really appreciate your input in this and former proposals (including LTIPP):
You’re right that in case of gaming / NFT projects it’s easier to artificially boost metrics. In order to counteract such actions, Patterns team is going to cross-check on-chain data with off-chain trackers that will be required. Additionally, we could include revenue / fee related metrics into these 2 categories - happy to hear your thoughts!
That makes sense and as it was mentioned in comments above, we’ll probably go for a mixed set of metrics - absolute and relative.
This is currently being discussed with teams, please bear with us until we propose a solution. Some kind of external validation will be included, it’s not yet decided what kind though.
On Patterns side it’s going to be me and our data analysts who analyzed LTIPP - we’ll share more personal details with the upgraded proposal version
Hey @Tekr0x.eth, thanks for bringing this up! First of all, on average the budgets should oscillate around $150k. Secondly, we expect that being responsible for the KPI deliveries, teams will not overpromise or overspend without being sure about the results they’re going to deliver. Otherwise, it could end up with them not getting reimbursed with the full amount they’ve spent. I think such potential loss is enough of a security measure but if you think otherwise - happy to understand your line of thinking.
@karpatkey, great to see you here! Yes, some of your considerations are already being worked on:
We particularly appreciate the focus on measurable metrics (KPIs, CAC/LTV), as this is something we always emphasize. To further strengthen the proposal, we would like to share some thoughts and questions from our perspective:
1. Validation of Self-Declared KPIs
Allowing projects to define their own KPIs carries the risk of setting overly conservative goals (to ensure full funding) or unrealistic targets (without execution capacity).
How will you ensure that the KPIs proposed by projects are both ambitious and achievable? Would you consider setting minimum/maximum ranges per category (e.g., minimum TVL for DeFi) based on Arbitrum’s historical data?
Is there an option to publish a reference framework with suggested KPIs for each category (Bridges, DeFi, etc.)?
2. LTV Calculation in Short Timeframes
LTV depends on long-term retention, but the program lasts only three months.
How will you calculate the LTV of acquired users if, for example, a Gaming project only has two months of data? Will you include predictive models or extend post-campaign tracking?
If a user is attracted by a Bridge but generates value in DeFi, how will their LTV be attributed without distorting incentives? Will you implement a multi-touch attribution model (e.g., the Bridge receives 30% of the LTV generated in DeFi), or will only the acquiring project be considered?
4. Program Duration vs. Market Cycles
Over three months, external factors (e.g., market volatility, war, and other political issues I will avoid mentioning) could impact KPIs such as TVL or trading volume, distorting results
How will you isolate the real impact of the campaigns from external variables? For instance, if ARB or ETH rises by 50% during the period, will you adjust expected metrics accordingly?
Would it be possible to include a correlation analysis in the reports? (e.g., “TVL increased by X%, but the global market rose by Y%, so the net impact is Z%”).
Once again, we appreciate the proposal and its emphasis on transparency and measurable results, thank you
Hey @GensDAO, thanks for your insights!
We may however design some kind of references before applications launch, thanks for the idea!
Once whole Arbitrum network is indexed (which is included in the budget), Patterns will have all the historical data and possibility to calculate LTV. Since incentives aren’t sent out directly to users, we don’t expect farming & mercenary behavior so the LTV shouldn’t vary much - although we don’t know that yet and will monitor it in real-time.
LTV will be calculated for each protocol (revenue from user) and for Arbitrum Ecosystem (sequencer fees). Attribution will be measured separately only to understand user acquisition funnels, it doesn’t influence the LTV itself (although different acquisition funnels may bring in users with different LTV).
That’s an interesting approach and you’re right that some kind of normalization should take place. I think it’s either measuring the volume in absolute amount of assets or normalization with USD value correlation, although if you have a solution in mind - we’re happy to discuss!
@kamilgorski thank you for submitting this proposal. I like the direction. Can I ask a maybe sensitive question? How would you compare this program you are proposing, versus using something like royco.org ?
Hey @paulofonseca, thanks for the question and bringing this product up. I think it’s somehow similar to Merkl, which is also working on its ARB Incentive proposal simultaneously.
I perceive platforms like Royco more or less as a farming solution for users who are looking for the highest yield within multiple ecosystems. It allows to seamlessly move funds between protocol X in ecosystem A to protocol Y in ecosystem B and probably works great from a user perspective (as long as these protocols are secure). Protocols start to compete for the highest APY and eventually, they start offering additional incentives for users to end up higher in the ranking
And it’s all great unless these incentives are financed by ecosystems because then you may have an inflow of tens of protocols into the platform with multi-million USD budget which is basically spent within a short period of 3-6 months on competing with other multi-million USD ecosystem budget.
The result is that existing loyal ecosystem users start using this platform, searching for the highest APY and farm incentives. Once budget is depleted, they do exactly the same thing that happened after LTIPP - move to another ecosystem with highest incentives. It works great for the platform and users (as long as there’s budget to spend) but not necessarily for the ecosystem (which probably lost a % of its loyal users to the platform).
