Continued Funding for the Arbitrum Foundation

Proposals
1

Abstract

This proposal seeks funding of $16M in USD (RWAs), 1.7k ETH and 230mn ARB to support the Arbitrum Foundation’s continued operations for an additional year beyond its initial allocation under AIP 1.1.

The Foundation serves as a growth engine and cost center of the Arbitrum ecosystem on behalf of the DAO. It coordinates development of the technology stack, executes strategic partnerships in coordination with other Arbitrum Aligned Entities (“AAEs”), supports and funds ecosystem expansion and facilitates DAO initiatives. Importantly, it also covers all costs associated with Arbitrum One and Arbitrum Nova, with technical costs expected to represent 54% of all anticipated expenses for 2027.

All activities undertaken by the Foundation are focused on working with other AAEs to grow the ecosystem and identify new revenue sources, with the ultimate goal of increasing revenue flowing to the DAO. As all revenue accrues directly to the DAO treasury, the Foundation must periodically return to the DAO and request funding in order to continue our activities.

The medium to long term goal of the Arbitrum Foundation, alongside all other AAEs, is to continue expanding the DAO’s revenue across multiple sources including Arbitrum One and AEP fees, Timeboost, the ATMC endowment, and new business lines that are expected to emerge over the coming months and years. We believe a sustainable future can be achieved via the DAO governance model and will continue focusing our efforts on ensuring its success.

Motivation & Rationale

The Foundation acts as a capital allocator, ecosystem facilitator, and the ArbitrumDAO’s legal wrapper and backstop for DAO proposals.

We identify emerging opportunities and work with other AAEs to bring high-impact initiatives into the Arbitrum ecosystem. As an intentionally structured cost center, the Foundation absorbs the cost of growth and development while enabling the DAO to capture the upside through increased usage, stronger network effects and sustainable revenue generation.

Among the AAEs, the Foundation plays a central role across four key areas:

Strategic Grants and Partnerships. The Foundation supports both emerging crypto-native teams and established institutional partners.

Our ecosystem team is focused on onboarding teams across various verticals, including institutional tokenization, DeFi, Consumer, Payments, AI, and emerging trends. This forms the application layer of Arbitrum and further attracts builders to build on Arbitrum. The Arbitrum ecosystem is one of the most dynamic in the blockchain industry and attracts the interest of developers, retail users and now institutions. In many cases, this is thanks to the relationships and partnerships we have structured to bring users, capital, and strategic collaboration across the ecosystem.

The Foundation has continuously improved its capital allocation over time, and supports ecosystem growth through programs including our grants program, Trailblazer, Audit Subsidy Program, Arbifuel and DRIP. We have reviewed over 3,200 applications with an acceptance rate below 20% for these programs. Key Arbitrum teams that the Foundation directly supported in their early stages are Pendle, Ostium, USDAI, Instadapp, Cow Swap and El Dorado. Key Web3 communities were won over competition, like ApeChain. Institutional partnerships secured through the Foundation include Robinhood, BlackRock, Franklin Templeton, WisdomTree, Circle, Securitize and Paxos.

Technical Advancement and Infrastructure Maintenance. The technical and ecosystem team work hand-in-hand to sponsor core protocol upgrades alongside onboarding new partnerships that enhance the developer experience.

Sponsoring core protocol upgrades is essential for the continued improvement of the Arbitrum technology stack in terms of security, features, developer and end-user experience. Major sponsored upgrades include new execution environments such as Stylus, new revenue streams such as Timeboost and the Arbitrum Expansion Program, reducing fees for all users with Dynamic Gas Pricing, and continuous ArbOS upgrades with general improvements and security enhancements. The majority of research, development, and technical implementation of this work came from our partnership with Offchain Labs. As we mention elsewhere, Offchain Labs will approach the DAO separately to continue funding protocol research work.

Since the Arbitrum technology stack has an ecosystem licence (BSL) and is increasingly adopted as the chain of choice by other projects, we have sought to onboard new partners who can enhance the developer experience. Partnerships include OpenZeppelin to develop a Stylus SDK and audit early Stylus teams, onboarding Nethermind for client diversity, and several top-tier audit firms with the Audit Program for emerging builders alongside many others.

Additionally, the Foundation funds core ecosystem tools and services, such as block explorers, RAAS providers, and transaction simulation and analytics tools which have extensive distribution across developers and users. As a result, Arbitrum offers best-in-class infrastructure support to the ecosystem and the Foundation maintains a strong relationship with infrastructure companies. This directly benefits the Arbitrum ecosystem, for instance, with the $10M grant program launched and funded by Alchemy.

Marketing, Community, and Education. The Arbitrum Foundation is focused on vertical marketing through developer engagement, in-person initiatives, and coordinated media distribution.

Our developer relations and ecosystem teams focus on supporting builders through technical education, tutorials, hackathons, and ecosystem showcases. Complementing this, in-person initiatives such as OpenHouse and ArbiLink bring together founders, developers, and institutional partners, facilitating collaboration and onboarding to the ecosystem.

