Annual Report | Arbitrum DAO | 2024 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 rest 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 non-chain data was used, the source of such data has been outlined in the report. No verification over non on-chain data 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.
2
The Arbitrum Decentralised Autonomous Organisation (DAO)
Annual Report | Arbitrum DAO | 2024
The Arbitrum DAO is a decentralized autonomous organization (DAO) built on the Ethereum blockchain. At its core, the Arbitrum DAO is a community-driven governance mechanism that allows ARB token holders to propose and vote on changes to the organization and the technologies it governs. Throughout this report, any reference made to the Arbitrum DAO refers to the consensus mechanism whereby Arbitrum token holders vote on AIPs using their token holdings. The DAO's governance smart contracts are implemented on the Arbitrum One rollup chain, which is a Layer 2 scaling solution for the Ethereum blockchain. These smart contracts include the DAO's governance token, ARB. DAO members use ARB tokens to vote on Arbitrum Improvement Proposals (AIPs). The weight of any given voter's vote is proportional to the amount of ARB they hold (or represent). The DAO is a powerful tool that facilitates decentralized governance and community-driven management of the Arbitrum ecosystem. By holding ARB tokens and participating in the governance process, individuals can have a direct impact on the future of Arbitrum and, by extension, Ethereum.
ARB Token Information
Initial supply cap
10 Billion ARB
Inflation
2% p.a. (max)
Minting / burning mechanism
L2 smart contract
Bridgeable to
Ethereum L1
Tokens launched on
Arbitrum One
On- chain governance (voting) happens on
Arbitrum One
Airdrop snapshot
Block 58642080 on Arbitrum One = February 6th, 2023
Claiming started
Block 16890400 on Ethereum Mainnet = March 23rd, 2023
Claiming ended
Block 18208000 on Ethereum Mainnet = September 24th, 2023
The Arbitrum DAO may propose, vote on and implement AIPs, which can either be constitutional or non-constitutional:
Constitutional
Non-Constitutional
- Process: Modifies the text or procedures of this Constitution and, so long as The Arbitrum Foundation exists, the Amended & Restated Memorandum and Articles of Association and the Amended & Restated Bylaws of The Arbitrum Foundation; - Software Update : Installs or modifies software on any chain; - Core: Takes any action that requires "chain owner" permission on any chain; and - New Chain Approval : Authorizes a new chain as approved by the ArbitrumDAO. This includes authorizing both Governed Chains and Non-Governed Chains.
- Funding : Requests funds/grants or otherwise propose how to spend or allocate funds from the DAO Treasury and, so long as The Arbitrum Foundation exists, the Administrative Budget Wallet as defined in the The Arbitrum Foundation’s Amended & Restated Bylaws; and - Informational : Provides general guidelines or information to the community but does not otherwise propose a new feature or update.
3
Arbitrum DAO - Key Facts and Figures
Annual Report | Arbitrum DAO | 2024
27,150 ETH Total Sequencer Fees 39,087 ETH Total Transaction Fees
68.6M ARB Total ARB spending 0.3M USD Total Stablecoin spending
3.5B ARB DAO ARB Holdings
11,937 ETH DAO ETH Holdings
TVL on Arbitrum (USD) - DefiLlama
4.5b
1.5m
1.4m
3.9b
1.3m 1.3m
1.3m
1.3m
1.2m 1.2m
1.3m
1.2m
1.1m 1.1m
1.1m 1.2m
1.1m
3b
2.9b
3b
2.7b
2.6b
1m
2.4b 2.5b
2.4b
2.4b
2.3b
877.4k
2.3b
2b
2b
809.9k
2b
794.2k
771.8k
1.9b 1.9b
1.8b
1.8b
702.8k
750k
1.5b
1.5b 1.6b
652.1k
1.5b
1.3b
915.3m 588.9k
556.3k
551k
543k
1.1b
1b 998.9m 1b
697.7m
500k
425.8k
0
250k
TVL (USD)
TVL (ETH)
Arbitrum User Analytics
1.2m
300k
271.6k
1.1m
254.1k
992.9k
938.5k
218.6k
877.8k
864.5k
900k
843.4k
207.4k
203.9k
198.7k
200k
751.4k
722.1k
714.1k
169.1k
167.7k
642.7k
628.5k
615.6k
154k
600k
123.6k
100k
300k
Arbitrum Daily Transactions (Arbiscan) Arbitrum Daily Users (Dune Analytics) Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 Jan 24 Feb 24 Mar 24 0
0
4
Annual Report | Arbitrum DAO | 2024
DAO Token Flows 1 Mar 2023 - 31 March 2024 (Genesis to Date)
39,087 ETH Total Revenue Total Transaction Fee Inflows 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.
Total Sequencer Fee Outflows
0.31 Fee Outflow/Inflow Ratio
Net Fee Flow
27,150 ETH 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.
11,937 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.
Transaction fee figures were obtained from Dune Analytics.
