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 1 year 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 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:
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Point or token farming - costly and often forces early token launches. Requires big awareness.
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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
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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 -
Bootstrap Early Liquidity and create minimal lindy effect + enable the first level of looping: deposit the first $100/200k into a protocol
Usage: medium -
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 -
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
Supervision & Liquidity Flow
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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
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- 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
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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
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Fractalized - tokenized shipping vessels, insured and rented with 14-20% returns. 150 MOU pipeline. Lend liquidity into secondary marketplace / early deals.
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Fist Commerce: lend against insured cross-border business credits backed by S&P-rated insurers.
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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.
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Estate Protocol: Offer limited backstop liquidity to stabilize leveraged real estate loans and support continuous market operations.
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Locale.Cash: lend to local businesses backed by live financial data. Joint pool with US municipality
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Bulla: provide liquidity for 1 month freight invoice financing
Operational Flow
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The Program acts as a Liquidity Allocator, managing the credit lines of each approved project. Each project goes through the following steps:
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
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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.
