L3 Orbit Ecosystem Fund


  • Arbitrum tried a lot of things for the last year, but it has been difficult to gain traction from the market in terms of users.

  • Recently, organic fundamental narrative is brewing leveraging Arbitrum infrasturcture, which is Arbitrum Orbit L3. Look at Degen Chain attention followed by massive repricing of Sanko Chain

  • Accordingly, based on the market-oriented approach, I think the fastest way to spurring the growth of Arbitrum would be L3

  • Launch L3 Orbit Ecosystem Fund, ASAP


Arbitrum is the most legitimate L2 in the ETH space and clearly was the frontrunner in the L2 race especially at the ARB TGE of March 2023. Everyone thought ARB as go-to L2 token & the fastest ETH beta initially. However, for various reasons, ARB has lagged every single L2 chain including OP, METIS and even BOBA.

That is why Arbitrum needs a fundamentally different approach from the previous ones. Thanksfully, we can use reference of the market. We should use leverage market-oriented approach. We have to focus on what market is already paying rewards among the Arbitrum-based infrastructure.

L3. The market starts to pay attention to L3 narrative, finally. DEGEN, the strongest and the most organic BASE memecoin, adopts Arbitrum Orbit L3 solution for its own chain. DEGEN chain crossed

  • 12M TX
  • 701K Unique Wallets
  • $30M bridged

for the less than a week time span. Not just DEGEN. With the massive DEGEN hype, DMT, which was one of the strongest organic project with grassroot community on crypto industry, gained dynastic traction from the market and experienced galactic repricing from $20M market cap to $70M market cap, +250%.

The repricing caused by L3 narrative is the key. L3 repricing is the most fundamental & organic theme that Arbitrum ecosystem faced for its entire lifetime. We don’t need to forcefully facilitate memecoins or other narrative gaining hype on other chains.

Arbitrum has luxary of its own. We just need to focus on what we already have. We are blessed, just we did not realize it.

Ecosystem Fund criteria

  • Bridged Wallet > 10K

  • Bridged TVL > $1M

  • L3 TX > 100K

  • Among the project qualifying the criteria, elected committee will decide the beneficiary

Ecosystem Fund method

  • Providing liquidity for ARB-(project token) on Arbitrum L2 linearly to Bridged TVL [5% of bridged TVL can make sens as I think]
  • Providing liquidity mining for ARB-(project token) on Arbitrum L2 linearly to Bridged TVL
  • Buying the project token on Arbitrum L2 linearly to L3 chain activity [this will be quite controversial, just suggestion. Defining L3 chain activity itself is not easy]

open to suggestion


ASAP. Starting with 1 month long of test period would be proper. Bull market would not be that long, so we need to leverage all the timely resources as fast as possible.

Overall costs

5M ARB for 1 month test period

  • 4.9M ARB for ecosystem fund
  • 0.1M ARB for elected committe members

To be honest, I don’t really understand how more users will appear in L2 Arbitrum if we finance L3 solutions.
It would be more effective to copy the solutions of Blast or Mode to attract users to the L3 networks


You have some of points of L2 adoption. However, the Arbitrum ecosystem fund executed has not made significant progress so far. That is why I say we should focus on the theme that market is rewarding currently.

Copying solution of Blast or Mode can be also good. Actually, the method itself is not that important I think, the point of this proposal is that Arbitrum must systematically spur the growth of L3 chain in the foundation level.

1 Like

gm @cryptobyrde, thanks for sharing this proposal.

I agree that the L3 mechanism can potentially be one of the greatest growth catalysts for Arbitrum - the number of projects I spoke with in the last month that are launching their own appchain is considerable. We should absolutely lean into that as a DAO too.

I believe that Arbitrum TVL will soon be measured by the aggregated L3s settling on Arbitrum, similarly to what is done with Ethereum.

I am also intrigued by the reward system you suggested (liquidity provision instead of giving ARB directly to teams), however, I think those projects would probably appreciate more attracting liquidity onto their L3 rather than Arbitrum itself (as I mentioned, this would still work from a holistic perspective).

Some thoughts:

  • We should design some early incentives to help projects bootstrap users and liquidity (this could be an independent program)

  • I think there should still be a manual review of every L3 that is set to receive the rewards (how easy is it to game the process of attracting fake TVL, then dump the token paired against ARB? We should have safeguards in place until the process is battle tested)

  • We also need to consider the business model: from here, we know that

Shall we also include incentives for these alternative-settlment L2s?

  • We need to coordinate with the Arbitrum Foundation / OFL, as we don’t want to create redundant (or even conflicting) incentives vs what is being done already.

  • I don’t believe we should buy any token

  • Is there any other support we can provide as a DAO?

Happy to further collaborate on the evolution of this.


Thank you for your initiative to make the Arbitrum ecosystem more popular among users. However, in my opinion, this proposal is somewhat superficial and overlooks the following:

Market Dependence: The strategy heavily depends on current market trends, which are volatile. A more diversified approach could reduce risks associated with market fluctuations.

Criteria Rigidity: The specific funding criteria could exclude innovative projects that don’t meet the exact thresholds. More flexible criteria could support a broader range of promising initiatives.

Focus on Short-term Hype: Emphasizing the current hype around L3 might not ensure long-term sustainability. Incorporating strategies that build long-term value for the ecosystem could be beneficial.

Resource Allocation: Allocating nearly the entire budget to the ecosystem fund with little reserved for oversight might not allow for effective fund management and governance. Dedicating resources to robust fund management and oversight could enhance the fund’s effectiveness and transparency.

Implementation Urgency: Rushing to implement the fund “ASAP” may overlook the need for thorough planning and community consultation. A more thoughtful schedule that includes community feedback and pilot testing could better align with community needs and expectations.

In my opinion, addressing these aspects could strengthen the proposal, making it more resilient to market changes, inclusive of diverse projects, and focused on the long-term health of the ecosystem.


This is Dolapo Lai, from Blockchain Innovation Hub. I agree that this proposal is a very good step for Arbitrum to adopt its technological stack in building more Layer 3 (L3) solutions, which have proven to be effective in the past.

It’s also a better and more inherent way to not only scale the use of Arbitrum Orbit, but also to acquire users from the market without dabbling in aspects such as the trending meme coin, which lacks a well-defined approach.

However, I have certain objections for which I will need some clarity:

On what metrics and basis will the elected committee use in determining who the beneficiaries of the projects are?

Another objection is that the timeline isn’t defined, which is a major concern for me. What are the activities that will be going on during the period of one month (4 weeks)? Can you provide a granular analysis of the timeline, preferably on a weekly or biweekly basis?

The costs aren’t explicit, and the ecosystem funds criteria aren’t well defined. Why is that? Also, there isn’t a projected number of Layer 3 (L3) project that the team is looking to bring onboard.

Additionally, there is no clarity on how the funds will be distributed among the L3s — is it just random?

A more in-depth breakdown and analysis of each of these aspects is what is needed to provide more clarity. Again well done, your idea is great.