Entropy Advisors Monthly Update: October 2025

DAO Programs & Initiatives Entropy Advisors Updates
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Treasury Management

On October 24, Entropy published the Arbitrum DAO’s first Investment Policy Statement (IPS). The IPS establishes a structured framework for managing treasury assets across multiple classes, outlining long-term objectives, performance benchmarks, risk parameters, rebalancing thresholds, and the roles of key stakeholders. It is designed to support transparent and efficient decision-making while allowing flexibility to adapt to evolving conditions.

On October 30, Entropy released the first Treasury Management Quarterly Report. Q3 marked the DAO’s highest-yielding quarter to date, with ~$400K in income generated from RWAs, stablecoin deployments, and ETH-denominated strategies. The report also includes detailed insights into income and expenses, projected runway, and a breakdown of the DAO’s $86M treasury portfolio: 36% in ETH & ETH-correlated assets, 55% in RWAs, and 5% in deployed stablecoins.

Finally, on November 1, the DAO approved Entropy’s proposal via Tally to activate 8,500 ETH from the treasury into yield-generating strategies. This represents ~80% of the DAO’s idle ETH and is expected to generate over 200 ETH in annualized yield while supporting DeFi ecosystem growth. Deployment will begin once the OAT approves the granular allocation list.

Incentives: DRIP

Earlier today, Entropy posted an October DRIP update.

To summarize, over the last month DRIP Season One progressed through epochs 3 and 4 with epoch 5 currently ongoing. Since the start of the Performance Phase, a total of 3.905M ARB has been allocated to lending protocols from the base and discretionary budgets.

A few data highlights from epoch 2 through the end of epoch 4:

  • Despite Arbitrum TVS declining 14% MoM, Arbitrum Lending Market Size grew by $176M / 5.7% in the same period
  • Market Cap of Yield-bearing Stablecoins grew by $94M / 19% to nearly $600M
    • Up ~140% since DRIP inception
  • 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

Lastly, Entropy is monitoring the ongoing downstream effects of Stream Finance’s insolvency and its impact on certain lending markets. So far we have observed limited bad debt on Arbitrum directly related to xUSD, but lending protocols that utilize curators (Morpho, Euler, and Silo) are experiencing declines in market sizes and vault liquidity. As the situation unfolds, Entropy will continue to communicate with the DAO any necessary adjustments to DRIP Season One.

Ecosystem Data

Arbitrum GTM Support:

The Data Team:

  • Builder Support:
    • Variational Protocol: Variational is a new perpetual DEX built on Arbitrum. This dashboard helps drive traction and momentum for Arbitrum protocols while providing analytics and insights by tracking TVL, flows, top addresses, and loss refund revenue.
    • Robinhood Stock Tokens: This dashboard tracks all 493 stock tokens deployed by Robinhood on Arbitrum. It provides early insights into adoption and shows how one of the world’s leading fintech firms is using Arbitrum to give EU users access to US stocks. The dashboard has been featured by top media outlets, including Cointelegraph and WuBlockchain.
    • Aave Horizon: Aave has been a leading force in DeFi and on Arbitrum. Their latest Horizon market on Ethereum showcases a breakthrough in integrating RWAs into DeFi. This early analysis highlights a key innovation in DeFi infrastructure, and with Arbitrum emerging as a top ecosystem for RWAs, it provides early insights into how the convergence of RWA and DeFi may evolve.
    • Ethereal Chain: Ethereal is an L3 built on the Arbitrum Orbit stack and an exciting new perpetual DEX using Ethena’s USDe as its native gas token. With Ethereal’s mainnet set to go live for public access, this dashboard serves as the primary hub to track adoption and monitor activity on this emerging Orbit chain.

Governance Operations & Other Initiatives

The revised Code of Conduct and DAO Procedures remain active. As a reminder, the DAO’s holiday break begins next month.

Stylus Sprint

Entropy published an October update on behalf of the Stylus Sprint committee. Teams continue to make progress on their scoped work. To date, 3,646,036 ARB has been disbursed, representing approximately 40.5% of the total program budget.

We’re excited to highlight a technical case study published by RedStone earlier today. Their Stylus implementation has impressive testing benchmarks and could lead to gas consumption savings for builders.

Watchdog

On October 14, the committee published an update, including adjustments to the reward structure. Medium and high-severity base rewards were reduced to better reflect the scale and types of misuse observed so far. The share of recovered funds awarded to reporters doubled from 5% to 10%. The update also clarified reporting guidelines, eligibility rules for duplicate reports, and how recovered ARB will be handled. These changes only apply to reports submitted after October 14th, 2025.

As of October 31st, 37 reports have been submitted through the Watchdog portal, the majority of which involve non-active programs. The reviewing committee (Entropy, the Arbitrum Foundation, and SeedGov) meets weekly to assess submissions and work to verify the information submitted. Depending on the report, verifying submitted data and obtaining clarifications can take several weeks. The committee is working through the high volume of reports.

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.

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