Summing up, I believe that platforms like these can be useful for single protocols to enhance specific liquidity pools or token pairs and that’s what they’re doing great. But they might be dangerous for ecosystem retention if you start competing with treasury-funded incentives.
Thanks a lot for this proposal.
To understand my point of view: I have in the past managed (Web2/Ecom) companies with a monthly Ad Spend of 200-300k on Meta & Google.
What I know is
Please don’t get me wrong I am a big believer in getting new users on Arbitrum & using Web2 channels but in my opinion it can only be successful if it has the power to
a) hire a marketing person/get a dedicated marketing person
b) influence the new user experience end-to-end
We are very pleased to see that the heavy reliance on on-chain incentives is being tackled and more emphasis is being placed on off-chain marketing. With clear metrics and goals being set for different sorts of projects, we can see that the project helps mitigate campaigns that do not perform. However, there are some concerns:
There is no solid system or mechanism being used to verify the authenticity of the KPIs being reported. These KPIs can be easily manipulated, such as by buying bots rather than actually getting user growth. Without a clear system in place that is standardized across all the projects, some protocols may be able to inflate metrics.
With different marketing platforms having different ways of handling interactions and performance metrics, the absence of fixed guidelines could lead to unfair payouts. Additionally, since KPIs are self-declared, they may not always be suitable targets—for instance, projects could set goals that are too low.
We would also appreciate further clarity on the Pattern team, including its structure and the expertise of its members. Given the significance of this initiative, would it be beneficial to involve additional parties in the application review process to ensure a well-rounded evaluation? To further add to this, the method of choosing applications based on the highest KPI-to-budget ratio could result in overly ambitious targets that are not realistically achievable. (This concern seems to be addressed with the mixed set of absolute and relative metrics.)
We’re looking forward to the outcomes of this proposal.
Hey @tamara - these are great insights, thank you very much for this
Hey @BristolBlockchain - thanks so much for your kind words! Let me answer your concerns:
Regarding the KPIs being too low or too high - with limited budget, we expect some level of competition between participants. At the same time, they will be responsible for delivering their results, risking budget loss if not delivered. However, an additional mechanism is being created here. Thanks for your support!
Thanks for sharing this! Some great insights here. From the first look, it seems like you’re focused on keeping things as transparent as possible, which I really appreciate.
I really liked the idea of tracking CAC and LTV—these are fundamental for any org. But onchain apps have completely changed the game. And now it is relatively difficult to track these accurately.
That said, I have a few questions:
If dApps are seeing results—though temporary—doesn’t that mean user acquisition isn’t necessarily the issue? Could it be a problem with UI or the use case itself? How would increasing the budget for user acquisition solve this?
If campaigns are being run independently, and Patterns is mainly optimizing and tracking metrics, don’t you think this is a relatively small value-add?
How do you justify this budget? If a web2 project runs its own campaign and uses a CRM tool, how much do you think it would cost them? Most of those tools provide deeper insights than what’s being proposed here.
Lastly, I appreciate that you’ve included data from LTIPP participants, but 19/40 is a pretty small sample size.
Hey @Amira, thanks These are very in-depth questions, let me answer below:
As you mentioned here - CAC and especially on-chain LTV are difficult to calculate. That’s why I think we’re proposing a substantial value-add. You might agree that it’s better to have important & accurate metrics rather than a pool of hundreds of metrics that aren’t decisive.
None of these tools provide information about CAC and LTV for web3 protocols - because of the same technical difficulty you mentioned. This is the exact reason for the proposed budget. Of course, any web3 protocol can set up HubSpot or 3RM but none of these tools will answer the question:
“How do I acquire this wallet segment that generates positive ROI for my dApp?”
Unfortunately, most of web2-focused tools aren’t designed for web3 complexity - I can get into more technical details if needed. And I really appreciated answering these questions!
Summary (TL;DR)
88% of LTIPP dApps & Protocols that spent $ on off-chain ads & content campaigns in 2024 indicated that it’s the 2nd most effective user acquisition strategy. However, only 54% of dApps have used it last year, with only 21% being able to calculate their CAC and 0% calculating their users’ LTV.
Patterns proposes a 1st iteration of a program for dApps & Protocols to cover the costs of their off & on-chain user acquisition campaigns - up to a level they manage to achieve out of self-declared category KPIs. Participants can design their campaigns freely with a requirement for all of them to be measurable and Patterns will calculate ROI (CAC + on-chain LTV) for all campaigns to focus on the most efficient strategies in the next iteration.
The challenge
No off-chain marketing - most protocols didn’t communicate rewarding to new users in other ways than using existing SM channels such as Twitter and Telegram.
Lack of knowledge of on-chain user acquisition funnels - only 37% of protocols have off-chain tracking tools installed for marketing purposes, which makes it impossible to run successful user acquisition campaigns.
No consideration for ROI and over-expenditure on non-performing projects - as discussed during ARB Liquidity Incentive calls, most teams don’t have any active marketing & growth teams that would take care of CAC & LTV ratios for their marketing campaigns.
