Arbitrum Token Flow Report - January 2025

Arbitrum DAO Token Flow Report

January 2025

Prepared by r3gen Finance

DISCLAIMER This report is exclusively prepared for the confidential use of the Arbitrum Decentralized Autonomous Organization ("Arbitrum DAO"). In its preparation, the preparer (r3gen Finance) has relied upon unaudited information available for all entities related to Arbitrum DAO. The information contained herein has not been audited or formally reviewed, and therefore, r3gen Finance does not express an opinion or any form of assurance regarding its accuracy. No party shall be liable for any loss, damage, or expense incurred by relying on this report.

No Assurance

The preparation of this report relies on unaudited financial and non-financial information available for the entity. However, neither this report nor associated parties provide an opinion or any other form of assurance regarding the accuracy of the information presented.

Compilation

r3gen Finance has compiled the accompanying report for Arbitrum DAO based on information provided by individual members of the DAO. This compilation has been conducted in accordance with ethical requirements, including principles of integrity, objectivity, professional competence, and due care. Responsibility for the accuracy and completeness of the information used to compile this report rests with the Arbitrum DAO. As a compilation engagement does not entail assurance, r3gen Finance is not obliged to verify the accuracy or completeness of the information provided. Consequently, no audit opinion or review conclusion on this information has been provided.

Source of Data

To preserve the integrity of the data presented in this report, on-chain data sources were used where possible. Where data not on-chain was used, the source of such data has been outlined in the report. No verification over data that was not on-chain was performed.

Important Notice

Please be advised that the information presented in this report is intended solely for informational purposes as a Token Flow report and is not to be construed as a financial statement. It should not be relied upon for making financial decisions. r3gen Finance does not assume responsibility for the accuracy, completeness, or reliability of the information contained herein. Furthermore, r3gen Finance disclaims any liability for any misstatements or loss of funds resulting from actions taken based on the information provided in this report.

Arbitrum DAO - Key Facts and Figures (since inception)

428M ARB Total DAO ARB Expenditure 3.2M USD Total Stablecoin spending

11.7k ETH DAO ETH Holdings 3.1B ARB DAO ARB Holdings

28k ETH Total Sequencer Fees 45k ETH Total Transaction Fees

Arbitrum TVL (DefiLlama)

1.4m

3.8b

1.3m

3.5b

3.4b

3.5b

3.4b

3.3b

1.2m

3.3b

1.1m

2.9b

987k

952.4k

2.8b

928.7k

915.4k

2.7b

2.8b

880.8k

800k

2.5b

TVL (USD)

TVL (ETH)

Arbitrum Ecosystem Stats (Arbiscan)

60m

170

158

50m

160

48m

45m

42.8m

41m

150

146

39.3m

37.6m

35.8m

36m

33.2m

140

28.7m

133

131

129

127

130

22.3m

24m

19.8m

122

18m

17m

120

116

12m

111

110

105

2.1m 1.9m 1.8m 1.6m 1.8m 2.2m 2.1m 1.9m

1.2m 1.6m 2m

929.4k

767k

ArbitrumOne Average Daily Tx ArbitrumOne Average Verified Contracts Jan 24 Feb 24 Mar 24 Apr 24 May 24 Jun 24 Jul 24 Aug 24 Sep 24 Oct 24 Nov 24 Dec 24 Jan 25 0 ArbitrumOne Unique Addresses

100

DAO Monthly Token Flows January 2025

610 ETH Total Revenue Total Transaction Fee Inflows

Total Sequencer Fees Collected 194 ETH

0.68

Net Fee Flow

415 ETH Net fee flow is the total collected fee less any fee owed to the sequencer to post transactions onto the Ethereum blockchain. This is the fee that flows into the DAO's treasury.

Users of DAO-governed chains are charged fees to process transactions - these are split between Layer 1 fees to post to the Ethereum network, and Layer 2 fees for processing transactions within Arbitrum.

Sequencer fees relate to direct costs owed to the sequencer to post transactions onto Ethereum's Layer 1 blockchain. These fees are collected from users and passed on to the sequencer via smart contracts.

Net Fee / Total Fee Ratio

Transaction fee figures were obtained from Dune Analytics.

DAO Fee Inflow and Expenditure - 2024 (ARB)

251.1m

49.4m

24.4m 27.4m

5.3m

5.2m

4.8m

3.7m

2.7m

1.8m 812.3k

2.3m

1.4m

1.1m

1.3m

Feb 24 Mar 24 Apr 24 May 24 Jun 24

Jul 24

Aug 24 Sep 24 Oct 24 Nov 24 Dec 24

Jan 25

Total Transaction Fees (ARB)

Total DAO Expenditure (ARB)

Transaction fees in ETH were converted to ARB using historical price data obtained from CoinMarketCap. This conversion from ETH to ARB is used to illustrate the overarching "value flow" within the DAO and to establish a standardized nominal currency for comparing inflows and outflows to the DAO Treasury. Note that April saw a net inflow as STIP protocols returned funds. Note the significant increase in October was driven by an AIP sending 250M ARB to the Foundation - this is deemed as having been spent by the DAO and will fall under the Foundation's transparency reporting processes.