30m
22.7m
20m
15.4m
13m
11.5m
10m
5.8m
2.1m 2.3m 1.6m 1.5m
1.1m 1.3m 1.1m 1.2m 1.4m 1.8m 1.4m 1.2m 1.3m
0
Net Fee Flows - ARB 19.3m DAO Expenditure - ARB 68.7m Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 Jan 24 Feb 24 Mar 24 0
Transaction fees in ETH were converted to ARB using historical price data obtained from CoinMarketCap. Since prices were provided on a weekly basis, the ETH transaction fees for each day within that week were converted to ARB using the exchange rate for that week.
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.
DAO Value Flow - Overview (all converted to ARB)
March 2023 - March 2024
Fees charged to process transactions
Transaction Fee Inflows
63,900,479
Sequencer costs to post on Ethereum
Sequencer Fee Outflows
(44,584,742)
Net fee earned by the DAO
Net Fee Flow
19,315,737
Total grants spending
DAO Expenditure
68,785,973
Net inflows / (outflows) for the period
Net Token Flows During the Period
(49,470,235)
5
Annual Report | Arbitrum DAO | 2024
Fee Inflows Arbitrum DAO-governed chains (Arbitrum One and Nova) programatically generate ETH inflows through transaction fees paid by users within the Arbitrum ecosystem.
Arbitrum DAO Transaction Fee Flows (ETH)
These fees are split into:
Layer 1 Sequencer 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.
L1 Sequencer Fee Inflow/Outflows 27.2k (69.… Layer 1 Surplus Fee Inflow 3k (7.7%) Layer 2 Base Fee Inflow 6.6k (16.9%) Layer 2 Surplus Fee Inflow 2.3k (6.0%)
Layer 2 Surplus Fee Inflow
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)
6k
50k
189
575
39.1k
538 143
40k
36.3k
265
4.5k
561
33k
292
29.8k
761
30k
22
24.8k
338
168
3k
538
21.8k
226 490
20.4k
639
224
19.2k
148 417
20k
94
277
4.4k
484
4k
886
530
202 450 113
12.6k
238
258
1.5k
3k
167 367
2.5k
10k
186 409
7.1k
2.3k
2.1k
2.1k
173 400
1.6k
1.4k
1.2k
1k
825
615
L1 Sequencer Fee Inflow Cumulative Fee Inflow Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 Jan 24 Feb 24 Mar 24 0 Layer 1 Surplus Fee Inflow Layer 2 Base Fee Inflow Layer 2 Surplus Fee Inflow
0
6
Fee Outflows
In the reporting period, L1 Sequencer Fee inflows amounted to 27,150 ETH. However, during this time, a total of 6 payments, totaling 27,021 ETH, were made from the wallet to the sequencer, leaving 129 ETH unclaimed or unpaid inflow fees. It's worth noting that each of the months detailed in the tables had one claim event, except for December 2023, where there were two such events.
L1 Sequencer Fee Flow (ETH)
30k
+27.2k
-6.1k
-6.1k
20k
-8k
10k
-2.3k
-4.5k
129
0
Total L1 Sequencer Fee Inflows
L1 Sequencer Outflow May 2023
L1 Sequencer Outflow August 2023
L1 Sequencer Outflows December 2023
L1 Sequencer Outflow February 2024
L1 Sequencer Outflow March 2024
Unclaimed Sequencer Fees (at 31 March 2024)
Net Fee Flow
Net fee flow is the total collected fee less any fee owed to the sequencer to post transactions onto the Ethereum blockchain. As at 31st March 2024 the total net flows amounted to 11,937 ETH. The net fee flows is likely to reduce moving forward as the charges relating to the execution cost for running the transaction on Arbitrum alongside the cost of posting data to Ethereum has reduced following the Arbos v20 "Atlas" upgrade.
Net Fee Flows (ETH)
15k
11,937
12.5k
11,284
10,501
9,417
10k
8,444
7,711
7,061
7.5k
6,484
5,719
4,991
5k
4,110
3,080
2.5k
1,659
1,421
1,084
1,030
973
881
783
728
765
732
650
653
577
Net Fee Flows Cumulative Net Fee Flows Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 Jan 24 Feb 24 Mar 24 0
7
Annual Report | Arbitrum DAO | 2024
Treasury
The Arbitrum DAO's treasury holdings consists of 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 grants issued by the DAO.
Treasury statement inclusive of ARB holdings held within the various incentive & grant programs.
ARB Holdings 3.5B
ETH made up 0.6% of total DAO Assets
The DAO collected 11,937 Ethereum in transaction fees in excess of the L1 fee owed to the sequencer. This was valued a USD 44M as of March 31st, 2024. Consideration could be given to how the DAO can use this ETH productively.
