# Proposal: Institutional $ARB Buyback via Bond Issuance **URL:** \ **Category:** Governance Discussion\ **Tags:** proposal\ **Created:** [June 24, 2025, 1:40pm UTC](https://forum.arbitrum.foundation/t/proposal-institutional-arb-buyback-via-bond-issuance/29491 "2025-06-24T13:40:39Z")\ **Posts on this page:** 1\ **Showing post:** 11
**Author:** ![TodayInDeFi](https://yyz1.discourse-cdn.com/flex029/user_avatar/forum.arbitrum.foundation/todayindefi/32/13505_2.png) [@TodayInDeFi](https://forum.arbitrum.foundation/u/TodayInDeFi)\ **Post date:** [July 2, 2025, 9:26am UTC](https://forum.arbitrum.foundation/t/proposal-institutional-arb-buyback-via-bond-issuance/29491/11 "2025-07-02T09:26:07Z")
Hi, this is Brook from TiD Research. This is a high-level discussion with many details still to be clarified, but I find the exploration quite compelling. > [@GFXlabs](#): > > It wouldn’t make a ton of sense to do a buyback when ARB is still used as the primary method of financing DAO activities. Instead of framing this as a pure ARB buyback, we could view it as a mechanism to **offset the persistent ARB sell pressure** caused by DAO expenditures. According to the token flow report, the DAO has spent an average of **3.1M ARB per month** (~1% of circulating supply) over the past six months—a meaningful amount. ![image](https://canada1.discourse-cdn.com/flex029/uploads/arbitrum1/original/2X/a/a9d868a293a060682e03e79a3b43724c4472c7dd.jpeg) However, I agree with @GFXlabs: if the DAO continues to sell ARB to raise stablecoins for expenses, borrowing stablecoins via bond issuance to then buy back ARB, only to sell it again later, is inefficient. A better approach would be to **use stablecoins raised from the bond issuance to directly fund part of the DAO’s expenses** , thereby reducing the need to sell ARB. > [@GFXlabs](#): > > A better approach would be to begin capping what percentage of expenses may be paid with ARB. One of the most important factors why Microstrategy can be so successful is that it provides those who are too conservative to hold BTC directly at the moment but still want to be exposed to the potential upside a risk-remote instrument to invest. The bond reduces the risk of capital loss, and the embedded written call option provides upside exposure. > [@TempeTechie](#): > > I’m not sure if what you’re proposing would work the same way. Strategy raised funds to buy BTC using bonds that convert into MSTR stock. That creates buy pressure for BTC and eventual sell pressure for MSTR in the future, when bondholders convert their bonds into MSTR shares. Even though the underlying of the bond is essentially BTC and the asset corresponding to the option is MSTR, but they’re highly correlated and move in the same direction most of the time. MSTR holders seem not too worried about the embedded option being triggered as it’s only possible when the price of MSTR goes up by a lot to cross the conversion price, and the selling pressure following the redemption will be most likely to be absorbed by the organic market demand. > [@TempeTechie](#): > > But in your proposal, we’d have both buy and sell pressure on the same asset, the ARB token. Initially, there would be buy pressure from acquiring ARB, but when the bonds mature, there could be a massive sell-off as bondholders dump ARB on the market. So I do think we might be able to copy the Microstrategy model and apply it on ARB to a certain extent. We can look at the issuance of the bond as a way to give TMC enough time to accumulate yields from stable coin investments. **Ideally, if we can really structure the bond to set coupon rate at 0%, we can use the fund raised to cover the DAO monthly spending and at maturity use the yields earned by TMC to repay. The arrangement might be able to reduce selling of ARB.** Overall I think this is a very meaningful discussion, but there’s a lot to be confirmed. **Convertible Bond Terms & Option Design** Would it be possible to share a set of example terms for the convertible bond? For instance: - What is the indicative **conversion price** and **conversion ratio**? - Given the plan to issue **zero-coupon bonds** , how do you envision structuring the **embedded option** to ensure investor appeal without offering a periodic yield? - Are there any **benchmarks** (e.g., MicroStrategy, Coinbase’s convertible bonds, or DeFi-native deals) you’re using to inform pricing and term design? It would be helpful to understand the rationale and trade-offs. **Sizing & Buyback Schedule** Is there a target **issuance size** under consideration? If the primary goal is to support the ARB price, one reasonable framing might be to **offset ARB emissions** (~180–200M ARB over 12–18 months). This could help define: - The **buyback size and schedule** : Will it follow a fixed monthly schedule, or adjust dynamically based on emission flow or price volatility? - Will there be a **public buyback framework** to ensure transparency and avoid front-running? **Underwriting & Demand Discovery** - Would it make sense to **build a soft orderbook** first by gauging institutional interest in the bond issuance? This would help calibrate demand and optimize pricing. - Who would be responsible for **underwriting, marketing, and distributing** the bonds? --- _[View the full topic](https://forum.arbitrum.foundation/t/proposal-institutional-arb-buyback-via-bond-issuance/29491)._