DAO Value Flow - Overview (all converted to ARB) - January 2025

Current Month Genesis to Date

Fees charged to process transactions

Transaction Fee Inflows

2,748,705

87,319,201

Sequencer Fee

(876,379)

(47,540,782)

Sequencer costs to post on Ethereum

Net Fee Flow

1,872,326

39,778,419

Net fee earned by the DAO

DAO Expenditure

(1,090,678)

(432,104,253)

Total DAO spending

Net Token Flows During the Period

781,648

(392,325,835)

Net inflows / (outflows) for the period

Fee Inflows

DAO Fee Inflows - January 2025 (ETH)

Arbitrum DAO-governed chains (Arbitrum One and Nova) programmatically generate ETH inflows through transaction fees paid by users within the Arbitrum ecosystem.

These fees are split into:

Layer 1 Sequencer (Base) Fee Inflow

Transaction fee component paid by a user and distributed to a chain's Sequencer to refund the Sequencer for its batch-posting fees.

Layer 1 Surplus Fee Inflow

Transaction fee component charged as proportion of Layer 1 base fee, in excess of the actual cost required to be paid to the sequencer.

Layer 2 Base Fee Inflow

Transaction fee component that covers the minimum cost of Arbitrum transaction execution.

Layer 2 Surplus Fee Inflow

L1 Base Fee 194 (31.9%) L2 Base Fee 106 (17.3%) L2 Surplus Fee 310 (50.8%)

Transaction fee component that covers the cost beyond that covered by the Layer 2 Base Fee during chain congestion.

Arbitrum DAO Transaction Fee Flows (ETH)

4.8k

47.5k

45k

44.4k

43.5k

43k

42.7k

42.4k

42.5k

538

41.6k

41.3k

3.2k

168

224

40.1k

39.8k

40k

639

221

2.4k

318

277

37.5k

153

36.5k

1.6k

2.9k

35k

800

32.5k

554

688

310

481

213

244 131

194 106

162

119

106

102

119

118

163

L1 Base Fee Cumulative Revenue Jan 24 Feb 24 Mar 24 Apr 24 May 24 Jun 24 Jul 24 Aug 24 Sep 24 Oct 24 Nov 24 Dec 24 Jan 25 0 L1 Surplus Fee L2 Base Fee L2 Surplus Fee

30k

Fee Outflows

The L1 Base Fee component of Arbitrum transaction fees are refunded to the sequencer - they accrue in the L1 Base Fee wallet and are claimed by the sequencer periodically. Since the start of the Arbitrum DAO, 28k ETH has been charged in L1 Base Fees. The sequencer has periodically claimed that amount and as at the end of January 2025, was owed 403 ETH which it can claim at any point.

Sequencer Fee Flow (ETH)

+28.1k

(6.1k)

(14.2k)

(7.1k)

(194)

(594)

L1 Base Fee

Sequencer Refunds - 1H 2023

Sequencer Refunds - 2H 2023

Sequencer Refunds - 1H 2024

Sequencer Refunds - 2H 2024

Sequencer Refunds - Current Month

Unclaimed Sequencer Fees

Net Fee Flow

Decrease in Net Fees post "Atlas" 49%

Net fee flow is the total collected fee less any fee owed to the sequencer to post transactions onto the Ethereum blockchain. As at the end of January 2025 , the total net flows amounted to 16.9k ETH, streamed periodically to the L2 Treasury Timelock Wallet. Net transaction fees collected in January 2025 amounted to 415 ETH - compared to the 3 months before the "Atlas" upgrade (December 2023 - February 2024), total transaction fees have fallen 85% while net transaction fees have fallen 48% (for the months of April to January 2025).

To date, the DAO has sent 12.7k ETH from treasury: - 5.1k for the BoLD Validator proposal - 0.03k ETH for Ethereum Attackathon sponsorship - 7.5k ETH for Treasury Management v1.2

Arbitrum DAO Net Transaction Fee Flows (ETH)

16.4k 16.9k

15.7k

15k 15.2k 15.4k

13.9k 14.2k

12.6k 12.8k

12k

11.3k

10.5k

9.4k

8.4k

7.7k

6.5k 7.1k

5.7k

4.1k

3.1k

1.4k

1.4k 1.7k 1k

881 728 765 577 650 732 973 1.1k 783 692 600 233 1.1k 280 806 188 195 339 685 415

Net Fee Flow

Cumulative Net Fee Flow

Treasury

ARB Treasury Holdings 2.88B

The Arbitrum DAO's treasury holds mainly cryptocurrency, with the majority being its native ARB token. It's important to note that the composition of the treasury holdings is subject to change due to various factors, including fee inflows, outflows, and spending approved by the DAO.

