Extending DRIP's Mandate

[Entropy]

Non-Constitutional

Abstract

This proposal extends the DRIP program’s mandate end date from July 1st, 2026 to July 1st, 2027, giving the Season Selection Committee additional time to deploy remaining funds across future seasons. No additional funding is requested in this proposal. All other terms of the original DRIP proposal remain unchanged, such as the committee composition and the DAO’s ability to terminate the program via an offchain vote.

Motivation

As background, when the DAO approved DRIP in June 2025, the proposal outlined a 1-year mandate to execute up to 4 seasons with a total budget of 80M ARB. Season durations were originally estimated to be ~3-months, despite the proposal acknowledging this length was somewhat arbitrary and the Season Selection Committee retained the ability to modify or extend season lengths.

When designing Season 1 in collaboration with the selected distribution partner, Merkl, it became clear that a 3-month season was likely too short of a time period to run an effective campaign. Going live in early September, Season 1 ultimately ran for approximately 5.5 months to fully utilize the distribution partnerships secured and to create a slower tapering of rewards. We believe these design decisions helped the campaign achieve an overall adjusted cost-effectiveness ratio of 51 (76 on USD assets specifically), the highest of any major Arbitrum incentive program to date, alongside yield-bearing stablecoin supply growth on Arbitrum from $130M to over $1B, as detailed in the season retrospective.

We want to address the most obvious question upfront. Since DRIP Season 1 concluded on February 18, 2026, the program has been quiet. We recognize that work on the next season has taken longer than we anticipated and appreciate the DAO’s patience.

There are several strategic developments in flight that materially affect what an effective Season 2 should be designed around. We judged it more prudent to wait than to deploy meaningful ARB in a shortened season that did not fully align with these developments should they be confirmed. Spending 15-20M ARB on the wrong campaign is a much worse outcome than waiting a few additional months to run the right one. We are not in a position to detail every development driving this judgment publicly, but the OAT, Offchain, and the Arbitrum Foundation have been looped in throughout, and we hope to be able to share more in the coming weeks. The remaining ~63.7M ARB budget continues to sit with the AF, with deployment subject to Season Selection Committee approval.

Specification

Extend the DRIP mandate end date from July 1st, 2026 to July 1st, 2027.

The following language from the original proposal:

“DRIP End Date (funds returned if not used or another proposal is not passed): July 1, 2026. An ongoing season may go past this date, but new seasons will not begin after this date.”

Is amended to:

“DRIP End Date (funds returned if not used or another proposal is not passed): July 1, 2027. An ongoing season may go past this date, but new seasons will not begin after this date.”

All other terms of the original DRIP proposal, including the 80M ARB total budget, season structure, Season Selection Committee composition and approval thresholds, and the DAO’s ability to terminate the program remain unchanged.

Timeline

• Forum: Thursday June 11th, 2026
• Offchain vote: Thursday June 18th, 2026

[MconnectDAO]

Thanks for putting this forward and for the clear Season 1 recap – the cost-effectiveness and growth in yield-bearing stables are strong positives.
arbitrum

However, I’m cautious about extending the mandate by 12 months without stronger accountability. Since Season 1 ended in Feb 2026 and DRIP has been quiet, I’d prefer:
arbitrum

A concrete target window for Season 2 and basic milestones.
A clearer reporting cadence and public updates, even if partially redacted.
arbitrum

An explicit framing of opportunity cost for the remaining ~63.7M ARB that stays earmarked with the Foundation.
arbitrum

If these governance safeguards and transparency commitments can be clarified, I’m directionally supportive of the extension; otherwise I’d lean toward a revised proposal text. @Entropy

[pedrob]

I would like to express my support for this proposal. The DRIP is a fundamental component for the implementation of the strategy that has been under development for a while. Lots of exciting stuff ahead!

[Arb_Junior]

(DAO-governed programs must prioritize fiduciary responsibility, Extended silence risks perceptions of inefficiency, If these governance transparency commitments can be clarified since Season 1 ended in Feb 2026.)

I support this proposal the extension of DRIP’s mandate from July 1, 2026 to July 1, 2027.

This is a prudent, low-risk, high-upside decision, No new funds are being requested - we’re simply giving the Season Selection Committee the necessary runway to deploy the remaining

~$63.7M ARB effectively rather than rushing into a suboptimal Season 2.

Season 1 was a clear success. Despite running longer than the original 3-month estimate (5.5 months), it delivered the highest adjusted cost-effectiveness ratio (51) of any major Arbitrum incentive program to date, alongside significant growth in yield-bearing stablecoin supply. This proves the program works when given proper time and thoughtful design.

