BLAZE: Bootstrapping Loans for the Arbitrum Ecosystem

[maxlomu]

What is it?

BLAZE is a new initiative for Arbitrum builders.
The Arbitrum DAO, through a dedicated committee, will deploy and manage a pool of liquidity to support early stage projects aligned with the Crypto Cities thesis (real-world economy integrations) through short-term loans.

The aim is to remove early liquidity blockers and help these cashflow-positive protocols launch, prove traction, and scale.

BLAZE will run for 2 years as an experimental program.

Request

$5M total budget - $4m in USDC and $1m in ARB

This includes:

• $30k for operational expenses ($15000 for KYB platform) - unless already fully or partially covered by OpCo
• Up to $100k per year available for committee compensation, disbursed by opCo for members who do not waive it.

Context

BLAZE builds on the work done through the Orbit Track around Crypto Cities and real-world integrations and the early research on builders’ needs.

It focuses on projects that connect real economic activity to onchain liquidity, from RWA protocols to settlement tools.

The BLAZE program wants to fulfill what has emerged as #1 need for these types of projects: liquidity. BLAZE operates when it’s most needed: at the start, when protocols have demand but no capital to scale their operations.

Today, protocols usually bootstrap this initial liquidity with:

• Point or token farming - costly and often forces early token launches. Requires big awareness.

• Market maker deals - require large token allocations upfront, not suitable for early stage projects.

BLAZE will become a third option: a more builder-centric, aligned source of early liquidity that provides returns to the Arbitrum treasury.

Applications

1. Receivables financing: provide short-term liquidity (working capital) for verified trade invoices or business credits, ideally insured or backed by audited offchain data sources.
   Usage: high

2. Bootstrap Early Liquidity and create minimal lindy effect + enable the first level of looping: deposit the first $100/200k into a protocol
   Usage: medium

3. Create Backstop liquidity for early exits. Most RWA protocols have a multiannual lock up, a big friction in case an investor needs to exit their position early. The DAO would in this case create a liquidity pool to buy assets at a discount. Those assets would then be the first ones to be resold on the market when new buyers present themselves.
   Usage: low

4. Small incentives distributed on top of pools. Most of RWA assets have a return between 15-20%. Adding just a couple of extra % on top via ARB incentives would create a rush into the pools, allowing the DAO to gradually remove their own liquidity.
   Usage: low

Committee

Read more

• Max Lomu (me) - I am a delegate for the Arbitrum DAO and have been pushing for an initiative connecting real world applications to onchain liquidity through the DAO Grant Program. BLAZE is the natural continuation and a necessary step for builders.
  Before entering crypto, I spent 5 years at General Motors Financial, where I led a team responsible for modeling wholesale loans for international dealerships. This provided hands-on experience in credit risk, portfolio modeling and operational workflows directly relevant to what BLAZE intends to underwrite.
• Lorenzo Sicilia (and team) - Head of Technology at the Arbitrum Foundation.
• opCo - representatives from AAE and the legal team when operative.

Note: The Arbitrum Foundation legal team kindly confirmed they can act as a backup both as legal counterparty and for drafting documents if opCo has no legal personnel available at the time of proposal approval. This reduces operational risks.

Supervision & Liquidity Flow

Read more

Funds approved for the program are first held by the ATMC and placed into safe, liquid venues (e.g. Aave or other pools that don’t have IL or switching fees).

When a project is approved, the committee requests the needed amount and the ATMC transfers it from the idle vaults into the loan-specific vault for that project.

Once loans are repaid, funds return to the Blaze project-specific vault (if there is a rolling agreement), or go back to the idle vaults and can be reused for new projects without additional DAO votes.

All activity is transparently tracked via a live dashboard - managed by the Committee - with approved and rejected projects will be made public. This will be initially a Notion doc.