This combined approach of online engagement alongside real-world activations helps to equip teams with the knowledge to build on Arbitrum while connecting them to high-value partners. Together, these efforts reinforce Arbitrum’s position as a highly attractive ecosystem for builders.

Finally, to ensure Arbitrum is well positioned within broader industry narratives, alongside promoting teams building on Arbitrum, we actively engage with the media across both crypto-native and traditional financial outlets. Some outlets include Unchained, Decrypt, CoinDesk, The Block, Bankless, and Messari, as well as traditional financial media such as Fortune, Bloomberg, Financial Times, and CNBC.

Tokenholder Relations, Governance and DAO Wrapper. The Arbitrum Foundation has begun to actively engage with new prospective tokenholders alongside facilitating governance for existing tokenholders.

On the capital markets side, the investment strategy team has broadened engagement with investment firms, research houses, and asset managers to introduce the Arbitrum ecosystem and the role of the ARB token. This includes building relationships with selective capital market participants exploring the ecosystem’s growth trajectory and supporting initiatives that extend Arbitrum’s reach into institutional and/or investment communities. Additionally, we have facilitated several institutional roundtables and prospective token holder roadshows across key markets such as the US, EMEA and Asia.

Governance, specifically DAO relations, will begin to converge with institutional relationship building as we work to bring more long term token holders into the governance process.

On the governance front, the governance team has played both a strategic and operational role since the DAO’s inception. They have facilitated six Security Council election cycles, as well as the implementation of many DAO-approved initiatives including liquidity programs (e.g. ATMC, STEP I and II), third-party grant providers (e.g. Plurality Labs, Questbook), DAO-mandated research initiatives (e.g. ARDC), and recovery of misused funds (e.g. Watchdog, other independent actions), among many others. More recently, they have supported the establishment and enablement of several Arbitrum Aligned Entities including OpCo, Entropy Advisors, and AGV.

Importantly, the Arbitrum Foundation serves as the legal wrapper for the DAO and has committed $10M to establish the Captive Insurance Product, designed to act as a backstop to safeguard participation within the DAO.

Use of Funds and the Reinvestment Flywheel

The Foundation operates at the intersection of the ecosystem’s core participants among AAEs, builders, institutions, and governance, where we coordinate efforts to drive adoption and growth.

All activities are ultimately focused on improving key metrics across Arbitrum One and Arbitrum Chains which directly translates into revenue for the ArbitrumDAO.

The impact of this model is best illustrated by the ecosystem’s growth to date.

In March 2023 (at the Foundation’s launch):

  • 1.28M daily transactions,

  • $1.9B in stablecoins,

  • $6.15M revenue for that month, with $3.52M paid to Ethereum L1 data costs,

  • No meaningful real-world asset (RWA) presence.

By February 2026:

  • 4.7M+ daily transactions (up 270% from March 2023)

  • $8.6B stablecoin supply (up 320% from March 2023)

  • ~$800M in RWAs, top 6th network by value and ranks #1 globally by total assets issued,

  • $23.49M in gross profit generated in 2025 across transaction fees, Timeboost, and the Arbitrum Expansion Program, all accruing to the DAO treasury.

Going further, Arbitrum has developed one of the deepest liquidity layers across L2s, with peak TVL of ~$21B and over 2.3B total transactions processed, with the second billion completed in just 13 months. Most importantly, network fees paid by users have drastically decreased while maintaining a significant revenue stream for the DAO.

This growth reflects a reinforcing economic flywheel. More teams building on Arbitrum drives more onchain activity; increased activity generates DAO revenue through fees, Timeboost, the Arbitrum Expansion program, and native yields available on Arbitrum chains; that revenue is reinvested into grants, programs, technology improvements, and ultimately attracts the next wave of teams to build on Arbitrum.

This flywheel is already established and accelerating. This proposal funds the work that continues to compound it with the Foundation’s efforts focused on ecosystem growth, increasing DAO revenue, and ensuring our own continued future funding.

We recommend viewing the following dashboards that reflect the on-chain transaction data, total stablecoin supply, and total RWAs on Arbitrum.

Projected Foundation Expenses (2027)

USD ARB
Operating Expenses $27.6M
Ecosystem Growth Expenses & Investments 244.9M
Total Projected 2027 Expenses $27.6M 244.9M

Table 1: Total expected operating and ecosystem growth related expenses in fiat and ARB for 2027

Table 1 presents our current best estimate of total 2027 expenses. The annualized expense is below the annual costs outlined in the Foundation’s 2025 transparency report. This reflects a combination of cost efficiencies undertaken by the Foundation, our treasury management efforts, and the absence of funding for Offchain Labs.

The Foundation’s current payments to Offchain Labs for technical services will run through January 2027, but after that OCL will no longer be paid by the Foundation. They may approach the DAO separately for funding in the future.

In relation to our expected ecosystem growth expenses & investments, the Foundation works with other AAEs to allocate this funding. We view this as an important part of creating a sustainable flywheel for the DAO. As mentioned previously, key Arbitrum teams that the Foundation directly supported in their early stages are Pendle, Ostium, USDAI, Instadapp, Cow Swap and El Dorado. The 2027 budget includes funding for both new and existing ecosystem growth commitments.