The team is being responsible by waiting for key developments (with OAT, Offchain, Arbitrum Foundation already looped in) instead of burning 15-20M ARB on a misaligned campaign. In crypto, deploying capital at the wrong time is far more damaging than waiting a few extra months for the right setup.

The original proposal already acknowledged that season lengths were somewhat arbitrary and gave the committee power to adjust them. This extension simply formalizes that reality and aligns governance with how the program actually performs in practice.

The termination clause remains fully intact (offchain vote possible at any time), the total 80M ARB budget is unchanged, and unused funds can still be returned. We’re not extending the program indefinitely -we’re giving it the breathing room it clearly needs to maximize impact.

Well done to the DRIP team and Season Selection Committee for the transparent retrospective and thoughtful approach. This extension deserves broad support. Let’s give them the time to deliver another high-performing season.

[Zeptimus]

Voting FOR. DRIP had a positive impact on Arbitrum, it brought Morpho and Euler over, grew yield for stables significantly. The 10/10 deleveraging was just unfortunate timing for a looping program, not a flaw in the plan. The strategy and execution were solid and its worth keeping it moving forward.

[maxlomu]

gm, voting for both on offchain and onchain votes - It’s reasonable to extend the successful program.

@Entropy

overall adjusted cost-effectiveness ratio of 51 (76 on USD assets specifically)

@entropy as it’s been 4 months since the end of season 1, it would be great to see the current figures on the TVL retained after campaign (how the 76:1 looks like now, and just before the start of next season).

[Abel189]

I support extending the mandate.

The primary reason is that this proposal does not request additional funding. The DAO has already approved the DRIP budget, and the question is whether the committee should have additional time to deploy the remaining allocation effectively.

Based on the reported outcomes of Season 1, the committee appears to have taken a disciplined approach by prioritizing efficiency over spending speed. In principle, I agree that waiting for stronger opportunities is preferable to distributing large amounts of ARB simply to meet an arbitrary deadline.

That said, the extended period without a new season naturally raises questions about visibility and planning. As part of the extension, I would appreciate more regular communication regarding strategic priorities, design considerations, and the expected timeline for future deployments. This would help maintain accountability while preserving the flexibility needed to maximize the impact of the remaining budget.

Overall, extending the mandate appears reasonable, but increased transparency would strengthen community confidence going forward.

[Griff]

Vote: FOR

I’m a believer in the approach Entropy is taking. I hope the can prioritize it more this year. The campaign they ran seems to have created more demand than it cost, so why not keep it going…

[krst]

Disclaimer: these are my personal views, not L2BEAT’s position on the proposal.

I am strongly against this proposal.

To be clear from the start: I am against this proposal, not against Entropy, DRIP, or incentive programs in general.

My main concern is that I don’t know what the DAO is being asked to approve. The original DRIP proposal, in its implementation, ended up looking only loosely related to the proposal we voted on.

The “Rules of the DRIP Season” begin with: “The seasons must have a defined, singular goal. Specificity is required.” DRIP Season 1 did not have such a defined, singular goal. I know because I asked about it during internal calls before Season 1 launched, and I was told that this was not an accidental omission.

The original proposal described three four seasons. In practice, there was one season, longer than initially proposed. The proposal also mentioned an evaluation partner. There is no evaluation partner.

So what exactly are we voting on now? What program are we approving? Why do we not have a comprehensive, independent review from the parties responsible for oversight - OAT, OpCo, or an independent evaluator? As written, this looks like a blank check for Entropy to spend DAO funds on broadly Arbitrum-related activity.

I think it is time to take a step back, review Season 1 independently - the DAO already has a financial expert in OpCo - and then vote on a future proposal that clearly explains its scope, purpose, and goals. There is nothing like that in front of us right now.

To be clear, I have respect for both Entropy and the OAT members involved in oversight. I appreciate their dedication to the Arbitrum ecosystem. But Arbitrum is not a pet project of Entropy or particular OAT members. It is governed by a DAO, and the funds under discussion are DAO Treasury funds.

I think we used to hold ourselves to a higher standard here. At the beginning of this DAO, Entropy’s founders led the opposition to the AIP-1 vote with the argument: “Too often we have seen funds go into a black box of expenses. It is time to make DAO transparency a priority.” I believe they were right then, and I think the DAO should return to that spirit now.

ARB is supposed to be a governance token. If we treat it as a rubber-stamping memecoin instead, we should not be surprised if the market prices it as such.

[Entropy]

@krst, responding directly to the points raised.