Balance in native ARB token within the DAO's treasury wallet. See below for additional holdings across DAO controlled wallets.

DAO Assets - Converted into USD

Net Transaction Fees

16.9k

BoLD Validator Send ETH Attackathon Send Treasury Management Send

(5.1k) (0.03k) (7.5k)

ETH Treasury Holdings 4.2k

NET DAO ETH

4.2k

ARB Holdings 2b (96.6%) ETH Holdings 38.1m (1.9%) USD Holdings 32m (1.6%)

ETH in Fee Wallets ETH in L2 Treasury Wallet

0 4.2k

The majority of the DAO's treasury is therefore held in its native token, ARB. It also holds ETH from transaction fees, as well as US Dollar-linked investments mainly via the STEP program.

NET DAO Treasury ETH

4.2k

It is worth drawing attention to the fact that the ARB tokens sitting in "treasury" are represented in native ARB token and not a fiat or other cryptocurrency equivalent - much discussion has been had around this point but it is clear that the value of treasury ARB cannot be priced at current ARB market prices. These tokens are effectively out of circulating supply and are similar to a traditional company holding its own stock as treasury shares. If the DAO were to decide to deploy its entire ARB balance, the market would be flooded with liquidity and the price of ARB would be materially impacted. Any proposal moving ARB out of treasury holdings and into the market will have an inflationary impact on the price of ARB (i.e. cet. par . proposals moving ARB out of treasury will cause the price of ARB to fall relative to e.g. the USD).

Treasury Holding - ARB and USD Overview

USD Stablecoin Holdings

ARB Holdings

DAO Treasury

2,884,632,693 178,750,000

Catalyze Gaming Ecosystem Growth

Entropy - Treasury Management & Events Budget

27,750,000 10,474,782 7,000,000 5,260,000 1,097,297

Delegate Incentive System

Event Horizon Sylus Sprint

ARDC v2

Plurality Labs - Grants Safety Multisig

518,215 403,443 48,623

Arbitrum MSS

Plurality Labs - Thrive Impact Foundation Multisig

Questbook Wallets ADPC - Aera Vault

3,556

1,266,087

195,979 70,970

ADPC - Multisig

STEP (using most recent 31 Dec report)

30,504,194 32,037,231

TOTAL

3,115,938,609

Note immaterial balances not included.

DAO Spend Analysis

Monthly ARB Expenditure - Last 6 Months

Aug 24

Sep 24

Oct 24

Nov 24

Dec 24

Jan 25

DAO Expenditure in ARB

(27,192,389)

(1,906,121)

(250,206,292)

253,904

(5,468,706)

(578,693) (511,985)

DAO Expenditure in USD - converted to ARB Total DAO Monthly (Expenditure) / Income

(213,939)

(275,861)

(848,246)

(474,050)

(437,993)

(27,406,328)

(2,181,982)

(251,054,538)

(220,146)

(5,906,699)

(1,090,678)

*positive ARB spend relates to LTIP protocols returning funds

*includes 250M ARB sent to the Foundation

Note figures may update in each version of the report

monthly expenditure ARB 48M using 6-month average

ARB 251M monthly expenditure using highest 1 month

ARB 2.4M monthly expenditure using 3-month average

The Arbitrum DAO's sustainability represents its ability to fund operations based on its current treasury holdings. It evaluates the holdings of the DAO, taking into account the average monthly ARB outflows within the organization. Using these averages, it calculates the number of months of funding that the current asset holdings would be able to sustain. Note that the analysis only looks at ARB held in the DAO's treasury wallet and not across all wallets. It is also worth noting that the ARB held in treasury cannot be valued at the same price as circulating ARB - it is effectively locked supply that when introduced into the market will likely cause material changes in prices. To factor this in, we include an analysis on runway based on the price of ARB falling by different amounts.

Number of months the DAO can maintain expenditure levels before fully depleting the DAO ARB Treasury based on ARB expenditure within the DAO.

6 Month Average Spend (in ARB)

3 Month Average ARB Spend, Increased by 25%

959

3 Month Average Spend (in ARB)

3 Month Average ARB Spend, Increased by 50%

1.2k

799

Highest Month Spend (in ARB)

3 Month Average ARB Spend, Increased by 75%

685

ARB Introduced into Circulation

Treasury Allocated to Proposals 21% Treasury Spent to Date 12%

Every proposal that allocates the DAO's treasury holdings of ARB is introducing more tokens into supply - ARB out of circulation held in treasury is brought into the market. Over the period from June 2023, when the first Tally proposal was approved, to January 2025, the DAO approved 745M ARB worth of spending outlined in various proposals. This represents 21% of the DAO's initial treasury balance of 3.6B ARB. Spending began in August 2023, with a total of 432M ARB spent to January 2025 (including USD spend converted into ARB). This represents 12% of the DAO's treasury balance - the balance is still held in DAO-controlled wallets.

Arbitrum DAO Expenditure

The Arbitrum DAO has committed (and plans to continue to commit) a material portion of its treasury towards funding growth within the Arbitrum ecosystem. This report divided spending across 6 major categories:

Long term programs, committees or groups funded by and supporting the effective functioning of the Arbitrum DAO. Provide services to and are approved and funded directly by the DAO (not via a Grants Program). Funds in multisig wallets are treated as DAO funds until they are distributed to third parties.

DAO Core

Ecosystem Incentives

Funds for users in the Arbitrum ecosystem distributed to them via protocols built on Arbitrum. Used to directly incentivise network and user growth on Arbitrum. Funds in multisig wallets are treated as DAO funds until they are sent to protocols for subsequent distribution to users.

Funds earmarked for major initiatives and ventures within the DAO ecosystem, aimed at addressing a certain identified area for development within the DAO. Generally facilitated via working groups and/or DAO-elected councils. Funds in multisig wallets are treated as DAO funds until distributed to third parties.

Ventures

Treasury Diversification

Funds moved out of the DAO's treasury holdings and deployed into investments aiming to generate returns for the DAO that aren't in its native ARB token. Funds sent out of the multisig to service treasury diversification providers are treated as DAO funds. Funds spent on operational costs are considered spent.

Grants Programs

Grants Program fund many different contributors, initiatives and builders within Arbitrum DAO. Each Grant Program will fund many grant initiatives. Funds in multisig wallets are treated as DAO funds until they are sent to grant program managers or grantee.

One off funding/grants for external service providers or protocols to deliver specific work within a stated remit. Proposal must have been approved directly through on-chain governance. Funds in multisig wallets are treated as spent funds when sent to the service provider or protocol.

Direct Grants

Allocated Treasury - March 2023 to Current Month (ARB)

Actual Spend - March 2023 to Current Month (ARB)

DAO Core 30m (4.0%) Ecosystem Incentives 154.9m (20.8%) Ventures 478.7m (64.2%) Treasury Diversification 61.3m (8.2%) Grant Programs 10.3m (1.4%) Direct Grants 9.9m (1.3%)

DAO Core 10.5m (2.4%) Ecosystem Incentives 115.5m (26.7%) Ventures 256.5m (59.4%) Treasury Diversification 35.3m (8.2%)

Grant Programs 10m (2.3%) Direct Grants 4.4m (1.0%)

Note differences between allocated and actual spend relates to either proposals not spending its allocated funding, or to proposals that are still live and in the process of deploying their funding. Also note the below material changes from the last report: - GCP moving funding to an AF-controlled wallet was removed from spending after the Foundation confirmed the funds are in a controlled wallet - Treasury Management ARB spend has been removed and will be classified as spent once it leaves the multisig 9

7.5% of ARB tokens (ARB750M) were transferred to the foundation in the initial token airdrop. A portion of these tokens were spent before AIP1.1 required the Foundation to place its holdings into a vesting wallet with a four-year lock-up period, thus the remaining ARB balance was transferred to that wallet. The Foundation can call funds over time from the vesting wallet. These unlocked funds are then transferred from the vesting wallet to a wallet controlled by the foundation. Arbitrum DAO - The Arbitrum Foundation

Foundation Vesting Wallet ARB Transactions

+750m

(50.5m)

699.5m

(97.7m)

(201m)

(14.8m)

386m

ARB Airdropped to Foundation

ARB Spent pre AIP1.1

ARB Initially Locked in Vesting Contract

ARB Unlocked and Sent - 2023

ARB Unlocked and Sent - 2024 excl. Current Month

ARB Unlocked and Sent - Current Month

ARB Balance in Vesting Contract

Funds streamed from the vesting wallet to the Foundation's wallet were then partially sent to another wallet, whereafter our analysis ends. We have deemed funds sent to the external wallet as spent and beyond the scope of this report - please refer to the Foundation's transparency report for more context regarding their use of funds.

Foundation Wallet ARB Flows

+313.5m

+500k

(290m)

24m

ARB Received from Vesting Wallet

ARB Received from External Wallet

ARB Sent to External Wallet

ARB Remaining in Wallet

Summary of Foundation ARB Flows

ARB

ARB Received - Total

750,000,000

ARB Spent - Pre AIP1.1

50,500,008

ARB Spent - Post AIP1.1

289,500,001

Total ARB Spent

340,000,009

Total ARB Unspent

409,999,991

ARB Unspent in Vesting Wallet

385,965,450

ARB Unspent in Foundation Wallet

24,034,541

Total ARB In Wallets

409,999,991

Arbitrum DAO - DAO Core

This represents the long-term programs, committees or groups funded by and supporting the effective functioning of the Arbitrum DAO - these are funded directly by the DAO and not via a Grants Program. The pledged outflows amount indicates the amount allocated to each group via an on-chain governance vote, while actual outflows are funds which are then distributed from the wallet at which point they are "spent".

DAO Core Budget (ARB)

+4m

30m

+6m

+325k

+600k

+12.1m

+1.2m

+5.7m

Arbitrum Research &

ArbitrumDAO Procurement Committee (incl. Phase II)

Delegates Incentive System (incl. v2)

Multisig Support Service

Entropy Advisors

Event Horizon DAO Events Budget

Total

Development Collective (incl. v2)

DAO Development Spend - March 2023 to Current Month (ARB)

+200k

10.5m

+6m

+196.6k

+1.7m

+633.6k

+1.8m

Arbitrum Research & Development Collective

ArbitrumDAO Procurement Committee (incl. Phase II)

Delegates Incentive System

Multisig Support Service

Entropy Advisors

Event Horizon DAO Events Budget

Total

Arbitrum Research & Development Collective v2

During January 2025, the ARDC multisig sent 2.85M ARB to the Aera vault to be converted into stables. Early in Feb 2025, the process to convert ARB into USDC started, with Odos being used. No ARB had been converted at 31 January 2025. The Tally proposal aimed to convert the requested 3.98M ARB into $1.73M to fund service provider commitments. As at 31 Jan 2025, if the full 3.98M ARB was converted to USDC at the closing price on that date ($0.63), the Collective would have $2.52M and therefore would be able to pay service providers. If the price were to fall below $0.434, the ARDC would have insufficient ARB to cover service provider fees (i.e. the 20% ARB price buffer would be insufficient to cover actual price movement).

Min ARB Price for Shortfall $0.434

ARDC v2 Budget

1.2m

735.6k

660k

663.8k

410k

368.6k

180k

93.6k

35k

19.4k

Security - OpenZeppelin

Research - Llama Research & Castle Capital

Risk - Nethermind

Supervisory Council (3 Members)

Immutable Lawyer Drafting

ARB Price Buffer

ARB Budget 4m

USD Budget 2.2m

Arbitrum DAO - DAO Core contd.

ArbitrumDAO Procurement Committee - Phase II

120k

72.7k

54k

49.9k

47.3k

4.1k

Member 1 - Axis Advisory

Member 2 - Areta

Member 3 - Daimon Legal

Operational Budget

USD Budget 414k

USD Spend to Date 222.1k

USD Remaining to be Sent 191.9k

The ADPC spent $65.4k on Committee member compensation and $4.1k on operational expenditure during January 2025, taking total spend to $222k to date. The multisig had $71k remaining in it ($75k was transferred from the Aera vault to the MS during the month), while the Aera vault had $196k remaining, therefore across the multisig and vault there are sufficient funds on hand to cover committee costs.

Delegates Incentive Program (DIP)

The DIP passed on Tally in October 2024 - it aimed to build on the momentum gained from the initial period and outlined a budget for a 12-month period. The combined budget across both delegate incentive programs is outlined below.

Delegate Incentive Programs - Combined ARB Budget

+2.4m

12.1m

+369.1k

+30k

+188.2k

+9.1m

Delegate Incentives

Karma Development

Admin Costs - SEED Latam

Multisig Signers (first AIP)

Price Buffer

Total Budget

For ease of tracking total incentives and operational costs associated with Delegate Incentives, we have combined both DIP AIP's in our analysis.

DIS Spend - March 2023 to Current Month (ARB)

9.1m

7.6m

1.5m

369.1k

303.6k

188.2k

133.1k

65.5k

55.1k

30k

Delegate Incentives

Admin Costs - SEED Latam

Karma Development

Multisig Signers

ARB Budget 9.7m

ARB Sent to Date 1.7m

ARB to be Sent 8.1m

Arbitrum DAO - DAO Core contd.

Total Delegates Incentivised 58

Average Total ARB Incentive per Delegate ARB26k

ARB Remaining in DIS Multisig Wallet ARB10.5M

Average total monthly ARB incentives ARB116k

ARB Delegate Incentives - March 2023 to Current Month (ARB)

952k

54.1k

53.4k

52k

51.8k

49.3k

46.6k

44.9k

44.3k

40.9k

40.4k

40.1k

Multisig Support Service (MSS)

162k

Surplus / (Shortfall) to pay Roles USD54k Balance in Wallet ARB403k USD255k

108k

90k

79.8k

60k

54k

46.6k

33.3k

30k

MSS Chairs

MSS Signers

r3gen Token Flow Report

USD Budget 331.8k

USD Spend to Date 130.6k

USD Remaining to be Sent 201.3k

Arbitrum DAO - Ecosystem Incentives

This relates to funds allocated towards users in the Arbitrum ecosystem, distributed to them via protocols built on Arbitrum. The funding is used to directly incentivise network and user growth on Arbitrum.

Ecosystem Incentives Budgets (ARB)

200m

+45.7m

154.9m

+37.6m

+21.5m

+50.1m

Short Term Incentives Program

Short Term Incentives Program Backfund

Short Term Incentives Program Bridge

Long Term Incentives Program

Total

Short Term Incentives Program (STIP)

All STIP programs had a 16 September 2024 deadline to utilize all funds allocated. All remaining funds have been returned to the DAO.

STIP

Backfund

Bridge

Protocols approved for funding under the STIP program that weren't funded

Protocols funded in STIP or STIP backfund eligible to receive an additional incentive

DAO-funded incentives targeting active Arbitrum protocols

Rationale

Incentive Budget (ARB) Operations Budget (ARB) Incentives Actually Allocated (ARB) Number of Protocols Allocated Funding

50,000,000

21,400,000

37,500,000

94,000

120,000

100,000

50,038,044

21,312,500

37,025,522

Funding Sent (ARB)

48,893,148 (1,036,833) 47,856,315

17,533,929 (1,705,936) 15,827,993

27,247,306

Funding Returned (ARB) Net Funding Spent (ARB) Number of Protocols Sent Funding

(629,829)

26,617,477

Total STIP Allocation and Spend (ARB)

150m

+37.5m 108.9m (48.9m)

100m

+21.4m

+1m (17.5m)

+50m

+1.7m (27.2m)

50m

+629.8k

18.6m

Arbitrum DAO - Ecosystem Incentives contd.

Long Term Incentives Program

During January 2025, 2 protocols received funding out of the Hedgey vesting contracgt totalling 393k ARB, with the 393k ARB returned to the LTIP multisig shortly thereafter. In total, 452k ARB was returned to the multisig during the month.

The multisig then returned its entire balance to the DAO treaury wallet on 31 January 2025 (31M ARB).

LTIP

Rationale

Test new incentive designs to ensure the DAO is ready to commit to a long-term program

Incentive Budget (ARB)

45,000,000

Operations Budget (ARB)

735,000

Incentives Actually Allocated (ARB)

30,654,389

Number of Protocols Allocated Funding

Funding Sent (ARB)

30,337,723

Funding Returned (ARB)

(5,865,956)

Net Funding Spent (ARB)

24,471,767

Number of Protocols Sent Funding

LTIP ARB Allocation vs. Spend

+45m

(30.3m)

+5.9m

20.5m

ARB Budget

ARB Spent

ARB Returned by Protocols

ARB Unspent

On 31 January 2025, the LTIP Multisig returned 31M ARB to the DAO Treasury Wallet. - this balance is made up from:

- 85.2M being received via AIP's - 60.5M being sent to Hedgey to distribute incentives to protocols under LTIP and the STIP Bridge - 6.5M being received from protocols returning unused incentives (under STIP Bridge and LTIP) - 0.4M being sent to various parties under operating expense budgets

Arbitrum DAO - Ventures

Ventures Budgets (ARB)

+250m

478.7m

+225m

+3.5m

+191.7k

+52k

M&A for Arbitrum ADPC Subsidy Fund Arbitrum Ventures Initiative

Gaming Catalyst Program

Arbitrum Foundation's Strategic Partnerships Budget

Total

Gaming Catalyst Program

The GCP provided its first transparency report and gave an EOY update during December. During December 2024, it sent 44.9M ARB out of the multisig wallet - the Arbitrum Foundation confirmed the funds sit in a Foundation-controlled multisig and therefore we have removed this amount from the spent figures. To date, the GCP has not deployed capital for investments or grants. In the GCP's transparency report, they reported the below spending to date. Note these figures have not been verified as they occurred mainly off-chain.

General Legal Fees: $60.4k Entity Set-up & Related Legal Fees: $568.2k Marketing, Events & PR: $17k

General & Admin: $553.3k Investments & Grants: $0 TOTAL: $1.2M

ADPC Subsidy Fund

The full 3.5M ARB allocated to this venture were converted into USDC via Coinbase Prime. In total, the subsidy fund realized ~ USDC1.918M per the ADPC update thread. To date, USDC1.912M has been allocated towards security audits across 22 projects building on Arbitrum. The fees are allocated based on the tier projects fit into:

- Tier 1: 70% audit fee subsidy - Tier 2: 60% audit fee subsidy - Tier 3: 55% audit fee subsidy - Tier 4: 47% audit fee subsidy

9 shortlisted security providers will receive the subsidy payments upon completion of certain deliverables and documentation.

Arbitrum DAO - Treasury

Arbitrum Stable Treasury Endowment Program (STEP)

The STEP report, covering 1 - 31 December 2024, was published on the forum and is summarized below (this is the most recent report). STEP Allocations

Market Value 31 Dec 2024 $30.5M Interest Earned (YTD) $196k Yield YTD (Cash on Cash) 0.65%

9.5m

9.6m

5.2m

5.3m

5.2m

3.5m

Securitize BUIDL

Ondo USDY

Superstate USTB

Mountain USDM

OpenEden TBill

Backed Finance blB01

USD Cost 30.3m USD Market Value 30.5m

Yield YTD Cash on Cash

USD Cost Interest Earned

Securitize BUIDL

9,523,937 5,194,875 5,194,875 3,463,250 3,468,250 3,463,250 30,308,437

58,390 26,859 56,403 34,966 13,342 195,756 5,796

0.61% 0.52% 1.09% 1.01% 0.17% 0.39% 0.65%

OndoUSDY

Superstate USTB Mountain USDM OpenEden TBill

Backed Finance blB01

Total

Other updates posted by the program manager included:

Securitize/Blackrock

Following BUIDL’s integrations with stablecoins from Ethena, Usual, and Frax, Securitize is working to add these tokens for additional on-chain redemption options.

OpenEden

OpenEden’s TBILL is now roughly 5% backed by Securitize/Blackrock’s BUIDL, with the goal of enhancing both liquidity and portfolio diversification.

Treasury Management V1.2

Both treasury management streams (Treasury Management and Growth) are currently in the RFP process, with no funding deployed to date. Note the "spend" in December has been removed from figures and will rather be added when the funds are moved out of the DAO-controlled multisigs.

Treasury Management Committee

Growth Management Committee

Austin Campbell (WSPN USA) $20k per milestone ($60k total)

Entropy Advisors

Three Sigma

Make Markets

Callen (Wintermute) $20k per milestone ($60k total)

Llama Risk

Waiving Payment

$20k per milestone ($60k total)

Arbitrum DAO - Grants Programs

The Arbitrum DAO has implemented various grants programs to foster growth and facilitate development within the Arbitrum ecosystem. Grants are either awarded directly from the DAO's treasury wallet to grantees, or are awarded to grant manager(s) - the grant manager(s) approved by the ArbitrumDAO have sole discretion on how to allocate the grant program’s ARB treasury based on their own criteria. The Arbitrum Foundation focuses on the legal backend for supporting the grant programs while the DAO representatives are free to execute on their proposal and allocate funds according to criteria agreed with the community. The Arbitrum DAO has implemented 2 grant programs, as well as issued several direct grants (i.e. funding allocated directly to a grantee without being facilitated by a grant manager via a program). For the purposes of the below analysis, funding requests by a single party funded directly out of the DAO's treasury wallet are included under direct grants. The Arbitrum Foundation also has its own grant program, solely under its control - figures for their program have therefore not been included in the analysis below.

Grant Criteria

Grant programs overseen and facilitated by third parties, with grantees receiving funding via these third parties and not directly from the DAO. Examples include Plurality Labs and Questbook.

Arbitrum DAO Grant Programs

Funding sent directly from the DAO's treasury wallet to the ultimate recipient. This could either be as a proposed grant or any other proposal where the end beneficiary is funded directly and not via a third-party grant manager/facilitator.

Arbitrum DAO Direct Grants

Supports builders with milestones-based funding for growth. All grants issued through this program will serve to improve the adoption of Arbitrum chains, create stronger technical structures, and build sustainable communities in the Arbitrum ecosystem.

The Arbitrum Foundation Grant Program

ARB Allocated

25m

+9.9m

20.2m

20m

15m

+3.3m

10.3m

10m

+2.8m

+3.4m

+800k

Questbook Grant Program

Plurality Labs Grant Program Milestone 1

Plurality Labs/Thank ARB Grant Program Milestone 1B

Questbook Grant Program Extension

Total Grant Programs

Direct Grants

Total Grant Programs and Direct Grants

Arbitrum DAO Grant Programs

The Questbook Arbitrum Grants program focuses on anyone developing domain-specific projects on top of Arbitrum, ranging from education, gaming, and dev tooling to innovative ideas. Through the program, grantees receive milestone-based funding based on domain-specific needs outlined by the domain allocators elected by the community.

Questbook - Flow of Grant Funding

ARB

USDC/T

Grant 1 Budget

800,000

ARB Sent to Program Wallets

(800,000)

ARB Returned from Program Wallets

120,000

ARB Received from Program Wallets to Swap to Stablecoins

380,578

ARB Swapped into USDC for Programs

(424,398)

728,143

Stablecoins sent to Program Wallets

(675,000)

Stablecoins Returned from Program Wallets

61,000

Grant 2 Budget

3,300,000

Grant 2 Budget Swapped to Stablecoins

(3,300,000)

3,393,024

Stablecoins sent to Program Wallets

(3,081,000)

Funding Available for Operational Costs

76,180

426,167

ARB Swapped for Operational Spend

(2,797)

4,003

Funding Spent on Operational Costs

(73,383)

(369,880)

Remaining Funding

60,290

During January 2025, the Questbook program spent 7.4k USDC on operational costs. The multisig wallet therefore had 60k USDC in it.

No grants were paid out during January 2025 relating to any of the first round grants. The 4 multisigs therefore stull hold $189k in them.

