According to Blockworks, Arbitrum may be disbursing tens of millions of dollars worth of its native token for the third time in the past five months to incentivize usership and development on the layer-2. The DAO passed an initial Snapshot vote on Tuesday to fund a “long term incentives program” with 45.8 million arbitrum (ARB), worth nearly $90 million at current prices. The project would have a five-person council pre-screen to grant recipients and hire three advisors to provide projects with feedback on their grant proposals. The plan is subject to a second Tally vote before being ratified.
Arbitrum held a public-facing contest in October for allocations from a $44 million “short term incentives program.” In November, it extended the first round of incentives by spending an additional roughly $20 million ARB to “backfund” applicants whose proposals passed but missed out on funding due to a tiebreaker. Projects funded by Arbitrum’s incentives program mostly grew across the board in total value locked (TVL), volume, fees, and daily active users (DAUs) after receiving funding, according to an OpenBlock dashboard. However, the crypto market increased as a whole during that time frame, so it’s likely too early to draw conclusions about the funds’ effectiveness.
Notably, the new grant round proposed this week would distribute fewer ARB tokens than the first round, but with roughly double the fiat value. During the first round in October and November 2023, Arbitrum fluctuated around $1. Now, ARB has traded above $2 for much of January as investors pursued ether-related tokens in the lead-up to bitcoin spot ETF approval, according to a Kaiko Research note. Arbitrum’s treasury value has ballooned to $7 billion in value from $3 billion in October 2023, according to DeepDAO. ARB lacks the market depth to absorb most of this value, though, so the DAO doesn’t have all those billions in spending power.
The primary difference between this grant round and the last one — aside from the larger ARB pot — is the creation of a council and advisors who would vet grant applicants, preventing governance fatigue on the part of Arbitrum delegates. Elections for proposed members of the council and advisors are already underway on Snapshot. This council was initially going to decide on grant recipients itself, but the role was amended to deciding on which projects should advance to a community vote, following complaints from the DAO. Nearly 97% of votes went in support of funding the new incentives program.