Starting with what is actually being voted on. A vote in favor keeps the program’s optionality past July 1st. A vote against dissolves the operational infrastructure, including the contract with Merkl as the distribution partner, all of which would have to be rebuilt at real cost if the DAO later re-approves a similar incentive program.

We would push back on the “blank check” framing. DRIP funds are not held or unilaterally controlled by Entropy. None of the ARB allocated to DRIP moves without approval from the Season Selection Committee, which includes two other AAEs. The custody of the funds sits with the Arbitrum Foundation and any transactions from the DRIP wallet (naturally) require their sign off. That is the structure the DAO approved and this proposal does not change it.

On the AIP-1 reference, that statement was made roughly three years ago, in a different context and before the AAE structure existed. Views and structures across the DAO have evolved since then, and so has its operational maturity. To look back on the DAO of three years ago, with its millions in ineffective spending, and argue it was in better shape than it is now is something we confidently disagree with. A 2023 quote tells us little about a 2026 program, and the substance of the objection reads as a concern with the AAE model itself rather than with the 12-month extension in front of us. That is a fair debate to have, but it is a separate one, and it is not what this vote decides.

[cornellbc.eth]

Cornell Blockchain is voting FOR this proposal. We agree that a realistic and cautious approach will yield a better Season. As no extra funding is requested and the budget and vague timeline are already approved, we feel fully comfortable with the extension. Overall, though, we would appreciate timeline updates as soon as they become available.

[Manugotsuka]

The following reflects the views of L2BEAT’s governance team, composed of @krst and @Manugotsuka, and is based on their combined research, fact-checking, and discussion.

We voted AGAINST.

We are not opposed to DRIP’s objectives, and we recognize that Season 1 appears to have produced strong reported results. The program showed that targeted incentives can be deployed in a more disciplined way, and we agree that spending ARB quickly just to meet an arbitrary deadline would not be the right outcome.

However, we do not think the current proposal provides enough visibility to justify extending the mandate for a full additional year. While no new funding is being requested, the extension would preserve authority over a large remaining allocation of approximately 63.7M ARB. In our view, that is still a material governance decision and should come with a higher standard of transparency.

The context has also changed since DRIP was originally approved. The ARB token price has moved significantly, which changes the practical impact and opportunity cost of deploying the remaining allocation. At the same time, the DAO now has more mature structures, including OpCo, that could help support a more updated incentive strategy or framework instead of simply extending the existing mandate.

The program has also been quiet since Season 1 ended in February. We understand that the committee may be waiting for better strategic conditions before launching the next season, but the DAO has limited public information about what Season 2 is expected to target, when it may launch, how the remaining budget is expected to be paced within the existing 20M ARB per-season cap, or what success criteria will be used.

Before extending the mandate, we would like to see an updated post-incentive retention analysis for Season 1. While retention was identified as an important metric and a retrospective was published, delegates would benefit from clearer current figures showing how much liquidity or activity remained after incentives ended. The original results are encouraging, but updated retention data is important for understanding whether DRIP produced durable ecosystem growth or mainly temporary incentive-driven activity.

We would also prefer to see a clearer deployment framework for the remaining funds, including an expected timeline, reporting cadence, objectives for future seasons, and conditions under which unused funds should be returned to the DAO. A shorter extension, or an extension tied to a more concrete Season 2 plan, would be easier for us to support.

[Saurabh]

The following reflects the views of GMX’s Governance Committee and is based on the combined research, evaluation, consensus, and ideation of various committee members.

The Drip program has been instrumental, demonstrating that when incentives are deployed properly, they meaningfully improve protocol growth. We’d support this proposal and would like to see the DAO continue the program. The delay due to recent market conditions is understandable on GMX’s end the Drip program has already proven valuable in unlocking partnerships, such as with Morpho.

[Flook]

Merlyn Labs is voting FOR this proposal because it just extends the DRIP mandate by a year without requesting any new funding or changing the committee or budget.

[SEEDGov]

Voted FOR;

DRIP has represented a refreshing approach to ecosystem incentives since its inception, differentiating itself from previous DAO incentive programs through its focused scope, performance-based allocation model, and active management throughout the program.

Season 1 demonstrated that this approach can generate meaningful results despite challenging market conditions. According to the retrospective, Arbitrum increased its lending market share during a broader market downturn while expanding its lending ecosystem, onboarding major protocols and new yield-bearing assets, and achieving strong capital efficiency relative to comparable incentive programs.

Given these results, extending DRIP’s mandate by one year seems reasonable, especially considering that this proposal does not request additional funding but rather provides the flexibility needed to continue executing future seasons without being constrained by an arbitrary timeline.