ETH Holdings 11,937
DAO Treasury holding by multi-sig (ARB)
45.7m
Treasury Holding - Overview
31Mar2024
DAO - ARB LTIP - ARB PL - ARB STIP Backfund - ARB ARDC - ARB DIS - ARB STIP - ARB ADPC - ARB Questbook - ARB
Assets - Nominal Holdings ARB
3,527,371,512
Stablecoins
522,611
ETH
11,937
Assets - $USD
ARB
$5,867,429,773
Conversion rate applied $1.6634 (CoinMarketCap)
Stablecoins
$522,611
No rate applied
ETH
$43,507,619
Conversion rate applied $3,644.77
Total Assets - $USD
$5,911,460,004
8
Annual Report | Arbitrum DAO | 2024
DAO Spend Analysis
Monthly ARB Burn
Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23
Dec23
Jan24
Feb24
Mar24
DAO Expenditure
0
0
0
0
0 0 135,432 197,501 11,525,473 15,456,196 22,681,803 12,977,376 5,844,668
ARB Token "Burn"
0
0
0
0
0 0 -135,432 -197,501 -11,525,473 -15,456,196 -22,681,803 -12,977,376 -5,844,668
monthly expenditure ARB 5.3M using 12 month average
ARB 11.4M ARB 13.8M monthly expenditure monthly expenditure using 6 month average 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 grant outflows within the organization. Using these averages, it calculates the number of months of grant funding that the current asset holdings would be able to sustain.
Number of months the DAO can maintain expenditure levels before fully depleting the DAO ARB Treasury based on ARB expenditure within the DAO.
3 Month Average ARB Spend Increased by 50%
Full Period Average Spend (in ARB)
655
167
3 Month Average ARB Spend Increased by 100%
6 Month Average Spend (in ARB)
303
125
3 Month Average ARB Spend Increased by 200%
3 Month Average Spend (in ARB)
251
84
0
200
400
600
800
0
50
100
150
200
9
Annual Report | Arbitrum DAO | 2024
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 - these have been labeled as Grant Outflows. This report divided Grant Outflows across 5 major categories:
Arbitrum Foundation
The Arbitrum Foundation is a Cayman Islands foundation company. Funds sent to the Foundation are de-recognised from the DAO's Treasury once they are deposited into the Foundation's wallet. Note the initial ARB750M was sent via the airdrop event and did not flow out of the DAO treasury.
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 sent to protocols for subsequent distribution to users.
DAO Core
Ecosystem Incentives Direct Grants Grants Programs
Funds for users in the Arbitrum ecosystem distributed to them via protocols built on Arbitrum. Used to directly incentivise network growth on Arbitrum. Funds in multisig wallets are treated as DAO funds until they are sent to protocols for subsequent distribution to users.
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.
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.
ARB Allocated Spend
ARB Actual Spend
This represent funds which have been committed to programs through DAO on chain governance. Allocated spend is sent to relevant programs multsig to then by distributed by the program.
This represents the funds that have been distributed directly from programs multisig via an onchain transaction and thus treated as actual spend.
STIP 50.1m (40.0%) STIP Backfund 21.5m (17.2%) LTIP 45.7m (36.5%) Questbook 800k (0.6%) Plurality Labs 3.4m (2.7%) Rarible 127.4k (0.1%)
STIP 48.7m (72.5%) STIP Backfund 17.5m (26.0%) LTIP 127.4k (0.2%) Questbook 830.4k (1.2%)
ARDC 1.8m (1.4%) ADPC 200k (0.2%) DIS 1.6m (1.3%)
Rarible 4k (0.0%) ADPC 15k (0.0%) DIS 2.8k (0.0%)
The DAO to date has therefore allocated: - 93.7% of the total ARB allocation towards incentivising users - 3.4% of the total ARB allocation towards direct grants and grant programs - 2.8% of the total ARB allocation towards long term programs, committees or groups funded by and supporting the effective functioning of the Arbitrum DAO
The DAO has therefore spent: - 96.3% of actual ARB spend to incentivising users
- 3.6% of actual ARB spend towards direct grants and grant programs protocols and projects building within Arbitrum - 0.1% of actual ARB spend towards long term programs, committees or groups funded by and supporting the effective functioning of the Arbitrum DAO
10
Annual Report | Arbitrum DAO | 2024
The Arbitrum Foundation has enabled the DAO to assume full responsibility for the chain’s technology, future, as well as how to deploy net transaction fee revenue. With the DAO assuming those rights and controls, it also assumed the responsibility to fund the ongoing operations of the chains and the costs of running critical chain infrastructure, including RPCs, the Sequencer, and third-party vendors and service contracts. While there are many activities that the DAO can do directly on-chain, several of its responsibilities require a representative that can engage, maintain and enter new agreements with service providers to run infrastructure that’s critical for the ecosystem (e.g. servers, RPCs, block explorers, data feeds and analytics platforms, and tooling), and ensure that both the chain and the ecosystem have the support they need to continue to thrive. In order to ensure a smooth transition to the DAO without any interruption of services, it was necessary to create an organization that would be ready to service the DAO immediately from launch. The Arbitrum Foundation was created to fill this need, with its mission and scope outlined across the Foundation Bylaws. Prior to the launching of the DAO, The Arbitrum Foundation assumed responsibilities for funding and running chain infrastructure. However, in an arrangement that appears to be unique amongst Arbitrum’s peers, the Foundation does not receive or control the net revenue from transaction fees as this is given directly to the DAO treasury. 7.5% of ARB tokens (ARB750M) was transferred to the foundation in the initial token airdrop. A portion of these tokens were spent before AIP1.1 required them to be placed into a vesting wallet with a four-year lock-up period, thus the balance ARB were transferred to that wallet. Arbitrum DAO - The Arbitrum Foundation
Foundation Initial ARB Transactions
1b
+750m
(40m)
(10.5m)
699.5m
750m
500m
250m
0
ARB Airdropped
ARB Sent to Wintermute
ARB Sent to Other External Wallets
ARB Sent to Foundation Vesting Wallet
The Foundation can call fund over time from the vesting wallet. These unlocked funds are then withdrawn from a vesting wallet to a wallet controlled by the foundation:
Foundation Vesting Wallet ARB Transactions
750m
+699.5m
(47.9m)
(20.6m)
(29.2m)
(28.2m)
(23m)
550.7m
500m
250m
0
ARB Received
ARB Unlocked and Sent - July 2023
ARB Unlocked and Sent - September 2023
ARB Unlocked and Sent - November 2023
ARB Unlocked and Sent - January 2024
ARB Unlocked and Sent - February 2024
ARB Balance in Vesting Contract
11
Arbitrum DAO - The Arbitrum Foundation contd.
