Arbitrum Token Flow Report - February 2025

Arbitrum DAO Token Flow Report

February 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)

432M ARB Total DAO ARB Expenditure 3.6M USD Total Stablecoin spending

12.4k ETH DAO ETH Holdings 3B ARB DAO ARB Holdings

28k ETH Total Sequencer Fees 46k ETH Total Transaction Fees

Arbitrum TVL (DefiLlama)

1.3m

3.8b

1.3m

3.5b

3.4b

3.5b

3.4b

1.2m

3.3b

1.1m

2.9b

987.2k

2.8b

968.8k

2.8b

952.6k

960k

929k

2.7b

915.6k

2.8b

881k

840k

2.5b

Mar 24

Apr 24 May 24

Jun 24

Jul 24

Aug 24

Sep 24

Oct 24

Nov 24

Dec 24

Jan 25

Feb 25

TVL (USD)

TVL (ETH)

Arbitrum Ecosystem Stats (Arbiscan)

60m

170

158

50m 50.8m

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

118

120

116

12m

110

105

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

1.2m 1.6m 2m

100

Mar 24

Apr 24

May 24

Jun 24

Jul 24

Aug 24

Sep 24

Oct 24

Nov 24

Dec 24

Jan 25

Feb 25

ArbitrumOne Average Daily Tx

ArbitrumOne Unique Addresses

ArbitrumOne Average Verified Contracts

DAO Monthly Token Flows February 2025

816 ETH Total Revenue Total Transaction Fee Inflows

Total Sequencer Fees Collected 56 ETH

0.93

Net Fee Flow

761 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 (ARB)

250.7m

49.5m

24.5m 27.6m

5.2m

4.8m

4.7m

3.7m

2.7m

1.8m 812.3k

2.3m

1.4m

1.1m

1.3m

Mar 24

Apr 24

May 24

Jun 24

Jul 24

Aug 24

Sep 24

Oct 24

Nov 24

Dec 24

Jan 25

Feb 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) - February 2025

Current Month Genesis to Date

Fees charged to process transactions

Transaction Fee Inflows

4,652,535

91,971,744

Sequencer costs to post on Ethereum

Sequencer Fee

(317,558)

(48,734,703)

Net Fee Flow

4,334,978

43,237,041

Net fee earned by the DAO

DAO Expenditure

(4,447,830)

(436,359,675)

Total DAO spending

Net Token Flows During the Period

(112,852)

(393,122,634)

Net inflows / (outflows) for the period

Fee Inflows

DAO Fee Inflows - February 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 56 (6.8%) L2 Base Fee 98 (12.0%) L2 Surplus Fee 663 (81.2%)

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)

47k

45.8k

46k

221

2.5k

45k

318

44.4k

153

44k

43.5k

43k

42.7k

42.4k

1.5k

42k

41.6k

41.3k

41k

40.1k

40k

39.8k

554

500

688

663

39.1k

310

481

213

39k

131

106

162

127

119 114

110

119

106

244

102

194

118

163

38k

Mar 24

Apr 24

May 24

Jun 24

Jul 24

Aug 24

Sep 24

Oct 24

Nov 24

Dec 24

Jan 25

Feb 25

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, 28k ETH has been charged in L1 Base Fees. The sequencer has periodically claimed that amount and as at the end of February 2025, was owed 5 ETH which it can claim at any point.

Sequencer Fee Flow (ETH)

+28.2k

(20.2k)

(7.1k)

(194)

(594)

(53)

L1 Base Fee

Sequencer Refunds - 2023

Sequencer Refunds - 1H 2024

Sequencer Refunds - 2H 2024

Sequencer Refunds - 1H 2025 excl. Current Month

Sequencer Refunds - Current Month

Unclaimed Sequencer Fees

Net Fee Flow

Decrease in Net Fees post "Atlas" 46%

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 February 2025 , the total net flows amounted to 17.6k ETH, streamed periodically to the L2 Treasury Timelock Wallet. Net transaction fees collected in February 2025 amounted to 761 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 46% (for the months of April to February 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)