The opCo (/ other supervising body) can revoke the multisig and trigger full fund recall at any time

Requirements

Read more

• Projects must build on Arbitrum or Orbit chains
• Must be audited
• No impermanent loss risks: liquidity must remain in stable-value positions (USD in → USD out), allowing predictable accounting and withdrawal conditions.
• Liquidity should stay on Arbitrum as much as possible
• Offchain assets or receivables must have verifiable backing, (ideally) insurance from a rated underwriter (S&P, AM Best, or similar) or attested data from a trusted verifier (audited financials, verified invoices, or third-party proof of claim validity).
• Marketing/partnerships collaborations (see “Expected Returns”)

Risks

Read more

Yes, these loans carry more risk than typical treasury actions. There is a realistic risk that 100% of the funds do not return. There is also a different upside

• Support early builders when they need it most
• Signal to the market: if you build on Arbitrum, Arbitrum has your back

Aspect	Treasury	BLAZE (Loans)	Grants
Risk level	Low (1 / 5)	Medium (3 / 5)	High (5 / 5)
Asset custody	DAO always holds custody of funds in its own contracts	Funds tend to stay in control of DAO, deployed into liquidity pools. Leave DAO control temporarily, secured by loan agreements	Funds transferred outright to teams
Primary goal	Capital preservation + modest yield	Kick‑start liquidity flywheel, recover principal	Fuel runway and growth, no repayment expected
Expected return	2‑7% APR from low‑volatility strategies	Variable, target 10-15% plus upside clauses (ex: tokens)	0% direct financial return
Default scenario	Not applicable	Legal recourse and clawback rights after 30‑day notice	Loss accepted at grant issuance
Liquidity horizon	Near‑instant (subject to protocol withdrawal time)	6‑month average, recall within 30 days	Irreversible once sent
Typical instruments	Aave, short‑duration stables, T‑Bills	Short‑term stablecoin loans to audited dApps/Liquidity pools	Salaries, audits, marketing for builders

Expected Returns

Although returns are not the primary goal, we expect to outperform TBills ROI vastly:

• Specific deals may include return mechanisms for the DAO (fixed rate, token upside, etc)
• Most of the selected RWA provide a return between 10-20%, if the DAO were to acquire them
• Idle liquidity will be deployed in yield-bearing, low-risk pools (e.g. Aave)

Some deployments may be neutral-return if they directly support onchain integrations with real businesses or civic infrastructure, aligned with the DAO’s long-term goals.

In addition, projects are expected to have tight collaboration with the Arbitrum ecosystem.
Activities we will request:

• Commitment to marketing amplification and multimedial content (blog post, videos, spaces) explaining how the protocol works on Arbitrum
• Integrate with other protocols (ex: lending pools from Locale.Cash) and projects in the Crypto Cities network

Early Interest & Use Cases

• Fractalized - tokenized shipping vessels, insured and rented with 14-20% returns. 150 MOU pipeline. Lend liquidity into secondary marketplace / early deals.

• Fist Commerce: lend against insured cross-border business credits backed by S&P-rated insurers.

• Dual Mint: provide early liquidity for locked RWA positions (tokenized cashflow), allowing smoother secondary market activity and easier entry for new investors. The DAO temporarily holds discounted assets until resale or maturity.

• Estate Protocol: Offer limited backstop liquidity to stabilize leveraged real estate loans and support continuous market operations.

• Locale.Cash: lend to local businesses backed by live financial data. Joint pool with US municipality

• Bulla: provide liquidity for 1 month freight invoice financing

Operational Flow

Read More

The Program acts as a Liquidity Allocator, managing the credit lines of each approved project. Each project goes through the following steps:

Proposed KPIs

1. Capital preservation: 100% of capital (excluding ARB used as incentives) is returned or withdrawable. Locked positions do not exceed 20% of the total and must have full, verified backing.
2. Yield benchmark: Performance exceeds T-Bills (4.5%) or the USDC Aave borrowing rate, depending on the funding source.
3. Ecosystem impact: 10+ projects supported across RWA and crypto city integrations.
4. Operational maturity: Full end to end processes established (compliance, legal, approval flow, credit line management).
5. Time to decision: maintain < 7 day for early responses and <31 days committee response time

Terms Matrix

How we can evaluate the opportunities

Higher score = higher potential loan size.