Annual Report | Arbitrum DAO | 2024
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
200m
+500k
(125m)
+148.8m
150m
100m
50m
24.3m
0
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
124,500,001
Total ARB Spent
175,000,009
Total ARB Unspent
574,999,991
ARB Unspent in Vesting Wallet
550,658,591
ARB Unspent in Foundation Wallet
24,341,400
Total ARB Unspent
574,999,991
12
Annual Report | Arbitrum DAO | 2024
Arbitrum DAO - DAO Core
DAO Development Budget (ARB)
4m
+1.6m
3.5m
+200k
+1.8m
2m
0
Arbitrum Research & Development Collective
ArbitrumDAO Procurement Committee
Delegates Incentive System
Total
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 onchain governance vote, actual outflows are funds which are then distributed from the wallet at which point they are "spent".
Arbitrum Research & Development Collective
ARDC Budget (ARB)
The Arbitrum Research & Development Collective (ARDC) was proposed to aid in turning Arbitrum DAO members’ ideas into reality for a term of 6 months. The ARDC’s role in reviewing and enhancing governance proposals, conducting code reviews for security, providing quantitative analysis for economic risk, and fostering active delegate engagement aims to contribute significantly to the growth and success of the Arbitrum ecosystem. It pledges to be a valuable resource for proposal authors, helping them refine their ideas and make better-informed decisions.
Security
+665k
Research
+665k
Risk
+335k
The collective's mandate would includes: - Forum Proposal Review & Assistance; - Review on Chain Proposal Code Updates; - Quantitative Assistance; and - Project Management It also aims to offer the following benefits: - Tooling Creation and Enhancement;
DAOAdvocate
+50k
Multisig Signers
+30k
Immutable Lawyer
+16k
Total
1.8m
- Research New Mechanisms; - Delegate Engagement; and - Growth Initiatives
0
500k
1m
1.5m
2m
The Committee will include a DAO Advocate whose role will be to represent the DAO and function as the bridge between the DAO and the ARDC - they will ensure the Committee acts in the best interests of the DAO. As of 31st March ARB8.5k of the total allocation has been spent by the program.
Elections were held for the various roles within the collective, the results of which are summarised below:
OpenZeppelin Research Member
OpenZeppelin DAO Advocate
OpenZeppelin Risk Member
OpenZeppelin Security Member
OpenZeppelin L2BEAT / Ant Federation
OpenZeppelin Blockworks / Delphi Digital
OpenZeppelliin
OpCehnaZoes pLpaeblsin
13
Arbitrum DAO - DAO Core contd.
Annual Report | Arbitrum DAO | 2024
ArbitrumDAO Procurement Committee
The ArbitrumDAO Procurement Committee (ADPC) proposal tasked the ADPC with facilitating & administering various procurement frameworks within the Arbitrum Ecosystem, creating new procurement frameworks for DAO Ratification & creating a proposal for security-service subsidies. It aimed to ensure a transparent, efficient, and accountable approach to procurement, benefiting the ecosystem by securing high-quality service providers via a preemptive quality assurance mechanism. The committee's mandate would include: - Overseeing and facilitating the procurement framework for security-oriented service providers. - Researching & drafting a proposal to the ArbitrumDAO to set up a subsidy-fund for security-oriented services that will be used to subsidize the costs for security-services for smaller projects within the Arbitrum Ecosystem. - Researching & implementing a framework that will establish a set of qualitative & quantitative metrics that will be utilized to assess a project’s eligibility for the ‘Subsidy Fund’. - Establishing procurement frameworks for a myriad of verticals/service-types that the ArbitrumDAO could need in the foreseeable future. - Creating and communicating guidance notes and circulars that will substantiate and provide additional detail in relation to any procurement framework that is ratified by the ArbitrumDAO. Member elections closed on 30 January 2024, with the three elected members, and fees, displayed opposite. As of 31st March ARB20k of the total allocation has been spent by the program. ARB15k to committee members (ARB5k each) & ARB5k for multisig signers (ARB1k each).
