The Arbitrum DAO on Wednesday unveiled “Season One” of its DeFi Renaissance Incentive Program (DRIP), which introduces a reward system for specific assets and activities across the Arbitrum ecosystem instead of focusing on individual decentralized finance (DeFi) protocols.
Season One earmarks up to 24 million ARB tokens, worth nearly $12 million at current prices, to fuel growth in the Arbitrum ecosystem. ARB, the L2’s native token, is currently trading near $0.50, up 28% over the past month. It boasts a market capitalization of $2.6 billion, per CoinGecko data.
This first season will focus on leveraged looping strategies for yield-bearing Ethereum (ETH) tokens and stablecoins. It will reward activity across select lending and borrowing protocols, including Aave, Morpho, Fluid, Euler, Dolomite, and Silo, according to a press release viewed by The Defiant.
Participants will be able to earn ARB rewards for borrowing against a curated set of collateral types, including weETH, wstETH, rsETH, ezETH, gmETH, sUSDC, sUSDS, USDe, sUSDe, syrupUSDC, RLP, wstUSR, sUSDai, and thBILL.
Arbitrum, an Ethereum Layer 2 (L2) network with $3.5 billion in DeFi total value locked (TVL), unveiled its DRIP initiative in April; however, it wasn’t approved by the Arbitrum DAO until June.
Sustainable Growth
The initiative underscores how DeFi incentives could be modeled in the future. Rather than distributing rewards broadly, Arbitrum is steering them toward strategies that can boost liquidity and promote sustainable growth.
“Not all TVL is created equal, and the retention of growth during the program is what matters most,” Matthew Fiebach, co-Founder of Entropy Advisors, told The Defiant. “It’s the combination of new deployments, co-incentives, listings, integrations and parameter changes that lead to structural improvements to the ecosystem.”
How it Works
Season One is part of a larger four-season plan that will distribute around 80 million ARB tokens – over $40 million at the time of publishing – to boost DeFi experimentation, liquidity, and protocol growth.
To track progress, Entropy Advisors will measure efficiency metrics like TVL per dollar spent and market share growth, while also publishing public dashboards for the community.
“Efficiency metrics will serve more as health indicators, signaling whether the campaign should make adjustments,” Fiebach said. “However, we’re strong believers that the qualitative aspects mentioned above are just as, if not more, important.”
Fiebach explained that Entropy will launch public dashboards so the wider crypto community can track performance data in real time.
Each season will last around four months and highlight a different DeFi vertical. “Season Two is still in development, but technologies that are top of mind for the team include [decentralized exchanges], [real-world assets], and perpetual futures,” Fiebach said.
Strong Momentum
The development comes amid strong momentum for Arbitrum, driven by new product launches and a partnership with retail brokerage giant Robinhood.
The L2’s TVL has grown nearly 66% from $2.1 billion in April to over $3.5 billion as of today, Sept. 3, according to data from DefiLlama. Meanwhile, decentralized exchanges (DEXs) on Arbitrum have processed over $100 billion in cumulative volume since April.