Factor	Low	Medium	High
Lockup	long lockups (12m+)	moderate lockups (1–12m)	short lockups (< 1m)
Return predictability	Non-contracted, variable inflows	Returns depend on business variables (usage, rent, activity)	Contracted receivables, insurance
Team Strength & Operational Readiness	New team, new ops	operational track record 6–12 months	operational track record 12m / clear pipeline
Liquidity Requirement	Backstop/Secondary Liquidity	Working capital (medium frequency liquidity)	Working capital (high-frequency liquidity)
Risk Profile of the Underlying Assets	Exotic collateral	Mixed liquidity	S&P-rated insurance, verified receivables
Expected loan	<$50k	$50k - $200k	$350k - $500k

FAQ / Clarifications

Read all

Why is this not managed directly by the Arbitrum Foundation or the Treasury Committee?

The AF clarified that operating a liquidity provision program is outside their current mandate and not the best use of their resources, while this initiative has a different objective and risk profile than treasury management (as clarified by the Entropy team).

OpCo might decide to absorb the program into their future builders’ funnel.

Are some verticals preferred?

Initial focus will be around RWAs and cashflow positive businesses. DeFi and crosschain liquidity tooling will be considered in a second stage.

Will all projects get similar loan sizes?

No. Loan size is flexible and can increase based on performance and demand. We’ll start small and scale responsibly.

What if this program becomes too political? How are conflicts of interest handled?

The scope of the program is to have an opinionated bet towards projects that need support and have high potential. It should be considered as an extra support tool, not a requirement everyone is entitled to. The committee is designed to have diverse backgrounds to minimize overlap.

How long will the loans last?

The term isn’t fixed for all projects. We will come up with agreements that are reasonable for the DAO and for the type of working capital that projects require.
If they can’t repay a loan within the deadline, we explore alternate repayment terms (e.g. other liquid assets) or, if needed, legal routes.

Who is legally responsible / accountable for enforcing the actions with those teams?

opCo has agreed to take on this role.

What type of deals we might get with those businesses? Can we get some equity in exchange for the loans?

Most projects are open to this. If equity or similar upside is operationally feasible for the DAO, we will pursue it.

Where will this liquidity be coming from?

Among the options:
(a) selling ARB,
(b) reallocating Treasury from T-Bills, or
(c) depositing ETH/stETH from our Treasury and borrowing stablecoins

our recommendation is (c): borrowing rates are currently low, and it is feasible to outperform them.
We will ultimately follow the DAO’s decision on this matter.

[Tekr0x.eth]

Thank you, Max, for the proposal. It’s great to see proposals focused on builders, and I believe the DAO should explore more initiatives like this. I like the direction BLAZE is taking.

A few questions came to mind:

1. KPIs: How will we measure success after the first year, and what criteria will define success or failure of this experiment? You mentioned few things in the Expected Returns part of the proposal, but for the program of this size I would like to see much more detailed and clear KPIs.

2. Timeline: One year feels short for an experimental phase, especially with RWAs. You mentioned liquidity horizon is averaged 6 months, but in FAQ you mentioned the terms aren’t fixed, and that they swing quite a lot. How will results be measured if a protocol can’t repay on time and requests alternate repayment? This could push the experiment well beyond the planned one-year window.

3. What does the Z in BLAZE stands for?

[maxlomu]

Thanks for the feedback, and excellent questions.

@Tekr0x.eth

Timeline: One year feels short for an experimental phase

Good point. 2 years is probably more realistic given the types of deals involved, with a half way program review and quarterly public check ins.
The aim is still to stay highly liquid, with the majority of capital deployed in short term deals. Longer positions could be taken only when participating in secondary markets and with clear exit visibility.

