How will DAOs in the Abritrum ecosystem use their ARB allocation?

A look at proposals popping up in various DAOs that received an ARB allocation from the Arbitrum Foundation

How will DAOs in the Abritrum ecosystem use their ARB allocation?

Arbitrum airdropped 111,834,000 ARB tokens to DAOs within the ecosystem. Nansen provides a full breakdown of the allocation to each specific DAO. Abritrum’s motivation was to distribute governance to the sub-communities allowing them to decide on their own governance stance/ use of tokens, thereby enabling greater governance distribution than solely airdrop recipients.

It is important to note that only projects with a DAO and governance token were eligible for this distribution. And that the Arbitrum Foundation will commence a grants program that will enable further distribution of ARB tokens to protocols within the Abritrum umbrella.

Largest Recipients

Treasure and GMX were by far the largest recipients, with each DAO receiving 8 million tokens each.

Treasure DAO governs the Treasure protocol, a decentralized gaming ecosystem bringing together metaverse projects through its token MAGIC. MAGIC acts as the reserve currency for all games built within the Treasure framework leading to excellent network effects.

GMX DAO governs Arbtirum’s most famous and liquid decentralized perpetual futures exchange.

These projects are Arbitrum native (GMX did later launch on Avalanche), one of the criteria used by the Arbitrum Foundation for distribution, and firm favorites amongst the community, making their large allocations no surprise.

How Will Sub-Communities Use Their ARB?

Two proposals have already been floated to the community. The first suggestion outlined distributing ARB tokens to GMX & GLP stakers, with a 30% to 70% distribution focusing on subsidizing the interest rate for GLP stakers. The second suggestion proposed replacing UNI in the GLP pool with ARB. However, DAO member Jonezee replied there was no need:

As GMX version 2 is soon to launch and will allow for the trading of assets like Arb and other top cryptos through isolated token pools. There is no need to add any assets to GLP.

One suggestion from the Radiant DAO suggests distributing ARB to platform users with the following distribution: 40% to borrowers, 40% to dLP holders, 10% to depositors, and 10% to the Starfleet Treasury.

Sushiswap and Head Chef Jared Grey have been served with subpoenas from the SEC, and a current proposal seeks to establish funding for a legal team. Sushiswap DAO member Martyvb responded with tongue and cheek stating:

There are worse ways to spend the DAO’s Arb airdrop.

The Future

These initial suggestions shine a light on the opinions of DAO members regarding the ARB allocation to each DAO. Likely each DAO will allocate a percentage of ARB as incentives, hold a percentage of ARB in the treasury for governance purposes, and some DAOs will likely sell some percentage either currently or at a future date to fund runway operations. The question will come down to percentages.

As humans act from self-interest, proposals that seek to distribute ARB as platform incentives will likely prove popular amongst communities. Only time will tell what these Arbitrum sub-communities choose to do with their allocation.

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