ADPC Budget (ARB)
Joseph (immutablelawyer) Stipend
+48k
Bernard Schmid Stipend
+48k
Paul Imseih (pablo) Stipend
+48k
+30k
Multisig Signers
ARB Price Buffer
+26k
200k
Total
0
50k
100k
150k
200k 25…
Delegates Incentive System (DIS)
The Delegates Incentive System aimed to introduce an Experimental Incentive System aimed at the Arbitrum DAO delegates with a duration of six months. The goal was to assess the incentives' impact on the delegates' active participation and involvement in the DAO's governance. 50 delegates would be selected to receive these incentives based on various criteria, including: - >ARB50k - >25% historical participation on Tally Delegates could receive a maximum of ARB5k per month, with actual receipts driven by a scoring framework. The framework aims to reward delegates who are driving the DAO forward and is a weighted metric taking into account delegates' participation in Snapshot and Tally voting, their communication of voting rationale and commentary on proposals impacting the DAO. As of 31st March only ARB20k has been spent on this program and it all relates to Karma's fees.
DIS Budget (ARB)
Delegate Incentives
+1.5m
+30k
Karma Development
+20k
Admin Costs
Multisig Signers
+30k
Total
1.6m
0
500k
1m 1.5m 2m
14
Annual Report | Arbitrum DAO | 2024
Arbitrum DAO - Ecosystem Incentives
Ecosystem Incentives Budgets (ARB)
200m
+45.7m
117.3m
100m
+21.5m
+50.1m
0
Short Term Incentives Program Short Term Incentives Program Backfund
Long Term Incentives Program
Total
Short Term Incentives Program (STIP)
The initial STIP proposal (AIP 9) allocated ARB50M to various DAO-funded incentives targeting active Arbitrum protocols. Aimed at fulfilling short-term community needs, the program planned to allocate DAO-owned ARB towards incentives while ensuring transparent consensus and distribution methods. It spanned two voting rounds and provided incentives to eligible programs designed to fund incentives through January 31, 2024. Granted funds were expected to be distributed by the end of January 31, 2024. The goals of the program were to: - Support Network Growth and accelerate the distribution of incentives to Arbitrum dApps to drive network and ecosystem growth. - Experiment with Incentive Grants and grant distribution to uncover new incentive strategies that increase user engagement and increase volume, transactions, and liquidity in the Arbitrum ecosystem. - Find new models for grants and developer support that generate maximum activity on the Arbitrum network. - Create Incentive Data on the efficacy of distributed grants to inform future incentive programs and incentive design. 30 projects were funded, with more than 74% allocated to the 11 largest proposals. Incentives were allocated to proposals across various types of projects, with perpetual future protocols receiving the majority of funding (45%), followed by decentralised exchanges (13%). Radiant claimed the full allocation of their budgeted amount (ARB2.9M) but subsequently sent ARB123.8K back to the multisig on March 30, 2024. Other protocols plan to return unused ARB due to either meeting goals with less ARB or low user activity. The rising ARB price allowed reduced ARB spending. Unspent ARB is being returned gradually to the incentives multisig, expected to complete by May 3rd 2024. Additionally, unclaimed ARB in hedgey streams will be reclaimed. All ARB in the incentives multisig will return to the Arbitrum DAO treasury in the coming months.
Program Budget ARB50M
STIP Operational Budget (ARB)
Multisig Signers 54k (57.4%) tnorm Project Facilitation 20k (21.3%) StableLab Review 20k (21.3%)
STIP Budgets (ARB)
15m
13.1m
12m
12m
11.8m
10m
6m
6m
5m
3.1m
3.1m
3m
3m
2.9m
2.7m
2m
2m
2m
2m
1.5m
1.5m
1.5m
1.5m
1.5m
1.5m
1.5m
1.5m
0
ARB Allocated
ARB Spend
15
Arbitrum DAO - Ecosystem Incentives contd.
Annual Report | Arbitrum DAO | 2024
Short Term Incentives Program Backfund
The STIP Backfund AIP proposed a one-time backfund to all "approved but not funded proposals’’ from the STIP. The AIP increased the total budget by 21.4M to 71.4M while increasing the total participating protocols by 26, for a total of 56 funded projects. The program aimed to allocate DAO-owned ARB towards incentives while leveraging distribution systems, consensus, and delegate diligence already created under the STIP. Some key reasons the program was backfunded instead of opening a second round of applications were to: - reduce time delays; - increase the sample size and diversity of stages and categories within the STIP data set; - allow teams with limited resources to spend less time lobbying delegates when they have already been approved under the STIP; and to - maintain focus on STIP round 1 proposals instead of new round 2 proposals. Developing and implementing Round 2 or similar future funding programs requires careful consideration and time. In the interim, projects approved but unfunded required immediate support. Backfunded projects were required to follow similar timelines, reporting requirements etc. as those funded under the initial STIP, and the same KYC system was used for the new protocols receiving funding. While the additional funding increased the size of the program considerably, the original STIP working group proposed a budget of ARB75 million - the total funding spent on the STIP is therefore still within the originally proposed budget. Protocols plan to return unused ARB due to either meeting goals with less ARB or low user activity. The rising ARB price allowed reduced ARB spending. Unspent ARB is being returned gradually to the incentives multisig, expected to complete by May 3rd 2024. Additionally, unclaimed ARB in hedgey streams will be reclaimed. All ARB in the incentives multisig will return to the Arbitrum DAO treasury in the coming months.
