Treasury Management
March was a particularly busy month for treasury management. Resolv suffered an exploit in which the exploiter was able to mint unbacked USR, leading to downstream effects across certain projects on Arbitrum. The DAO’s treasury management positions had zero exposure to the incident, and the greater DAO treasury remains unimpacted. Entropy has posted an ad-hoc update going into further details here.
On the options side, the ETH covered calls strategy was further upsized from 5.05K ETH to 6.75K ETH. The additional ETH mainly derives from capital that was withdrawn from Fluid. The withdrawals were performed in 3 tranches to ensure users weren’t negatively affected and to let the market stabilize at a new equilibrium. The last tranche was finalised in the middle of March. The covered calls strategy has been an excellent yield generation avenue for the TM portfolio, with premiums across 5 rounds of sales translating to APYs ranging from 7% to 19%.
The DAO’s incentive token holdings were rebalanced during the month in accordance with guidelines in the Investment Policy Statement. GRAIL, MORPHO, and KING tokens were converted into USDC and ETH.
The OAT has approved a ~$4.5M stablecoin reallocation from Gauntlet’s USDC Prime vault on Morpho towards syrupUSDC. In connection with this reallocation, idle stablecoins will additionally be supplied into the new position. The withdrawal from the Prime vault will be performed in tranches to minimize impact on users, with two withdrawals completed to date.
In late March, Backed, the issuer of bIB01, announced that bTokens will be gradually wound down during 2026. Accordingly, a suggestion was made to the OAT to divest the position and supply the proceeds into USDai. The suggestion additionally included a reallocation from Superstate’s USTB, making the total size roughly $9M. The suggestion was approved by the OAT in late March, and a test transaction to withdraw funds from bIB01 has already been performed.
Incentives: DRIP
Compared to our Treasury Management work, March was a relatively quiet month for DRIP, with Entropy primarily focused on ongoing partnership negotiations with potential Season 2 projects. While we had initially hoped to launch Season 2 in mid-to-late April, those conversations are still ongoing and we now anticipate May as the earliest feasible launch window. Entropy has also completed a draft proposal to extend DRIP’s mandate, which will be posted in the coming weeks following an internal review.
As of today, approximately 2.84M ARB (~20% of total rewards) remains unclaimed from Season 1. Users have until EoD May 18th, 2026, to claim rewards from all participating protocols, with the exception of Aave, which carries an extended deadline through EoD August 18th, 2026. The full Season 1 retrospective, covering program performance from September 3rd, 2025, through February 18th, 2026, was published on March 5th and can be accessed here.
Ecosystem Data
Arbitrum GTM Support:
- Social Media Campaigns:
The Data Team:
- Arbitrum DAO DVP Quorum Mechanism: Entropy updated our data dashboards to support the new DVP quorum mechanism adopted by Arbitrum DAO, ensuring governance metrics and thresholds are accurately reflected across our tooling.
- OCL ArbOS 60 Proposal Analysis: Our team provided supporting data analysis for OCL’s ArbOS 60 proposal, examining how the proposed mechanism impacts Timeboost and transaction fee revenue on Arbitrum.
- Data Infrastructure: Entropy is in the process of establishing new data infrastructure to enable more granular analytics for the DAO.
Governance Operations & Other Initiatives
Code of Conduct and DAO Procedures
Following a successful offchain vote that concluded on April 2nd, the new living versions of the Code of Conduct and DAO Procedures are now active. Going forward, OpCo will be the steward for these documents, and we expect them to publish the new versions in the Announcements section in the coming days.
Stylus Sprint
In March, 715,168 ARB was disbursed to teams at an average price of $0.096 (~$68,832). This brings the total amount of ARB distributed to teams to ~6.43M (71.4% of the 9M budget). Payments that total 745,000 ARB are currently being processed with the Arbitrum Foundation.
With the deadline for milestones being February 28th, the program received a large influx of submissions (~24). The committee is still currently reviewing 5 milestones, which total 255,496 ARB, and are providing feedback to teams on certain improvements we’d like to see before marking them as complete. Once these are finalized, the program will be functionally closed from a disbursement standpoint.
On March 26th, Entropy hosted the third and final Stylus Sprint Demo Day. Syndicate, Fairblock, Thirdweb, and Stylus Saturdays presented live, with Sifter (prev. Angel) submitting a recorded demo due to a last-minute scheduling conflict. The full recording is available here. OCL marketing released a case study on Fiet Protocol and how they are leveraging Stylus. Additionally, case studies for Stylusport and Moving Stylus are in review and are currently scheduled to be released in April. Lastly, a draft of the Stylus Sprint retrospective is in its final stages. Following a review from OCL, the AF, and other committee members, in addition to waiting for the above-mentioned milestone reviews to be completed, it will be published to the Arbitrum forum.
Watchdog
Entropy recently published the promised six-month Watchdog retrospective in partnership with the Arbitrum Foundation and SeedGov. It covers the program’s performance from September 8th, 2025, through March 31st, 2026, and can be found here. At a high level, the program received 78 total reports (59 unique), completed 51 investigations, validated 32 cases of misuse, and recovered 422,316 ARB for the DAO. The report covers the full financial summary, a report severity breakdown, operational lessons learned, and the committee’s recommendations for the path forward, including next steps on the transition of the program to OpCo.
In April, the reviewing committee will be focused on several key items as part of our recommendations in the retrospective. First will be finalizing the scope boundary that would limit future Watchdog coverage to programs launched after a defined cutoff date, which will be followed by a formal announcement in the forum. In parallel, the committee will continue working to close out the remaining open investigations from the legacy incentive programs and prepare a separate governance proposal to the Arbitrum forum with DAO ban recommendations for the three High severity cases. Lastly, Entropy will work with OpCo to get them onboarded to the Watchdog Portal and help assist with the transition of the program.
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 1:15pm 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.