17.6k

16.9k

16.4k

15.7k

15.4k

15.2k

15k

14.2k

13.9k

12.8k

12.6k

12k

1.1k

692

806

685

761

600

280

339

415

233

188

195

Mar 24

Apr 24

May 24

Jun 24

Jul 24

Aug 24

Sep 24

Oct 24

Nov 24

Dec 24

Jan 25

Feb 25

Net Fee Flow

Cumulative Net Fee Flow

Treasury

ARB Treasury Holdings 2.8B

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

17.6k

BoLD Validator Send ETH Attackathon Send Treasury Management Send

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

ETH Treasury Holdings 4.9k

NET DAO ETH

4.95k

ARB Holdings 1.2b (95.2%) ETH Holdings 26.5m (2.1%) USD Holdings 33.6m (2.7%)

ETH in Fee Wallets ETH in L2 Treasury Wallet

0.09k 4.86k

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

4.95k

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

2,796,648,066 178,750,000

Catalyze Gaming Ecosystem Growth

Entropy - Treasury Management & Events Budget

27,749,998 10,355,519 7,000,000 5,240,000

Delegate Incentive System

Event Horizon Sylus Sprint Arbitrum MSS

354,944 90,826

ARDC v2

Plurality Labs - Grants Safety Multisig Plurality Labs - Thrive Impact Foundation Multisig Questbook Wallets

3,556

1,088,146

DAO Treasury

89,313 78,180 49,880

ADPC - Aera Vault ADPC - Multisig ARDC - Aera Vault

1,572,534 30,730,775 33,608,828

STEP (using most recent 31 Jan report)

TOTAL

3,026,192,909

Note immaterial balances not included.

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)

(215.9m)

(13.4m)

372.5m

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

+500k

(310m)

+327m

17.5m

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

309,500,001

Total ARB Spent

360,000,009

Total ARB Unspent

389,999,991

ARB Unspent in Vesting Wallet

372,548,481

ARB Unspent in Foundation Wallet

17,451,510

Total ARB In Wallets

389,999,991

DAO Spend Analysis

Monthly ARB Expenditure - Last 6 Months

Sep 24

Oct 24

Nov 24

Dec 24

Jan 25

Feb 25

DAO Expenditure in ARB

(1,906,121)

(250,206,292)

253,904

(5,468,706)

(578,693) (380,191)

(4,140,353)

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

(423,243)

(462,778)

(473,733)

(337,901)

(307,476)

(2,329,364)

(250,669,070)

(219,829)

(5,806,607)

(958,884)

(4,447,829)

*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 44M using 6-month average

ARB 251M monthly expenditure using highest 1 month

ARB 3.7M 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%

599

3 Month Average Spend (in ARB)

3 Month Average ARB Spend, Increased by 50%

748

499

Highest Month Spend (in ARB)

3 Month Average ARB Spend, Increased by 75%

428

ARB Introduced into Circulation

Treasury Allocated to Proposals 23% 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 February 2025, the DAO approved 834M ARB worth of spending outlined in various proposals. This represents 23% of the DAO's initial treasury balance of 3.6B ARB. Spending began in August 2023, with a total of 436M ARB spent to February 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 60m (7.2%) Ecosystem Incentives 154.9m (18.6%) Ventures 478.7m (57.4%) Treasury Diversification 96.4m (11.6%) Grant Programs 33.7m (4.0%) Direct Grants 9.9m (1.2%)

DAO Core 11.2m (2.6%) Ecosystem Incentives 115.5m (26.5%) Ventures 260m (59.6%) Treasury Diversification 35.3m (8.1%) Grant Programs 9.9m (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. 10

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)

+30m

60m

+4m

+6m

+325k

+600k

+12.1m

+1.2m

+5.7m

Arbitrum Research & Development Collective (incl. v2)

ArbitrumDAO Procurement Committee (incl. Phase II)

Delegates Incentive System (incl. v2)

Multisig Support Service

Entropy Advisors

Event Horizon

DAO Events Budget

OpCo

Total

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

+200k

11.2m

+6m

+245.1k

+1.8m

+758.1k

+2.2m

Arbitrum Research & Development Collective

ArbitrumDAO Procurement Committee (incl. Phase II)

Delegates Incentive System

Multisig Support Service

Entropy Advisors

Event Horizon

DAO Events Budget

OpCo

Total

Arbitrum Research & Development Collective v2

The ARDC used an Aera vault to convert the requested ARB into USDC to pay service providers. Funds were initially sent to the vault at the end of Jan 2025 and were converted into USDC in Feb 2025. In total, 3.77M ARB was converted into 1.75M USDC, achieving a rate of $0.46 / ARB, therefore sufficient funding was achieved to pay all providers. To date, providers have received $173k, representing 20% of their 6-month fee. On 18 Feb, 30k ARB was sent to 3 different wallets (90k ARB total) and subsequently, 29k ARB was refunded from each of those wallets. The 29k ARB was then sent to 3 new wallets to be streamed to the council members. This was to correct vesting period timeline issues. Immutable Lawyer has already received his 35k ARB fee.