@Tekr0x.eth

KPIs: How will we measure success after the first year, and what criteria will define success or failure of this experiment?

Proposed KPIs:

1. Capital preservation: 100% of capital (excluding ARB used as incentives) is returned or withdrawable. Locked positions do not exceed 20% of the total and must have full, verified backing.
2. Yield benchmark: Performance exceeds T-Bills (4.5%) or the USDC Aave borrowing rate, depending on the funding source.
3. Ecosystem impact: 10+ projects supported across RWA and crypto city integrations.
4. Operational maturity: Full end to end processes established (compliance, legal, approval flow, credit line management).
5. Time to decision: maintain < 7 day for early responses and <31 days committee response time

@Tekr0x.eth

What does the Z in BLAZE stands for?

The original full name suggested by chatGPT of the program was
Bootrasrapping Loans for Arbitrum and Zero to One Ecosystems.
Decided to simplify it but keep the name because it sounds cool and on brand
ArbitrumZ Everywhere

[Sinkas]

Dropping a quick note to let everyone know that we have been and still are discussing this proposal with Max. Any reference to OpCo is something we are aware of and actively working on in collaboration with Max.

[maxlomu]

gm, quick updates based on feedback & private questions. Will update the proposal shortly.

1. Clarifying the initial committee composition

• Max Lomu (me) - I am a delegate for the Arbitrum DAO and have been pushing for an initiative connecting real world applications to onchain liquidity through the DAO Grant Program. BLAZE is the natural continuation and a necessary step for builders.
  Before entering crypto, I spent 5 years at General Motors Financial, where I led a team responsible for modeling wholesale loans for international dealerships and later supported the expansion of the refactoring business. This provided hands-on experience in credit risk, portfolio modeling and operational workflows directly relevant to what BLAZE intends to underwrite.

• Lorenzo Sicilia (and team) - Head of Technology at the Arbitrum Foundation.

• opCo - representatives from AAE and the legal team when operative.

2. Coordination with opCo and Foundation legal

The Arbitrum Foundation legal team kindly confirmed they can act as a backup both as legal counterparty and for drafting documents if opCo has no legal personnel available at the time of proposal approval. This reduces operational risks.

3. Source of Funds

I was informed the Treasury Committee is not allowed to use Aave deposits as collateral. Ideally we revisit this rule and position the DAO as a true DeFi power user. We currently hold around 12m of stETH on Aave (enough margin to be used as collateral) and hundreds of millions of ARB that could be collateralised on platforms like Nerite. The alternatives remain as previously presented.

4. Liquidity paths and distribution

I spoke with a couple of wallets that are now evaluating how to present these city yield vaults. This will be key for allowing the DAO to gradually exit bootstrapped positions once retail liquidity arrives.

The Tooling domain has coincidentally received a grant application to build mini apps showcasing Arbitrum Stylus technology. We are requesting as deliverable a crypto city vault app for Farcaster and Lemon to expand distribution channels.

[danielo]

As someone supporting projects in Arbitrum, I see the need and value of this proposal. There are very important gaps in the Arbitrum support system for early-stage projects, and this proposal only covers DeFi protocols in need of liquidity, so in that sense, it is both badly needed, and other proposals to cover further gaps are needed too.

For this proposal, particularly comes to mind the example of Bulla.network within the RnD Ventures (previously RnDAO) product ecosystem. Bulla is bringing web3 to SMBs via a payroll and invoicing platform where the invoices are minted onchain. The resulting Invoice NFTs represent the bill to be paid by the client and can be sold at a discount (less than the value the client owes) => service providers receive advanced payments, and liquidity providers (NFT buyers) make a profit (8-15% APY).

This process of selling accounts receivable is called Invoice Factoring, and it’s a $3 trillion market globally. To our knowledge, Bulla is the only player bringing this onchain. The automations they have already created (and audited) enable massive cost savings in processing these invoices and making the process trustless.