Program Budget ARB21.4M
STIP Backfund Operational Budget (ARB)
Plurality Labs Data & Monitoring 100k (83.3%) StableLab Review 10k (8.3%) Multisig Signers 9k (7.5%) tnorm Community Moderation 1k (0.8%)
STIP Backfund Budgets (ARB)
6m
4.5m
4.5m
3.7m
4m
3.7m
2m
2m
2m
1.8m
2m
1.3m
1.3m
1.2m
1.2m
1m
1m
1m
1m
1m
1m
1m
1m
771.4k
750k
0
0
0
ARB Allocated
ARB Spend
16
Arbitrum DAO - Ecosystem Incentives contd.
Annual Report | Arbitrum DAO | 2024
100m
+21.5m
71.6m
(48.7m)
75m
+50m
50m
(17.5m)
25m
5.3m
0
ARB Allocated - STIP
ARB Allocated - Backfund
ARB Allocated - Total
ARB Spent - STIP
ARB Spent - Backfund
ARB Unspent
Long Term Incentives Program
The Long Term Term Incentives Pilot Program aims for the DAO to test new incentive designs and answer the necessary questions to ensure it is ready to commit to the long-term program. This Pilot Program will distribute a maximum of 45M ARB to protocols building on Arbitrum that were not funded during STIP or the Backfund over a period of 12 weeks. It looks to implement new mechanisms to address the issues seen during the STIP- the DAO will use this Pilot Program as a test run for a long-term framework before committing to a year-long program. The Pilot Program will operate using a Council, will have Advisors to ensure protocols receive adequate feedback and assistance, and will allow protocols more freedom to create innovative ARB incentive plans. Running the Pilot Program to test these new features will allow the DAO to compare different program methods before implementing a long-term framework beginning in Q2 2024. This Pilot Program would allow protocols that missed out on Round 1 the opportunity to apply to gain these benefits, which will help level the playing field for these protocols. It focuses on obtaining evidence using a committed working stream to guarantee the DAO comes away from this program ready to make informed decisions on a long-term framework. The pilot program also allows the DAO to test new aspects of an incentive program such as Advisors, Councils, and more flexible incentive distributions before committing long-term.
Program Budget ARB45M
LTIP Operational Budget (ARB)
5k
125k
100k
30k
105k
70k
100k
200k
Council Members 125k (17.0%) Advisors 105k (14.3%) Research Bounties 200k (27.2%) Data and Analytics Provider 100k (13.6%) Program Manager 70k (9.5%) Proposal Authors 30k (4.1%) Retroactive Community Funding 100k (13.6%) Multisig Signers 5k (0.7%)
OpenZeppelin
17
Annual Report | Arbitrum DAO | 2024
Arbitrum DAO - Grants Programs
The Arbitrum DAO implemented a grants program to foster growth and facilitate development within the Arbitrum ecosystem. Grants 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 1 direct grant (i.e. funding allocated directly to a grantee without being facilitated by a grant manager via a program). The Arbitrum Foundation also has its own grant program, solely under its control.
Grant Criteria
Arbitrum DAO Grant Programs
Focuses on anyone developing domain-specific projects on top of Arbitrum, ranging from education, gaming, and dev tooling to innovative ideas.
Questbook Grant Program
Plurality Labs Grant Program Arbitrum DAO Direct Grants
Community-created grant program to facilitate participation from the ecosystem.
Introduced to integrate Arbitrum One with the open-source Rarible Protocol, which is an indexer, order book, and SDK powering NFT-based applications, which, once integrated, can be freely and easily used by the Arbitrum builders.
RARI Foundation Grant
The Arbitrum Foundation
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.
Arbitrum Foundation Grant Program
ARB Allocated
15m
+6.8m
14.1m
10m
+127.4k
7.3m
+6.2m
7.2m
5m
+1m
0
Questbook Grant Program
Plurality Labs Grant Program
Total Grant Programs
RARI Foundation Grant
Total Grant Programs and Direct Grants
Arbitrum Foundation Grant Program*
Total Grant Programs, Direct
Grants and Foundation Grants
* figures for the Arbitrum Foundation are taken from their 2023 transparency report (USD converted to ARB at reporting date)
18
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.
Credentials Needed
Why it is relevant
This will help Arbitrum encourage more developers to create innovative gaming experiences and thus onboard new users to its ecosystem This will help Arbitrum build essential infrastructure, tooling for Arbitrum Nova This will encourage more contributors to propose and run experiments for improving the Arbitrum protocol This will help Arbitrum attract quality builders through community growth activities such as education courses, bootcamps, hackathons and sponsoring events
Experience in game development or a deep understanding of Web3 gaming industry.
