What did DAOs do with their $ARB airdrop?

Castle Capital Research Report

Arbitrum airdropped more than $125 million to its ecosystem DAOs.

Some speculated it would pump our bags, or at least trickle down as incentives.

But what actually happened to the most anticipated airdrop of the year?

So it had us wondering: What DID the protocols actually DO with the millions they were airdropped?

Let’s find out in this Castle research piece!

Distribution Governance Responsibility

On the 24th of April, the Arbitrum Foundation initiated its token distribution of 112.8 million $ARB tokens (as displayed in the above Treemap) to eligible protocols within its ecosystem.

In total, 139 protocols received tokens based on various criteria; whether it was ‘native or multichain, based on total TVL, usage activity, transaction volume, value of transactions processed through protocols, and consistency of maintaining its metrics’. As to avoid a concentration of its allocation, the Arbitrum Foundation alongside Nansen’s team focused on broadening the diversity of projects with different KPIs and applications.

A high-level overview of the Arbitrum DAO airdrop by size and category.

The protocols have full autonomy to determine the most suitable approach for utilizing their airdropped tokens. They can use the funds to reward users directly or retroactively, use the funds as bribes, increase POL, or extend their runway.

In a blog post addressing this particular airdrop initiative, the Arbitrum team shed light on the underlying objective of the token allocation as “localization of community governance”. The distribution of tokens directly to Arbitrum protocols’ treasuries aims to empower them to take charge of their own governance and decision-making processes within the ecosystem.

This approach enables protocols to leverage the additional resources of this airdrop to bolster their operations and propel their platforms and/or products forward, ensuring a stronger future for both the protocols and subsequently the Arbitrum ecosystem.

In the following months of the launch of the $ARB token, some might have disregarded the L2 believing there’s little opportunity left to pursue. Instead, we believe the ecosystem is riddled with catalysts opening a wardrobe of opportunities even during this Crypto Winter. These include:

That being said, the coverage of these catalysts is beyond the scope of this article, we might cover them in the future. 😉

On-chain Findings and Dune Dashboard

In this report, we’ll highlight the major findings of our on-chain research around the behavior of Arbitrum projects with respect to their airdrop allocation. We aim to provide market participants with insights into the movement of capital and the integrity of decisions made by each DAO.

Protocols and their metrics as of June 23rd, 2023.

Additionally, our very own Shogun has made a Dune dashboard providing a high-level overview of all the protocols’ initial $ARB allocations and current balances on top of a bunch of other useful metrics, such as user count, transaction count, and accrued fees in USD.

Big shoutout to our Dune Wizard as he compiled over 500 Arbitrum contracts within this dashboard to accurately display platform/product metrics.

Disclaimer: as we cannot constantly track the movements of all 139 treasury wallets all the time, the findings in this article are limited to movements up until June 23rd. Take note that some DAOs may have used their airdrop in the meantime and that the information laid out in this section is now outdated.

Beached Whales

Amongst the biggest receivers, GMX (8 million $ARB), Uniswap (4.3 million), SushiSwap (4.2 million), and Curve (3.3 million) have not used their tokens yet nor have they posted any noteworthy governance proposals to distribute the funds. There is a pitch from Arrakis going on that proposes to distribute Uniswap’s airdropped tokens to LPers on the DEX through Arrakis.

The top 5 receivers have not moved/used any of their tokens.

Balancer, Radiant, And Stargate Rewarding LPs

A similar proposal has been initiated and approved by Balancers’ governance. The protocol received 3 million tokens and aims to use 1 million tokens in batches of 100k on a bi-weekly basis to reward active liquidity providers. Furthermore, the proposal suggests using the remaining 2 million tokens to deploy POL (Protocol Owned Liquidity) in combination with Aura through the triad BAL/AURA/ARB pool.

Radiant (3.4 million) is another large airdrop recipient that has approved a governance proposal (RFP-18) regarding the distribution of their airdrop:

  • 40% as an airdrop to all new 6-month and 1-year dLP lockers.

  • 30% to all Arbitrum dLP lockers over the course of next year.

  • 30% stays in the treasury for further use.

In an effort to utilize its allocation of 1.7 million $ARB to the fullest, Stargate DAO’s latest proposal has passed, allowing the DAO to use 70% of the tokens for liquidity mining incentives on Arbitrum and to conclude all STG emissions until depletion. In practice this would mean the migration of all LPs to new contracts rewarding them in ARB, helping to contribute to the protocol’s sustainability and longevity.

The remaining 30% would be allocated to partner integrations, helping to encourage greater alignment to further the Arbitrum and Stargate ecosystems.

TreasureDAO Funding Game Developers

Another interesting proposal was published on the governance forum of TreasureDAO (8 million) on the 9th of May and went up for voting on June 1st.

In the proposal, 2 million $ARB tokens are allocated towards rewarding contributing game builders. Initially, 500k tokens will be distributed to builders through grants or treasury swaps. The remaining 1.5 million tokens will be reserved for future rewards/grants. Receiving game studios include: The Beacon, Realm, Tales of Elleria, Knights of the Ether, The Lost Donkeys, Smithonia, Ruffion Reborn, CastleDAO, Power Plins, City Clash, Smol Age, Billy's World, and Kasumi Dungeons. It is unclear how many each will be receiving.

Dopex & Cap: Liquidity & Incentives

Dopex received 3.8 million tokens and the founder, tztokchad, stated on April 25th in the Discord server that the protocol would split the airdrop into bonding for dpxETH, incentives, and rewards for long-term holders. Now, almost 2 months later, the protocol has used 300k for what looks like liquidity for options products. Additionally, 30k tokens were sent to 0xde…7d0b that were then distributed to what seem to be staking contracts.