However, Bulla needs help to overcome the chicken-and-egg problem by attracting liquidity. They have over $20m in unmet demand, and they could easily scale the demand side further!.

If AF or ArbitrumDAO could soon provide $2m in liquidity for at least 6 months, we calculate this would be enough to break the chicken and egg and attract other liquidity providers. The $2m would receive 8-15% APY so Arbitrum would:

• Attract TVL: $20m+ in TVL over the next few months
• Generate onchain transactions (through the NFTs)
• Make a 8-15% APY profit

Given the smart contracts have already been audited, this is basically a no-brainer in our opinion. All that’s missing is a program that can support.

So my only significant concern with this proposal is the budget being too small.

[maxlomu]

Thank you all for the valuable feedback.
We are organizing a call on

Tuesday 16th @ 9am ET

Shortlisted loan recipients will be presenting their platforms and economic units and answer questions from DAO delegates

Hope to see you many of you there.

Google Meet: Online Web and Video Conferencing Calls | Google Workspace

UPDATE: Recording of the call available HERE.

[CastleCapital]

It is refreshing to see a proposal focused on helping builders get the support they need to take the next step. Let’s manifest more of this in 2026.

We believe BLAZE is a good initiative for using treasury funds to generate revenue. This helps put idle funds to work and reduces dependence on native ARB tokens in the treasury, while complementing existing treasury management initiatives.

We also recognise the second-order benefits for the ecosystem and for innovative protocols. Deploying these funds as liquidity can help address the cold-start problem faced by most protocols, while simultaneously generating revenue for the DAO. Beyond previous grant programs, the ecosystem currently lacks initiatives specifically focused on liquidity bootstrapping. In this context, BLAZE appears complementary to DRIP (for more established protocols) and D.A.O. Grants (for earlier-stage ideas), and could further strengthen Arbitrum’s liquidity bootstrapping stack. The potential for future investment in early-stage projects is also notable.

That said, we note the risks associated with this type of mechanism and believe these should be carefully managed as the program moves toward execution.

[TempeTechie]

I support this initiative. I think we need a program like this to help jumpstart this RWA category on Arbitrum. We have to be aware that we are competing with other ecosystems (Base, Solana etc.) and we cannot afford to be late in this space.

Just like governments create programs to support some sectors in their early stages, Arbitrum also needs a dedicated support structure for certain niches. The BLAZE video call that happened this Tuesday (16 Dec) was especially helpful in showing that there are serious high-quality projects ready to participate in the program.

The next step is to help these teams access enough liquidity to achieve meaningful growth. An added bonus is that this liquidity will come back to the treasury, along with some yield. For me, the most important benefit is helping this RWA category grow on Arbitrum - and Arbitrum becoming the leading RWA hub. Getting the whole investment back (+ yield) is secondary, but makes the whole proposal even better.

[GFXlabs]

Directionally, we like this idea. However, this is an endeavor that will carry high execution risk, since these are likely to be complex deals where landmines and edge cases abound.

What would really strengthen this proposal – and de-risk it for governance – is to provide a generic template for one or more structures contemplated under this program. Specific terms can either be blank or use dummy numbers.

This would demonstrate that the proposers possess a level of expertise for structuring these deals, and would, we think, help many delegates understand what exactly this program would do on a month-to-month basis.

There are many ways that BLAZE could choose to structure a deal, and would presumably choose the one that best met the needs of the recipient while providing governance with upside exposure to the recipient’s project. Even something as simple as a vanilla convertible loan can leave room for losses in unexpected scenarios.

It would also be helpful to have in place a plan for how bad loans will be handled. Will OpCo be charged with pursuing recovery? Will we attempt to pre-arrange someone to buy any nonperforming loans? Will we write them down and call it cost of doing business?

Also, where will they be intended to sit in the capital structure of the recipient? Will these loans have recourse to the recipient only? Personal guarantees from founders? Be secured? Senior unsecured? Subordinated? Some mix of these across the BLAZE portfolio?

