The Arbitrum DAO, governing the Ethereum Layer 2 network, has made a pivotal decision to allocate a substantial $23.54 million in a one-time “backfund” to support 26 projects that were previously overlooked in its initial grant funding round. The move, which garnered two-thirds majority approval in the voting process, is a strategic effort to nurture and incentivize the development of applications on the Arbitrum network. The decision reflects the DAO’s commitment to fostering a diverse and robust ecosystem within its platform.
The backfund initiative is designed to rectify an earlier shortfall in the network’s Short-Term Incentive Program (STIP), which had a budget constraint of 50 million tokens. The limitation led to several deserving projects missing out on the crucial financial support needed to advance their applications. The DAO’s recent vote to disburse 21.1 million tokens, equivalent to $23.5 million, aims to bridge the gap and ensure that these projects receive the necessary backing to contribute effectively to the Arbitrum ecosystem.
Diverse Projects receiving the grant by Arbitrum DAO
Among the 26 projects now slated to receive grants, Gains Network stands out with the largest allocation of 4.5 million tokens, valued at approximately $5 million. The significant funding underscores the project’s potential impact on the Arbitrum network. Other notable recipients include Stargate Finance and Synapse, each receiving 2 million tokens ($2.2 million), and Wormhole, which is set to receive 1.8 million tokens ($2 million). These grants reflect the diverse range of applications and solutions that the Arbitrum network is keen to support and develop.
The approval of the proposal has effectively increased the STIP’s total budget to 71.1 million ARB tokens. The additional funds are scheduled to be dispersed following a three-day waiting period as stipulated in the proposal. The expansion of the budget is a clear indication of the DAO’s willingness to invest substantially in the growth and diversification of its network, recognizing the long-term benefits of a well-supported developer community.
Mixed reactions and calls for a different approach
Despite the overwhelming support for the backfund proposal, some dissenting voices emerged from projects that had received funding in the initial round. Camelot and MUX, two of the beneficiaries from the first round of funding, were among the one-third of voters who opposed the additional funding proposal. Camelot articulated their opposition in a detailed comment, advocating for a second round of proposals rather than a backfunding event. They argued that a fresh round of proposals would allow for a more equitable and transparent allocation of funds, ensuring that only the most deserving and well-planned projects are supported.
MUX’s opposition, though more succinct, echoed a similar sentiment. They emphasized the importance of supporting proposals that demonstrate solid protocol fundamentals, effective incentive execution strategies, and reasonable grant sizes. MUX’s stance suggests a preference for a more selective and merit-based approach to funding, rather than bundling a variety of proposals with mixed quality into a single funding event.
The Arbitrum DAO’s decision to allocate a $23 million backfund to projects that missed out on the initial grant round is a significant development in the Ethereum Layer 2 network’s ecosystem. The move not only rectifies the shortcomings of the initial funding round but also demonstrates the DAO’s commitment to nurturing a diverse range of projects and applications. While the decision has been met with mixed reactions, it highlights the ongoing dialogue and decision-making processes within decentralized autonomous organizations. As the network continues to evolve, such decisions will play a crucial role in shaping the future of the Arbitrum ecosystem, balancing the needs of development and innovation with fairness and strategic foresight.