These insights along with the supporting data were presented at ARB Liquidity Incentives calls organised by L2Beat (thanks to Kaerste & Sinkas):
The above reasons make most incentivization programs attract only a small group of existing Arbitrum users and / or users that interact with cross-chain protocols available on Arbitrum.
Insights from dApps & Protocols
While working on this proposal, our team conducted surveys amongst LTIPP participants to understand their perspective on user acquisition and most efficient strategies they used. Out of 40 protocols we’ve contacted, 19 filled out the survey. The results bring in some significant new conclusions:
84% of surveyed protocols indicated covering user gas fees & airdrops as the most efficient user acquisition strategies
– However, 53% of protocols haven’t spent a single dollar on off-chain user acquisition in 2024
– Out of 47% of protocols that spent $ on off-chain user acquisition in 2024, 88% indicated 2 off-chain strategies (paid posts & ads; newsletters) as the second most efficient user acquisition tool.
Only 21% of surveyed protocols know their CAC (“Customer acquisition costs”)
0% of protocols know their LTV (“Lifetime value of a user”)
Further questions uncovered more interesting insights about user-related development plans of dApps & Protocols:
Even though 84% of surveyed protocols mentioned covering gas fees & airdrops as the most efficient user acquisition strategies, only 37% of protocols are aware of or have plans to implement ERC-4337 standard (Account Abstraction standard allowing to easily onboard users and cover their gas fees).
Only 37% of dApps & Protocols have some kind of off-chain tracker installed - which is a crucial prerequisite for running successful user acquisition campaigns and calculating CAC & LTV
As many as 68% of surveyed dApps & Protocols mentioned metrics other than TVL as the most important for them.
The solution
Patterns would like to propose an iterative program, complimentary to the one proposed by IOSG, that would solve these challenges by helping protocols run and measure their off & on-chain user acquisition campaigns. The aim of the program is for protocols & ecosystem to learn how to run these campaigns successfully and build a culture of web3 user acquisition through measurable marketing that finally allows to calculate the LTV / CAC and ROI.
Duration: 3 months per iteration
Budget: $3m (first iteration)
Scope: Patterns will run a program to boost user acquisition by dApps & Protocols into the $ARB ecosystem. All projects will be divided into categories, based on the ecosystem user acquisition funnel:
Budget will be spent on helping these projects achieve predefined measurable goals through all the steps of the above user acquisition funnel:
Off & on-chain performance campaigns - consisting of measurable ad campaigns in networks such as Meta, Google Ads, Linkedin and on-chain networks such as Hypelab and Slise; Paid content and landing page creation; Setting up off-chain tracking tools.
On-chain incentivisation - including gas fee coverage, rewards and long-term on-chain incentives; Setting up Account Abstraction infrastructure to make Arbitrum products user-friendly and easily acquire new users.
Goals & metrics: Each project category will have a different goal connected to its role in the Arbitrum Ecosystem according to the user acquisition funnel:
Bridges & On-ramps - the main purpose of bridging & on-ramp projects is to bring in as much funds into the ARB ecosystem as possible and make them as hard as possible to move out. This strategy has worked really well in LTIPP projects and should be continued.
DeFi - this segment is characterized by high to medium value transactions and wallets. Its main purpose is to generate as many high volume trades as possible to keep users’ capital engaged in the ecosystem for as long as possible. Additionally, offering assets available only on ARB would be highly appreciated.
Gaming & Social - this segment is characterized by low value transactions and low value wallets. From an ecosystem perspective, incentivizing these projects can be beneficial only if users stick with the game for long, making their lifetime number of transactions high enough to generate sequencer fees.
NFT - speculative in its nature, this category is characterized with medium value transactions and medium value wallets. The common denominator of a successful NFT project is the speculative increase of its collections value.
Process:
1.2. KPIs levels they declare to achieve within a timeframe
1.3. Requested budget with expected items & costs
1.4. Tools used for running and off-chain measurement of the campaign. *All activities must be measurable and Patterns will receive access to tools used (eg. Google Analytics, Mixpanel, Meta Ads, etc.). If activities include KOLs, paid content creation, SEO - all of these need to be fully measurable.
Reporting:
Project’s results will be measured for each campaign separately and for the program as a whole. Patterns will be transparently showcasing information following the below frame:
Budget & costs:
The $3m budget dedicated for the program will be divided as follows:
Who are we?
Patterns (formerly known as Tokenguard) is an experienced team of web3 data & user activity analysts who build a web3 user acquisition tool with DeFi & dApp builders in mind. Our tool offers a web3 CRM for builders and growth specialists to boost their conversions & revenue. We started working on this idea in early 2023 and quickly gained traction with protocols and companies such as Optimism Foundation, Polkadot, Aleph Zero, Astar Network, Sygnum Bank, Bitcoin. com and others. Our work includes:
Discussion & sources
Most important materials and insights regarding user acquisition & incentivization in the Arbitrum Ecosystem (from newest to oldest):