SCP-201: Sunset the LP rFOX Incentives Program Effective October 1, 2025

Proposal Discussion
1

SCP-201: Sunset the LP rFOX Incentives Program Effective October 1, 2025

Summary

This proposal recommends ending the Liquidity Provider (LP) rFOX incentives program on October 1, 2025. As part of the DAO’s Arbitrum expansion strategy, LP rFOX successfully bootstrapped liquidity via FOX/WETH LP staking. However, with Ethereum mainnet gas costs becoming more favorable, operational shifts back to mainnet, and stabilized liquidity levels, the program’s marginal utility has diminished. Resources can now be better deployed toward higher-impact initiatives.

Abstract

  • The LP rFOX program was originally expanded under SCP-186, incentivizing FOX/WETH LP contributions on Arbitrum.
  • While it helped establish robust liquidity during the DAO’s operational pivot, on-chain data—e.g., deposits, withdrawals, net flow, and participation over time—now show a tapering effect.
  • Two dashboards (linked below) provide visual proof of this trend sans speculation:
    • LP Usage Over the Last Year: A chart showing monthly LP activity and net flow.
    • LP Metrics and Insights: Summary KPIs pointing out reduced incremental benefits.
  • Based on this data, the DAO Finance Committee (DFC) recommends sunsetting the program, ceasing rewards through September 2025, and formally ending it on October 1, 2025.

Dashboards:

Motivation

  1. Mission Achieved – LP incentives successfully nurtured sufficient liquidity and participation at a time when it was strategically vital.
  2. Operational Shifts – Arbitrum is no longer the default for contributor payments; mainnet gas costs are manageable.
  3. Diminishing Returns – Visual evidence from the dashboards shows that net LP flow is stagnating. Continued incentives yield minimal new participation or liquidity gains.
  4. Simplified Tokenomics – Reducing overlapping rewards streamlines messaging and reduces governance complexity.
  5. Optimized Treasury Use – Freed allocations can be repurposed toward evergreen liquidity, buybacks, or other high-impact use cases.

Specification

  • End Date: LP rFOX incentives end on October 1, 2025.
  • Final Distribution: Streaming rewards continue through September 30, 2025.
  • Contract Changes: LP rFOX staking contracts will be deactivated, retired, or repurposed.
  • Reallocation: The DFC will publish a follow-up proposal for reallocating freed treasury funds toward prioritized strategies.
  • Communication Plan:
    • Forum announcement of program sunset and KPIs summary.
    • Cross-post on Discord, Twitter, Snapshot.
    • Targeted notifications to active LP addresses (if feasible).

KPIs (On-Chain Data)

Month Total Deposits Total Amount (FOX) Unique Depositors Cumulative Deposits Cumulative Unique Depositors
2025-07 112 4,850,000 45 1,245 238
2025-06 98 3,720,000 39 1,133 225
2025-05 125 5,310,000 52 1,035 209
2025-04 131 6,010,000 48 910 190
2025-03 147 7,820,000 57 779 172
2025-02 162 8,150,000 61 632 155
2025-01 141 7,200,000 55 470 137
2024-12 164 8,500,000 62 329 120
2024-11 102 4,200,000 43 165 105
2024-10 63 2,800,000 37 63 63

Note: These KPIs are derived directly from the rFOX LP staking contract (shapeshift_arbitrum.rfoxlpstakingv1_call_stake) via Flipside MCP. Metrics include deposit counts, total FOX amounts, and cumulative participation over time.

Benefits

Benefit Description
Treasury Savings Reduces FOX emissions, freeing assets for higher-impact uses.
Strategic Clarity Focuses incentives where they earn more ROI and reduces complexity.
Data-Driven Governance Supports decision with actual on-chain metrics and visual evidence.

Drawbacks

  • Short-Term Liquidity Dip: Ending incentives risks a minor liquidity reduction, potentially increasing slippage temporarily.
  • LP Disengagement: Some LPs may withdraw immediately, prompting perceived volatility.
  • Transition Overhead: Internal effort will be required to retire contracts, update docs, and inform the community.

All drawbacks are expected to be temporary, with market conditions and organic LP interest mitigating downside quickly.

Vote

  • YES — Sunset the LP rFOX program effective October 1, 2025 (final rewards through September 30).
  • NO — Continue LP rFOX beyond that date.
1 Like
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Sounds good, I feel that the program for rewards for LP on Arbitrum has run its course and had some decent results even if we didn’t meet all the set goals.

Thanks to @ProfMcC and the DFC for their diligence during this program and for organizing the sunset.

Just to make sure, it seems that we’ve abandoned the practice of tagging the title of the post with “[Ideation]” but this is in Ideation phase and the vote which will likely be posted soon should also include a “Yes with changes” option, right ?

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(forum title) shouldnt include ideation, (as it becomes part of the link, then we have to updated it, and it breaks the old vote)
but i think it should be in the body header.

1 Like
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I see, thanks for the info. I guess we should update the template, it still mentiones the [Ideation] tag: