Arbitrum Token Flow Report - November 2024

Arbitrum DAO Token Flow Report

November 2024

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)

422M ARB Total DAO ARB Expenditure 2.66M USD Total Stablecoin spending

10.6k ETH DAO ETH Holdings 3.16B ARB DAO ARB Holdings

27,710 ETH Total Sequencer Fees 43,460 ETH Total Transaction Fees

Arbitrum TVL (DefiLlama)

1.3m

3.8b

1.3m

1.2m

3.5b

3.4b

1.2m

3.3b

1.1m

2.9b

2.8b

973.4k

2.8b

941.7k

960k

931.5k

2.7b

919k

2.8b

885.1k

TVL (USD) TVL (ETH) Dec 23 Jan 24 Feb 24 Mar 24 Apr 24 May 24 Jun 24 Jul 24 Aug 24 Sep 24 Oct 24 Nov 24 840k

2.5b

Arbitrum Ecosystem Stats (Arbiscan)

50m

170

42.8m

158

41m

160

39.3m

40m

37.6m

35.8m

150

33.2m

146

145

28.7m

30m

140

133

131

22.3m

131

129

19.8m

127

130

18m

20m

17m

15.8m

120

116

112

10m

111

110

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

1.2m 1.6m 2m

1.1m 929.4k

767k

ArbitrumOne Average Daily Tx ArbitrumOne Average Daily New Verified Contracts Dec 23 Jan 24 Feb 24 Mar 24 Apr 24 May 24 Jun 24 Jul 24 Aug 24 Sep 24 Oct 24 Nov 24 0 ArbitrumOne Unique Addresses

100

DAO Monthly Token Flows November 2024

503 ETH Total Revenue Total Transaction Fee Inflows

Total Sequencer Fees Collected 163 ETH

0.68

Net Fee Flow

339 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)

300m

251.1m

250m

200m

150m

100m

49.4m

50m

27.4m

24.4m

22.7m

5.3m

5.2m

4.8m

1.7m

1.4m

2.3m

818.9k

1.1m

1.3m

-50m

Jan 24

Feb 24

Mar 24

Apr 24

May 24

Jun 24

Jul 24

Aug 24

Sep 24

Oct 24

Nov 24

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) - November 2024

Current Month Genesis to Date

Fees charged to process transactions

Transaction Fee Inflows

2,347,985

81,027,801

Sequencer costs to post on Ethereum

Sequencer Fee

(762,889)

(46,708,297)

Net Fee Flow

1,585,096

34,319,504

Net fee earned by the DAO

DAO Expenditure

(228,601)

(425,115,331)

Total DAO spending

Net Token Flows During the Period

1,356,495

(390,795,828)

Net inflows / (outflows) for the period

Fee Inflows

DAO Fee Inflows - November 2024 (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 163 (32.5%) L2 Base Fee 127 (25.2%) L2 Surplus Fee 213 (42.3%)

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)

50k

43.5k

189

42.4k 42.7k 43k

41.3k 41.6k

39.8k 40.1k

143

575

39.1k

40k

538

36.5k

265

561

292

32.7k

29.6k

761

30k

538

338

168

224

21.6k

490

639

20.2k

221

19k

20k

226

153 318

4.4k

277

484

886

530

113

238

12.5k

450

258

2.9k

367

202

10k

409

167

2.2k

7.1k

400

186

1.6k

1.4k

173

1.2k

1.1k

688

481

814

213

577

162

119 119

118 102 106

163

L1 Base Fee

L1 Surplus Fee

L2 Base Fee

L2 Surplus Fee

Cumulative Revenue

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, 27.7k ETH has been charged in L1 Base Fees. The sequencer has periodically claimed that amount and as at 30 November 2024, was owed 159 ETH which it can claim at any point.

Sequencer Fee Flow (ETH)

+27.7k

(6.1k)

(14.2k)

(7.1k)

(178)

+159

(16)

L1 Base Fee

Sequencer Refunds - 1H 2023

Sequencer Refunds - 2H 2023

Sequencer Refunds - 1H 2024

Sequencer Refunds - 2H 2024 (excl. Current Month)

Sequencer Refunds - Current Month

Unclaimed Sequencer Fees

Net Fee Flow

Decrease in Net Fees post "Atlas" 50%

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 November 2024 , the total net flows amounted to 15,750 ETH, streamed periodically to the L2 Treasury Timelock Wallet. Net transaction fees collected in November 2024 amounted to 339 ETH - compared to the 3 months before the "Atlas" upgrade (December 2023 - February 2024), total transaction fees have fallen 86% while net transaction fees have fallen 50% (for the months of April to November 2024). An AIP was passed in August/September 2024 to send 5,134 ETH to bootstrap the first BoLD validator. In addition, an AIP passed in October to send 30 ETH to sponsor the Ethereum foundation Attackathon. No other ETH send events have occurred.