Tztokchad’s response as of April 25th, 2023.

Cap Finance used its airdrop in a similar manner. They sold 1 million tokens for 576k USDC and 311 ETH to fund their trading pools. Additionally, they distribute 100k ARB tokens a month to users based on trading volume.


Plutus (2.7 million) did not wait for any community input and distributed 18% (or 500k tokens) to team members.

So just for clarity - none of the ARB deposited as plsARB is being sold (obviously) - it is forever locked! As for how we intend to use the ARB DAO airdrop, we've said in an announcement that the allocation will be used in multiple ways to ensure that Plutus is best positioned to succeed in the future. Effectively this means we're using some as runway, some for the team, incentives for products, bPLS incentives, plsARB airdrop and providing deep liq for plsARB/ARB. This is extremely similar to what Dopex and a lot of other DAOs are doing. I want to remind you that this is an airdrop for building early on Arbitrum and being able to continue to do so in the future.

A statement from Mesky (Plutus Core Team)

Additionally, Plutus stated it will be using 300k $ARB to buy back plsARB and distribute it back to plsARB stakers. Interesting to note that for the 9 million $ARB tokens staked by $plsARB holders, there are no official liquid trading pools for them to convert their $plsARB back to $ARB.

The only trading pool available as of now has $16k $ARB liquidity and plsARB trades 30% below peg. It has to be noted that this is NOT an official pool and that the Plutus team has been waiting for Camelot’s concentrated liquidity pools to launch a new, more liquid pool. So for the 2936 holders, they’ll have to continue to wait (currently for more than 3 months) for the emergence of a solution by the team.

plsARB/ARB Liquidity Pool as of 23rd June, 2023.

As for our insights, we discovered in an attempt to fill the illiquid black hole of $plsARB, the team utilized 100K $ARB to fund a Vendor pool to allow $plsARB as collateral and borrow $ARB upon. Finally, they have supplied 200k $ARB in Silo Finance’s lending pools to gather yield on, for what reason we don’t know.

Other projects With Allocations Over 600k

  • DForce (2.4 million) used for POL: deposited their entire airdrop in their own lending pools.

  • Beefy Finance (1.8 million) used for runway & incentives: By the looks of it they distributed 1.3 million tokens as incentives and used 100k ARB to swap for USDC that we assume to be for runway.

  • BattleFly (1.2 million) sold 280k ARB.

  • KyberSwap (1.1 million) used 152k as incentives.

  • Umami Finance (900k) created on-chain sell orders monitor here.

  • Multichain (900k) used 167k ARB for incentives.

  • 0x Protocol (643k) holding the entire airdrop in an EOA — the only project to do so.

  • Impermax (500k) sent 100k ARB to EOA and LP’d on their platform.

  • 3xcalibur (500k) used 100k to airdrop to LPs with another 100k if $1mln in TVL is retained. Also used a portion for bribes/incentives and plans to use some for runway in the future.

For the smaller projects, we refer you to the Dune Dashboard so you can do some digging yourself. We thought it wasn’t worth mentioning their movements and the vast majority of the projects are still holding their airdrop.

We do want to mention all the projects that have sold their airdrop: TridentDAO, Damned Pirates Society, Covalent, XToken, Bridge Network, Rice DeFi, ApolloX, CREDA, Aelin, Unmarshal, and ZeroSwap.


In conclusion, the vast majority of the airdropped tokens are sitting idle in the multi-sigs of the projects (around 80% of all airdropped tokens) and they seem to be aligned with the Foundation’s overall thesis for distributing the airdrop, which was to empower protocols to take charge of their own governance and decision-making processes within the ecosystem.

While there are a few rotten apples that have outright sold their entire airdrop to fund their “runway”, we would argue that it seems fair to the extent that funds are then used to stimulate growth and indirectly benefits the whole Arbitrum ecosystem.

One emerging issue from our research is that some of the sellers portray themselves to be DAOs, operating in accordance with community governance, although hesitate to share discussions of distribution plans with their own communities.

$ARB holdings over time broken down per category as of June 23rd, 2023.

Ideally, the projects would have either:

  1. Kept the tokens to use in future Arbitrum governance;

  2. Redistributed their value back to their communities to stimulate and incentivize platform/product growth within the Arbitrum ecosystem.

By simply tracking on-chain token movements from the multi-sigs and their behavior we can clearly separate those who are more aligned with growing the Arbitrum ecosystem.

We urge anyone interested in themselves to navigate to our Dune Dashboard and do some on-chain sleuthing themselves. This should be one of the main takeaways of this article: on-chain accountability for protocols.

In fact, more often than not, we have a hard time really knowing what’s going on behind the scenes with web3 projects. The airdropped governance responsibility on Arbitrum brings the advantage of having more transparency and being able to monitor how these protocols effectively make use of the distributed funds. This is an interesting second (as Optimism was first) and we think it is an interesting model that will be replicated in the future.

To further align incentives, future airdrop distributions for governance could potentially have restricting conditions on certain actions with the tokens, like selling, for example, or enforcing long-term vesting. Nonetheless, we believe that the current distribution is done fairly and acts as a natural selection of which protocols are more aligned with the Arbitrum ecosystem and which ones are not. If we look back, Optimism had some restrictions in place with their protocols airdrop.

However, on-chain analysis can only provide one side of the story.

For this reason, we at Castle would love to invite all involved protocols to be transparent with their plans for the airdrop. There are a ton of idle tokens that can be utilized in various ways. We aim to engage the broader community in a common discourse that is very important for the future of Arbitrum, and for DAO token holders to be aware of!

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