ARB Remaining in Multisig Wallet ARB91k USDC Remaining in Aera Vault USDC1.6M

ARB USDC

ARDC v2 Budget vs Spend (USD)

AIP Funding Received

3,982,602

660k

Funds Swapped into Stables Funding Sent - Immutable Lawyer Funding Sent - Supervisory Council Funding Sent - Service Providers Funds Remaining in Multisig

594k

(3,767,602) 1,745,534

410k

(35,000)

369k

330k

297k

(89,174)

66k

41k

33k

(173,000)

Security - OpenZeppelin

Research - Llama Research

Research - Castle Capital

Risk - Nethermind

90,826 1,572,534

USD Budget 1.7m

USD Sent to Date 173k

USD Remaining to be Sent 1.6m

Arbitrum DAO - DAO Core contd.

ArbitrumDAO Procurement Committee - Phase II

120k

93.9k

54k

49.9k

26.1k

4.1k

Member 1 - Axis Advisory

Member 2 - Areta

Member 3 - Daimon Legal

Operational Budget

USD Budget 414k

USD Spend to Date 285.9k

USD Remaining to be Sent 128.1k

The ADPC spent $63.8k on Committee member compensation during February 2025, taking total spend to $286k to date.

The Aera vault has returned 129k USDC to the multisig and therefore has 78.2k USDC remaining, sufficient to pay the balance owing to each member. The multisig returned 75.1k USDC to the DAO treasury and therefore has 49.9k USDC remaining, enough to cover the balance of expected operational expenditure.

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

7.5m

1.6m

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 1.8m

ARB to be Sent 7.9m

Arbitrum DAO - DAO Core contd.

Total Delegates Incentivised 62

Average Total ARB Incentive per Delegate ARB26.3k

ARB Remaining in DIS Multisig Wallet ARB10.3M

Average total monthly ARB incentives ARB148k

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

58.6k

54.3k

54.1k

53.4k

52k

51.8k

49.3k

46.6k

44.9k

44.3k

40.9k

40.4k

During February 2025, the program administrator used its powers to ban 2 users from the DIP who they determined had violated the rules. The violations related to: - Suspicious Activity : Both delegates commented on the same proposals within a very short time frame of each other, and their posts contain similar content. - Suspicious External Connections : There is evidence of coordination between these accounts, indicating a possible conflict of interest or manipulation of the program. - Bot-like Behavior : This delegate’s interactions in the forum reflect automated behavior, with generic responses and a lack of qualitative analysis. There is clear abuse of tools like ChatGPT for generating comments, instead of using it solely for translations or grammatical improvements. They also recently commented on old threads without a logical reason to do that. - Low Value Comments : both delegates usually post low-value comments as can be seen in the rubrics of the last few months.

The banned users were kuiclub and duokongcrypto.

Multisig Support Service (MSS)

The MSS multisig spent 48k ARB in the current month across signers and chairs (r3gen was paid for February at the end of January). It is worth noting that, using the 28 Feb price of ARB, the multisig holds the equivalent of USD151k vs. expected future commitments of USD173.6k. There is therefore a shortfall of USD23k at a price of $0.4249 / ARB.

Balance in Wallet ARB355k USD151k Surplus / (Shortfall) to pay Roles (USD23k)

162k

94.5k

90k

79.8k

67.5k

52.5k

53.2k

37.5k

26.6k

MSS Chairs

MSS Signers

r3gen Token Flow Report

USD Budget 331.8k

USD Spend to Date 158.2k

USD Remaining to be Sent 173.6k

Arbitrum DAO - DAO Core contd.

