Despite allocating millions of dollars in incentives, Arbitrum DAO has faced criticism for failing to sustain user growth and network activity. According to a report from Web3 marketing studio Pink Brains, the short-term gains generated by Arbitrum’s incentive programs have not translated into lasting engagement.
Millions Spent, But Metrics Drop Quickly
In a thread posted on April 4, Pink Brains outlined key weaknesses in Arbitrum’s strategy, noting that initiatives like the Short-Term Incentives Program (STIP) and Long-Term Incentives Pilot Program (LTIPP) brought temporary boosts in user activity, total value locked (TVL), and transaction volume. However, the growth quickly reversed once the campaigns ended.
“The gains were short-lived. Metrics dropped soon after the campaigns ended,” said Pink Brains.
Arbitrum launched its STIP in January 2024, distributing 50 million ARB to active projects. A long-term pilot followed to support sustained growth, but concerns persist about the lack of performance measurement across funded projects.
Poor Performance Tracking Hinders Progress
Pink Brains’ analysis identified several core issues undermining Arbitrum’s incentive effectiveness:
- Lack of off-chain marketing
- Weak tracking of performance metrics
- Minimal ROI analysis
In a survey cited by the agency, only 21% of protocols reported knowing their customer acquisition cost. Alarmingly, none of the respondents were aware of their users’ lifetime value—a critical metric in evaluating the true impact of incentives.
Missed Opportunities for Improvement
The marketing firm suggested that any protocol receiving DAO funds should implement clear key performance indicators (KPIs) and ROI tracking. While this approach was included in a recent Arbitrum DAO proposal, the proposal failed to pass.
“DAO-funded projects should be accountable for showing what works and what doesn’t,” Pink Brains stated.
Without structured performance evaluation, it becomes difficult for the Arbitrum ecosystem to determine which incentive strategies are effective or how to optimize future funding.
Declining TVL and Token Price Reflect Challenges
The broader data paints a sobering picture. Arbitrum’s total value locked (TVL) has fallen from its all-time high of $3.45 billion in December 2023 to around $2.42 billion today. Its native token ARB has dropped 86.94% from its peak of $2.40 in January 2024.
Final Thoughts
While Arbitrum’s incentive programs were launched with the right intentions—to attract users and stimulate on-chain activity—execution and follow-through appear to be lacking. As more DAOs and protocols explore incentive-driven growth, the call from marketing experts like Pink Brains is clear: performance must be measurable, transparent, and tied to long-term value.
Without it, millions in funding may continue to deliver only temporary gains.
