[RFC] Protocol Participation Request: DAO Liquidity Injection via Smart Contracts into Paribus on Arbitrum

Governance Governance Discussion
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Summary

We respectfully request that the Arbitrum DAO consider using its own liquidity — such as $ARB, $USDT, $ETH, or $BTC — directly within the Paribus lending protocol on Arbitrum through smart contracts. This does not require any grants or fund transfers to wallets. The goal is to help bootstrap interest rates and utilization in a secure, transparent, and fully on-chain manner.

About Paribus

Paribus is a non-custodial, non-P2P lending and borrowing protocol deployed on Arbitrum, Ethereum, and Lumia. It supports a wide range of collateral types, including:

  • Native assets: $ARB, $ETH, $BTC, $USDT
  • LP tokens from Camelot (e.g., $ARB/$WETH, $USDT/$USDC)
  • NFTs (Ethereum chain)
  • RWAs, and metaverse assets (coming soon)

Paribus uses a pooled liquidity model, offering instant loan fulfillment without peer-matching delays. It has been audited 6 times (5x Hacken, 1x Zokyo), and its smart contracts are fully open-source and on-chain.

Live App: https://app.paribus.io
Website: https://paribus.io/
Docs: https://docs.paribus.io
Audits: Hacken: Paribus audits by Hacken
Zokyo: Paribus - Zokyo
Paribus Whitepaper: https://paribus.io/wp-content/uploads/2024/10/PARIBUS-Whitepaper-v2.0-.pdf

Why We’re Reaching Out

We are not requesting a grant or direct token allocation.

Instead, we propose that the DAO:

  • Use idle treasury assets (e.g., $ARB, $ETH, $USDT, $BTC)
  • Deposit them directly into Paribus’s live lending pools via smart contracts
  • Maintain full on-chain custody and control at all times

This would:

  • Inject valuable liquidity into core markets on Arbitrum
  • Increase borrowing activity and market interest rates
  • Showcase DAO-level support for ecosystem-native protocols
  • Involve zero risk of fund loss via manual transfer or third-party custody

Current Status on Arbitrum

Paribus is already deployed on Arbitrum with the following active markets:

  • Supply and borrow: $ARB, $ETH, $BTC, $USDT
  • LP Collateral: $ARB/$WETH and $USDT/$USDC from Camelot
  • Custom LP oracles integrated

Benefits to Arbitrum DAO and Ecosystem

  • Demonstrates leadership in composable DeFi
  • Helps increase TVL and user activity within Arbitrum
  • Sets precedent for safe, transparent DAO engagement with on-chain protocols
  • Enables $ARB and other DAO-held assets to generate passive yield

Next Steps

We invite community feedback on this RFC.
If supported, we will provide:

  • Detailed smart contract instructions for DAO deployment
  • Real-time dashboard visibility for tracking DAO deposits
  • Ongoing collaboration and reporting from the Paribus team

We’re also happy to host an AMA or join a governance call to answer questions.

Thank You

Thank you for considering this request. We believe this on-chain engagement strategy aligns perfectly with Arbitrum’s commitment to secure, scalable, and decentralized finance.

Let’s build a stronger DeFi foundation together.

—
Nikola
On behalf of Paribus Protocol
Twitter: https://twitter.com/paribus_io

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I understand your desire to get Arbitrum support, because you are doing a project on it
However:

  1. Arbitrum is not the only chain you are working on
  2. The funds you want to use from Arbitrum are not just sitting in the Treasury. We have a special TMC committee that distributes ARBs and stables to maximize profits and minimize risks
  3. You can apply for your protocol to be used for placing funds if you offer the best returns on the market
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Someone correct me if I’m incorrect here, but this seems DRIP adjacent: DeFi Renaissance Incentive Program (DRIP) – might be worth approaching this within the context of the above proposal.

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Thanks for the thoughtful response!
1. You’re absolutely right — Paribus is multichain (Ethereum, Lumia, Arbitrum), but our goal is to make Arbitrum our primary DeFi hub. That’s why we’re launching unique features here first, like LP collateral with custom oracles.
2. We completely understand the role of the TMC and respect the structured approach. Our proposal isn’t meant to bypass that — we’re simply offering a fully non-custodial, on-chain option where the DAO always retains control over its assets.
3. We’d love to be considered by the TMC. As our protocol grows, we’re confident our pooled lending model will offer highly competitive, market-driven returns — especially in the LP markets, which are unique to Paribus.

Appreciate the dialogue and happy to provide any additional data you need!

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Thanks for pointing that out — I wasn’t aware of DRIP, but it sounds like it could be a great fit for what we’re proposing.

We’d love to explore how this initiative works and see if Paribus can align with its goals. If anyone can share more details or point us in the right direction, that would be greatly appreciated!

