Arbitrum initiates token distribution to ecosystem DAOs

Arbitrum, currently the leading Layer 2 network on Ethereum, has initiated the distribution of its governance token allocations to eligible decentralized autonomous organizations within its ecosystem.

The core Arbitrum team previously designated 1.13% of the overall 10 billion token supply — equivalent to 113 million ARB tokens, with a current value exceeding $145 million — for distribution among qualified projects. This allocation for DAOs is distinct from the 11.6% of the token supply previously distributed as an airdrop to early Arbitrum users in March.

Arbitrum announced issuing the initial batch of tokens to DAOs that confirmed receiving test transactions on Twitter. Meanwhile, on-chain data from Arbitrum showed the foundation's transfer of a substantial amount of ARB tokens to 125 DAO addresses today, with a few more distributions anticipated later.

Optimism — Arbitrum's competitor in the Layer 2 niche — adopted a comparable approach, distributing its governance tokens to projects within its ecosystem shortly after its 2022 launch.

The price of Arbitrum's governance token has declined by roughly 18% over the past week. Source: TradingView

Arbitrum-based DAOs get rewarded

The governance tokens granted to DAOs may help bootstrap activity on the Arbitrum network. Such allocations can be used as components of their treasuries or for other objectives as decided by their communities via governance votes.

The projects to receive tokens include GMX, TreasureDAO, SushiSwap, Uniswap, Aave, Hop Protocol, Radiant Capital, Balancer, Gains Network, Synapse, MakerDAO, Vesta, Curve, Layer Zero, 1inch, Swapr, and many others.

As the Arbitrum Foundation persists in supporting other DAOs within its ecosystem, it encountered a brief controversy surrounding its own DAO. Proposal AIP-1 aimed to transfer 750 million tokens to the foundation for capitalization but was rejected due to reports that the foundation had already spent 50 million tokens without obtaining proper governance authorization.

Nonetheless, in the follow-up proposal AIP 1.1, the community consented to transfer the full 750 million ARB tokens to the Foundation — allocating them within its administrative budget for special grants.

Today's distribution to DAOs was not a grant; instead, it was a free complimentary allocation provided to projects that operate as DAOs and add value to the Arbitrum network — akin to the user airdrop.