Arbitrum, a prominent layer-2 blockchain platform, is preparing to launch an ambitious incentives program. Following an initial approval in a Snapshot vote, the decentralized autonomous organization (DAO) behind Arbitrum is poised to fund a “long-term incentives program” with an allocation of 45.8 million ARB tokens, valued at nearly $90 million based on current market prices. This move represents Arbitrum’s continued effort to stimulate user engagement and development on its platform.
The proposed program, still awaiting a final ratification through a Tally vote, marks the third instance in the past five months where Arbitrum has initiated such a venture. Earlier, the platform had rolled out a $44 million “short term incentives program” and subsequently augmented it with an additional $20 million ARB to support more proposals.
Evaluating the impact of previous incentives
The implementation of Arbitrum’s previous incentives programs has led to noticeable growth in projects funded under these initiatives. Metrics such as total value locked (TVL), volume, fees, and daily active users (DAUs) have all shown upward trends. Data from OpenBlock dashboard affirms this positive trajectory. However, given the overall rise in the crypto market during these periods, it’s prudent to exercise caution before attributing this growth solely to Arbitrum’s funding.
This latest round of incentives is distinguished not only by a higher fiat value despite a lower token count compared to the first round but also by the creation of a specialized council and advisory team. These entities are tasked with pre-screening grant recipients and providing essential feedback on proposals, aiming to streamline the governance process and alleviate delegate fatigue.
ARB’s market dynamics and community response
Arbitrum’s financial position has strengthened significantly, with its treasury value soaring to $7 billion, a substantial increase from $3 billion in October 2023. However, the market depth of ARB tokens remains a limiting factor, restricting the DAO’s effective spending power.
Notably, the recent surge in ARB’s value, trading above $2 for much of January, has been influenced by broader market dynamics, including investor interest in ether-related tokens and anticipation surrounding bitcoin spot ETF approval.
The governance process surrounding the new incentives program has not been without its challenges. Initial plans for the council to decide on grant recipients directly met with resistance from the DAO community, leading to a revised approach where the council’s role is limited to shortlisting projects for community voting. This amendment reflects the DAO’s commitment to maintaining a decentralized decision-making framework.
Despite some dissent, such as the opposition from delegate SEEDLatam citing concerns over centralized committees, the proposal has garnered overwhelming support from the community, with nearly 97% of votes backing the new incentives program.