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Hi @Nikola_Paribus , thanks fo submitting your request.

I’ve been pretty vocal about this - I firmly believe the DAO should support protocols through direct liquidity injections, and not just incentives.

The reality is that the DAO isn’t fully equipped today to support this kind of liquidity strategy, but with the new Treasury Management Council coming online, we should be moving in the right direction.

Just to clarify: DRIP will focus on incentives (liquidity mining), not direct liquidity provision.

Really hope we’ll be able to support you soon, especially for projects that choose Arbitrum as their primary liquidity hub.

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Thanks for the feedback, @DonOfDAOs!

You’re right, this idea is similar to DRIP in that both aim to support Arbitrum ecosystem projects. But there are a few key differences:

How It’s Similar:

  • Uses DAO assets to help ecosystem protocols grow
  • Aims to boost DeFi activity on Arbitrum

How It’s Different:

  • DRIP gives out ARB as rewards
  • This proposal just asks the DAO to deposit some of its idle assets (like ARB, ETH, USDT, BTC) into Paribus lending pools
  • No grants, no transfers — funds stay on-chain and under DAO control
  • The goal is to kickstart interest rates and borrowing activity, not give direct incentives to users

We’re happy to align this with DRIP or work within any structure the DAO prefers. If this could fit under DRIP as a “liquidity-focused” approach, we’d be glad to adjust it accordingly.

Let us know if you’d like to chat more or if there’s a DRIP team we should connect with.

Thanks again!

Nikola / Paribus

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Thank you for sharing this RFC and for the efforts by the Paribus team to build innovative lending infrastructure on Arbitrum.

We appreciate the transparent, fully on-chain nature of the proposed interaction, as well as the clear alignment with Arbitrum’s decentralized ethos.

We’d like to highlight that as of recently, DAO Treasury Management efforts are being consolidated under the new Arbitrum Treasury Management Council, led by Entropy, as part of the broader consolidation of STEP, TMC, and GMC functions.

Under this updated framework:

  • Treasury allocations will be coordinated by Entropy and OpCo under OAT and DAO supervision.
  • Projects interested in hosting Arbitrum DAO assets, like Paribus, will be able to apply after a formal forum notice is issued signaling that idle DAO assets have been identified for allocation.
  • At that point, Paribus is encouraged to present its case directly to Entropy as part of the evaluation process.

In this structure, proposals for treasury deployment are no longer passed directly by the DAO, but rather funneled through Entropy’s oversight to ensure coherent capital allocation across ecosystem priorities.

We recommend staying engaged with the DAO Forum and Entropy’s updates to be prepared when such idle funds are made available for strategic deployment.

Looking forward to seeing Paribus continue growing on Arbitrum.

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Thanks for the great feedback, Sean.

To address your points:

  • Comparison to other protocols: Paribus differs by supporting a broader range of collateral types — including NFTs, RWAs, LPs, and metaverse assets — all in a non-P2P, instant-liquidity model, which Aave and Compound don’t offer.
  • Why DAO liquidity? We’re not asking for a grant — just for DAO assets to be deposited via smart contracts, earning yield while supporting innovation. This keeps control with the DAO, with no off-chain transfer or lockup.
  • Security: Paribus has undergone 6 audits (5 by Hacken, 1 by Zokyo), and our contracts are fully verified. We also use time-tested lending mechanisms with isolated risk per market.
  • Data: The protocol is live on Ethereum, Arbitrum, and Lumia, with the PBX token staked across 3 chains. Our lending markets are already active, and we recently launched LP collateral support on Arbitrum.

Happy to dive deeper if needed — and thanks again for engaging.

— Nikola | Paribus

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Appreciate your input and the key points raised.

To clarify:

  • Risk/reward for the DAO: Since Paribus isn’t requesting a grant, the DAO retains full control over deposited assets and earns native yield on them — with no off-chain exposure.
  • Revenue impact: The deposited liquidity directly fuels borrowing markets, generating interest from borrowers and protocol fees — all while increasing on-chain activity on Arbitrum.
  • Utilization expectations: Based on early demand, we expect high utilization, especially for stable pairs and LP markets. As more asset types (e.g., RWAs) come online, this demand should grow.
  • Comparison with other deployments: Unlike typical incentive programs or liquidity mining, this model is lean — no dilution or token spend, just smart contract deposits earning yield.

Happy to provide more metrics or walk through potential models if needed.

— Nikola | Paribus

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Thank you for taking the time to put together this RFC. There does not yet appear to be a proposal for delegates to vote on and instead a discussion on the topic was kickstarted. With that in mind, we have moved this thread to the Governance Discussions category to enable everyone to continue discussing it.

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