Arbitrum DAO Net Transaction Fee Flows (ETH)

20k

15.7k

15k 15.2k 15.4k

13.9k 14.2k

12.8k

12k 12.6k

11.3k

10.5k

9.4k

10k

8.4k

7.7k

6.5k 7.1k

5.7k

4.1k

3.1k

1.4k

728

765

732

973 1.1k

783

692

1.4k 1.7k

881

577

650

600

233

1.1k

280

806

188

195

339

Net Fee Flow

Cumulative Net Fee Flow

Treasury

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.

ARB Holdings 2.88B

DAO Assets - Converted into USD

The DAO collected 15.7k Ethereum in transaction fees in excess of the L1 fee owed to the sequencer, and has sent 5.1k ETH (on the BoLD validator and attackathon proposals). The 10.3k ETH holdings were valued at USD 38M at the end of November 2024 . Note the remaining ETH (0.3k) sits unclaimed in fee wallets.

ETH Treasury Holdings 10.3k

ARB Holdings 3.1b (97.9%) ETH Holdings 38m (1.2%) USD Holdings 29m (0.9%)

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.

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 - Overview

USD Stablecoin Holdings

ARB Holdings

DAO Treasury

2,877,631,963 223,650,000

Catalyze Gaming Ecosystem Growth

LTIP - Multisig

30,614,944 11,081,642 7,000,000 5,330,000 3,982,602

Delegate Incentive System

Event Horizon Sylus Sprint

ARDCv2

Arbitrum MSS

462,860 518,216 75,633

Plurality Labs - Grants Safety Multisig

Plurality Labs - Thrive Impact Foundation Multisig

Questbook Wallets ADPC - Aera Vault

3,556

1,692,361

408,051

STEP (using most recent 31 Oct report)

26,853,842 28,954,254

TOTAL

3,160,351,416

Note immaterial balances not included.

DAO Spend Analysis

Monthly ARB Expenditure - Last 6 Months

Jun24

Jul 24

Aug24

Sep24

Oct24

Nov24

DAO Expenditure in ARB

(49,288,542)

(24,208,788)

(27,192,389)

(1,906,121)

(250,206,292)

253,904

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

(137,196)

(188,720)

(213,939)

(275,861)

(848,246)

(482,505)

(49,425,738)

(24,397,508)

(27,406,328)

(2,181,982)

(251,054,538)

(228,601)

*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 59.1M using 6-month average

ARB 251M monthly expenditure using highest 1 month

ARB 84.5M 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%

3 Month Average Spend (in ARB)

3 Month Average ARB Spend, Increased by 50%

Highest Month Spend (in ARB)

3 Month Average ARB Spend, Increased by 75%

ARB Introduced into Circulation

Treasury Allocated to Proposals 20% Treasury Spent to Date 11.8%

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 November 2024, the DAO approved 719M ARB worth of spending outlined in various proposals. This represents 20% of the DAO's initial treasury balance of 3.6B ARB. Spending began in August 2023, with a total of 425M ARB spent to November 2024 (including USD spend converted into ARB). This represents 11.8% 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 Spend - March 2023 to Current Month (ARB)

Actual Spend - March 2023 to Current Month (ARB)

DAO Core 30m (4.2%) Ecosystem Incentives 154.9m (21.6%) Ventures 478.7m (66.6%) Treasury Diversification 35.3m (4.9%) Grant Programs 10.3m (1.4%) Direct Grants 9.6m (1.3%)

DAO Core 9.5m (2.2%) Ecosystem Incentives 115.4m (27.1%) Ventures 251.6m (59.2%) Treasury Diversification 35.3m (8.3%) Grant Programs 9.3m (2.2%) Direct Grants 4.1m (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. 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)

(171.9m)

(14.1m)

415.8m

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

+283.7m

+500k

(230m)

54.2m

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

229,500,001

Total ARB Spent

280,000,009

Total ARB Unspent

469,999,991

ARB Unspent in Vesting Wallet

415,817,359

ARB Unspent in Foundation Wallet

54,182,632

Total ARB In Wallets

469,999,991

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 Development Budget (ARB)

+6m

+325k

+4m

30m

+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)

+6m

+200k

9.5m

+137.1k

+1.1m

+358.2k

+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

v2 of the ARDC aims to extend and build upon v1's deliverables in relation to research and development initiatives within the DAO. It was proposed for a 6-month term, with the possibility of extending the term for another 6 months via a Snapshot vote. It also aims to create more structure via the establishment of a Supervisory Council of 3 elected members (two focusing on communication and one on operations). Elections were ongoing to fill all the positions as at 30 November 2024.

