Arbitrum DAO approves 35 million ARB allocation to tokenized US Treasurys from Franklin Templeton, Spiko, and WisdomTree

The Arbitrum Foundation announced Thursday that the Arbitrum DAO has approved the next phase of its Stable Treasury Endowment Program (STEP), following an onchain vote.

The program will allocate 35 million ARB, worth around $11.6 million at current prices, to tokenized U.S. Treasurys through leading institutional issuers Franklin Templeton, Spiko, and WisdomTree.

Following a request for proposal process that evaluated over 50 submissions, the Ethereum Layer 2's DAO approved an allocation of 35% to Franklin Templeton's FOBXX (tokenized as BENJI), 35% to Spiko's USTBL, and 30% to WisdomTree's WTGXX under the STEP 2 real-world asset program. A committee composed of community-elected members put forward the selection, aiming to strike the right balance between fees, existing TVL, risk-adjusted setups, and community involvement.

Nearly 89% of participants voted in favor of the allocations, with just 0.01% against, and around 11% abstaining. Voting began on May 1 and concluded at 9 a.m. ET on Thursday. Applicants not selected in STEP 2 will have an opportunity to reapply in the next round, according to the proposal.

"Having organizations like Blackrock, Franklin Templeton, Spiko, and Wisdom Tree interacting with a DAO publicly in a forum is an unbelievable accomplishment for the whole crypto space," Matthew Fiebach, co-founder of Arbitrum DAO strategic consultants Entropy Advisors, said in a statement shared with The Block. "Since day one, Arbitrum has been strategically positioned at the heart of crypto's convergence with TradFi, and STEP is a great example of the DAO's steadfast push to continue bringing institutions onchain." Entropy Advisors submitted the proposal on behalf of the committee. 

"We are thrilled to be selected as a manager for the STEP 2 program, deepening our already strong connection with the Arbitrum user base,” Roger Bayston, Head of Digital Assets at Franklin Templeton, said. "By leveraging Arbitrum’s leading Layer 2 technology, we are able to deliver faster, more scalable, and cost-efficient solutions to our clients. This collaboration not only strengthens our commitment to innovation but also positions us at the forefront of the next generation of financial services infrastructure."

The growing market for tokenized US Treasurys

Launched in July 2024, STEP is Arbitrum DAO's first major effort to deploy treasury funds into tokenized real-world assets, generating nearly $700,000 in yield from over $30 million invested in products like BlackRock's BUIDL, Ondo's USDY, and Mountain Protocol's USDM during the program's initial STEP 1 tranche. STEP's mission is to create a yield-bearing, composable, and sustainable treasury for Arbitrum.

BlackRock's BUIDL currently leads the rapidly growing $6.8 billion tokenized U.S. Treasurys market, with over $2.8 billion in assets under management, according to RWA.xyz. Franklin Templeton's BENJI accounts for the second largest at over $763 million. WisdomTree's WTGXX and Spiko's USTBL represent more than $108 million and $71 million in AUM, respectively.

Tokenized U.S. Treasurys. Image: RWA.xyz.

Arbitrum DAO has now deployed more than $45 million across eight issuers, and over $240 million in RWAs is currently held onchain via Arbitrum-based platforms, representing a 50x increase over the past year, the Arbitrum Foundation said.

"Arbitrum's STEP program not only addresses idle capital inefficiencies but also positions the Arbitrum DAO for future diversification into new asset classes, including early-stage ventures, credit strategies, and commodities," the foundation added.

Arbitrum's ARB token is trading up 7.7% over the past 24 hours at $0.33, according to The Block's Arbitrum price page.