We’re supportive of the initiative. The above would be good to get into the proposal (or supplementary documentation in the case of the first suggestion).

[OpCo]

We would like to provide additional context on the feedback that was initially shared with @maxlomu when he was drafting this proposal, and which reflects the views of all AAEs, as coordinated by the OpCo.

Overall, we believe the initiative could be valuable and appreciate the effort that has gone into it. As outlined in the proposal, the Arbitrum Foundation would be happy to serve as a technical service provider, helping to assess the quality and robustness of the underlying technology of projects applying to the program, and the OpCo would be keen to support on the operations side.

That said, from a broader ecosystem perspective, we do not believe that such an initiative being undertaken from an individual or team that’s external to the existing AAEs that focus on ecosystem support is sensible.

There is a lot of context to consider when thinking about a program like this, from the teams’ needs to the process to be followed, so this effort is fruitful. For the DAO to undertake such an initiative without the accompanying context would be a waste of effort and resources.

At the same time, we believe that the Arbitrum Foundation’s ecosystem team, alongside Offchain Labs’ business development team, can likely address any high-impact opportunities without requiring a separate program with additional funding from the DAO.

---

cc @Arbitrum @Entropy @offchainlabs

[maxlomu]

Thank you all for the valuable feedback!

From the discussion so far, 2 points seem broadly agreed.

@CastleCapital

the ecosystem currently lacks initiatives specifically focused on liquidity bootstrapping.

Arbitrum has an opportunity to catch up with other ecosystems when it comes to direct liquidity support. Base, Avalanche, BNB and others are actively deploying capital into RWA protocols, a sector expected to grow by several orders of magnitude in the coming years. Acting early matters here, and there is a clear opportunity for Arbitrum to accelerate.

2) Better risk management frameworks are necessary.

@GFXlabs

this is an endeavor that will carry high execution risk, since these are likely to be complex deals where landmines and edge cases abound.

This point is well taken. As noted, these structures can carry meaningful execution risk. To address this, we can produce concrete outputs ahead of execution, including:

• Modeled returns and downside scenarios, including potential capital loss. (also requested by @Entropy in the previous call)
• Standardized templates for the deal structures contemplated
• A defined process for managing non performing loans
• Clear positioning in the capital structure

Regarding the comment that high impact opportunities could be addressed by existing teams without a separate program, I want to clarify intent.

This is not about duplicating efforts or inefficiently allocating DAO capital. But effectiveness should come first. Today there appears to be a gap in how builders are supported on the liquidity side.

Even with a small sample, out of the 6 shortlisted projects, 5 had never been in contact with Arbitrum teams prior to this process, and none had received liquidity support to date.

For context, a similar request was raised with AAEs 6 months ago. After an extended back and forth, the guidance received from the @Arbitrum foundation was that direct liquidity provision was not considered the best use of resources, with support instead focused on marketing and BD. As a result, no projects in this category were supported during that period.

This leads to 2 questions that I think are important for alignment.

1. Has the internal vision changed regarding liquidity deployment? Are these considered high impact opportunities today, or is the preferred strategy still limited to traditional avenues such as T Bills and passive deployments?
2. Can one AAE commit to running an open liquidity program and execute it within the next 2 months?

If the answer is yes, I am fully supportive of delegating execution and framing this as a high level DAO mandate with clear accountability.

If the answer is no, that’s also ok! Let’s just be clear so people in the DAO understand how and where experimentation, alternative frameworks, and faster iteration can realistically happen.

I believe we share a common objective: we win if we put Arbitrum and its builders in the best possible position to win.

[GFXlabs]

@OpCo

we do not believe that such an initiative being undertaken from an individual or team that’s external to the existing AAEs that focus on ecosystem support is sensible.

We will take the other side of this. We are agnostic to whom performs a service, although there may be a higher threshold for new contributors.

