DRIP December 2025 Update

DAO Programs & Initiatives DeFi Renaissance Incentive Program (DRIP)
1

Program Finances: Epochs 8-9

December marked the beginning of the tapering phase with Season One rewards beginning to be slowly decreased each epoch. Compared to the peaks ~2M ARB being allocated in epochs 6 & 7, a total of 1.43M ARB was distributed in epoch 8 and 1.385M ARB in epoch 9. Of the total 2.815M ARB allocated, 2.6M was from the core base budget and 225K from the discretionary budget.

Upon restarting Aave’s incentives in epoch 6, Entropy initially bucketed this spend under the discretionary budget. This was largely due to the lack of previous ramp up data and available performance benchmarks to the other participating lending protocols. Now that we’ve been able to observe the outcomes in epochs 6 & 7 for Aave, we’ve returned to bucketing their allocations for epochs 8 & 9 in the core base budget.

The 225K ARB that was allocated across the two epoch from the discretionary budget, includes Silo’s allocation, continued incentives for syrupUSDC markets on Fluid, and special purpose incentives on Morpho for borrowing USDT0 and lending USDC/USDT0 to Steakhouse Morpho V2 vaults.

The following is the allocation per epoch, broken down by lending market:

Epoch 8:

  • Aave: 800K ARB
  • Morpho: 290K ARB
  • Fluid: 180K ARB + 10K for borrowing USDC from syrupUSDC/USDC market
  • Euler: 90K ARB
  • Dolomite: 40K ARB
  • Silo: 20K ARB

Epoch 9:

  • Aave: 600K ARB
  • Morpo: 290K ARB + 160K in special purpose incentives (20K for borrowing USDT from a set of whitelisted markets & 140K ARB split evenly to lend USDT/USDC on Steakhouse Morpho V2 high-yield vaults)
  • Fluid: 180K ARB + 5K for borrowing USDC from syrupUSDC/USDC market
  • Euler: 90K ARB
  • Dolomite: 40K ARB
  • Silo: 20K ARB

In addition to the above allocations, Entropy Advisors and the Arbitrum Foundation have helped finalize a strategic distribution partnership with Bitget and Steakhouse utilizing the DRIP discretionary budget. More details on the partnership are shared below.

To date, a total of 9.375M out of the 16M ARB has been allocated to lending markets from the core base budget and ~5.195M ARB out of the 8M ARB has been allocated from the discretionary budget.

Data & Metrics Highlight from DRIP Month 4

Data is from December 3rd through December 31st, which includes the 2nd week of epoch 7 and is through the first week of epoch 9.

1. Program Overview / Arbitrum Network Overview

  • Arbitrum Lending Market Size in dollar terms remained unchanged while ETH price declined ~3.5% during the same period.
  • Although the circulating supply of ETH decreased by ~9%, the Lending Market Size of ETH was flat this period
  • USDC Market Size also stayed flat this month but USDC Loans grew by ~6% to $447M
  • USDT circulating supply increased from $994M to $1.07B (~7%)
  • Combined Stablecoin Market Cap of Eligible USD Assets has climbed to a new ATH of $1.1B, an increase of about 12% during this period.
  • DEX Liquidity of USD Assets has also grown $5M / ~6% to $86M

2. Top Protocols highlights on Arbitrum:

  • Following the start of epoch 9, Morpho’s Market Size grew 54% from $180M to ~$277M. A ~54% increase from the previous period
    • $82M / ~85% of this growth can be attributed to USDC and USDT0
    • Morpho’s Borrowed Market Size grew ~41% to $102M

3. Top Assets highlights on Arbitrum:

  • ezETH has a very strong December with its Market Size growing over 138% from $49M to $118M
    • ezETH’s Arbitrum Market Share has also jumped from ~8% to 19%
  • While USDS Market Size was relatively flat this period ($13M), it marked a new ATH of $23M on December 14th
  • RLP Market Size also saw an increase of ~31% to $12.5M

Metrics that Entropy is monitoring:

  • Circulating Supply of both ETH and USDC dropped 9% and 19% respectively during this period.
  • DEX Liquidity of eligible ETH Assets is continuing to decrease, driven primarily by declining DEX liquidity for wstETH.

