Arbitrum Sets Up $45 Million War Chest to Attract Blockchain Builders

Arbitrum Sets Up $45 Million War Chest to Attract Blockchain Builders

The Arbitrum DAO has announced a new $45 million funding initiative aimed at boosting development on its Ethereum scaling solution. The so-called "Long-Term Incentives Pilot Program" will distribute the funds over 12 weeks to protocols building on top of Arbitrum, with the goal of remedying complaints about Arbitrum's past incentive programs.

A five-person council elected by the DAO will be responsible for evaluating applications and selecting recipients. Applicants will have two weeks to apply, followed by a two week feedback period where they can modify their proposals with guidance from assigned advisors. The council will then select recipients, subject to a Snapshot vote by Arbitrum delegates.

The program hopes to test new incentive designs and prepare for an even larger long-term incentives framework going forward. The Arbitrum network promises fast transactions and low fees by handling computation and data off the main Ethereum blockchain while still benefitting from its security. But despite its technology, developer adoption has lagged competitors.

Will the new funding be enough to attract builders and cement Arbitrum's place in the future of Ethereum scaling?

Fixing Past Complaints

The Long-Term Incentives Pilot Program aims to remedy three main complaints about Arbitrum's previous developer incentive programs:

  1. Too much burden placed on delegates: Previously, delegates had to vote on every incentive application individually, with almost 100 Snapshot votes. The new program's council shifts the workload.
  2. Lack of feedback for applicants: Many teams struggled to get feedback to improve their applications pre-vote. New "Application Advisors" will now provide guidance.
  3. Strict limitations on incentives: Past rules unintentionally restricted innovation in incentive models. More flexibility should lead to better incentive alignment.

By addressing these issues and empowering the council and advisors, the DAO hopes to run more effective funding rounds.

$45 Million Fund Details

The program launches with a budget between $25-45 million in Arbitrum's governance token, ARB. The exact amount will be determined by a Snapshot vote. All funds will be distributed over a 12 week period to selected recipient protocols.

Protocols will have two weeks to submit their applications on the Arbitrum forum, with help from advisors during an additional two week feedback period. A screening committee will then select recipients, subject to Snapshot votes approving each one.

Incentives must be distributed by recipients over the full 12 weeks. Any unused funds get returned to the DAO.

The funding covers more than just direct incentives. It also pays the new council members, advisors, analytics, program management, and community contributors.

But the vast majority goes directly to builders - between $25-45 million depending on the final vote. The full proposed budget consists of:

  • Incentives: $25-45 million
  • 5 Council Members: $125,000
  • 3 Advisors: $105,000
  • Research: $200,000
  • Analytics: $150,000
  • Program Mgmt.: $100,000
  • Proposal Assistance: $15,000
  • Retroactive Funding: $100,000
  • Multisig signers: $20,000

Empowering Builders With Accountability

In my view initiatives like these that empower developers are crucial for the health of blockchain networks. However, the decision making process could be further decentralized by allowing the broader community to vote on funding recipients, rather than just a small council.

Striking the right balance between efficiency and decentralization will determine if this program reaches its full potential.

On the other hand, the additional accountability mechanisms with advisors and a formal screening process could prevent issues. Past incentives programs across Ethereum have shown that simply throwing money at developers does not guarantee results.

By formalizing feedback and requiring regular progress updates, Arbitrum aims not just to attract builders - but attract the right builders and incentivize real adoption.

Ongoing Challenges Ahead

Going forward, I predict that attracting top development talent will remain an ongoing challenge even for technically sound blockchains like Arbitrum. Initiatives like this pilot funding program are a step in the right direction, but networks must also focus on creating sustainable business models and user bases beyond speculative activity.

The next year will test if Arbitrum can turn its technology and funding into real-world adoption. Its future depends on providing true utility to Ethereum users, not just promises to developers.

Competitors like Optimism and zkSync are rapidly innovating as well. If Arbitrum's incentives fail to generate results, its first-mover advantage may soon slip away.

For now, the Arbitrum community has high hopes for the new incentives program. But it remains to be seen if the DAO can effectively manage such a large budget. And it's the developers who will ultimately determine if the network can move from promises to actual adoption.

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