Reviewing Arbitrum's Long-Term Incentives Pilot Program Projects: Which One Offers the Highest Returns?
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Reviewing Arbitrum's Long-Term Incentives Pilot Program Projects: Which One Offers the Highest Returns?
Arbitrum's Long-Term Incentive Pilot Program (LTIPP) has allocated approximately $30 million in total, with most projects funded through September.
Navigating Web3 tides with focused insightsAuthor: Stephen, Founder of DeFi Dojo
Translation: Felix, PANews
The Arbitrum Foundation previously launched the Long-Term Incentive Pilot Program (LTIPP), aimed at driving greater network participation by enabling ArbitrumDAO to direct protocol funds as liquidity incentives toward collaborative projects built on Arbitrum. The awarded LTIPP grants are redistributed through recipients’ protocols as liquidity incentives for the Arbitrum community. This encourages Arbitrum users to explore emerging use cases while generating higher network activity.
The program has a total grant pool of approximately $30 million, with most projects receiving funding until September. Stephen, founder of DeFi Dojo, reviewed the returns across various participating projects.
Factor
Most incentive strategies involve LRT Silo Labs leveraged positions or LRTPenpie LP strategies.
Yields range from 22% to 93%, but Factor’s TVL is relatively low, so watch out for dilution and security risks.
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Yield: 22%-93%
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TVL in vaults: <$2 million
Gearbox
Gearbox first introduced a lending campaign and will soon launch incentivized trading and Renzo leverage. In their new STIMMIES campaign, users can earn both ARB and GEAR rewards. Current lending yields:
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USDC: 15%
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ETH: 14%
Anticipated subsidies for leveraged ezETH positions are worth noting, though full details will take about a week to emerge. You can also benefit from low borrowing rates subsidized by LTIPP by leveraging LSTs such as rETH, wstETH, and cbETH.
Trading on PURE also qualifies for STIMMIES rewards.
Contango
DeFi protocol Contango channels substantial ARB incentives into leveraged ETH positions. These strategies can handle large amounts of ETH. Yields range from 20% to 30%, with some strategies capable in principle of managing over $2 million.
Using Contango also earns points that will be used for a TGE airdrop in about a month.
Silo Labs
While both Factor and Contango aggregate Silo opportunities, other standalone opportunities should also be noted.
WOETH collateral currently offers a -7.4% borrowing rate for ETH.
This means you get paid to borrow ETH.
At maximum leverage, this equates to an annualized yield of 63%, although nearly all of it is paid in ARB.
Note: Consider selling ARB to acquire more WOETH to continue increasing your collateral.
Merkl
Merkl hosts numerous LTIPP incentives because major projects like Lido, PancakeSwap, and Camelot use Merkl as the incentive layer for their LTIPP campaigns.
However, the sheer number of options may feel overwhelming.
The author tends to prefer stablecoin pairs and ETH pairs (and occasionally ETH/BTC if yields exceed 30%).
ETH yields:
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WETH/ETHx: 45%
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wstETH/ETHx: 37%
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ezETH/WETH: 21%
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uniETH/ETH: 46%
Stablecoin yields:
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fUSDC/USDC: 52%
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USDe/USDT: 43%
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grai / usdc: 40%
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usdc / usdc: 25%
Note: These are average APRs; many of these pools have low liquidity, so pay special attention to dilution risks.
Curve and Convex
Curve and Convex are using ARB rewards to subsidize select pools. Again, the author prefers ETH, BTC, or stablecoin pools.
Stablecoin pools:
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crvUSD/sUSDe: 41%
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usdd / fraxbp: 38%
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sUSD/FRAXBP: 32%
ETH and BTC pools:
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2BTC-nq: 27%
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WETH/weETH: 18%
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frxETh/afETH: 26%
Timeswap
Lending protocol Timeswap features an interesting Pendle market where users can earn ARB rewards through lending.
Here, lending PT-weETH yields 30%, while borrowing WETH against collateral yields 9%.
Note: As this is an emerging market, lending rate liquidity may be limited.
Trader Joe
Trader Joe now runs several interesting farms under LTIPP.
Some advertised APRs appear extremely high, but note that Trader Joe's stated APR assumes single-bin (tick) liquidity concentration.
This means any reasonably distributed liquidity will achieve a much lower APR. You can quickly calculate a pool’s average APR. For example (WBTC/ETH):
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Advertised APR: 2065%
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TVL: $331,000
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24h volume: $441,000
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Fees: 0.04%
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Rewards: 214 ARB/day ($173)
Thus:
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Average fee APR: 19.45%
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Average ARB incentive APR: 19.08%
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Total average APR: 38.53%
A significant difference from the advertised single-tick APR.
RAMSES
Ramses, similar to Trader Joe, likes to advertise APR based on single-tick liquidity.
These figures are highly unrealistic for average liquidity providers, but at least help identify where incentives are directed.
The author recommends clicking “EPOCH REWARDS” to sort and see exactly where all ARB incentives are going.
Then, examining token pairs like Renzo’s ezETH/ETH gives a clearer picture of realistic, achievable yields.
With liquidity spread across 5 ticks, you can achieve an 18% APR (as shown below).
For stablecoin liquidity providers, USDC/USDT might be attractive—setting a range of 8 ticks can yield 73% APR.
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