Arbitrum Token Flow Report - September 2024

Arbitrum DAO Token Flow Report

September 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)

172M ARB Total DAO ARB Expenditure 1.8M USD Total Stablecoin spending

10.1k ETH DAO ETH Holdings 3.41B ARB DAO ARB Holdings

27,469 ETH Total Sequencer Fees 42,684 ETH Total Transaction Fees

Arbitrum TVL (DefiLlama)

1.5m

3.5b

3.2b

1.3m

2.9b 2.8b

1.2m

1.3m

2.7b

2.6b

1.1m

2.4b

2.5b

2.4b

1.1m

2.3b 2.3b

2.3b

2.2b

983.6k

2.1b

959.4k

1.8b

853.3k

849.1k

1.7b 1.7b

806.8k 795.9k

778.2k

750k

1.5b

TVL (USD)

TVL (ETH)

Arbitrum Ecosystem Stats (Arbiscan)

50m

300

279

39.3m

40m

250

37.6m

35.8m

33.2m

215

201

28.7m

30m

200

22.3m

19.8m

146

145

18m

140

20m

150

17m

15.8m

129 131

127

14.8m

116

13m 13.9m

112 112

111

12m

10.5m

9.4m

98 100

8.1m

10m

100

6.1m

4.5m

2m 2.1m 1.9m 1.8m 1.6m

955.5k 1.2m 896.7k 835.1k 712.5k 602.5k 553.6k 563.7k 772.8k 1.1m 929.4k 767k 1.2m 1.6m

ArbitrumOne Average Daily Tx

ArbitrumOne Unique Addresses

ArbitrumOne Average Daily New Verified Contracts

DAO Monthly Token Flows September 2024

235 ETH Total Revenue Total Transaction Fee Inflows

Total Sequencer Fee Outflows 47 ETH

0.80

Net Fee Flow

188 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)

60m

1729%

49.3m

45m

1043%

27.4m

30m

24.4m

22.7m

689%

572%

13.2m

15m

204%

194%

5.4m

5.3m

4.7m

1.7m

1.4m

1.1m

819.7k

-15m

-5

Jan 24

Feb 24

Mar 24

Apr 24

May 24

Jun 24

Jul 24

Aug 24

Sep 24

Total Transaction Fees (ARB)

Total DAO Expenditure (ARB)

% of Monthly Revenue Spent

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.

DAO Value Flow - Overview (all converted to ARB) - September 2024

Current Month Genesis to Date

Fees charged to process transactions

Transaction Fee Inflows

1,069,056

77,589,203

Sequencer costs to post on Ethereum

Sequencer Fee

(207,116)

(45,887,503)

Net Fee Flow

861,940

31,701,700

Net fee earned by the DAO

DAO Expenditure

(2,181,981)

(173,832,191)

Total DAO spending

Net Token Flows During the Period

(1,320,041)

(142,130,491)

Net inflows / (outflows) for the period

Fee Inflows

DAO Fee Inflows - September 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 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 47 (20.1%) L2 Base Fee 102 (43.5%) L2 Surplus Fee 86 (36.4%)

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

189

42.4k 42.7k

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

577

162

119

118

102

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, 27.5k ETH has been charged in L1 Base Fees. The sequencer has periodically claimed that amount and as at 30 September 2024, was owed 1.7 ETH which it can claim at any point. The sequencer has recently started claiming multiple times per month.

Sequencer Fee Flow (ETH)

+27.5k

(6.1k)

(14.2k)

(7.1k)

(62)

(46)

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

Net fee flow is the total collected fee less any fee owed to the sequencer to post transactions onto the Ethereum blockchain. As at 30 September 2024, the total net flows amounted to 15,216 ETH, streamed periodically to the L2 Treasury Timelock Wallet. Net transaction fees collected in September 2024 amounted to 188 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 43% (for the months of April to September 2024). An AIP was passed in August/September 2024 to send 5,134 ETH to bootstrap the first BoLD validator: - 4,234 ETH to allow the Arbitrum Foundation to run a BoLD validator - 500 ETH to pay proposers actively participating in and advancing the chain (expected to fund 3 years of operations - 400 ETH to reimburse all L1 gas costs for active proposers

Decrease in Net Fees post "Atlas" 43%

The proposal passed and was executed on 9 September 2024.