OpCo: A DAO-adjacent Entity for Strategy Execution

During February 2025, the OpCo proposal was passed on Tally, outlining a plan to establish a legal entity that delegates and key stakeholders can leverage to achieve DAO-defined goals, principally by forming an operational mesh layer and assigning internal employees or negotiating and entering into agreements with service providers and individual contributors to facilitate initiatives. OpCo’s mission is to negate identified frictions affecting the DAO’s strategy execution, such as allowing for the establishment of more operational roles for the DAO, facilitating efficient and competitive contributor and service provider negotiations and information flow between these parties, creating clear responsibilities for carrying out initiatives, and helping ensure the continuation of programs the DAO depends upon. OpCo is also required to be proactive, meaning that if the entity has the bandwidth and recognizes a potential advancement that could be made within its mandated focus areas, it can work on and propose a strategy through which the entity would address the identified frictions. The initial period of the OpCo is 30 months before possible renewal, with 6 months to establish all operations and then a 24-month initial operational period. The total ARB requested was 30M. OpCo Operational Budget

Full Budget

Per Annum Per Month

Internal Employee Salaries Chief Chaos Coordinator

5,328,000 720,000 384,000 4,224,000 4,945,000 2,400,000 2,545,000 1,125,000

2,664,000 360,000 192,000 2,112,000 2,472,500 1,200,000 1,272,500 450,000

222,000 30,000 16,000 176,000 206,042 100,000 106,042 37,500

Chief of Coins

Other 10 Employees Setup and Admin Costs

Legal Services

Other Setup and Admin Costs *

Oversight and Transparency Committee (5 members) *

TOTAL COST (USD)

11,398,000

5,586,500

465,542

Internal Employee Bonus (in ARB)

3,000,000 1,000,000

1,500,000 500,000

125,000 41,667

Oversight and Transparency Committee Bonus (in ARB)

TOTAL COST (ARB) 166,667 * These costs include elements in the initial 6-month establishment period, whereas other costs are only for the 24-month operational period. These costs are: - $690k for entity setup (plus a buffer) in the first 6 months, based on GCP's estimated expenses - $225k for the Oversight and Transparency (OAT) Committee for the first 6 months ($37.5k per member per month) 4,000,000 2,000,000

The next step in the OpCo process is to elect the 3 OAT members via Snapshot, who will then be tasked with filling the additional 2 OAT member slots. The OAT will then begin the recruitment process for the Chief Chaos Coordinator and the Chief of Coins.

The funds have been transferred to a Foundation-controlled wallet and have not been converted at this stage.

For the purposes of this report, spending will be tracked up to the point that the OpCo is fully launched i.e. the most important roles have been filled, an entity has been created etc. Once that occurs, the full value remaining under this AIP will be deemed as spent and all further reporting will fall under the obligation of the OpCo.

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)

The STIP has been fully closed out, with all funds remaining in the multisig returned to treasury in August of 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

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

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 an update in the GRC call that was posted to the forum. The major updates were: - 4 deals have moved through initial review - >7 deals are currently in the initial review phase - work is being done with other stakeholders on strategic alignment - the process to hire a recruiting firm and start headhunting for leadership, investment, ops etc. roles is in-progress - the forum post for council salaries has been posted

ADPC Subsidy Fund

The ADPC published their Subsidy Fund Outcome Report in February 2025, highlighting the outcomes of the initiative as well as giving detailed insights into the protocols funded, security firms used and other outcomes. In total, the fund deployed $1.81M across 22 projects over an 8-week cohort (from a pool of 56 applications) - therefore 94.3% of the fund was utilized. 9 security firms were whitelisted (from 12 applicants), and of those, 6 were selected by projects to performed audit services.

Full details of the outcomes of this fund are available on the forum.

All funding was deemed to have been spent in February 2025, in-line with when the forum update was provided.

Arbitrum DAO - Treasury

Arbitrum Stable Treasury Endowment Program (STEP)

The STEP report, covering 1 - 31 January 2025, was published on the forum and is summarized below (this is the most recent report). STEP Allocations

Market Value 31 Jan 2024 $30.7M Interest Earned (LTD) $422k Yield LTD (Cash on Cash) 1.39%

9.5m

9.7m

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 30.7m

Interest Earned (LTD)

Yield LTD Cash on Cash

USDCost

Securitize BUIDL

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

186,942 66,715 75,783 48,707 17,467 26,724 422,338

1.96% 1.28% 1.46% 1.41% 0.50% 0.77% 1.39%

OndoUSDY

Superstate USTB Mountain USDM OpenEden TBill

Backed Finance blB01

Total

Other updates posted by the program manager included:

Securitize/Blackrock

BUIDL has successfully migrated to daily distributions of interest. Previously, interest was deployed on the first of every month.