No spending or conversion into stablecoins had occurred at the end of November 2024.

ARDC v2 Budget (ARB)

1.2m

735.6k

660k

663.8k

410k

368.6k

180k

93.6k

35k

19.4k

Security

Research

Risk

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

The ADPC Phase II AIP passed in October 2024 - the requested funding was as seen below. The proposal outlined a budget to cover Committee operations for a 6-month period.

120k

93k

54k

27k

Member 1 - Axis Advisory

Member 2 - Areta

Member 3 - Daimon Legal

Operational Budget

USD Budget 414k

USD Spend to Date 81k

USD Remaining to be Sent 333k

The Aera vault held 408k USDC at 30 November 2024 and therefore has sufficient funding on hand to cover budgeted expenditure for this initiative - the ARB to USDC conversion strategy achieved a rate of $0.512 / ARB and therefore the budgeted 20% ARB price buffer more than covered adverse price movements.

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)

10m

8.2m

9.1m

963.6k

369.1k

342.4k

188.2k

150.7k

37.5k

30k

26.7k

Delegate Incentives

Karma Development

Admin Costs - SEED Latam

Multisig Signers

ARB Budget 9.7m

ARB Sent to Date 1.1m

ARB to be Sent 8.7m

Arbitrum DAO - DAO Core contd.

Total Delegates Incentivised 48

Average Total ARB Incentive per Delegate ARB20k

ARB Remaining in DIS Multisig Wallet ARB11.1M

Average total monthly ARB incentives ARB120k

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

558.5k

500k

37.7k

37.6k

36.1k

36k

34.7k

34.6k

33.4k

32.4k

31.2k

31k

30.4k

29.9k

Multisig Support Service (MSS)

Balance in Wallet ARB463k USD450k Surplus / (Shortfall) to pay Roles USD193k

162k

135k

90k

79.8k

75k

46.6k

33.3k

27k

15k

MSS Chairs

MSS Signers

r3gen Token Flow Report

USD Budget 331.8k

USD Spend to Date 75.3k

USD Remaining to be Sent 256.6k

Entropy Advisors: Exclusively Working With Arbitrum DAO

During November 2024, the Entropy-controlled multisig wallet had a 1.75M send event to Coinbase Prime. Entropy provided a detailed update on the Forum covering all workstreams currently live and what was achieved in November, some of which include the Stylus Sprint, OpCo discussions, an events budget, Delegate CoC and Treasury Management v1.2.

DAO Events Budget

During November, an AIP passed outlining allocating USD1.5M / 4M ARB towards allowing the DAO to have continued presence at the industry's most prominent events. The allocation of funding will be overseen by Entropy, the ADPC and Disruption Joe. 13

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. During October 2024 there were therefore no send events to any protocols under the STIP program - a few protocols returned unused funding and we expect the balance of unused funds to be returned over the course of November 2024.

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

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

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

27,247,306

(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

The LTIP incentives ended on 2 September 2024, after which unused funding needed to be returned to the DAO. There were therefore no send events to protocols under the LTIP in November 2024 as the program has closed.

Several protocols returned funds to the LTIP Multisig during November 2024 as the timeline to use the incentives had expired.

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)

29,852,827

Funding Returned (ARB)

(5,414,388)

Net Funding Spent (ARB)

24,438,439

Number of Protocols Sent Funding

LTIP ARB Allocation vs. Spend

+45m

(29.9m)

+5.4m

20.6m

ARB Budget

ARB Spent

ARB Returned by Protocols

ARB Unspent

In total, the LITP Multisig wallet had 30.6M ARB in it as at 30 November 2024 - this balance is made up from: - 85M being received via AIP's - 60.5M being sent to Hedgey to distribute incentives to protocols under LTIP and the STIP Bridge - 6M being received from protocols returning unused incentives (under STIP Bridge and LTIP) - 0.2M being sent to various parties under operating expense budgets

This was valued at close to USD30M as at 30 November 2024 - consideration should be made around the use of these funds as they have already been allocated out of the DAO's treasury.

Arbitrum DAO - Ventures

Ventures Budgets (ARB)

750m

+250m

478.7m

500m

+225m

250m

+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

There was no spending relating to M&A for Arbitrum, the AVI and the GCP during November 2024 (out of the multisig wallets), therefore the analysis focuses on items where spending occurred or new proposals.

