Members of the Arbitrum community are rejoicing as the total value locked (TVL) in the network reaches an unprecedented high. However, the celebration is tempered by growing concerns about the efficiency of current incentive programs aimed at boosting activity within the ecosystem.
How High Did Arbitrum’s TVL Climb?
Recent data from L2Beat indicates that Arbitrum’s TVL soared by around 67% in just one month, hitting a remarkable $21 billion. This significant achievement highlights the layer 2 solution’s advancements since its inception in 2021. Notably, many supporting protocols have seen similar growth on other networks, which raises questions about the sustainability of this increase.
Are Current Incentive Programs Effective?
Despite the impressive TVL figure, some protocols that benefit from incentives are witnessing declines in their own TVL. This has fueled skepticism regarding the effectiveness of the incentive programs. In September 2023, the Arbitrum DAO approved a $56 million incentive program to allocate ARB tokens to active protocols, but experts argue that the lack of specific goals undermines the program’s effectiveness.
Key points to consider include:
- TVL has increased significantly, but many protocols are not benefiting equally.
- Existing incentive programs may lack measurable targets.
- New proposals suggest focusing on results-driven frameworks for better liquidity.
As the Arbitrum ecosystem evolves, it is taking necessary measures to ensure sustained TVL growth through improved and fairer incentive structures, fostering a more user-oriented environment for developers and liquidity providers alike.