Arbitrum's Economic Engine: Foundations of a Digital Sovereign Nation

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Key Insights

  • Arbitrum’s evolution is guided by the vision of building a “Digital Sovereign Nation,” pioneering a model for how a decentrally governed onchain entity can utilize its resources to compound demand for its products and grow its treasury.
  • Arbitrum features a dual-product offering: Arbitrum One, one of the most active and liquid networks with a $6.6 billion stablecoin supply and $2.59 billion in DeFi TVL, and Arbitrum Orbit, a diverse ecosystem of 48 customized Arbitrum Chains live on mainnet.
  • This dual offering executes the “Arbitrum Everywhere” strategy, giving developers the flexibility to leverage shared liquidity on Arbitrum One or custom-create rollups that feature “opinionated blockspace” catering to a variety of emergent use cases.
  • Arbitrum’s economic engine is fueled by diverse onchain revenue streams, including core protocol revenue and Timeboost auctioning, which captures MEV and has generated over $1 million for the DAO in the first 44 days since launch.
  • ArbitrumDAO leads a growth flywheel, deploying treasury assets to fund ecosystem investment programs and support economic zones of opportunity through initiatives like the Stable Treasury Endowment Program (STEP) and Arbitrum Gaming Ventures (AGV).

Arbitrum Today

Arbitrum (ARB) is best known for Arbitrum One, a Layer-2 (L2) that has established itself as one of the most active, liquid, and highest-performance blockchains in crypto. However, this captures only part of Arbitrum’s offering, which has evolved into a comprehensive, multi-product technology platform. Arbitrum’s proposition consists of two distinct but interconnected products that serve different segments of the market.

  • Arbitrum One: The flagship L2 rollup featuring a shared execution environment that provides EVM-equivalent functionality. Its success is demonstrated by its year-to-date Chain GDP (USD) of $214.9 million, $2.59 billion in TVL (USD), and stablecoin supply (USD) of $6.6 billion, which was the most across L2s as of May 31, 2025.
  • Arbitrum Orbit: The Arbitrum Nitro technology framework enables projects to deploy customized L2 or L3 networks using the same underlying infrastructure that powers Arbitrum One. These Arbitrum Chains can be tailored for specific use cases while maintaining interoperability with the broader Arbitrum Orbit ecosystem.

This dual-product strategy allows Arbitrum to capture value from shared infrastructure adoption and custom deployment requirements, addressing what has historically been viewed as competing market segments. Together, Arbitrum One and Arbitrum Orbit underpin the “Arbitrum Everywhere” vision, positioning Arbitrum as a foundational infrastructure layer for a wide spectrum of applications.

The “Arbitrum Everywhere” vision reflects a strategy to support the complete application development lifecycle, from initial deployment on a shared liquidity layer to future migration to a specialized, custom network as needs evolve. This vision is guided by three core pillars: performance, unification, and decentralization. The stated objective is to advance all three pillars simultaneously, rather than making trade-offs between them.

Realizing this vision required more than technical innovation, but also a foundational shift in the project’s governance model in March 2023 with the creation of the ArbitrumDAO. This marked Arbitrum’s transition from a project led by a single company in Offchain Labs to a decentralized protocol governed by ARB tokenholders. This move was a deliberate step to empower its community, reflecting a core belief that the story of Arbitrum is no longer confined to scaling Ethereum, but about redefining the decentralized ethos inherent to the original crypto dream.

Once ArbitrumDAO was initialized and onchain governance was deployed, Arbitrum was ready for expansion. Specifically, by becoming a shared ecosystem of rollups custom-built using Arbitrum Nitro and governed by ArbitrumDAO. Arbitrum Orbit was launched in October 2023 and has grown to 48 publicly announced Arbitrum Chains live on mainnet, giving credence to the “Arbitrum Everywhere” moniker.

In 2025, Arbitrum began its next evolution, shifting focus to building a dynamic onchain economy. The groundwork for a “Digital Sovereign Nation” has been laid, and Arbitrum aims to pioneer a model for how decentralized protocols can achieve long-term economic prosperity.

