Accelerating Arbitrum - leveraging Camelot as an ecosystem hub to support native builders

Abstract This post proposes granting 1.5M ARB per month to Camelot DAO for the next 6 months to fund liquidity incentives for Arbitrum-focused projects on Camelot, including the onboarding of new and multi-chain protocols entering the ecosystem. Camelot strives to support the native ecosystem through collaborative relationships and has a proven track record of allocating incentives to enable sustainable growth and long-term liquidity for ecosystem protocols. This proposal will therefore support deeper spot liquidity for Arbitrum native builders, as well as supporting integration partners and the launch of new protocols, thereby enabling significant growth through an approach that prioritizes Arbitrum’s core values. Most importantly, this will further the adoption of ARB as a base asset within liquidity pools and partner integrations.

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Motivation Camelot is not just a DEX - it’s the infrastructure that enables native protocols to build sustainable and efficient liquidity. As Arbitrum’s first major native DEX, Camelot strives to support the ecosystem with a long-term and collaborative approach that moves beyond the traditional role of DEXs as simple ‘yield farms’.

In just over 6 months of being live, Camelot has achieved over $2,500,000,000 total volume traded, highs of $100m TVL, and the successful onboarding of countless protocols to the Arbitrum ecosystem. The Round Table is the hub for Camelot’s official long-term partners, and the initial members consisted of the core Arbitrum protocols such as Vela, Jones, Pendle, Plutus, GMX, Sperax, and more. On average, Round Table partners have over 90% of their total DEX liquidity and volume on Camelot.

Since then, the Round Table now consists of over 25 official partner protocols, and through its launchpad Camelot has supported over 9 protocols to raise funds in a community-focused and decentralized way. Most importantly, Camelot is home to numerous community builders that leverage the custom-built features to manage their liquidity, with a combined reach of over 40 native protocols present on Camelot and over 15 integrations being built on top of its infrastructure. Camelot is one of the most used dapps in the ecosystem, with over 300,000 unique users since launch. Camelot is not a fork, and is custom-built code that has been thoroughly tested and audited by Paladin. In addition, Camelot has no private investors and was launched in a truly community-focused and decentralized way. The ownership of Camelot has been spread through the key Arbitrum players, thereby making the protocol truly part of the ecosystem and community.

This grant would have a significant impact on the growth of the Arbitrum ecosystem in several ways:

Deep spot liquidity is the foundation for DeFi protocols to thrive, enabling further innovation and use cases for Arbitrum native protocols. For example, deeper spot liquidity unlocks the potential for tokens to be used in lending markets, options and perps protocols, structured products, and much more. Whilst other DEXs also tackle this for blue chip tokens, Camelot is uniquely positioned to most effectively support the native ecosystem builders. This proposal will specifically focus on Arbitrum protocols throughout their lifecycle, whilst leveraging the network and community of Camelot to generate sustainable growth with real users. Deepening pools that already have significant liquidity is not our only focus, as Camelot is positioned to ensure the distribution of ARB tokens materializes into a stronger ecosystem. Most importantly, Camelot can work with partners to pair their tokens with ARB as a base asset. This will advance ARB as a foundational asset of the ecosystem, providing it with direct value and utility.

Camelot has a proven track record of effectively allocating rewards in a sustainable and economical way. Therefore, not only will this grant proposal deepen liquidity, it will also ensure that the most active and aligned builders on Arbitrum directly benefit from it too. As an ecosystem hub for native builders, Camelot will leverage this grant to support and incentivise new protocols launching in the ecosystem, further cementing Arbitrum’s position as the go-to layer 2 for innovation and DeFi. Through its launchpad and network of Round Table partners, Camelot additionally offers protocols marketing, BD, and general support.

In addition to liquidity, Camelot is one of the largest Arbitrum governance delegates and has continued to foster collaboration in the ecosystem. Therefore, this proposal would also focus on integration partners that enable more efficient liquidity management and further use cases. These protocols also build on top of our partner liquidity pools, therefore multiplying the network effects of the allocated Arb incentives. Camelot currently has over 15 integration partners, ranging from advanced liquidity management apps, leveraged yield farming, derivatives, structured products, and more.

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Rationale Camelot was conceived to help deliver Arbitrum’s goal of scaling and revolutionizing the future of Ethereum. Through its commitment to supporting native builders, Camelot strives to build the foundation of sustainable liquidity and collaboration that will allow Arbitrum and its diverse ecosystem to thrive.

Since its inception in December 2022, Camelot has maintained a robust upward trajectory, steered by a long-term, sustainable incentives approach. We've avoided the common pitfalls of being a ‘yield-farm for mercenary capital,’ and our proven track record of allocating incentives effectively to yield maximum returns for our community, protocol, and ecosystem stands testament to our potential. We plan to harness the power of Arbitrum grant incentives to maintain this growth trajectory.

Though past performance doesn't necessarily predict future success, it does offer valuable insights into the potential of this proposal. Over the period from December 2022 to May 2023, Camelot experienced an impressive average monthly increase in volume and Total Value Locked (TVL) of 275% and 79% respectively. Even more noteworthy is that during this period, Camelot generated over $10m in protocol fees, with a significant proportion of these channelled back to our token holders. This strongly suggests that, with the additional Arbitrum incentives, we can stimulate significant growth and capture substantial long-term value across a large number of native protocols. Moreover, we can achieve this while ensuring a decentralized and sustainable token ownership distribution. Camelot also received an airdrop of over 2,000,000 ARB, which has so far been fully dedicated to being an active governance participant.

To allocate the Arbitrum incentives even more effectively we will distribute it across 4 different categories: Ecosystem Builders, Integration Partners, Core Pairs, and Liquid Staking Derivatives.