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 first STEP report, covering 1 - 31 October 2024, was published on the forum and summarized below.

STEP Allocations

15m

9.5m

10m

5.2m

3.5m

3.4m

Securitize BUIDL

Ondo USDY

Superstate USTB

Mountain USDM OpenEden TBill

Backed Finance blB01

USD Cost 26.8m USD Market Value 26.9m

USDCost

Interest Earned

YieldYTD

Securitize BUIDL

9,523,937 5,194,875 5,194,875 3,463,250

101

0.00% 0.31% 0.14%

OndoUSDY

15,979

Superstate USTB Mountain USDM OpenEden TBill

7,354

(14,780)

(0.43%)

5,000

0.02%

Backed Finance blB01

3,463,250 26,845,187

Total

8,655

0.03%

Treasury Management

The Treasury Management v1.2 proposal has been submitted on Tally, with voting having started on 6 December 2024. The proposal aims to establish 2 tracks: - Treasury, allocating 10M ARB for ARB-only on-chain strategies and 15M ARB converted into stables or cash-like holdings to serve as a pilot for the DAO's "checking account"; - Growth, allocating 7,500 ETH to be used in DAO-approved investments on a case-by-case basis The proposal also outlines a committee for each track, comprising of three members (per committee). Committee members will be compensated USD60k for a 6 month term, with payment contingent on deliverables. As Entropy will fill one of the Growth committee seats, the total operational cost of this proposal is USD300k.

Voting closes on 20 December 2024.

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

+9.6m

19.9m

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)

(355,080)

Remaining Funding

75,090

During November 2024, the Questbook program spent 42k USDC on operational costs. The multisig wallet therefore had 75k USDC in it.

There have been no additional ARB grants relating to the first round of Questbook - there have, however, been a few USDC grants. The updated total stablecoin grant spend is outlined below.

Questbook Grant Program Stablecoin Funding - 1st Round

263.5k

196.2k

189k

183.1k

Remaining USDC Funding 202k

130k

129.4k

75.5k

67.3k

59.6k

54.5k

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 563.2k Stablecoins Remaining in Wallets 202.4k

Grant Spend - Second Round

Questbook Grant Program Stablecoin Funding - 2nd Round

770.3k

Remaining USDC Funding 1.4M

449.6k

421.8k

401.4k

393.4k

376.9k

368.9k

348.4k

320.7k

Gaming

Developer Tooling on NOVA

New Protocol Ideas

Education, Community growth and events

Stablecoin Funding Received 3.1m Stablecoin Grants Spent 1.7m Stablecoins Remaining in Wallets 1.4m

During November 2024, 265k of USDC funding was deployed across the 4 grant program categories, taking total grant spending to date to 1.67M USDC across grantees. Each sub-category has USDC remaining in their wallets totalling 1.4M USDC.

Questbook - Round 2 Grants

ARBGrants

421,801 37,500 27,500 24,000 332,801 398,400 48,000 35,000 25,000 290,400 401,360 25,000 25,000 25,000 25,000 301,360 462,298 40,000 35,720 25,000 25,000 336,578

Gaming

Arbitrum Gaming Growth with New Game+

UGC Campaign Bot

Tempest Gaming Guild

Other Grantees

Developer Tooling on NOVA

Search Multichain Worlds on Arbitrum with Dora

Economic Risk Simulation Engine

StylusSecure

Other Grantees

New Protocol Ideas

DexPal.ai

SONGS

Locale Network Primis Protocol Other Grantees

Education, Community growth and events

Merge Madrid

Online+IRL Hackathon Aleph - The Pop-up City

Namaste Arbitrum!

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

In addition to the above, the multisig from milestone 1a still holds 518k ARB in it - it has not spent funding on grants since June 2024 (the only send events relate to moving the milestone 1b funds to the Thrive multisig).

