DRIP January 2025 Update

DAO Programs & Initiatives DeFi Renaissance Incentive Program (DRIP)
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Program Finances: Epochs 10-12

Season 1 is approaching its conclusion, as rewards continued to be decreased each epoch through January and early February. A total of 1.075M ARB was distributed in epoch 10, 695K ARB in epoch 11, and 365K ARB in epoch 12. Of the total 2.135M ARB allocated, 1.595M was from the core base budget and 540K from the discretionary budget.

Of the 540K discretionary budget, 505K was for special purpose incentives on Morpho for borrowing USDT0 and lending USDC/USDT0 to Steakhouse Morpho V2 vaults. The remaining 35K included Silo’s allocations and continued incentives for syrupUSDC markets on Fluid.

Lastly, incentives were ended early for Dolomite and Silo since their allocations in epoch 12 approached a level that would not have had any tangible impact on APYs.

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

Epoch 10:

  • Aave: 400K ARB
  • Morpho: 220K ARB + 200K in special purpose incentives (60K 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: 135K ARB + 5K for borrowing USDC from syrupUSDC/USDC market
  • Euler: 70K ARB
  • Dolomite: 30K ARB
  • Silo: 15K ARB

Epoch 11:

  • Aave: 200K ARB
  • Morpo: 140K ARB + 180K in special purpose incentives (40K 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: 90K ARB + 5K for borrowing USDC from syrupUSDC/USDC market
  • Euler: 45K ARB
  • Dolomite: 20K ARB
  • Silo: 10K ARB

Epoch 12:

  • Aave: 100K ARB
  • Morpo: 72.5K ARB + 125K in special purpose incentives (40K for borrowing USDT from a set of whitelisted markets & 85K ARB to lend USDT on Steakhouse Morpho V2 high-yield vaults)
  • Fluid: 45K ARB
  • Euler: 22.5K ARB

Season 1 will conclude with a total spend of 16.705M ARB. 10.97M of that coming from the core budget (16M ARB) and ~5.735M ARB coming from the discretionary budget (8M ARB).

Data & Metrics Highlight from DRIP Month 5

Data is from January 1st to January 31st, which includes the 2nd week of epoch 9 through most of epoch 11.

Network Overview

  • The lending landscape has returned to levels seen at the program’s inception, despite a 40.6% price decline in ETH since early September.
  • The total Arbitrum lending market contracted by 13.3% ($2.51B), closely tracking the 13.5% drop in ETH price ($2,578 as of Jan 31st).
  • Total borrowed liquidity decreased by $175M (-14.2%). Notably, the Utilization Rate remained flat, indicating a proportional scale-back in both supply and demand.
  • The USD Pool remained stable with only a $49M decrease, whereas the ETH Pool bore the brunt of the volatility, losing approximately $339M in value.
  • Total stablecoin market cap (excluding Hyperliquid) rose 1.7% to $4.56B. However, yield-bearing stablecoins saw explosive growth, surging 51.4% to $973M.

Protocol Performance

  • While most protocols faced contractions, Morpho emerged as the month’s primary outlier. The only protocol to grow, increasing market size by 17.1% (+$60M), driven by USDC, USDT, syrupUSDC, and PT-USDai markets.
  • Other protocols saw significant pullbacks, most notably Euler (-40.5%), Aave (-18.4%), and Fluid (-10.4%).

Asset Trends

  • ETH Circulating supply on Arbitrum continued its upward trajectory, increasing 10.8% to 848k ETH.
  • sUSDS grew by $250M, ending the month at $355M.
  • sUSDC continued a steady climb, rising 33.3% to $104M.
  • syrupUSDC’s market cap more than doubled to ~$116M.
  • wstUSR’s market cap nearly tripled in size to ~$30M.

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

New Eligible Assets: infiniFi and Reservoir

We’re excited to share that DRIP helped attract the deployment of two new yield-bearing stablecoins to Arbitrum: infiniFi’s siUSD and Reservoir’s wsrUSD. InfiniFi is rebuilding a fractional reserve like banking infrastructure onchain and with $165M TVL it has seen strong growth on mainnet. Reservoir is a multicollateral stablecoin backed by RWAs and onchain yield strategies that is currently at ~$82M TVL. These assets now have markets on Morpho and we’re included in DRIP Season One at the start of epoch 11.

DRIP Marketing

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

Epoch Announcements:

Protocol Highlight:

Continued features on

Looking Forward: Season 1 Retrospective

With Season 1 set to end next week on February 18th, Entropy is beginning to prepare a more substantive retrospective analysis of the season’s performance. This will be published in the coming weeks.

Season 2 is still in discussion among the council. There have been significant strides in planning and more information will be shared soon. Notably, with the depreciation of ARB price in prior weeks, there is a conversation occurring around if it might make sense to briefly pause incentives before beginning season 2.

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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Entropy Advisors Monthly Update: January 2026