Backed

Upon review of the bIB01 position, Steakhouse identified that the subscription fee discount initially offered to Arbitrum was not properly applied to the purchase. As a result, the program paid 30bps in excess of what was intended. Backed is in the process of refunding the STEP program additional bIB01 tokens to make up the differential, which should hit the wallet next week.

OpenEden

OpenEden’s TBILL fund now supports USD fiat subscriptions and redemptions, in addition to USDC.

600k

30.7m 422.3k

30.5m

30m

400k

29m

195.8k

200k

28m

26.9m 89.5k

26.9m

27m

Oct 24

Nov 24

Dec 24

Jan 25

Market Value (USD)

Interest Generated (USD)

Arbitrum DAO - Treasury contd.

Stable Treasury Endowment Program 2.0

During February 2025, an AIP outlining STEP 2.0 was passed on Tally. The key details of the program were: - diversify a further 35M ARB into real world assets that are stable in value, liquid in conversion and have yield uncorrelated to crypto markets - diversify the DAO's treasury and generate ecosystem growth for Real World Asset protocols on Arbitrum The proposal aimed to achieve 3 broad objectives: - Show that Arbitrum has a plan for the RWA vertical and projects in this sector should build on the chain, by building a regular cadence to the STEP program as the flagship program for RWA support; - Let the DAO directly own stable RWAs through a competitive selection process for providers, instead of paying 1% AUM to treasury managers for selecting and holding low risk assets on our behalf. Use yield from the products to cover operational expenses by sweeping it as USDC to the ARB DAO treasury; and - Provision funds ahead of time for optimal execution and take advantage of tailwinds when they arise for diversifying the treasury. Building up an endowment will let us weather even bear markets from an abundance mindset. The proposal outlined a similar committee structure to STEP 1.0, with each of the below committee members receiving 25k ARB compensation (10k ARB on completion and 15k ARB via a Hedgey stream over 3 years): - GFX - Northlake - Nethermind - Karpatkey - Devansh Meta (who subsequently stood down and was replaced by Entropy who waived their fee) as a non-voting facilitating member

All funds remain in the Foundation-controlled multisig.

Treasury Management V1.2

Treasury Management

The Treasury Management program is currently open for proposals and has attracted many applicants in the forum. Final allocations will be decided via Snapshot, which is not live yet. ThreeSigma outlined the TMC's recommendations around allocating funds to protocols. The initial plan was to convert 15M ARB into stablecoins to be managed on-chain, while the remaining 10M ARB was to be deployed into ARB-only strategies. The TMC suggested allocating the 15M ARB to stablecoin strategies to the below shortlisted protocols: - 5M ARB to Karpatkey, targeting 12 - 20% returns with a 0.5% management fee; - 5M ARB to Avantgarde/MYSO, targeting 5 - 15% returns with a 0.5% management fee and a 10% performance fee; and - 5M ARB to Gauntlet, targeting 8% returns with a 0.5% management fee.

The TMC recommended voting YES to the above allocation.

The TMC suggested allocating the 10M ARB-only strategies to the below shortlisted protocols: - 5M ARB to Karpatkey, targeting 7 - 20% returns with a 0.5% management fee - 5M to Avantgarde/MYSO, targeting >30% returns with a 15% performance fee

The TMC recommended voting NO to the above allocation, as they believe the current ARB proposals lack sufficient risk management and clear operational details - resulting in low yield projections - believing it is prudent to sit out on this allocation for now.

Growth Management

The Growth Management program is currently live, with the GMC outlining their recommendations for the DAO to approve via Snapshot (not yet live). Entropy outlined a proposed allocation for the 7.5k ETH to the below protocols: - 5k ETH to Lido to be staked for wstETH, expected to generate ~3.2% plus a 20% 'Reward Share' from Lido; - using the above 5k wstETH on Aave V3 on Arbitrum to act as liquidity for LST/LRT looping, expected to generate an additional 0.62% yield and 0.82% in deposit incentives, plus additional incentive programs; and - 2.5k ETH to be lent on Fluid to support ETH-based DEX lending liquidity, expected to generate 1 - 2% yield plus increasing liquidity.