Arbitrum DAO Net Transaction Fee Flows (ETH)

20k

15.2k

15k

13.9k 14.2k

12.6k 12.8k

12k

11.3k

10.5k

9.4k

10k

8.4k

7.7k

7.1k

6.5k

5.7k

4.1k

3.1k

1.4k 1.4k

1.7k

728

765

732

973

1.1k

783

692

881

577

650

600

233

1.1k

280

806

188

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 3.15B

DAO Assets - Converted into USD

The DAO collected 15.2k Ethereum in transaction fees in excess of the L1 fee owed to the sequencer, and has sent 5.1k ETH (on the BoLD validator proposal). The 10.1k ETH holdings were valued at USD 26.2M as at 30 September 2024.

ETH Holdings 10.1k

ARB Holdings 2.1b (97.2%) ETH Holdings 26.2m (1.2%) USD Holdings 32.7m (1.5%)

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 investment 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

3,152,451,094 223,650,000

Catalyze Gaming Ecosystem Growth

LTIP - Multisig

29,756,492 7,000,000 3,500,000

Event Horizon Wallet ADPC Subsidy Fund

Delegate Incentive System

786,592 574,104 518,216 264,888 253,470

Arbitrum MSS

Plurality Labs - Grants Safety Multisig

Plurality Labs - Thrive Impact Foundation Multisig Arbitrum Research & Development Collective

Questbook Wallets

3,556

2,454,206 30,450,000 32,904,206

STEP

TOTAL

3,418,758,412

Note immaterial balances not included (e.g. GovHack - 8 ARB).

DAO Spend Analysis

Monthly ARB Expenditure

Jan24

Feb 24 Mar 24 *Apr 24 May 24 Jun 24

Jul 24

Aug 24 Sep 24

239,206 (1,225,132) (49,288,542) (24,208,788) (27,192,388) (1,906,121)

DAO Expenditure in ARB

(22,624,174) (12,876,612)

(5,731,741)

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

(54,638)

(275,964)

(289,513)

(98,686)

(86,395)

(137,196)

(188,720)

(213,939)

(275,861)

(22,678,812) (13,152,576) (6,021,254)

140,520 (1,311,527) (49,425,738) (24,397,508) (27,406,327) (2,181,982)

*STIP refunds made this a net inflow

monthly expenditure ARB 16M using 9-month average

ARB 49M monthly expenditure using highest 1 month

ARB 18M 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.

9 Month Average Spend (in ARB)

3 Month Average ARB Spend, ARB Price Decreased by 25%

194

131

3 Month Average Spend (in ARB)

3 Month Average ARB Spend, ARB Price Decreased by 50%

175

Highest Month Spend (in ARB)

3 Month Average ARB Spend, ARB Price Decreased by 75%

ARB Introduced into Circulation

Treasury Allocated to Proposals 12.3% Treasury Spent

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 September 2024, the DAO approved 444M ARB worth of spending outlined in various proposals. This represents 12.3% of the DAO's initial treasury balance of 3.6B ARB. Spending began in August 2023, with a total of 174M ARB spent to September 2024 (including USD spend converted into ARB). This represents 4.8% of the DAO's treasury balance - the balance is still held in DAO-controlled wallets.

to Date 4.8%

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 September 2024 (ARB)

Actual Spend - March 2023 to September 2024 (ARB)

DAO Core 10.5m (2.4%) Ecosystem Incentives 154.9m (34.9%) Ventures 228.7m (51.5%) Treasury Diversification 35.3m (7.9%) Grant Programs 10.3m (2.3%) Direct Grants 4.3m (1.0%)

DAO Core 8.7m (5.0%) Ecosystem Incentives 116.3m (66.9%) Ventures 1.6m (0.9%) Treasury Diversification 35.3m (20.3%) Grant Programs 7.9m (4.5%) Direct Grants 4.1m (2.4%)

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)

(142.2m)

(14.8m)

444.8m

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

+254.7m

+500k

(205m)

