The Arbitrum DAO has recently approved a significant increase in funding for its Short-Term Incentive Program (STIP), allocating an additional $23.4 million. This decision was made following a community vote held between November 18 and December 2, aimed at expanding support for projects that were approved for a grant under the STIP but did not receive funding due to the initial cap of 50 million ARB tokens.
The outcome of the vote will see the distribution of an extra 21.1 million ARB tokens, valued at approximately $23.4 million, to 26 additional projects. This decision was supported by a majority of 216.7 million votes in favor, compared to 73.1 million against, effectively increasing the STIP’s total budget to 71.4 million ARB tokens. This funding round will now support a total of 56 projects, reflecting Arbitrum’s commitment to fostering a diverse and thriving ecosystem of emerging builders and new projects.
Arbitrum operates as a layer-2 solution, enhancing the Ethereum blockchain’s scalability by facilitating faster and more cost-effective transactions. The network is governed by holders of its native ARB tokens, and it generates revenue through transaction fees.
According to data from DefiLlama, Arbitrum saw significant financial activity, with over $180,165 in fees and $43,342 in revenue on December 1 alone. For the month of November, the fees collected amounted to $5.93 million, and the revenue reached $1.47 million.
The expanded budget includes allocations for notable projects such as Gains Network (4.5 million ARB), Wormhole (1.8 million ARB), and Stargate Finance (2 million ARB). However, PancakeSwap withdrew its proposal for a 2 million ARB grant due to the STIP’s Know Your Customer (KYC) requirements.
The decision to increase funding has not been without controversy. Some delegates, like those from the MUX protocol, expressed concerns that the additional funding might lead to a mix of projects with varying quality. They advocated for support of proposals with strong fundamentals and well-planned incentive strategies, but not as part of a bundle with mixed-quality projects.
Other members of the Arbitrum DAO suggested that conducting a full second round of funding would have been a fairer approach to include additional protocols in the incentive program, rather than backfunding existing proposals. This debate highlights the challenges and complexities involved in decentralized governance and funding allocation within the blockchain ecosystem.