The impacts of DRIP and its performance can be tracked with the following public dashboards:

Lending Markets: https://dune.com/entropy_advisors/drip-season-1-lending-protocols
ETH Assets: https://dune.com/entropy_advisors/drip-season-1-eth-assets
USD Assets: https://dune.com/entropy_advisors/drip-season-1-usd-assets

Distribution Partnership: Bitget

We’re excited to share that Entropy Advisors and the Arbitrum Foundation have helped finalize a strategic distribution partnership with Bitget and Steakhouse utilizing the DRIP discretionary budget. This initiative focuses on bridging off-chain users with USDC and USDT directly into Arbitrum’s lending markets through Bitget’s onchain earn product. This deal directs funds to Steakhouse’s USDC & USDT0 Morpho V2 vaults. As part of the agreement, Steakhouse has agreed to a revenue sharing arrangement with the Arbitrum ecosystem, aligned with Arbitrum’s special purpose incentive programs supporting liquidity and usage growth.

This deal is one of a few that we’ve been working on to increase the program’s distribution. While we believe season one has been successful so far in bootstrapping newly deployed assets, it is our view that sourcing new channels for capital is key for the next stage of Arbitrum growth. Additionally, we recognize the competitive landscape between risk curators within the lending space and would like to reiterate that Entropy remains open to supporting similar integrations with all money markets and curators.

DRIP Marketing

Entropy has continued to work with the Arbitrum marketing team and participants to amplify the DRIP program and its opportunities.

Epoch Announcements:

X Spaces:

Additional Coverage:

Aave Case Study: https://x.com/aave/status/2005649345631400341?s=20

Image credit to Aave Labs: https://aave.com/blog/aave-arbitrum?utm_source=x&utm_medium=post&utm_campaign=arbitrum
Image credit to Aave Labs: https://aave.com/blog/aave-arbitrum?utm_source=x&utm_medium=post&utm_campaign=arbitrum1920×1046 106 KB

Continued features on

Looking Forward: Extending Season One

The DRIP committee composed of Entropy, OCL, and the AF have determined that it is advantageous to extend Season One by an additional 2 epochs, which will push the season’s conclusion to February 18th, 2 pm UTC. With the recently launched distribution partnership, an extension allows the budget to be more fully utilized and potentially secure other high-impact distribution deals that are in discussion. Additionally, as conversations regarding Season Two are still actively evolving, we believe the extension and thus slower tapering of rewards, will help position Arbitrum to maintain the growth achieved during Season One by preventing a prolonged lapse in incentives.

Disclaimer

Participation in the DeFi Renaissance Incentive Program (“DRIP”) involves risks. Leveraged strategies such as looping can result in liquidation or total loss of funds. ARB rewards do not compensate for potential losses. You should carefully assess your own risk tolerance before participating.

Nothing in this post or the DRIP program constitutes financial, legal, or investment advice. All participants are solely responsible for their own decisions and for complying with all applicable laws and regulations in their jurisdiction.

Rewards are not guaranteed. The amount and distribution of ARB depends on program parameters and user activity. Program terms, eligible assets, and budget allocations are subject to change at the discretion of the ArbitrumDAO.

Merkl, the Arbitrum Foundation, and the DRIP Committee are not responsible for smart contract risks, protocol vulnerabilities, or losses incurred on third-party platforms. DRIP is a community-governed initiative: Entropy Advisors manages program operations but does not control ArbitrumDAO governance or treasury decisions.

Merkl, the Arbitrum Foundation, and the DRIP Committee shall have no liability to you should they fail to make a payment of rewards to you, for any reason, including without limitation whether this be in relation to the amount you do or do not receive or a payment that does not go to your nominated wallet address. If you receive a payment that is not intended for you or if you receive more than you should have received, you shall, upon request, immediately return this to an address nominated by the Arbitrum Foundation.

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