The AAE framework has never been voted upon, much less approved of, by governance. We therefore give the title no formal weight and simply treat it as shorthand for OCL + AF + Entropy + OpCo + AGV. We urge all delegates to do the same.

If one of those entities feels they specifically are better able to execute upon an iterated version of this proposal or are opposed to the proposal overall, then that would be helpful for those entities to share.

But whether or not a proposer is an “AAE” is not relevant.

[paulofonseca]

@OpCo

we do not believe that such an initiative being undertaken from an individual or team that’s external to the existing AAEs that focus on ecosystem support is sensible.

what’s not sensible is shutting down a proposal with this kind of comment, just because this proposal doesn’t originate from an AAE.

if in the AAE vision (which as @GFXlabs says has not been voted on or ratified in any way by tokenholders) only AAEs can execute on proposals, then there is no incentive for anyone else to propose anything for Arbitrum DAO.

so @OpCo might as well just lock the proposal category on the forum to only allow the AAEs to make proposals and create a google form for anybody else to leave their suggestions and ideas for the DAO, if they feel so inclined to do so.

also, AAEs that are delegates, specifically @Entropy which is the biggest delegate by far as of today, should speak for themselves and not shield their feedback about a proposal under the OpCo forum account.

[maxlomu]

gm everyone and happy new year.

I used the holiday period to speak with a number of projects that reached out. The opportunity feels increasingly meaningful: attract and support a new type of builders and projects, while earning high, diversified yield for the DAO.

Some notable projects I spoke with:

• Audacity - Invoice financing for the truck industry in Nigeria. Currently deployed on Plume (an Orbit chain). Could be a great opportunity to support the Orbit extended ecosystem.

• Lend.xyz - Tokenizing blue chip real estate backed by a $400m real estate developer Sate Investment Partners. Building a liquidity system to enable secondary sales.

• North Investment: tokenizing SMEs and introducing an onchain trading orderbook.

High level conversations with members of Yearn and Estate Protocol who are exploring vaults on Morpho.
I found out that a similar initiative already exist on the Gnosis Ecosystem for example, where RealT token holders are able to collateralize and leverage on their real estate holdings (about $17m in liquidity at the moment, yielding 9.7%).

These could be considered in due time as a potential second cohort. As you can notice, some patterns and categories are emerging. We can then define 4–5 categories, standardize templates for each, and consistently underwrite financial risk rather than operational execution, which remains with the partner.

As promised, here are the initial drafts of:

• The financial modeling of these early opportunities, including downside scenarios. This plans for full capital allocation for 2 years for simplicity. In reality, we could use ARB incentives to attract additional LPs and gradually exit positions to recycle the capital into new deals. Program costs are not included at this stage - they are expected to remain largely fixed and not scale linearly with capital deployed.

• A legal agreement template. This refers to the category of invoice factoring as a base template. We will branch it into category specific revisions and covenants.

Notes on the feedback so far:

1. I would encourage delegates to evaluate this primarily as a business decision, not a political one.
   Is it worth supporting these builders? Are incremental returns (+7–10% vs T bills or Aave) worth the risk?

2. What happens if things go south and the protocols incur bad debt? The answer depends on the type of protocol. The short term self liquidating deals are straightforward. For longer term (ex real estate) bad debt will be slower to recover. In these cases the benefits comes from the hard collateral and high certainty of eventual recovery. Fast liquidation is not assumed in all cases. If liquidity is required, selling the credit at a discount could be explored.

3. Why I think this can work as an independent program:

• Liquidity provision for RWA projects is a standalone activity. It can complement, but does not depend on, other initiatives. Similar to how the Treasury Committee was created instead of having everything managed internally by the Foundation.
• This category of projects has not been a historical focus of the Arbitrum Foundation, so there is limited existing context or in house expertise. Obviously happy to collaborate with existing and new initiatives.
• A public program sends a different signal to the ecosystem: we want to build with you and for you. Attracts more builders, creates public discussions. Loop and repeat.

Looking forward to further feedback and continuing to move this forward.