2027 (Forecast)
Variable Marketing Expenses $2.38M
General & Administrative (G&A) $10.40M
Technical $14.81M
Total Operating Expenses $27.6M

Table 2: Anticipated expenses forecast for 2027 by the Arbitrum Foundation

Table 2 provides an overview of the Foundation’s projected expenses as it relates to General & Administrative, Variable Marketing, and Technical costs.

It is important to note that the Arbitrum Foundation largely operates as a cost center for the DAO. While the chain revenue occurs to the DAO, the Foundation pays the operational expenses to keep Arbitrum One and Arbitrum Nova running.

In regards to the General and Administrative category, it primarily relates to personnel, contractors, external service providers, legal and insurance costs, and other operating expenses.

The Technical category alone accounts for approximately 54% of all expenses for the Arbitrum Foundation for next year. Let’s explore the technical expenses in more detail.

2027 (Forecast)
Security $4.63M
Infrastructure & Tooling $4.38M
Hosting & Support $5.80M
Total Technical Expenses $14.81M

Table 3: Breakdown of Technical Expenses

In Table 3, we present a breakdown of the Technical category which includes Security, Hosting & Support, and Infrastructure & Tooling. This covers a range of costs including block explorers, bug bounties, auditing spend, cloud service providers, external technical contributors, third party software tools and many other items that are required to keep the Arbitrum network running with high uptime.

We have worked with Offchain Labs to optimize technical costs and are targeting an 8% reduction in 2026 vs. 2025 despite higher expected transaction volume and network traffic. This reduction is accounted for in the request for funding.

The Foundation has reduced expected variable marketing expenses in 2026 and going forward versus prior years. This reduction reflects a change in the Arbitrum Foundation’s approach to marketing. The Foundation is now focused on vertical marketing across capital markets and developer relations, with the objective of attracting high-quality founders to build on Arbitrum and to attract capital to participate in the ecosystem. This change in approach was necessary to contain cost while focusing our marketing efforts on the highest impact areas.

Proposed Funding Ask

Asset Type Quantity
RWA & Stablecoins $16M
ETH 1,740
ARB 230M

Table 4: Requested funding for the Arbitrum Foundation

Table 4 outlines the Foundation’s funding request of, where most funding will be used to cover technical costs of the network, G&A, and ecosystem growth for an additional year beyond its initial allocation under AIP 1.1.

We request funding in RWAs, ETH and ARB to better align the Foundation’s assets with its liabilities. Our operating expenses are largely USD-denominated while ecosystem growth expenses can be denominated in ARB. This approach would improve balance sheet flexibility and support future operational and strategic needs while reducing the need to sell tokens to fund operations.

Additionally, we are requesting 230mn ARB to increase our treasury of ARB. This will be used primarily for ecosystem growth initiatives, including onboarding new strategic partners, and other operating expenses.

It is worth highlighting that in Table 1, our total estimated operating expenses will be approximately $27.6M and 244.9mn ARB while the proposal is only requesting $16M in RWAs,1,740 ETH, and 230mn ARB. Our RWA ask is ~$11.6M lower than our estimated operating expenses and our ARB ask is ~14.9mn lower. We are comfortable with this short-fall as we can accommodate the difference from our current balance sheet and from the ETH requested.

We request the RWA / Stablecoins, ETH, and ARB be released to the Foundation upon passage of the proposal, with the ATMC and OAT determining the appropriate DAO bucket for each allocation.

The proposed funding timeline reflects a deliberate approach to treasury management to ensure continuity of core functions and sustained support for the ecosystem while minimizing the near-term impact on the DAO’s treasury. The Arbitrum Foundation expects to come back to the DAO in 2027 to discuss future funding.

The Foundation has published Biannual and Annual Transparency Reports since inception, without interruption. This proposal commits to maintaining that cadence.

Timeline

We encourage all delegates to provide feedback on the forum and to attend the following governance call:

  • Tuesday, 26th May 2026, at 2pm UTC

Throughout the governance process, feedback will be collected and integrated with the proposal.

We aim to have a temperature check vote on 28th May 2026, which will run for one week. If the temperature check passes, then the on-chain vote will be initiated on 8th June 2026. Please note that these dates are subject to change based on feedback from delegates.

3 Likes
Arana Digital Delegate Communication Thread
2

Thanks for the detailed and data‑driven overview of the Foundation’s role and funding ask, especially the link between ecosystem growth, DAO revenue, and the reinvestment flywheel.
arbitrum

I’d still appreciate more concrete, program‑level KPIs and periodic reporting, so delegates can more clearly evaluate how this budget translates into measurable value for the DAO treasury over 2027.
@Arbitrum

1 Like
3

I appreciate the progress made growing the Arbitrum ecosystem.

That said, given the size of this ask, I believe stronger tokenholder alignment and accountability are needed.

My biggest concern is that while ecosystem growth is emphasized, direct value accrual to ARB holders remains unclear. The current model appears to be: 1) Foundation funds growth, 2) ecosystem expands, 3) DAO revenue grows, 4) Foundation returns for more funding.

But ARB holders continue funding expansion without a clear mechanism to benefit directly. Ecosystem growth alone should not automatically be treated as tokenholder value.