50.2m

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

204,500,001

Total ARB Spent

255,000,009

Total ARB Unspent

494,999,991

ARB Unspent in Vesting Wallet

444,831,167

ARB Unspent in Foundation Wallet

50,168,824

Total ARB In Wallets

494,999,991

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

10.5m

+600k

+1.6m

+200k

+1.8m

Arbitrum Research & Development Collective

ArbitrumDAO Procurement Committee

Delegates Incentive System

Multisig Support Service

Entropy Advisors

Event Horizon

Total

DAO Development Spend - March 2023 to September 2024 (ARB)

+6m

+200k

8.7m

+793.4k

+25.9k

+200k

+1.5m

Arbitrum Research & Development Collective

ArbitrumDAO Procurement Committee

Delegates Incentive System

Multisig Support Service

Entropy Advisors

Event Horizon

Total

Arbitrum Research & Development Collective

ARDC Spend - March 2023 to September 2024 (ARB)

665k

546.9k

377.6k

335k

332.5k

233.9k

118.1k

101.1k

50k

33.3k

30k

20k

16.7k

16k

10k

8.5k

7.5k

6.3k

(6.3k)

(38.8k)

(51.4k)

Security - OpenZeppelin

Research - Blockworks

Research - Delphi Digital

Risk - Chaos Labs

DAOAdvocate - L2Beat/Ant Federation

Multisig Signers

Immutable Lawyer

ARB Budget 1.8m ARB Sent to Date 1.6m

ARB Returned -90.1k

ARB to be Sent 253.5k

Blockworks and Delphi Digital both returned funds to the ARDC multisig wallet (as per internal Committee agreements), and no further disbursements were made - all members agreed to serve the rest of their terms without additional compensation. 11

Arbitrum DAO - DAO Core contd.

ArbitrumDAO Procurement Committee

The ADPC completed its term in August 2024, with no spend in September. A proposal is currently live to extend the Committee's tenure for an additional 6 months.

Delegates Incentive System (DIS)

The Delegates Incentive System is a 6-month program aiming to assess the impact of ARB incentives on delegates’ active participation and involvement in the DAO’s governance. The top 50 eligible delegates receive an ARB incentive based on outlined criteria linked to voting power, historical participation in DAO governance and other criteria.

DIS Spend - March 2023 to September 2024 (ARB)

1.5m

786.6k

713.4k

500k

30k

20k

Delegate Incentives

Karma Development

Admin Costs - SEED Latam

Multisig Signers

ARB Budget 1.6m ARB Sent to Date 793.4k

ARB to be Sent 786.6k

Total Delegates Incentivised 41

Average Total ARB Incentive per Delegate ARB17.4k

* transferred to a new multisig on 27 September ARB Remaining in DIS Multisig Wallet* ARB787k

Average monthly ARB incentives ARB119k

ARB Delegate Incentives - March 2023 to September 2024 (ARB)

500k

399.8k

250k

28.4k

28.3k

27.5k

27.4k

26.6k

26.4k

26k

25.3k

25.1k

24.6k

24.4k

23.7k

Arbitrum DAO - DAO Core contd.

Multisig Support Service (MSS)

To date, the MSS has spent 26k ARB relating to the r3gen Token Flow Reports and due to favorable ARB price movements, had sufficient ARB on hand as at 30 September to cover service provider fees. It has created 6 DAO multisigs to date, some of which have been used and others in anticipation of votes passing.

Balance in Wallet ARB574k USD346k

Surplus / (Shortfall) to pay Roles USD28k

Entropy Advisors: Exclusively Working With Arbitrum DAO

As at 30 September 2024, the Entropy multisig had not spent any ARB it received. Entropy has hired a data analyst and is in the process of building out their team - this should lead to funding being drawn down on in future months.

Event Horizon - Voter Enfranchisement Pool

The Event Horizon proposal creates a public-access metagovernance block - it aims to enfranchise small voters by delegating 7M ARB to a public access-voter block subject to a non-optimistic 1-year renewal. This delegation gets mobilized by Voter Pass functionally giving underrepresented DAO citizens multiplied voting power and more incentive to express their voices.

There is also a 325k ARB grant split between: - 200k ARB to the team to maintain the proposal for 1-year - 125k ARB to the 5-person Oversight Committee

The proposed committee members were: - Michael (Open Zeppelin) - Frisson (Tally) - Jordan (Event Horizon) - Juanbug (PGov) - DisruptionJoe (Arbitrum Delegate)

Subsequently, it was decided that the MSS would replace the oversight committee. The 125k ARB that was already transferred relating to the Oversight Committee was therefore returned to the DAO treasury wallet on 24 September 2024.