Questbook Grant Program Stablecoin Funding - 1st Round

263.5k

196.2k

189k

183.1k

142.4k

130k

Remaining USDC Funding 189k

75.5k

67.3k

54.5k

46.6k

Gaming

Developer Tooling on NOVA

New Protocol Ideas

Education, Community growth and events

Stablecoin Funding Received via Swaps 765.6k Stablecoin Grants Spent / Transferred to Round 2 Wallet 576.2k Stablecoins Remaining in Wallets 189.4k

Grant Spend - Second Round

Questbook Grant Program Stablecoin Funding - 2nd Round

770.3k

Remaining USDC Funding 1M

584.9k

523.2k

489.6k

466.9k

303.4k

280.7k

247k

185.3k

Gaming

Developer Tooling on NOVA

New Protocol Ideas

Education, Community growth and events

Stablecoin Funding Received 3.1m

Stablecoin Grants Spent 2.1m

Stablecoins Remaining in Wallets 1m

During January 2025, 230k of USDC funding was deployed across the 4 grant program categories, taking total grant spending to date to 2.1M USDC across grantees. Each sub-category has USDC remaining in their wallets totalling 1M USDC.

Questbook - Round 2 Grants

ARB Grants

523,217 40,000 37,500 27,500 418,217 489,600 48,000 40,000 25,000 376,600 466,860 25,000 25,000 25,000 391,860 602,700 40,000 35,720 29,788 497,192

Gaming

GamingGrid

Arbitrum Gaming Growth with New Game+

UGC Campaign Bot

Other Grantees

Developer Tooling on NOVA

Search Multichain Worlds on Arbitrum with Dora Open Source Code Contribution Dashboard (DevRel) Economic Risk Simulation Engine for Arbitrum One & Nova

Other Grantees

New Protocol Ideas

DexPal.ai

SONGS

Locale Network Other Grantees

Education, Community growth and events

Merge Madrid

Online+IRL Hackathon Support Arbitrum LATAM

Other Grantees

Thank ARB powered by Thrive Protocol Previously Plurality Labs

Milestone 1b Funding (ARB)

+3.4m

(336k)

(224k)

(18k)

2.8m

(2.7m)

75.6k

AIP Funding

Thank ARB Service Fee

Program Management

Oversight Board

Funding for Grantees

Funding Spent on Grants

Balance in Thrive Multisig

No funding was deployed in January 2025 - 11 ARB was returned to the DAO treasury. The full 518k ARB balance remains in the Milestone 1a multisig.

Parties Receiving Funding from Multisig 383

Average Allocation (ARB) 7.2k

Balance in Milestone 1a Multisig (ARB) 518k

Balance in Milestone 1b Multisig (ARB) 48.6k

Recipient

Program

ARB Spent to Date

Metagovernance Project

GA Cartographer Syndicate

330,000 240,000

Gitcoin

Gitcoin GG20

GA GIV-ARB Ecosystem Accelerator

several

154,940

Gitcoin several

Gitcoin GG21

150,000 136,850 120,000

GA Amplifying Impact

StableLab

Firestarters

Thank ARB Participation Incentives

Claim Contract

80,219

several

GA Oasis Onchain Quick Grants

65,250 63,150 56,600

Tara Stafford

GA Amplifying Impact

Enterprise Blockchain Labs LLC

GA RWAIG

Other Grantees

1,354,358 2,751,367

TOTAL

Arbitrum DAO Direct Grants

ARB Allocated

+251.9k

9.9m

+5.3m

+4.3m

Previous Grants

Fund the Stylus Sprint

Arbitrum Hackathon Builder Continuation Program

Total Direct Grants

Fund the Stylus Sprint

During January 2025, the 4 committee members received 5k ARB each, relating to their monthly compensation. Total spend to date has been 70k ARB, with a total of 5.26M ARB remaining in the multisig.

Arbitrum Hackathon Builder Continuation Program

During December 2024, and AIP was passed aiming to build an ecosystem of unique Arbitrum-based projects that will continue to grow and attract new projects. It outlined a 6-month, two-phase program to build on the outcomes of the Arbitrum CollabTech Hackathon (through Questbook). Phase 1 focuses on validating ideas while Phase 2 plans to support projects moving from PoC to development of MVP's and attaining their first 100 users. RnDAO will select the 4 most promising teams to join the program, each of whom will receive an initial stipend of $12k over 3 months. The top 2 projects will move onto Phase 2, where they will receive an additional $38k plus hands-on support.

The proposal also outlined a budget for operational costs and support, plus a 30% buffer for ARB price movement.

USD Budget

203k

188k

165.6k

76k

48k

34.4k

35k

26k

Capital Investment - Phase 1

Capital Investment - Phase 2

Grants (Incentives for user interview participants)

Program Ops

Venture Support

Total

Arbitrum DAO

RnDAO

Arbitrum DAO Token Flow Report January 2025

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