A few suggestions:

  1. Milestone-based funding instead of full upfront release, tied to measurable KPIs such as DAO revenue growth, institutional onboarding, RWA expansion, or ecosystem ROI. A request of this size should not be necessarily be released entirely upfront especially when is being requested it upon vote passage (seemse to quick of a turnaround with no clear KPIs.)
  2. Stronger ARB holder alignment, including utility that directly benefits ARB (staking, fee participation, revenue-linked mechanisms, etc.).
  3. Consider making a portion of the ARB allocation performance-based, released ONLY if meaningful ARB utility/value capture milestones are achieved.

I appreciate the work being done, but at this scale, funding should be more tightly aligned with accountability and measurable tokenholder outcomes as well.

3 Likes
4

I appreciate the detailed proposal and I agree that the Foundation plays an important role as the DAO’s legal wrapper, ecosystem coordinator, and operational backbone. The growth in transactions, stablecoins, RWAs, and DAO revenue is meaningful, and I do not think the question should be whether the Foundation should continue to exist or be funded.

However, given the size of this ask, I do not think the current structure is sufficiently accountable to the DAO and ARB holders.

The proposal requests $16M in RWAs/stablecoins, 1,740 ETH, and 230M ARB. At current prices, this is roughly a $40M+ funding package, and the 230M ARB alone represents about 2.3% of total ARB supply. This is a very large authorization to be released upon passage.

My main concerns are:

  1. Funding should be milestone-based rather than released entirely upfront. A 3-6 month initial runway plus quarterly releases based on public reporting would be more appropriate for an ask of this scale.

  2. The proposal needs more concrete KPIs. Examples could include DAO revenue growth, Timeboost/AEP revenue, gross profit, stablecoin and RWA growth, ecosystem grant ROI, strategic partner conversion, and cost efficiency targets.

  3. ARB holder alignment remains unclear. The model appears to be: the DAO funds growth, the ecosystem expands, DAO revenue grows, and the Foundation returns for more funding. But there is still no clear mechanism by which ARB holders benefit directly from this flywheel. Ecosystem growth and DAO treasury growth should not automatically be treated as tokenholder value accrual.

  4. The 230M ARB allocation needs a more detailed breakdown. How much is for existing commitments vs new ecosystem growth? How much may be sold for operating expenses? What are the sale/treasury management policies? Will unused ARB be returned to the DAO? Will recipient wallets and grant outcomes be disclosed?

  5. The relationship between Foundation technical expenses and any future Offchain Labs funding request should be clarified. If OCL may approach the DAO separately after January 2027, the DAO needs to understand whether technical costs are additive or whether the Foundation budget would be adjusted accordingly.

I would be much more supportive of this proposal if it were revised to include:

  • phased funding releases;
  • quarterly reporting against concrete KPIs;
  • a detailed ARB allocation and treasury management policy;
  • clawback or return provisions for unused funds;
  • clearer linkage between DAO revenue growth and ARB holder value capture.

In short, I support continued Foundation funding, but I believe the current proposal should be strengthened before moving forward.

2 Likes
5

how many months of runway does the @Arbitrum Foundation has if this proposal doesn’t pass?

how many months of runway does the @Arbitrum Foundation has if this proposal passes as it is?

1 Like
6

How much funding was OCL getting? How much funding will we have left to fund OCL? And will we have to fund other AAEs for 2027?

It feels weird to do one AAE at a time, it would be a lot easier to understand the impact of passing this proposal relative to the 2027 costs for all the other AAEs so we can have a clear perspective.

It’s probably unreasonable… but a vibecoded dashboard of AAE budgets would help a lot.

6 Likes
7

I support this proposal.

The Foundation has clearly become a critical operational layer for the Arbitrum ecosystem, coordinating ecosystem growth, infrastructure support, partnerships, governance execution, and strategic initiatives that would be difficult for a decentralized DAO alone to manage efficiently.

Importantly, the proposal provides concrete evidence that ecosystem growth has translated into measurable network expansion and DAO revenue growth over time. The increases in transaction activity, stablecoin supply, institutional adoption, and RWA presence demonstrate that the ecosystem has continued to evolve meaningfully since launch.

I also appreciate the effort to improve treasury management by requesting a mix of RWAs, ETH, and ARB rather than relying entirely on token sales for operational expenses.

That said, I believe future funding cycles should continue moving toward stronger KPI-driven accountability and clearer ROI evaluation for ecosystem programs and grants. The long-term objective should be a progressively more sustainable model where DAO revenues increasingly offset operational dependency on treasury allocations.

Overall, however, this proposal appears reasonable given the scale of the ecosystem, the technical responsibilities carried by the Foundation, and the strategic importance of maintaining Arbitrum’s competitive position.

1 Like
8

Surprisingly few questions regarding this relatively large funding.