Gaming
Developer Tooling on NOVA Core contributor to Arbitrum and popular L2s in Web3
New Protocol Ideas
Core contributor to Arbitrum protocol
Education, Community growth andevents
Experience in builder community growth and technical bootcamps
Questbooks' multisig wallet received ARB800k from the Arbitrum DAO treasury on 7 August 2023 to be deployed within the grants program.
The original plan was to allocate ARB160k to each domain, reserving ARB160k in the multisig for committee/Ops payments. However, each of the four categories received ARB200k from the multisig wallets. Subsequently, three domains (Gaming, Dev Tooling, and New Protocol Ideas) returned ARB40k each to the QB Grants SAFE multisig on the same day it was received, to cover the budgeted committee / Ops payments. The Education Community Growth and Events domain returned the ARB40k during the ARB to USDC diversification process undertaken by the grants SAFE multisig in January 2024. The 4 Domain Allocator's were to allocate the funding towards various projects that fell under each category. Some of these funds were further diversified into stablecoins. Received and spent funds for each of the programs is shown below. Note: We have included the ARB40K "Funding Received" within the Education domain as it wasn't returned until 3 months within the grants program. However, the ARB40K is not included within Gaming, Dev Tooling, and New Protocol Ideas "Funding Received" as it was returned the same day it was received.
Questbook Grant Program ARB Funding
Questbook Grant Program Stablecoin Funding USDC & USDT
300k
400k
200k
200k
200k
263.5k
250k
160k
160k
160k
160k
160k
187.1k
120k
120k
200k
140k
136.6k
100k
118.1k
109.9k
90.8k
67.3k
31.5k
0
0
Funding Received Funding Spent or Swapped to Stablecoins
Funding Received Funding Spent
19
The Plurality Labs grants program was proposed to build an Arbitrum DAO Pluralistic Grants Program, aiming to provide a middle ground between Decentralized and Centralized grants programs. The Program Allocator (Plurality Labs) onboards pluralist grants managers who will be responsible for distributing funds to grant applicants that benefit the Arbitrum Ecosystem, focusing on specific needs within Arbitrum and their potential impact. Emphasis was placed on facilitating participation from the entire ecosystem. The below breakdown focuses on program 1A, funding totalling ARB2.85M was sent to the PL multisig on 30 Mar 2024. This figure will be included within the treasury holdings and statements. Plurality Labs Funding Request (ARB) Use of Funds Breakdown (ARB)
224k
617.5k
336k
300k
1.9m
827.8k
2.5m
Ecosystem Development 2.5m (74.4%) Matching Gitcoin Funding Pools 300k (8.9%) Plurality Labs Services 336k (10%) Grant Program Managers 224k (6.7%)
Funds Spent Funds Committed but Not Sent Funds Unallocated
The initial budget allocated to the program was ARB3.36M. Up to 31 Mar 2024, 82% of funding received by Plurality Labs had been either spent or committed to a grantee, leaving ARB617.5k unallocated. These are funds that have not been directly allocated to a grantee and remain uncommitted in the multisig wallet. Note that Program management fees, which were part of the initial budget, have been included in grants sent to grantees and not separately reflected. They have therefore been included under the category into which the grantee falls. Improving the clarity on segregation of funds between grantees vs program manager will be a key focus in the reporting on PL milestone 1b.
Plurality Labs ARB Spent / Allocated
4m
+3.4m
-776.3k
-510k
-300.9k
-336k
2m
-819.3k
-617.5k
0
Funding Received From Treasury
DAO Building Grant Innovation Gitcoin Funding Pools
Plurality Labs Service Fee
Committed but Not Sent
Unallocated
We have relied on PLs own data on funds "Committed but not sent" as these numbers are reflected only within PLs internal budgeting document and not represented by an onchain transaction.
Plurality Labs has their own classification of grants within 4 major categories:
Firestarters Designed to address specific and immediate needs within the DAO. Problems as identified by delegates and Plurality Labs are given a grant to do the initial sensemaking and research that is required to kickstart proactive action. Gitcoin QF Adds extra funds to the matching pool for quadratic funding rounds on Arbitrum. Top programs running on Arbitrum will be selected to receive additional funding.
GovBoost Direct grants funded to increase the Arbitrum DAO's ability to effectively govern its resources.
Grant Innovation Covers a range of areas across the arbitrum ecosystem.
20
Funding has been allocated to over 250 different grantees across 12 major programs implemented by Plurality Labs.
3m
+2.8m -568.7k
-330k
-236.6k
2m
-165k
-156k
-154k
-86.3k
-109.4k
-104k
-115k
1m
-90k
-67.5k
-617.5k
0
ARB Allocated
The largest 10 grants account for more than 74% of budgeted spend. The breakdown of committed and spent funds for these programs are outlined below. Details on committed spend are drawn from PLs internal budgeting documents and do not relate to an onchain transaction.