[Hefi1977]

Danke für die strukturierte Einordnung.

Den Ansatz, BLAZE primär als unternehmerische Kapitalallokation zu betrachten, halte ich für richtig- insbesondere im Vergleich zu risikoarmen Alternativen wie AAVE oder Staatsanleihen.

Entscheidend wird aus meiner Sicht weniger die Zielrendite sein als die konkrete Ausgestaltung der Risikomanagments ( Sicherheiten, Laufzeiten, Umgang mit uneinbringlichen Forderungen).

Positiv sehe ich, dass BLAZE alseigenständiges, experimentelles Programm aufgesetzt ist und damit gezielt reale Cashflow-Anwendungen testen kann ohen bestehende Strukturen zu verwässern.

[TempeTechie]

FYI, Hunter from Offchain Labs recently made a cool educational video about RWAs, and he also highlighted a couple of projects from this BLAZE proposal: https://www.youtube.com/watch?v=ew-p6zzvls8

[maxlomu]

gm, another update.

feedback is generally positive across the stakeholders I am engaging.

Conversations with wallets (Bleap, Aura) were particularly insightful. Note that the wallets I reached out to are still early stage (<10k MAU), but they see vaults earning high, diversified yield as very compelling for their users and as a potential competitive advantage for their platforms.

For them, priorities fall into three main categories.

1. Access to secondary liquidity.
   It’s important that their users are able, in normal conditions, to withdraw with minimal delays their capital. Vaults with extended lock ups would create friction for them.

What this means for BLAZE:
Less but accessible liquidity can be more valuable than larger amounts of primary liquidity.

For projects like DualMint and Fractalized, LPing into their AMMs can help expand the accessible market.
For projects like Estate Protocol, which aim to enable users to leverage real estate, wallets offering vaults may want to provide access to the stablecoin vault borrowed by leveragers. As seen in the Gnosis market mentioned above, returns can be as high as the primary assets, while maintaining exposure to the same underlying collateral. For BLAZE, this would imply providing a buffer in that vault.

2. Review & due diligence for each project
   We can help wallets explain to their users the assets and risks they are investing in. Having a standardized framework to review and present projects would go a long way.

3. Uniform and easy vault integration
   All vaults need to be easy to integrate and ideally standardized to simplify the dev experience. Rather than proposing single vaults, DualMint could expose their index vault aggregating all their assets.

There may also be an opportunity to aggregate all vaults behind a single API, a model already envisioned by other initiatives - see “Plaid for Crypto”:

AVI Mini-Thesis: "Plaid for Crypto"

Introduction This article serves as a follow-up to earlier contextual pieces that establish a framework for key concepts in our strategic recommendations and provide an understanding of our approach. The prior articles included discussions about how we aim to leverage captive and non-captive investment vehicles, as well as “fund in a box” investment vehicles. It extends those concepts by highlighting one key market opportunity that is actionable now and that addresses all three guiding principl…

Next steps:

• complete feedback from major delegates / any contributors who want to collaborate
• realign with opCo
• decide on timing and approach for moving to a vote

[Saurabh]

The following reflects the views of GMX’s Governance Committee, and is based on the combined research, evaluation, consensus, and ideation of various committee members.

Overall, We are very supportive of this initiative. Helping projects bootstrap early liquidity especially with support from the DAO would be extremely valuable. This would drive confidence among users and the wider Arbitrum community to provide liquidity to these projects as well. When speaking with early-stage teams, this is consistently one of their biggest bottlenecks. The proposed budget is also a solid starting point, and as the program proves itself and scales, the initial allocation can be increased.

A few questions / clarifications that could help strengthen the proposal further:

1. How quickly do you expect capital to recycle on average (i.e., the rough expected loan duration)?

2. Is there a cap on ARB incentives per project or per pool?

3. Entropy has done a great job with DRIP will the committee or Entropy be responsible for deciding on incentives, and for when to taper incentives and remove DAO liquidity?