I’ll try to be brief:

  1. As far as I understand, salaries are in G&A - $10.4 million, which, based on 44 employees, is $236,000 per person. I think this is too expensive, given the average salary in the crypto industry is up to 100,000.
    Either a more detailed salary request is needed, or these expenses need to be reduced.
    I’m even prepared for money to be spent on an audit of the Foundation from, say, KPMG, in order to optimize costs.
  2. The next item is Security - if this includes a program to pay audit projects, then I’m against it. I don’t see how this initiative brings any advantage to Arbitrum; it simply wastes DAO’s money.
  3. Hosting & Support - $5.8 million - the largest technical block. I’m completely unclear what costs such a large amount of money.
  4. Infrastructure & Tooling - $4.38 million - I’m also unclear what this money is spent on; why does Foundation need it?

I assume that the main tasks for Foundation are technical support of the network, legal framework and marketing.

1 Like
Cp0x Delegate Communication Thread
9

On behalf of OAT members A.J. Warner, Tyler Bench, Gavin Wang and myself, we support this proposal.

Over the past year, we had the opportunity to work closely with the Arbitrum Foundation on the structuring and spin up of the OpCo, as well as on operationalizing the entity to a point of self-sufficiency. Through our day to day work on the OAT, we have been firsthand witnesses to the enormous effort the Foundation puts into keeping Arbitrum at the forefront of the space and providing the support the ecosystem needs to grow.

It is also worth noting that the operational funding draws from revenue the DAO has generated over the years, reflecting a broader commitment to responsible ARB spending.

2 Likes
10

Governance Call Recap (26 May 2026)

On Tuesday, the Arbitrum Foundation held a governance call to walk delegates through the proposal for continued Foundation funding through 2027. The session covered the Foundation’s mandate, the flywheel connecting Foundation spending to DAO revenue, the 2027 budget and funding ask, the track record since inception and the timeline for the vote.

The slides are available here: 26 May 2026 - Governance Call Deck - Google Slides

The recording of the call is available here: https://drive.google.com/file/d/1OkqCVMEDxAQPSoDN6F0FhY-vUMeYm9E9/view?usp=sharing

This post addresses the main themes raised both during and ahead of the call.

The choice of a one-year funding cycle rather than a multi-year ask has been a recurring point from delegates. The primary reason is to minimise the near-term draw on the DAO treasury during current market conditions. While a one-year cycle does limit the Foundation’s ability to commit to some longer-term arrangements, the Foundation considers this the appropriate balance given current market conditions.

The transition of Offchain away from Foundation funding has also been raised. All Arbitrum-Aligned Entities are separately funded. As Offchain becomes more active in DAO governance, it is moving to the same model. One transitional month of Offchain funding (January 2027) is included in this proposal. Offchain is not funded via the Foundation beyond that point.

Several delegates have asked about the size of the Foundation’s budget reduction, which is almost 60% below the 2025 run rate. It reflects three factors: changing marketing priorities, Offchain approaching the DAO for funding separately and cost efficiencies across the Foundation. These changes are expected to be sustainable and should not affect key initiatives or ecosystem growth.

A question deferred during the call concerned when DAO revenue will cover the Foundation’s operating costs. Any projection here would depend heavily on market conditions and the pace at which new DAO revenue sources scale. The medium to long-term goal of the Arbitrum Foundation, alongside all other AAEs, is to continue expanding the DAO’s revenue across multiple sources, including Arbitrum One and AEP fees, Timeboost, the ATMC endowment and new business lines that are expected to emerge over the coming months and years, while also being cost-conscious and ROI-focused. The Foundation remains focused on building toward a sustainable model through DAO governance.

Finally, it is worth emphasizing again that only the RWAs, stablecoins and ETH requested will be used to fund operating expenses, which are USD-denominated. The latest transparency report sets out the detailed breakdown across G&A, technical and marketing:
https://docs.arbitrum.foundation/assets/files/ArbitrumFoundationTransparencyReport2025-3ac117dd3203dbe7bca401cf951f0c14.pdf.
The 230m ARB requested will supplement the Foundation’s strategic ARB holdings, which also enable its capacity to support new and existing ecosystem growth initiatives. Funding to strategic partners and growth initiatives is almost always released against performance milestones. This keeps ecosystem spend tied to growth.

1 Like
11

This clarification raises another question. If Offchain and other Arbitrum Aligned Entities are expected to request funding separately, how should delegates evaluate the Foundation’s funding request? I now struggle more to see how the expected return on investment from the Arbitrum Foundation justifies the requested funding amount.

If the DAO is allocating capital at this scale, a portion of the funding should be tied to initiatives that create direct value accrual for ARB tokenholders. At present, the burden of funding ecosystem growth appears to fall primarily on ARB tokenholders with no return of investment from for them. What incentives do future $ARB investors will see to buy and hold ARB? how does that success ultimately accrue value to the ARB token itself?

I believe this proposal, and future funding discussions, should place greater emphasis on answering that.

12

Voting FOR. The Foundation is doing great work, and the 2025/2026 partnerships really delivered. I heavily support the ETH and stables spend.

I still want a clearer plan for the ARB. But I won’t let that be a blocker since I trust the team to handle it well. Hearing the OAT’s take was also super helpful to decide.

13

TL;DR

  1. The lines between AAEs are blurry in this proposal. As an outsider, it’s difficult to understand who is responsible for what, how budget should be attributed, and whether the intended efficiency gains of the AAE structure are being realized.