Largest 10 Programs (ARB)
400k
330k
300k
195k
195k
200k
165k
158k
156k
154k
130k
127.6k
115k
109.4k
104k
101k
100k
100k
86.3k
86.3k
100k
67.3k
43.2k
7.5k
0
Committed 1.5m Spent 1m
21
Arbitrum DAO - Direct Grants
Approved
In progress
The Rarible Protocol - Arbitrum Integration Proposal was introduced to integrate Arbitrum One with the open-source Rarible Protocol, which is an indexer, order book, and SDK powering NFT-based applications, which, once integrated, can be freely and easily used by the Arbitrum builders. Rarible and the Rari Foundation will promote the integration in a cross-marketing push to ensure the NFT and crypto community knows that Arbitrum is serious about NFT growth. The activities to be provided to the Arbitrum DAO were: - Regular features on Rarible.com 1 top spotlight section (1 million MAU) - Dedicated social support for the launch on Rarible’s and Rari Foundation’s owned channels (Twitter, Instagram, Discord, 800k+ followers combined) - Email blasts for the integration (500k+ subscribers) - Leveraging Rarible’s and Rari Foundation’s press relations - Potentially a hackathon
Tally has contributed to the Arbitrum DAO as a service provider since the DAO was created one year ago, serving as the home for on chain governance, security council elections, and delegation. They are in the process of applying for USD220k (in ARB) to improve the proposal process, upgrade the Governor contracts, and highlight delegate contributions. Tally also proposes to ensure that the DAO is set up for success by researching specifications for partial delegation and shielded voting. The proposal aims to contribute to Arbitrum Community Values by making the Arbitrum DAO more socially inclusive, technically inclusive, and user-focused - making it easier for contributors of all backgrounds and technical abilities to engage with Arbitrum governance.
In progress
A proposal to form the Arbitrum Gaming Catalyst Program has passed on Snapshot and will be open to voting on Tally soon. The proposal entails allocating 200 million ARB from the Arbitrum treasury towards the Gaming Catalyst Program (GCP). The Arbitrum Foundation is expected to invest resources in establishing necessary legal entities. Until a council mandate is defined, approved, and elected by the DAO, the 'Gaming Working Group' will act as temporary custodians, refining the proposal. ARDC, Plurality Labs & Questbook will prioritize reasonable requests from the Gaming Working Group and the eventual council to establish GCP, until a separate budget is approved. Within 30 days of passing the proposal, the Gaming Working Group will present options for electing a council, staffing the GCP, and an interim funding request to the DAO.
22
Uniswap-Arbitrum Grant Program (UAGP)
The Uniswap-Arbitrum Grant Program (UAGP) is a 6-month grant program fueling projects of two leading ecosystems. Its objective is to foster growth and advance projects that build exclusively within the Uniswap-Arbitrum ecosystem, with a focus on long-term benefits. It was created by a proposal from Areta to leverage Uniswap’s allocation of ARB tokens intended to enhance the Uniswap ecosystem within the Arbitrum Protocol. As funds came directly from the Arbitrum <> Uniswap, airdrop unspent funds are not considered part of the DAO's treasury. Grant Program Fund: 1.1 million ARB tokens. Supporting growth and development of projects exclusively within the Uniswap-Arbitrum ecosystem, focusing on long-term benefits. Mission The UNI/ARB Grant Program (UAGP) aims to: Budget
- Fund High-Impact Projects: The program allocates grants specifically to projects that demonstrate the potential for substantial positive impact on the Uniswap and Arbitrum ecosystems. - Strengthen the Uniswap and Arbitrum Ecosystems: The UNI/ARB Grant Program (UAGP) aims to strengthen the ties and facilitate exchange between the Uniswap and Arbitrum ecosystems. - Ensure Transparency and Community Input: The program mandates regular progress reports and seeks community feedback to influence the direction of funded projects.
State of the UGAP The Uniswap-Arbitrum Grant Program (UAGP) is entering its fourth month of operations as of early March. With their first cohort being announced in early February. The total amount of funding transferred for this reporting period was 102k USDC with 586k USDC total allocated for further milestone pay-outs. The UAGP has currently accepted 7 projects which, as standard through this reporting, relates only to projects that have completed necessary KYC and KYB verification.
UGAP Applications
Applications The UAGP has seen continued strong application numbers as general awareness of the program has picked up across Uniswap and Arbitrum communities, and beyond. As of time of writing, the program has received 90+ applications from a widely diverse group of projects. The following describes the breakdown of application focus by each RFP category.
5%
21%
44%
31%
Open Contribution Liquidity Management and Derivative Protocols Uniswap on Arbitrum Ecosystem tools or products Uniswap v4 Infrastructure Dev Tools
Grants Overview
UGAP Treasury Holdings
Grants Overview
13 March 2024
Grants Allocated for Payout (USDC)
586,465
USDC Holdings
1,474,100
% of Project Treasury Allocated (USDC)
37%
ARB Holdings
161,590
Grants Already Paid Out (USDC)
102,580
The UAGP holds the project treasury in USDC stablecoin converted at a rate of $2/ARB to operationally hedge currency risk for projects of ARB token.
% of Treasury Transferred (USDC)
7%
23
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