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)

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

(487,511)

26,759,795

Allocated Incentive Budget - STIP Programs

GMX MUX Gains Camelot Vertex RADIANT Jones Pendle Synapse Stargate Wormhole

18m

12m

6.8m

4.5m

2.3m

4.6m

3.1m 3m

1.5m

4.5m

1.5m

4.3m

2.9m

1.4m

3m 3m 3m 3m 2.7m

2m 2m

1m 1m 1m 1m

2m 2m 1.8m

900k

Trader Dopex Frax Abracadabra KyberSwap

2.3m 2.3m 2.3m 2.3m 2.3m

1.5m 1.5m 1.5m 1.5m 1.5m

755k 750k 750k 750k 750k

Magpie RAMSES Balancer Other 37 Protocols

1.9m 1.9m

1.3m 1.2m

625k 624k

1.8m

1.2m

29.7m

10.4m

8.5m

10.8m

STIP 50m STIP Backfund 21.3m

STIP Bridge 37m

Arbitrum DAO - Ecosystem Incentives contd.

Protocols Allocated STIP Backfund 26

Protocols Allocated STIP 30

Protocols Allocated STIP Bridge 56

Average ARB Allocation: STIP 1.67M ARB

Average ARB Allocation: STIP Backfund 0.82M ARB

Average ARB Allocation: STIP Bridge 0.66M ARB

Funding Used 47.9m (95.7%) Funding Returned 1m (2.1%) Funding Unspent 1.1m (2.2%)

Funding Used 17.5m (81.9%) Funding Returned 1.7m (8.0%) Funding Unspent 2.2m (10.1%)

Funding Used 27.2m (72.7%) Funding Returned 487.5k (1.3%) Funding Unspent 9.8m (26.0%)

Total STIP Allocation and Spend - March 2023 to September 2024 (ARB)

125m

+37.5m 108.9m (48.9m)

100m

75m

+21.4m

+1m (17.5m)

+50m

50m

+1.7m (27.2m)

25m

+487.5k

18.5m

Arbitrum DAO - Ecosystem Incentives contd.

STIP Multisig - ARB Flows

+21.5m

71.6m

(68.6m)

+50.1m

+2m

5.9m

+1.1m

(75k)

(74.8k)

Funding Received - STIP

Funding Received - STIP Bridge

Total Funding Received

ARB Sent to Hedgey Contracts

ARB Sent to MS Signers & tnorm

ARB Sent to Open Block Labs

ARB Returned by Hedgey

ARB Returned by Protocols

Balance Returned to DAO Treasury

Note the difference in ARB returned by protocols in the above chart vs. the chart on page 16 relates mainly to Synapse, who returned their funds directly to the DAO treasury wallet.

STIP Bridge

The STIP Bridge started distributing incentives in June 2024 and planned to run for 12 weeks. The Tally proposal that was voted on by the DAO approved funding of 37.5M ARB to all protocols approved under STIP or STIP bridge - 56 protocols in total. To date, 28M ARB has been distributed, with 3M ARB distributed in September 2024. At this stage, an excess of 9.1M ARB is expected (37.5M AIP budget, less 27.9M sent to protocols, plus 0.5M ARB returned by protocols).

ARB Incentives - September 2024 ARB3M

Bridge Program Funding Requested and Received - March 2023 to September 2024 (ARB)

15m

14.1m

10m

5.4m

2.3m

1.9m

1.5m

1.4m

900k

755k

750k

297.9k

61k

70.9k

29.9k

27.8k

ARB Requested 37m

ARB Received 27.2m

ARB Returned 487.5k

Arbitrum DAO - Ecosystem Incentives contd.

When the STIP Bridge program was announced, an operational budget of 100k ARB was specified but provided no breakdown. At the end of August 2024, a Snapshot was submitted outlining the budget - it was approved by the DAO on 5 September 2024. All funds have been sent to the relevant people below.

