Treasury Management
December marked another month of close collaboration between Entropy, the Arbitrum Foundation, and OAT. Several allocation and reallocation suggestions have been presented to the OAT, with the AF executing based on the committee’s instructions.
The OAT approved the deployment of 1.5K ETH into GMX and 3.5K into etherfi’s LRT, weETH. The GMX position was fully deployed in December, while ~3,380 ETH was deployed into weETH. The remainder of the latter position is expected to be finalized during January.
The OAT additionally approved a suggestion to deploy 3.5K ETH into an options strategy, which is currently in the process of being initiated. A 10M ARB covered calls pilot program was started in December. The program is showing early success, and the calls were rolled over in January.
As part of working more closely with RWA issuers and streamlining the DAO’s RWA portfolio, the OAT has approved a reallocation suggestion to move the DAO’s ~$3.5M position in OpenEden’s TBILL to Spiko’s USTBL. This reallocation is also expected to take place in January. Finally, Entropy has sent a suggestion to the OAT to reposition the ETH portfolio due to certain underperforming positions. This suggestion is currently being considered by the committee.
More in-depth information regarding the previous month’s developments will be shared in the upcoming Treasury Management Quarterly Report.
Incentives: DRIP
Last week, Entropy posted a December DRIP update.
In terms of finances, Season One has now entered the tapering phase, with 2.815M ARB being allocated over epochs 8 and 9 compared to the 4.065M ARB across the previous 2 epochs. Additionally, Aave’s incentives were moved back to the core budget following a ramp up period.
A key highlight of December was finalizing a strategic partnership with Bitget and Steakhouse, through the season’s 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. Since the launch of the partnership we’ve seen over $200M increase in Morpho’s market size as they recently crossed the $500M mark for its Arbitrum deployment.
This deal is one of a few that we’ve been working on to increase the program’s distribution. To fully maximize these new distribution channels, Season One of DRIP has been extended by 2 epochs, pushing its conclusion to February 18th.
Ecosystem Data
Arbitrum GTM Support:
- Social Media Campaigns:
- Media Quotes:
- Blockstories (Ethereum)
- Defiant (Ethena)
- Cryptopolitan (Robinhood)
- Bankless (Robinhood)
The Data Team:
- sUSDai Dashboard: sUSDai is one of the largest yield-bearing stablecoins on Arbitrum at a market cap of $300M. It generates returns by backing loans collateralized by AI infrastructure assets, primarily GPUs, with any idle capital maintained in Treasury Bills to provide a base yield floor. This structure allows depositors to earn attractive yields from AI infrastructure lending without the need to underwrite or originate individual loans themselves directly.
- Ethereal Dashboard: Ethereal is an L3 Chain on Arbitrum, leveraging Arbitrum’s Orbit Stack and Celestia’s Data Availability. Ethereal Chain provides 3 key features:
- Low latency and fast execution for users to trade perpetual futures on Ethereal DEX.
- All users on Ethereal DEX automatically earn native USDe rewards on their full margin balance, powered by Ethena.
- Ethereal Chain’s native gas fee is in USDe.
- Fusaka Dashboard: The Fusaka upgrade represents the next step for Ethereum following Pectra, delivering enhanced capabilities across the entire ecosystem. Together, these improvements enhance Ethereum’s scalability, security, and overall user experience for both developers and end-users.
- Pendle Dashboard: Pendle is a leading yield-trading protocol on Ethereum and Arbitrum that enables users to tokenize and trade future yield from yield-bearing assets. It introduces a system where deposited yield-bearing assets are converted into Standardized Yield (SY) tokens, which are then split into two components - Principal Tokens (PT) and Yield Tokens (YT) - allowing users to lock in fixed yields (PT) or gain exposure to variable yield rates (YT).
- Enhancement of Treasury Management Dashboard: Added the newly deployed positions, including Etherfi’s weETH, the ARB Options Strategy, kpk’s stablecoin deployments, and GMX’s GLV [WETH-USDC] position.
Governance Operations & Other Initiatives
Code of Conduct and DAO Procedures
The Code of Conduct and DAO Procedures remains active until January 31st, 2026. Entropy has started conversations with the Arbitrum Foundation about the next iteration. Additionally, we believe that OpCo is best suited to own this initiative for the long term. We’ve mentioned this to their team and plan to loop them into this current iteration’s process.
As a reminder, the AF has the ability to extend the current version of the Code of Conduct and Procedures by up to 2 months (through March 2026). We expect them to enact this extension.
Stylus Sprint
Entropy posted a Stylus Sprint update yesterday. As of December 31st, about 4,765,369 ARB (~53% of the 9M ARB budget) has been disbursed for completed milestones. Despite a slower holiday month, five significant milestones were completed, including Walnut’s integration into the StylusSDK, Rather Labs completing the core of their Move-to-Stylus compiler, and Trail of Bits completing their final milestone.
On December 8th, MoreMarkets (formerly Nuffle Labs) announced that it was shutting down its earn account product, which was primarily focussed on providing yield opportunities for underutilized assets like XRP in DeFi. Over the last year, the committee monitored the growth and performance of MoreMarkets despite their pivot not presenting as clear of a need for Stylus. With the team winding down the earn product and transitioning to future endeavors, the committee felt it made sense at this time to formally end the grant. No ARB was ever paid out to MoreMarkets and the entirety of their 460K ARB grant has been reclaimed.
After discussing timelines with several teams, it became clear that important development milestones would need some additional time. The committee decided the best approach was to extend the Sprint deadline to February 28th, 2026.
Finally, we will be hosting the first of a likely several Stylus Sprint Demo Days on January 21st from 2-3 pm UTC to showcase completed projects.
Watchdog
On behalf of the reviewing committee, Entropy recently posted a more comprehensive Watchdog update. Going forward, Entropy will be providing full updates on a monthly basis rather than periodically.
To summarize, the Watchdog portal has received 56 total submissions, resulting in 42 unique reports. Of the 26 investigations completed so far, we have identified 19 cases of valid misuse, 11 of which involved a successful recovery of funds.
Having said that, we recognize and acknowledge that communication with reporters and the DAO can be more frequent. Going forward we will commit to providing a status check in to reports on a bi-weekly basis, even if there is no substantial update. Additionally, we will be providing updates on a monthly basis rather than periodically.
Financially, the Watchdog wallet currently holds ~601.7K ARB, with the current working budget being ~504.67K ARB. To date, a total of 256,423 ARB has been recovered and 141,423 ARB ARB is budgeted as rewards for valid reports. From that ~141.4K ARB, 44,308 ARB has already been paid out to reporters from the above-mentioned 3 completed cases and ~97,115 ARB remains reserved for cases where misuse has been found but the KYC is still pending or payment is processing.
Lastly, In light of recent market conditions, the committee will be re-evaluating the compensation structure at our upcoming meeting.
Requests from the DAO
Please continue to reach out and pass along requests to Entropy Advisors, or visit our bi-weekly office hours on Tuesdays at 12:15pm EST. Our team is always open to input from DAO members and encourages delegates to use this time to ask Entropy questions regarding any initiative.