February 18th: Bounty Structure Update
Since the last parameter adjustment on October 14th, 2025, market conditions have declined considerably. At the time of that update, the 30D MA price of ARB was approximately $0.43, while as of today the 30D MA is ~$0.14 and spot price is fluctuating lower between ~$0.10 & $0.12.
The table below provides the USD value of bounties for each severity. Note that the October 14th adjustment reduced the payouts for Medium (10k ARB to 5k ARB) and High (30K ARB to 10k ARB) severity cases, but was accompanied by an increase in the recovery bounty from 5% to 10%.
| Severity | Proposal Passed on Tally (May 26th): ARB= ~$0.40 | Program Launch (Sept. 8th): ARB= ~$0.51 | October 14th: ARB= ~$0.43 | Current (Feb. 18th): ARB= ~$0.11 |
|---|---|---|---|---|
| Low | $400.00 | $510.00 | $430.00 | $110.00 |
| Medium | $4,000.00 | $5,100.00 | $2,150.00 | $550.00 |
| High | $12,000.00 | $15,300.00 | $4,300.00 | $1,100.00 |
Table 1: Value of Watchdog Bounties overtime (in USD-terms)
This price action means that individuals submitting a report today are effectively receiving about a fourth of the dollar-denominated value for the same amount of effort compared to just a few months ago. To ensure the program remains attractive for reporters and help provide more predictability in the bounty for valid cases, the reviewing committee has decided to transition the Watchdog program to a USD-denominated payout model.
USD Denominated Bounties and Protection Floor
To protect the Watchdog budget, in the event of another extreme drawdown, a maximum ARB expenditure cap will also be added using $0.08 as the floor price. This allows the budget to remain sustainable even if market conditions decline further, while still aiming to provide reporters of valid cases with a meaningful USD value.
| Severity | Old ARB denominated Bounty Amounts (Launch) | Old ARB denominated Bounty Amounts (Oct. 14th Update) | New USD Based Bounty Amounts | New Payout in ARB (If ARB = ~$0.10) | Floor in ARB (If ARB = $0.08) |
|---|---|---|---|---|---|
| Low | 1,000 | 1,000 | $200.00 | 2000 | 2500 |
| Medium | 10,000 | 5,000 | $1,000.00 | 10000 | 12,500.00 |
| High | 30,000 | 10,000 | $2,000.00 | 20000 | 25,000.00 |
Table 2: Watchdog Program base bounty amounts broken down by severity
Additionally, the reviewing committee has decided to increase the recovery bonus from 10% to 15%. This bonus is paid on top of the base reward and applies to any assets successfully returned to the DAO. The bonus will still be paid out in the asset recovered. By increasing this percentage, we hope to further reward reports where recovery of assets is possible.
All payouts will remain subject to the maximum combined caps (base bounty + recovery bounty) per tier, which are $10,000 for Low, $25,000 for Medium, and $100,000 for High severity cases. We expect that these caps will now come into effect only if there is a significant recovery.
Operational Settlement Rules
The Arbitrum Foundation will calculate the necessary ARB amount to meet the USD denominated reward by using the spot price of ARB at the time the payment is initiated. While the Arbitrum Foundation works to process payments as quickly as possible, they will not be responsible for fluctuations in ARB value between the time when the payment is initiated and the final on-chain transfer.
Retroactive Application of Changes
To date, 6 reports have been paid out with an additional 3 payments in progress. For a majority of cases where there has been valid misuse found, the reporter still has not started the KYC process yet. Given that a minority of valid cases have had payments processed so far, the reviewing committee has decided to apply the payment changes retroactively across all submitted and paid out reports. We believe this will be operationally simpler than managing 3 different payout structures (Sept. 8th launch, Oct. 14th structure, and this Feb. 18th USD update) and it will provide a more appropriate reward for reporters who have made submissions over the last few months.
Based on the current working budget and finished investigations, this change will increase the amount of ARB earmarked for reports by ~45,500 ARB (If ARB = ~$0.10). For the 9 reports where payments have been completed or are in progress, a one-time additional payment will be provided only if the original payment was lower than what it would’ve been in this new structure. The reviewing committee will communicate to the reporters of cases where this applies. We estimate that this one-time top up will require ~18,500 ARB.