STIP Bridge Operational Budget (ARB)

Advisors (19.4k ARB each) - JoJo - SEEDGov - Castle Capital

Program Manager - Stable Labs

Proposal Author - Alex Lumley

Multisig Signers (500 ARB each) - Lindey - Limes - Joseph - Bobbay - Alex Lumley

Advisors 58.2k (58.2%) Stable Labs PM 34.3k (34.3%) Alex Lumley Proposal Author 5k (5%) Multisig Singers 2.5k (2.5%)

Long Term Incentives Program

The LTIP distributed 1.2M ARB in September 2024, and had protocols return funding of 4.5M ARB. In total, 29.9M ARB has been sent to 84 protocols, with 4.7M ARB returned to the Multisig. The balance of funds are expected to be returned to the multisig in the coming weeks.

LTIP Funding Requested and Received - March 2023 to September 2024 (ARB)

25m

19.5m

20m

15m

10m

1.8m

1.7m

905k

900k

750k

162.9k

51.5k

3.2k

ARB Requested 30.7m

ARB Received 29.9m

ARB Returned 4.7m

Arbitrum DAO - Ecosystem Incentives contd.

LTIP ARB Allocation vs. Spend

60m

+45m

(29.9m)

40m

20m

15.1m

Total ARB Allocated via AIP

ARB Sent to Qualifying Protocols

Unallocated ARB to be Returned to the DAO

Note that 4.7M ARB has been returned by protocols - these were protocols that received funding and returned it as it was not needed, they ran out of time etc. The initial spend for these protocols is therefore included in the 29.9M ARB above. In addition to that, the proposal requested 45M ARB and spent 29.9M ARB - the balance of 15.1M ARB should therefore flow back to the DAO as the incentive period has closed and protocols can no longer claim funds.

OpenZeppelin Average ARB Allocation 356k ARB

OpenZeppelin Protocols Allocated Funding 86

Funding Spent 29.9m (66.3%) Funding Unused 15.1m (33.7%)

There were no LTIP operational spend events in September. The remaining allocated spend relates to: - 100k ARB for Data & Analytics - 100k ARB for retroactive community funding - 13.9k ARB for Lampros Labs - 50k ARB for PYOR

The current unallocated budget is therefore: - 25k ARB for Wintermute (council member) who do not want to receive payment - 72.3k ARB for Research Bounties

LTIP Operational Budget and Spend to September 2024 (ARB)

+735k

(373.9k)

(263.9k)

97.3k

Operational Budget

Spend to Date

Allocated but Unspent

Unallocated

Arbitrum DAO - Ventures

Gaming Catalyst Program (GCP)

The GCP multisig spent 1M ARB in September 2024, taking total spend to 1.35M ARB. The wallet therefore still has 223.65M ARB in it.

In September, Andrew Green stepped down from his position on the GCP Council, with John Kennedy appointed to the Council early in October. The DAO expects a transparency report to be issued shortly.

Arbitrum Ventures Initiative (AVI)

USD Budget

The AVI has processed the below transactions - swapping 163k ARB to USD87k with Wintermute's OTC desk - returning excess funding of 29k ARB to the DAO treasury The budget is outlined alongside - it is worth noting that the ARB was swapped for USD via a CEX and therefore cannot be tracked on-chain therefore we are unable to provide data around actual spend to date. Note that the initial budget asked for a 49.7k ARB buffer to ensure sufficient USD was obtained - that drove the return of 29k ARB mentioned above.

Market Consultation 12.9k (14.8%) Thesis Development 33.4k (38.4%)

Strategic Recommendations 22.9k (26.3%) Community Engagement 12.1k (14.0%) Project Management 5.8k (6.6%)

M&A for Arbitrum DAO

The M&A Pilot Phase concluded at the end of July 2024. The outcomes of the Pilot Phase was, among other things, a comprehensive summary report outlining the steps taken and workflows concluded over the period. The Pilot Phase concluded with the view that, while M&A is a strategic lever for the Arbitrum DAO for growth and stabilizing its operations while addressing the challenges of current capital allocation initiatives, now is not the right time for a large M&A fund. This is mainly due to several fundamental building blocks needing to be in place before large capital outlays should be approved.

The wallet has received: - 52k ARB from the DAO treasury wallet - 52.7k ARB from the ADPC wallet

It therefore holds 104.7k ARB. These funds were paid to the wallet as compensation for its holder's role in the ADPC and M&A programs and therefore has not been included in the DAO ARB holdings.