  2. Being a cost center is fine and expected, but a request this size would benefit from explicit goals and KPIs that show how the AF specifically adds value to Arbitrum over the next 12 months.

gm, thank you AF for submitting the proposal.

I want to start by saying that I believe the Foundation’s work has been a net positive for the Arbitrum ecosystem. Arbitrum has retained a leadership position across several important areas in a highly competitive landscape, and the AF clearly deserves credit for part of that.

Given the size of the request, I’d like to raise a few things: not as criticism of the work done, but in the spirit of improving accountability and capital allocation across the DAO.

Around a year ago, a more coordinated and centralized approach to the DAO was introduced (A Vision for the Future of Arbitrum), with the goals of 1) improving capital efficiency and 2) accountability.

I’m not convinced we have fully achieved those goals.

The proposal highlights several important achievements for Arbitrum, including RWA growth, Timeboost, treasury initiatives, technical upgrades, and ecosystem expansion. These are all valuable, but from the outside it is not always clear which entity is responsible for what, and how the DAO should evaluate performance across the different AAEs.

This matters because several AAEs will come to the DAO for funding over time. Without clearer separation of responsibilities, it becomes difficult to know whether we are becoming more efficient, or actually funding overlapping work across multiple entities.

I second this. Could maybe @opco prepare a DAO budget and overview for the year, divided by the various funded entities?

Also, The DAO and the AF should be more explicit about what success looks like over the next 12 months.

It’s completely reasonable for the Foundation to operate as a cost centerbut that doesn’t remove the case for explicit targets. For a request this size (2x the yearly DAO revenues), it’d help to see:

  • What the Foundation expects to achieve over the next year
  • Which KPIs should be attributed directly to the AF

Final note: I do not say this to dismiss the work done so far. Again, the AF is central for Arbitrum today and I have no doubt this proposal will pass.

My hope is for a healthier and more sustainable Arbitrum ecosystem over the long term. Clear accountability, ownership, and KPIs across all AAEs.

3 Likes
14

as far as i know @Entropy has been doing that and on one side should give more clarity on general spending of the DAO, but on the other will not provide the granular data most are asking here since expenditures are internal to single AAEs

15

We are abstaining with a few stipulations we’d like to see changed, and questions answered.

First, we are very grateful for the dedicated work the foundation has done and excited to see it continually powering Arbitrum and the Arbitrum ecosystem. We are generally in favor of using the DAO to fund them as well as Offchain Labs. That said, for such a large number of tokens being transferred, we’d like a little more clarity on how they are being spent:

Questions:

  1. According to the foundation’s 2025 transparency report, the foundation’s treasury already holds 208 million ARB. This is almost as large as the 230m they are asking for. So it would be nice to get an explanation for how they plan to spend that, and why they need another 230 million ARB if they can dip into that.

  2. We are curious about the Offchain Labs handoff. How much were they being paid previously and what is the projected amount they will ask for this year. This proposal quotes a 60% reduction in asked funds but is it possible this reduction is mainly coming from Offchain Labs’ funding no longer getting included with the foundation’s?

  3. ARB sales: Since the token is already near the all-time low, nearly 3.7% of circulating supply represents significant potential sell pressure. Having limits or at least clarity on the foundation’s ARB selling policy would be great to see.

We’d also like to second @paulofonseca, @cp0x and @griff’s questions about runway, salary amounts/G&A spending breakdown, and Offchain Labs funding.

Things we’d like to see adjusted:

  1. Phase the release of tokens with solid KPI’s going forward. Anything from DAO revenue, Timeboost/AEP revenue, RWA and stablecoin growth, etc.

  2. In the flywheel mentioned in the proposal, value to the ARB token is absent. This should definitely be considered when we are creating potential sell pressure on ARB.

2 Likes
16

We are voting ABSTAIN on this proposal. We generally agree with the direction here and think Arbitrum has benefited from taking a more coordinated approach to ecosystem growth rather than trying to govern every initiative directly through the DAO. That said, for a request of this size we’d like more clarity on two things: (i) how ecosystem growth and DAO revenue ultimately translate into value accrual for ARB holders, and (ii) clearer ownership across the various AAEs so it’s easier for delegates to understand who is responsible for what and evaluate the effectiveness of each entity independently.

1 Like
17

Voting FOR, with two improvements I’d like to see in the on-chain version.

AF’s track record is strong — 4.7M+ daily transactions, $8.6B in stablecoin supply, ~$800M in RWAs, and a serious institutional pipeline. The 60% reduction from the 2025 run rate, plus the willingness to absorb shortfall ($16M ask against $27.6M projected opex) from existing reserves, reflects good faith. Operational continuity shouldn’t be gated.

That said, the ~29% Abstain block on this Snapshot is a meaningful signal from delegates representing a broad swath of ARB holders. Addressing two things would serve both the DAO and AF:

1. Budget and AAE transparency. The $10.4M G&A line implies ~$236k per employee at the rumored 44 headcount, and the $5.8M Hosting & Support line is unexplained. A short addendum with confirmed headcount, salary band ranges, and the prior Offchain Labs payment — alongside a unified AAE budget dashboard — would let ARB holders verify the 60% reduction claim and strengthen the case for AF’s funding in future cycles.

