Arbitrum’s $ARB Incentives Fail to Retain Users, Reports Pink Brains
By David Marsanic
April 4, 2025 – 6:29 PM UTC
Edited by Jayson Derrick
The Arbitrum decentralized autonomous organization (DAO) recently faced scrutiny for its apparent inability to retain users despite investing millions into incentive programs designed to attract new participants. According to a report from Pink Brains, a marketing studio specializing in the cryptocurrency and Web3 sectors, the current incentive strategies employed by Arbitrum have not been effective in fostering long-term user engagement.
Short-lived Gains
Pink Brains highlighted several critical shortcomings within Arbitrum’s marketing approach in its evaluation. A key finding indicated that the rewards campaigns led to a fleeting surge in user activity, with user metrics declining significantly after the promotions concluded. “The gains were short-lived,” Pink Brains remarked, noting that only 21% of surveyed protocols were aware of their customer acquisition costs—a vital metric in gauging marketing success.
A more concerning discovery from the survey was that none of the respondents could identify their users’ lifetime value, a crucial measure for determining the effectiveness and sustainability of any marketing initiative. This lack of insight raises questions about the strategic planning behind Arbitrum’s incentive offerings.
Recommendations for Improvement
In response to these findings, Pink Brains recommended that projects drawing from the Arbitrum DAO’s funding implement clear performance indicators as part of their incentive plans. Establishing these metrics would help determine which types of incentives are most effective in retaining users and provide a framework for assessing the overall return on investment (ROI) of the initiatives.
Significantly, this suggestion aligns with a recent proposal submitted to the Arbitrum DAO aimed at improving user retention and engagement through better marketing practices. However, the proposal did not pass, leaving many of the concerns raised by Pink Brains unaddressed.
Previous Incentive Programs
Arbitrum’s short-term incentive program was initially launched in January 2024, distributing 50 million ARB tokens to active projects as a one-time incentive. To bolster user engagement further, a long-term support pilot program was later approved by token holders. Despite these efforts, the Arbitrum ecosystem has seen a decrease in its total value locked (TVL), falling from a peak of $3.454 billion recorded on December 14 to its current level of approximately $2.422 billion.
The ARB token itself has not escaped the downturn, experiencing an 86.94% drop since reaching its all-time high of $2.40 on January 12, 2025. These statistics suggest that while Arbitrum’s initial incentive strategies may have attracted interest, sustaining that interest poses a significant challenge.
As the DeFi landscape continues to evolve, it remains crucial for projects like Arbitrum to reevaluate their marketing strategies to maintain a competitive edge and effectively engage their user bases.
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