DRIP October 2025 Update

DAO Programs & Initiatives DeFi Renaissance Incentive Program (DRIP)
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Program Finances: Epochs 3-5

October marked the beginning of DRIP Season One’s performance phase, where markets and projects that are more successful receive a greater share of incentives the following epoch. As we mentioned in last month’s update, in epoch 2 the decision was made to prioritize USD-denominated markets as a result of ETH’s high cost of capital. During these epochs, rewards on Aave continue to be paused and their allocations are being reserved for a future epoch. A total of 3.58M ARB was allocated across the three epochs from the base budget and 325K ARB from the discretionary budget for syrupUSDC markets on Morpho and Fluid. The following is the allocation per epoch, broken down by lending market:

Epoch 3:

  • Aave: Paused and reserved
  • Morpo: 480K ARB + 90K for lending USDC to syrupUSDC/USDC market
  • Fluid: 350K ARB + 30K for borrowing USDC from syrupUSDC/USDC market
  • Euler: 200K ARB
  • Dolomite: 70K ARB
  • Silo: 100K ARB

Epoch 4:

  • Aave: Paused and reserved
  • Morpo: 460K ARB + 90K for lending USDC to syrupUSDC/USDC market
  • Fluid: 360K ARB + 15K for borrowing USDC from syrupUSDC/USDC market
  • Euler: 250K ARB
  • Dolomite: 60K ARB
  • Silo: 60K ARB

Epoch 5 (ongoing):

  • Aave: Paused and reserved
  • Morpo: 420K ARB + 90K for lending USDC to syrupUSDC/USDC market
  • Fluid: 330K ARB + 10K for borrowing USDC from syrupUSDC/USDC market
  • Euler: 280K ARB
  • Dolomite: 60K ARB
  • Silo: 100K ARB

To date, a total of 5.18M out of the 16M ARB has been allocated to lending markets from the base budget and 405K ARB has been allocated from the discretionary budget.

Data & Metrics from Epochs 3 & 4

Note: Asset data does not include the ongoing epoch 5, which started on October 29th. Metrics and stats are based on growth from the end of epoch 2 through the end of epoch 4. Entropy is monitoring the impacts of Stream Finance and their recent announcement regarding sizable losses. The price of xUSD has dropped significantly and there are curators that operate on Arbitrum with losses. Overall, there is limited bad debt on Arbitrum’s lending markets, but with xUSD/USDC markets on Morpho and Silo, we expect market sizes and metrics to decrease in epoch 5.

Program Overview / Arbitrum Network Overview

  • Despite Arbitrum TVS declining 14% MoM, Arbitrum Lending Market Size grew by $176M / 5.7% in the same period
    • Total Arbitrum Loans grew by $64M / 4.9% to $1.37B
  • Combined Stablecoin Market Cap of Eligible Stablecoins reached a new ATH of $1B, up $70M / 7% MoM
    • Market Cap of Yield-bearing Stablecoins grew by $94M / 19% to nearly $600M - up ~140% since DRIP inception
  • Market Size of ETH Loans have grown to a new high of 163k ETH - up 7% MoM
  • Arbitrum Bridged TVL saw an inflow of +$1.3B in the last 30 days
  • Program’s Overall Cost Effectiveness sits at +$129, with an adjusted Cost Effectiveness of +$314

Top Protocols highlights on Arbitrum in October

  • In the last month, all protocols except Dolomite grew their Arbitrum Market Size - Morpho grew the most with +25M / +32%
  • Morpho: Recorded a new Market Size ATH of ~$475M at its peak
    • Borrow-side growth primarily driven by USDC loans, reaching ~$210M at its highest point - 18x increase since DRIP inception
    • PT tokens as collateral saw a meaningful uplift MoM, up $10M / +55% to $28M, suggesting a strong demand in looping activity this month
    • Morpho’s success can also be attributed to their competitive supply and borrow rates, as well as supporting the most eligible assets in DRIP, giving risk curators and users more flexibility
  • Euler: Whilst the Market Size remained relatively flat, USDC Loans continued to grow reaching a new high of ~$77M (+$21M / +38% MoM)
    • Similar to Morpho, majority of Euler loans are USDC
  • Fluid: Briefly made a new Market Size ATH of ~$388M (+$38M / +11% MoM)
    • This month’s growth was predominantly lead by syrupUSDC, growing $10M / 31% MoM
    • It’s worth noting that Fluid has made a strategic focus on USDT and GHO, as opposed to USDC

Top USD Assets highlights on Arbitrum in October

  • syrupUSDC market cap on Arbitrum peaked at $128.7M. It grew the most out of eligible stablecoins, increasing by $58.37M / +86.5% to $125.82M market cap at the end of epoch 4.
    • thBILL followed closely behind syrupUSDC, reaching a market cap of $125.74M
    • sUSDai remained the largest yield-bearing stablecoin in the program, but its market cap on Arbitrum decreased by ~$17.5m over epochs 3 & 4. This is largely due to flows to Plasma on October 2nd. Since then its market cap has steadily increased.
  • Total Borrowed Market Size of USDC grew by +$75M / +14% to ~$608M

Top ETH Assets highlights on Arbitrum in October

  • Despite Aave rewards being paused, rsETH grew its Market Size by +$58.38M / +110%, with ezETH trailing behind at +$29.2M / +62.5%

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

DRIP Marketing

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

Epoch Announcements:

Weekly Stat Recaps:

X Spaces:

Protocol Highlights:

Additional Coverage:

Continued features on

Looking Forward

Entropy is continuing to monitor competing programs and the potential cost-effectiveness of re-incentivizing ETH-denominated assets/loops.

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.