2. Consideration of ARB holder value. AF would hold ~438M ARB (~3.5% of supply) after this allocation. An explicit framing or commitment to exploring how AF’s mission can translates to ARB holder value would help alleviate concern here.

I’d welcome seeing these in the on-chain version or via a public commitment from AF during the on-chain period — either would let me support the on-chain vote with full confidence

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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.

Speaking on behalf of the GMX Governance Committee, we are generally supportive of Arbitrum maintaining a well-funded and effective operating layer. GMX has benefited from AF ecosystem support in the past, and we see them as a valuable partner. We recognise that the Foundation plays an important role as a legal wrapper, coordinator, and operational interface for the DAO. Their commitment is evident in initiatives such as the Arbitrum Founder House, the Security Budget Program, and the Gas Subsidy Program, all of which reflect a sustained, hands-on approach to ecosystem development rather than passive stewardship.

That being said, there are a few questions we would appreciate clarity on:

  1. Can AF provide a clearer 2027 responsibility map across AF, Offchain, OpCo, Entropy, and AGV? Several delegates are being asked to evaluate AF funding before seeing the full 2027 AAE budget picture.
  2. How much did AF pay Offchain in 2024/2025/projected 2026, and how much of the stated reduction from the 2025 run rate is due to OCL moving out of the AF budget versus true AF cost reductions?
  3. Can AF provide more detail on the $14.81M technical budget, especially the $5.80M Hosting & Support and $4.38M Infrastructure & Tooling lines?
  4. Can AF break down the $10.4M G&A line into personnel head count, salary ranges, contractors, legal, insurance, compliance, travel, etc.?

Furthermore, as Cornell and Max have noted, establishing clear KPIs would go a long way in clarifying the division of responsibilities, not just for accountability, but to help the community understand what success looks like and how the Foundation’s unique contributions are being measured over time.

As a result, we will be voting Abstain on the temperature check and look forward to more information before an onchain vote.

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Hi all,

Please find below the AF’s answers to the latest questions in this thread.

We’re unable to discuss the details of the Offchain agreement publicly. It is best for them (and other AAEs) to answer questions about their own funding requests. To the best of our knowledge, they may come to the DAO for funding next year.

Dividing the total G&A budget by 44 does not accurately estimate personnel costs, as G&A encompasses a range of non-personnel expenses that would distort the calculation. We’ve explicitly laid this out previously in the proposal and transparency reports, i.e. that G&A includes costs related to contractors, external service providers, legal and insurance, as well as other operating expenses. The calculation also fails to account for the fully loaded cost of an employee, including taxes, benefits, and other statutory costs associated with personnel.

All of the above includes server costs (like AWS) to ensure the Arbitrum One network is running reliably; security costs to ensure the technology stack remains secure, which becomes increasingly more important in the age of AI’s ability to find bugs; and third party tooling that is not only necessary for developers to build on Arbitrum, but for users to reliably access the network and send transactions. All of those cover RPCs, node infrastructure providers, software subscriptions, the Security Council, and other associated expenditures.

Lastly, it’s worth clarifying that the Arbitrum Audit Program is a separate DAO- approved and funded initiative and as such is outside the scope of this request.

About 54% of the funds this proposal is requesting is solely focused on technical costs for running the network and funding tooling.

For the rest of the funding, the AF has a track record over the past 3 years for onboarding partners and growing relevant network usage metrics. Additionally, we publish bi-annual transparency reports and update the DAO on workstreams every month via the public Governance Reporting Calls and on the forum.

Regarding capital allocation and KPIs, many of the opportunities (especially institutional and enterprise) we expect to pursue over the coming years are difficult to quantify in advance. Importantly, the AF builds growth milestones tied to KPIs into almost all of its partnership agreements, ensuring that funding is released against those milestones. This keeps ecosystem spend tied to growth. The AF remains committed to maintaining transparency around how funds are used and keeping the DAO informed of progress through our existing reporting processes.

The Arbitrum Foundation’s work is highly collaborative. This is why many of the items you have listed such as treasury initiatives, technical upgrades, ecosystem expansion, RWA growth, and Timeboost, are all areas that the AF has either led or been actively involved in.

With the above in mind, and as mentioned in the proposal, the Arbitrum Foundation is ultimately responsible for vertical marketing through developer engagement, in-person initiatives, and coordinated media distribution, education, ecosystem growth, funding and working with technical contributors, infrastructure maintenance, tokenholder relations, governance, absorbing the cost to run the Arbitrum network and acting as the DAO’s legal wrapper.

On the ecosystem growth and partnership side, we work with Offchain and more recently Entropy, to onboard new partners. Onboarding ranges from building rapport, negotiating and agreeing terms of the deal that are in the DAO’s best interest, and ensuring the deal terms are adhered to by all parties. Many of the wins require extensive leg work by the Arbitrum Foundation to get it over the finish line, but the outcome is shared by everyone involved and rightly so.

The collaborative nature is what prevents the DAO funding overlapping initiatives as each AAE is playing their part where it’s necessary.

