Speaking as a builder, one under-discussed advantage of BLAZE is how it changes team behavior, not just liquidity numbers.
When liquidity comes from recyclable, time-bounded DAO capital rather than grants or mercenary incentives, teams are implicitly pushed to design markets that can actually stand on their own. It forces earlier thinking around fee generation, secondary market demand, and exit paths for protocol-owned liquidity, all things that tend to get postponed when liquidity is “free.”
This is especially valuable at the early stage, where the difference between a protocol that survives and one that stalls is often not TVL size, but whether real usage appears quickly enough to replace bootstrap capital.
From a builder’s POV, knowing there is a clear lifecycle, bootstrap → organic adoption → DAO exit is hugely helpful for planning product milestones and liquidity strategy. It also creates healthier alignment with the DAO, since success means returning capital to be reused, not optimizing for perpetual subsidy.
If executed with conservative sizing and strong monitoring, this feels like one of the rare programs that can both:
lower the barrier for serious builders to launch on Arbitrum, and
improve the long-term capital efficiency of the DAO itself.
Strongly supportive and excited to see this iterated on with real data.
After reading through the proposal and speaking directly with @maxlomu I am, broadly speaking, in strong support of this proposal. It seems that Max has identified a valuable, currently unfilled niche that will help keep the Arbitrum ecosystem competitive.
Re Opco:
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.
I think that to better make the case for the DAO to follow the loose AAE framework, Opco should
Propose ways this initiative could be incorporated into pre-existing AAE-related work,
Explain why this proposal is duplicative with work already being done by the AAE-entities, or
Argue as to why this vertical (loans/liquidity provision) shouldn’t be perused by the DAO in general.
I echo others’ response in that I see the response given as insufficient, and worry that it gives the impression that the AAE framework (at least in this case) is limiting the DAO’s output instead of coordinating it.
gm all. Unfortunately, this initiative will be paused for now.
While I wish I had received more actionable feedback, it’s clear there’s a broader misalignment around capital usage and risk appetite between some Arbitrum entities and this initiative.
Given that, I don’t think it would be thoughtful to push this to a vote at this stage.
I want to thank all the delegates who took the time to engage and provide feedback across the different iterations - and who were ready to support it in a voting snapshot.
I still believe this represents a real economic opportunity for both liquidity providers and ecosystem platforms, and I’ll continue engaging with capital allocators and the numerous stakeholders that have reached out, which in itself shows there is genuine appetite in the open market.
From hearing from various AAE-folk — on today’s governance call and elsewhere — I do feel like I have a better sense of how they’re thinking about proposals like this one, and (just to be sure) it’s clear to me that all parties involved are operating on good faith to support the DAO.
I would encourage said AAE-entities to further explain their rationale publicly here in this thread as I think it would help with some the concerns that have been raised.
Below are some thoughts that our team shared on the open proposals call on Tuesday.
First we’d like to thank Max for the hard work he’s put into exploring this idea by speaking with numerous projects and stakeholders to assess its feasibility. When considering the following question, our primary concern arises from our belief that the risk of capital loss in this situation outweighs the anticipated returns.
Underwriting crypto loans, especially when they are intertwined with offchain assets, is notoriously difficult and evaluating the opportunities is only one aspect. Constant monitoring of positions is required to ensure that the DAO does not become the lender of last resort.
For example, the RealT protocol on Gnosis that was mentioned in a comment above as a comparison, is currently facing a liquidity crisis. The protocol allows investors to collateralize real-estate tokens that represent fractional shares of properties. They recently announced that they are offloading properties based in Detroit (we estimate it’s ~10% of the total portfolio based on public information) due to ongoing property management issues and disputes with the city. Leading up to this announcement, holders of the property tokens had been maximizing their leverage (LTV) to extract value in stablecoins, resulting in about ~14.8m USDC & xDAI becoming stuck as available liquidity for withdrawals fell to zero. RealT has paused borrowing on its markets in response to the events, and it’s unclear how quickly the properties can be sold so that collateral tokens can be redeemed.
We recognize that this project was just an example provided, so it shouldn’t be assumed that if on Arbitrum RealT would’ve passed the diligence process proposed by BLAZE, nor is it the sole type of activity/protocol being discussed, but we believe it highlights the risk and speed at which these positions can quickly turn into losses. Had the DAO provided a loan/liquidity to the protocol, it is unlikely the proposed structure would’ve been able to react quickly enough. To summarize, this is a complex initiative that would carry high execution risk, and we think it is best that it is closed for the time being.