Arbitrum DAO - Treasury

Arbitrum Stable Treasury Endowment Program (STEP)

Following the successful deployment of 35M ARB into USD30.45M of stable, liquid real-world assets to generate yield for the DAO. Emphasis was placed on attracting service providers to the Arbitrum ecosystem, therefore achieving both treasury diversification as well as incentivising users within Arbitrum.

STEP Allocations

15m

11m

9.6m

10m

5.2m

3.5m

Securitize BUIDL

Ondo USDY

Superstate USTB

Mountain USDM OpenEden TBill

Backed Finance blB01

ARB Allocation

USD Allocation

During September, a Snapshot was proposed to outline the potential shortfall in funding available for the program manager: - 100k ARB was allocated towards program management costs in the AIP, but Steakhouse Financial was voted as the manager with a quoted fee of $174k - the 100k ARB could only be converted into $87k The DAO voted in favor of keeping Steakhouse as the program manager at their full fee, and will use the yield generated from the STEP assets to cover the $87k shortfall. There is also a forum thread outlining the plan to diversify a further 35M ARB for the next edition of the STEP, aiming to convert to at least $30M and to further boost the RWA ecosystem within Arbitrum.

Treasury Management

The DAO is progressing discussions around managing its treasury, with particular highlighted areas being: - service provider shortfalls, such as in the ARDC, where USD liabilities are settled in ARB and therefore exposes service providers to ARB price depreciation - deployment of capital and generating yield on the DAO's treasury - productive use of sequencer ETH There are some proposed solutions, such as establishing Treasury and Growth committees to drive these processes forward, but no votes have been passed giving clarity on next steps. There is also no agreed-upon DAO-wide budgeting mechanism, an issue that has been raised by numerous delegates and ecosystem participants.

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

17.5m

+4.3m

14.6m

15m

12.5m

+3.3m

10.3m

10m

+2.8m

7.5m

+3.4m

2.5m

+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)

(271,080)

Remaining Funding

159,090

During September 2024, the Questbook program spent 52k USDC on operational costs. The multisig wallet therefore had 159k 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

189k

190.2k

183.1k

174.9k

Remaining USDC Funding 223k

130k

123.4k

75.5k

73.3k

65.6k

54.5k

8.2k

Gaming

Developer Tooling on NOVA

New Protocol Ideas

Education, Community growth and events

Stablecoin Funding Received via Swaps 765.6k Stablecoin Grants Spent 543k Stablecoins Remaining in Wallets 222.6k

Grant Spend - Second Round

Questbook Grant Program Stablecoin Funding - 2nd Round

770.3k

536k

530.3k

509.3k

497k

Remaining USDC Funding 2.1M

273.3k

261k

240k

234.3k

Gaming

Developer Tooling on NOVA

New Protocol Ideas

Education, Community growth and events

Stablecoin Funding Received 3.1m Stablecoin Grants Spent 1m Stablecoins Remaining in Wallets 2.1m

During September 2024, 334k of USDC funding was deployed across the 4 grant program categories, taking total grant spending to date to 1M USDC across grantees. Each sub-category has USDC remaining in their wallets totalling 2.1M ARB.

Questbook - Round 2 Grants

ARBGrants

234,295 27,500 21,000 18,000 167,795 244,950 32,000 25,000 24,000 163,950 261,000 25,000 25,000 25,000 186,000 273,283 25,000 21,500 20,000 206,783

Gaming

UGC Campaign Bot BharatGG Proposal

P2ECrew

Other Grantees

Developer Tooling on NOVA

Search Multichain Worlds on Arbitrum with Dora

StylusSecure Espacio Cripto Other Grantees

New Protocol Ideas

DexPal.ai

SONGS

Locale Network Other Grantees

Education, Community growth and events

Aleph - The Pop-up City

Namaste Arbitrum!

Merge Madrid Other Grantees

Thank ARB powered by Thrive Protocol Previously Plurality Labs

Milestone 1b Funding (ARB)

+3.4m

(336k)

(224k)

(18k)

2.8m

(2.5m)

264.9k

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 177

Average Allocation (ARB) 6.8k

Balance in Milestone 1a Multisig (ARB) 518k

Balance in Milestone 1b Multisig (ARB) 265k