The ARB outlined in the 2025 transparency report is largely earmarked and allocated already for this year, including initiatives to support ecosystem growth. Additionally, as shared in the proposal, the funding request is intentionally lower than the full projected expenses for 2027 and our current balance sheet will be used to cover the short-fall for 2027. The 230m ARB requested will supplement the Foundation’s strategic ARB holdings and will largely be used to support new and existing ecosystem growth initiatives.

As mentioned in a previous answer, the AF can’t discuss details of the Offchain agreement publicly. Offchain’s funding does represent a significant portion of the reduction, but we are actively reducing costs across the board as well.

As was mentioned before, the 230m ARB requested will supplement the Foundation’s strategic ARB holdings. This is used to support new and existing ecosystem growth initiatives. For strategic partners and growth initiatives, the ARB is generally released against performance milestones and keeps ecosystem allocations tied to growth. In regards to sales, the Foundation is a long-term holder of the native asset, has a demonstrable track record of managing a large ARB treasury, and across the organization we are highly aligned with the token’s performance. As a result, the Foundation always seeks to minimize negative market impact on any actions involving ARB and has the capacity and relationships to work with financial counterparties and desks to this end, similar to the role of other Foundations in the market.

ArbitrumDAO, unlike many DAOs or ecosystems in the industry, accrues the benefits of economic activity directly. Growth in the Arbitrum ecosystem and network (including through transaction activity, onboarding top quality teams, and supporting the growth of ecosystem projects) expands the market share and overall size of the Arbitrum ecosystem. A larger ecosystem drives activity and usage across Arbitrum’s core resources and generates revenue over time. Revenue flows to the ArbitrumDAO and supports the growth of the DAO treasury, which is directly governed and controlled in the interests of ARB holders. The DAO treasury is ~$500M+ including with a substantial ($130M+) non-native asset balance, which provides strategic optionality for the DAO to invest in and/or explore opportunities for the benefit of the Arbitrum ecosystem and ARB holders over time.

We acknowledge that there might be confusion around ownership of work by AAEs and we should work with OpCo to better communicate the responsibilities for each Arbitrum Aligned Entity. The Arbitrum Foundation is ultimately responsible for vertical marketing through developer engagement, in-person initiatives, and coordinated media distribution, education, ecosystem growth, funding and working with technical contributors, infrastructure maintenance, tokenholder relations, governance, absorbing the cost to run the Arbitrum network and acting as the DAO’s legal wrapper.

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We want to start off by saying that we appreciate the critical work that the Arbitrum Foundation does on behalf of the DAO to ensure that Arbitrum One stays operational and the DAO as a whole can perform functions that require an established entity that can interact offchain. While Entropy does not believe it’s prudent to be pulling from the ATM portfolio given its importance to the DAO’s long-term financial stability, we recognize the importance of the Foundation and the work it does on behalf of Arbitrum. As such, we will be voting for this proposal as is, but view it as a one-time injection. Future requests of this scale, particularly those that draw from the ATM portfolio in excess of its returns or that notably exceed such a large % of the DAO’s annual revenues in non-native assets, will be difficult for us to support absent a clear path toward tangible return-generating activities for token holders. We look forward to continuing to work with the Foundation and the rest of the DAO on building toward a more sustainable funding model over time.

While we understand that not a vast amount of details can be given on the specifics around exact fund usage, our team wants to be candid about our two main concerns with the proposal. First, we would have wanted to see a more tangible plan for reaching profitability in the medium term. Second, the usage of the ATM portfolio as the funding source for this proposal. The portfolio is intended to operate and exist into perpetuity, such that it can be used to facilitate ongoing DAO operations, ecosystem growth, and financial sustainability in the long term. Similar to an endowment, principal should never be drawn down, which has the added benefit of providing ARB with an increasing floor through growing non-native assets and diversified income sources.

Funding recurring operations and growth budgets from the ATM portfolio at this stage works against both of the above-mentioned purposes. Absent large structural changes, each annual funding request draws the floor down further. Looking forward, our preference would be to identify an alternative funding source for these types of proposals, in addition to stressing the need to both reduce OpEx and accelerate toward a positive bottom line.

If this proposal passes in its current form, we note that it leaves the appropriate bucket for each allocation to the ATMC and OAT to determine. We intend to fund it in a way consistent with proper portfolio management, which we will detail separately following the proposal’s outcome.

To answer @JoJo’s comment, we’ve included an overview of the DAO’s financial situation, granular breakdowns for DAO-side expenses, as well as net burn and runway estimations in each previous quarterly treasury management report, which can be found in this thread. These estimations include figures for the AF/Offchain, OpCo, as well as AGV, and are based on the most recent publicly available numbers and guidance at the time of publishing the reports. Given that Offchain will be funded separately from the AF going forward, and there are no historical figures publicly available to base estimations on, all-encompassing budget forecasting for 2027 would currently be speculative. Excluding OCL, assuming the price of ARB stays stable, no new initiatives are introduced that have costs attached to them, and incorporating AF’s new guidance, total expenses for 2027 should be expected to land at around $80M.

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