DRIP September 2025 Update

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

Hello everyone, with the start of epoch 3 Oct. 1 and DRIP transitioning from the Discovery to Performance Phase, we’d like to share a status update.

Epochs 1 & 2 Recap

As a reminder, the distribution of DRIP rewards was designed around a phased rollout. Season One began with a four week long ramp up discovery phase in order to establish necessary baseline data and validate initial theses. While Entropy originally projected spending 15% (2.4M) of the program’s base budget (16M), only 1.62M ARB of the base was allocated due to an adjustment that will be explained further below. From the discretionary budget, 60K ARB was allocated to the syrupUSDC market on Morpho. The following is the allocation per epoch, broken down by lending market:

Epoch 1:

  • Aave: 400K ARB
  • Morpo: 120K ARB
  • Fluid: 120K ARB
  • Euler: 120K ARB
  • Dolomite: 20K ARB
  • Silo: 20K ARB

Epoch 2:

  • Aave: Paused
  • Morpo: 240K ARB + 60K syrupUSDC
  • Fluid: 240K ARB
  • Euler: 240K ARB
  • Dolomite: 40K ARB
  • Silo: 60K ARB

September saw the launch of several other high profile incentive campaigns/chains, notably Linea Ignition and Plasma TGE. As we mentioned in our Season 1 Launch Recap, Entropy has been and will continue to monitor the cost effectiveness of incentivizing ETH or stable loops and how the spend/strategy of these competing programs may impact DRIP. Adapting quickly to changing market conditions when necessary remains a top priority.

In epoch 2, the decision was made to prioritize USD-denominated markets as a result of ETH’s high cost of capital. Attempting to incentivize ETH borrowing without the necessary ETH supply would have been a waste of funds. Therefore, rewards on Aave have been temporarily paused and reserved for future epochs as there are currently only eligible ETH assets listed. Entropy plans to revisit ETH-denominated loops as conditions change. Additionally, eligible stable assets, such as USDai, are making their way through the Aave governance process.

Data & Metrics from Epochs 1 & 2

Program Overview / Arbitrum Network Overview

  • Arbitrum TVS has crossed $20B (+4% MoM)
  • Arbitrum TVL has increased by ~$400M to a total of $3.5B (+12.4% MoM)
  • Arbitrum’s Stablecoin Market Cap crossed $10B (+11.8% MoM)
    • Market Cap of Eligible Assets doubled from ~$300M to ~$600M, contributing to ~60% of overall growth
    • Despite the launch of Linea and Plasma, the Market Cap of Eligible Assets has consistently increased with no noticeable decline
  • RWA AUM has also increased to $486M (+32% MoM)
  • DEX Liquidity of USD Eligible Assets grew by $71M from ~$25M to ~$96M
  • Gross Protocol Fees of all Lending Protocols grew MoM - some as high as 168%
  • USDC supply (excluding Hyperliquid’s USDC) has grown by 4%
    • ETH supply has also grown by 4.4%
    • Additionally, circulating supply of ETH has now surpassed Linea and Base

Top Protocols highlights on Arbitrum since DRIP

  • Since the launch of DRIP, Silo, Euler, and Morpho have seen their Arbitrum deployments gain a sizable increase of their protocols’ total market size. Fluid and Dolomite have also seen slight increases.
  • Morpho: Market size grew by $272M (+696%) to a new Market Size ATH of $311M.
    • Growth primarily driven by USDC and thBILL deposits
  • Fluid: Market size grew by $128M (+63%) to $332M
    • Growth primarily came from syrupUSDC deposits and USDC/USDT0 loans
  • Euler: New Market Size ATH of $167m (+186.8% MoM)
    • PT tokens were the key driver for the growth, including PT-USDai, PT-sUSDai, and PT-thBILL
    • Similar to Morpho, majority of Euler loans are USDC
  • Silo: New Market Size ATH of $105M (+187.3% MoM)
    • USDC, PT-sUSDai, rsETH and WETH were the top contributors to the growth in Market Size

Top USD Assets highlights on Arbitrum since DRIP

  • sUSDai is the fastest-growing asset on Arbitrum in terms of Market Size at +$99M, with thBILL (+$86M) and syrupUSDC (+$67M) at second and third respectively
  • sUSDai is also the largest Market Size of all eligible USD assets at $162M, followed by sUSDS at $103M and thBILL at $87M
  • Although $250M USDai was minted on Plasma, we’ve observed that ~80% of this supply was bridged back to Arbitrum

Top ETH Assets highlights on Arbitrum since DRIP

  • ezETH has grown the fastest of all ETH assets in Market Size by 2x, with rsETH trailing at 1.7x
  • After weETH, ezETH now has the second highest Arbitrum dominance per ETH asset - it was lowest at the start of DRIP

Performance Phase

The start of Epoch 3 yesterday, marked the season’s transition to a 3-month performance-based model, which is designed to maximize efficiency and competition. During this phase, markets and projects that are more successful will receive a greater share of the total incentives. Participant performance in DRIP will be judged partially based on the quantitative metrics available on Entropy’s 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

On September 30th, Entropy hosted a data workshop to walk through the methodology and metrics of each of these dashboards. A recording of this workshop can be viewed here.

As stated previously, while quantitative metrics will influence allocations, other discretionary factors such as co-incentives, participation in co-marketing, “sufficient” DEX liquidity, and others will be taken into account when evaluating a participant’s performance.

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 Notable Coverage:

Looking Forward

Lastly, now that Season One is in full swing, the DRIP committee is beginning to turn more attention and time toward ideation for Season Two. As previously mentioned, verticals that are top of mind are RWAs, DEXs, and perps; however, the committee is planning to explore other options as well.

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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