Does the recent announcement of a $23.4 million increase in the Arbitrum DAO extra budget pique your interest? This significant financial boost was directed towards supporting all approved projects under the latest Short-Term Incentive Program (STIP). The decision, made between November 18 and December 2, was influenced by the Arbitrum community’s vote.
Unpacking the Extra Budget Allocation
The STIP initially had a cap of 50 million ARB tokens, which limited the number of projects that could be funded. However, this recent vote has resulted in an additional 21.1 million ARB tokens, equivalent to $23.4 million, being distributed to an extra 26 projects. This supplementary capital was approved with 216.7 million votes in favor, as opposed to 73.1 million votes against.
The increase in the STIP’s total budget to 71.4 million ARB tokens will enable the funding of 56 projects. This move is aimed at nurturing a diverse group of emerging developers and creating a conducive environment for new initiatives. The ARB token holders have given their nod to the addition of 21.1 million tokens for funding grant applications.
The Impact of Arbitrum DAO on Ethereum Transactions
Arbitrum, a layer-2 network, is designed to scale transactions on the Ethereum blockchain. This allows for quicker and cheaper fund transfers. The protocol, governed by ARB token holders, generates revenue through transaction fees. Data from DefiLlama reveals that on December 1 alone, Arbitrum generated over $180,165 in fees and $43,342 in revenue. In November, the fees and revenue totaled $5.93 million and $1.47 million, respectively.
Beneficiaries of the Extra Budget
The new budget includes funding for Gains Network (4.5 million ARB), Wormhole (1.8 million ARB), and Stargate Finance (2 million ARB). PancakeSwap withdrew a 2 million ARB proposal due to STIP’s Know Your Customer (KYC) requirements. However, the decision to allocate additional funding wasn’t without controversy. Delegates from the MUX protocol argued that the extra funding could lead to the support of projects of varying quality.
Some members of the Arbitrum DAO suggested that a full second round of funding, instead of a backfund, would have been a more equitable way to include additional protocols in an incentive program.
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