Parties Receiving Funding from Multisig 381

Average Allocation (ARB) 7.2k

Balance in Milestone 1a Multisig (ARB) 518k

Balance in Milestone 1b Multisig (ARB) 75.6k

Recipient

Program

ARB Spent to Date

Metagovernance Project

GA Cartographer Syndicate

330,000 240,000 150,000 147,228 136,850 120,000 100,000 65,250 63,150 60,219

Gitcoin Gitcoin several several

Gitcoin GG20 Gitcoin GG21

GA GIV-ARB Ecosystem Accelerator

GA Amplifying Impact

StableLab

Firestarters

Lexicon Governance Ltd

GAMEV

several

GA Oasis Onchain Quick Grants

Tara Stafford Claim Contract Other Grantees

GA Amplifying Impact

Thank ARB Participation Incentives

1,313,670 2,726,367

TOTAL

Arbitrum DAO Direct Grants

ARB Allocated

+368k

4.1m

+1.9m

+1m

+42.5k

+237.5k

+155.3k

+130k

+125k

+127.4k

Tally Proposals In Progress (at November 2024)

Treasury Management v1.2

Arbitrum Hackathon Builder Continuation Program Status: Published on-chain, voting started Ask: 252k ARB / $188k to co-fund (with RnDAO) a program to take projects from hackathon PoC to an end MVP. It aims to build on the CollabTech hackathon funded under the Questbook grants program.

Status: Published on-chain, voting started

Ask: 10M ARB for ARB-only on-chain strategies + 15M ARB converted to stables (or cash-like instruments) to serve as a pilot for the DAO's 'checking account'. 7.5k ETH for growth opportunities to be approved on a case-by-case basis. Cost Breakdown: - 1M ARB / $300k to compensate 5 committee members (Entropy will waive any fee)

Cost Breakdown: - $124k capital investment - $3k for grants - $26k for program ops - $35k for venture support

Arbitrum DAO Token Flow Report November 2024

Statement of Token Flows - November 2024 (ETH)

November 2024

L1BaseFee

163

L1 Surplus Fee L2BaseFee L2 Surplus Fee

127 213 503

Total Transaction Fees

Sequencer Refund

(163)

Net Transaction Fees

339

DAO ETH Holdings L1 Sequencer Fee Inflow Wallet Layer 1 Surplus Fee Inflow Wallet Layer 2 Base Fee Inflow Wallet Layer 2 Surplus Fee Inflow Wallet

121 210

Arbitrum Foundation: L2 Treasury Timelock Wallet

10,260

Less: Fees Owed to Sequencer

(79)

Total ETH Holdings

10,590

Note the 5k ETH send event for the BoLD validator and the 30ETH Attackathon sponsorship send events have been executed.

Statement of Token Flows - Novmber 2024 (ARB)

DAO Treasury Wallet

Total

Other Wallets

3,166,359,838 2,885,614,565 280,745,273

Opening Balance

ARB Inflows and Outflows AIP Funding

(7,982,602)

7,982,602

253,904

AIPSpend

(217,120)

DAOCore

Ecosystem Incentives

490,269

Ventures

- - -

Treasury Diversification

Grant Programs

(19,245)

Direct Grants

AIP Operational Spend Swaps - ARB to Stables Other Transactions

3,166,613,742 2,877,631,963 288,981,779

Closing ARB Balance

Less: ARB in Hedgey Contracts (allocated to STIP or LTIP Protocols)

(2,262,273)

Closing ARB Balance - DAO Funds

3,164,351,469 2,877,631,963 286,719,506

Items to note above: - AIP allocations relate to the DAO events budget and ARDC v2 - Ecosystem Incentives reflect a negative spend (i.e. an inflow) as protocols returned funding to the LTIP multisig

Statement of Token Flows - March 2023 to November 2024 (Stablecoins) USDC & USDT

Treasury Diversification

Questbook - Multisig

Questbook - 1st Round Subwallets

Questbook - 2nd Round Subwallets

ADPC Phase II

Total

Opening Balance

32,946,596

30,450,000

117,090

218,646

1,671,769 489,091

Stablecoin Inflows ARB to Stablecoin Swaps Total Stablecoin Inflows

DAOCore ADPC v2 Spend

(81,040)

Grants Programs

Stablecoins (Sent) / Received ARB Swapped into Stables Grant Payments Operational Costs

(14)

(8,234)

8,220

- - - -

(273,128) (42,000) (315,142)

(8,000)

(265,128)

(42,000) (42,000)

Total Grants Programs

(16,234)

(256,908)

Direct Grants

ARB to Stablecoin Swaps

- - -

Grantees Paid

Total Direct Grants

STEP

ARB Swapped to Stablecoins

Closing Stablecoin Balance

32,631,454

30,450,000

75,090

202,412

1,414,861 408,051

Token Flow Report

November 2024

Arbitrum DAO

The information contained in this report is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Any tax advice contained in this report is not intended to be used for the purpose of avoiding penalties under tax law. While we use reasonable efforts to furnish accurate and up-to-date information, we do not warrant that any information contained in or made available through this report is accurate, complete, reliable, current or error-free. We assume no liability or responsibility for any errors or omissions in the content of this report or delivered information.

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