A full list of applicants can be found on the forum.

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 (800,000) 120,000 380,578 (424,398)

ARB Sent to Program Wallets

ARB Returned from Program Wallets

ARB Received from Program Wallets to Swap to Stablecoins

ARB Swapped into USDC for Programs Stablecoins sent to Program Wallets Stablecoins Returned from Program Wallets

728,143 (675,000)

61,000

Grant 2 Budget

3,300,000 (3,300,000)

Grant 2 Budget Swapped to Stablecoins Stablecoins sent to Program Wallets Funding Available for Operational Costs ARB Swapped for Operational Spend Funding Spent on Operational Costs

3,393,024 (3,081,000)

76,180

426,167

(2,797) (73,383)

4,003

(378,280)

Remaining Funding

51,890

Remaining USDC Funding 189k

During February 2025, the Questbook program spent 8.4k USDC on operational costs. The multisig wallet therefore had 52k USDC in it. No grants were paid out during January 2025 relating to any of the first round grants. The 4 multisigs therefore still hold $189k in them and have done for the last 3 month-ends.

Questbook Grant Program Stablecoin Funding - 1st Round

263.5k

196.2k

189k

183.1k

142.4k

130k

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

Grants 576.2k

Stablecoins Remaining in Wallets 189.4k

Combined Round 1 Wallet Balance (USDC)

222.6k

218.6k

202.4k

189.4k

Sep 2024

Oct 2024

Nov 2024

Dec 2024

Jan 2025

Feb 2025

Grant Spend - Second Round

Questbook Grant Program Stablecoin Funding - 2nd Round

770.3k

Remaining USDC Funding 847k

609.7k

566.1k

534.9k

523.4k

246.9k

235.3k

204.1k

160.5k

Gaming

Developer Tooling on NOVA

New Protocol Ideas

Education, Community growth and events

Stablecoin Funding Received 3.1m

Stablecoin Grants Spent 2.2m

Stablecoins Remaining in Wallets 846.8k

During February 2025, 170k of USDC funding was deployed across the 4 grant program categories, taking total grant spending to date to 2.2M USDC across grantees. Each sub-category has USDC remaining in their wallets totalling 847k USDC. Questbook - Round 2 Grants

USDC Grants

566,129 40,000 40,000 37,500 448,629 523,400 48,000 40,000 25,000 410,400 534,910 40,000 35,000 28,500 431,410 609,718 40,000 35,720 34,788 499,210

Gaming

GamingGrid

Upptic Growth Agency

Arbitrum Gaming Growth with New Game+

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

Arbitrum Proposals App

Locale Network

All-in-one management Tool for delegates

Other Grantees

Education, Community growth and events

Merge Madrid

Online+IRL Hackathon Support Arbitrum LATAM

Other Grantees

Domain Allocator Offerings - Third Round USDBudget Grants 6,750,000 New Protocols and Ideas 1,500,000 Education, Community Growth and Events 1,500,000 Dev Tooling on One and Nova 1,500,000 Gaming 1,500,000 Orbit 750,000

During February 2025, an AIP was passed to introduce the 3rd season of the Arbitrum Domain Allocator Offerings (previously known as Questbook). The proposal outlined a budget of 23.43M ARB to cover the ~USD7.5M needed to cover grants and OPEX. The season is expected to run for 12 months, followed by a further 6-month low capacity phase, where domain allocators and the program manager receive reduced compensation. All funds have been transferred to a new multisig and remain in ARB as at 28 February 2025.

Operating Costs

714,550 528,000 105,600 105,600 105,600 105,600 105,600 96,550 85,800 10,750 60,000 30,000

Domain Allocators

Castle Capital (New Protocols and Ideas) SeedGOV (Education, Community Growth and Events)

Juandi (Dev Tooling on One and Nova)

Flook (Gaming) MaxLomu (Orbit)

Program Manager

Jojo - USD

Jojo - ARB Converted into USD @$0.43

Questbook Platform

Legal Expenses

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