Arbitrum One

Arbitrum One’s specialty stems from its focus on DeFi. It is the most liquid venue in the Arbitrum Orbit ecosystem, with a DeFi TVL (USD) of $2.59 billion as of May 31, 2025. However, when including Hyperliquid and the Hyperliquid Bridge, Arbitrum One’s TVL (USD) jumps to $6 billion. The bridge sources all of its USDC liquidity from Arbitrum One, making up 56.9% of TVL with $3.42 billion.

Arbitrum One also features the largest L2 deployments of the blue chip DeFi protocols like Aave ($843.1 million), Uniswap ($283.7 million), Compound ($133.5 million), as well as the Arbitrum-native GMX ($417.2 million). However, the network also features up-and-coming protocols like:

  • Fluid: A lending protocol where deposited assets are also used to power its decentralized exchange (DEX). For a comprehensive overview of Fluid, see Messari’s Initiation of Coverage report.
  • Ostium: A perpetual futures exchange for real-world assets (RWAs). For an overview of real-world perpetual markets, including Ostium, see Messari’s report on the “Perpification of Real-World Assets.”
  • Renegade: An onchain dark pool offering spot token trading while maintaining privacy and eliminating maximal extractable value (MEV).

Arbitrum One’s stablecoin supply (USD) was $6.6 billion as of May 31, 2025, the most across L2s. The Hyperliquid Bridge holds 51.8% ($3.42 billion) of all stablecoins on Arbitrum One ($6.6 billion). This has led to Circle being the leading revenue-generating protocol year-to-date on Arbitrum One, generating $62.1 million from the stablecoin supply on the network. USDT is the second-largest stablecoin on Arbitrum One, making up 14.1% of all stablecoins with $928.8 million. In January 2025, USDT0 was launched as an omnichain implementation of USDT that uses Arbitrum One as its central liquidity hub.

Arbitrum One’s Chain GDP (USD), which refers to the total application revenue (USD) generated on a network, has totaled $214.9 million year-to-date as of May 31, 2025. Uniswap, GMX, and Aave have made up 40.5% of Arbitrum One’s Chain GDP year-to-date.

A network’s App Revenue Capture Ratio (App RCR) is the ratio of revenue generated by its apps to its Real Economic Value (REV). In the case of Arbitrum One, REV is defined as the sum of base transaction fees, priority fees, and Timeboost auction revenue. The network’s REV has totaled $7.4 million as of May 31, 2025, with an App RCR of 2,904% year-to-date. This can be interpreted as for every $100 spent in fees and auctions on Arbitrum One, applications earn $2,904 in revenue.

A network’s App RCR can be greater than one if its applications are successful in monetizing activity and/or the cost to transact is low. In the case of Arbitrum One, it appears to be both. Revenue streams for projects can even flow downstream to project tokenholders. For example, application revenue generated on GMX is partially shared with GMX stakers.

Arbitrum Orbit

Arbitrum Orbit became mainnet-ready in October 2023, making it possible for anyone to launch an Arbitrum Chain. Rollup-as-a-Service (RaaS) providers like Caldera, Gelato, Conduit, Alchemy, and AltLayer have simplified building, powering Arbitrum Chains like ApeChain, Proof of Play, and ReyaChain.

A key driver of Arbitrum Orbit’s growth is Arbitrum’s technological flexibility. The tech stack allows developers to make network-level customizations, creating opinionated blockspace tailored to specific use cases. Notable examples of Arbitrum Nitro’s customizations include:

Arbitrum Chains can function as either L2s that settle on an L1 like Ethereum, or L3s that settle on an L2 like Arbitrum One. As of May 31, 2025, the Arbitrum Orbit ecosystem comprises 48 publicly announced Arbitrum Chains live on mainnet, with an additional 38 either in testnet or in development. Cumulatively, Arbitrum Orbit has over 1.1 million weekly active addresses, $13.7 billion in TVL, 1.89 billion all-time transactions, and captures 31.8% of all L2 transactions.

Arbitrum’s Economic Engine

Digital Sovereign Nation

Arbitrum’s next evolution stems from the vision of becoming a self-sustaining “Digital Sovereign Nation.” The “Arbitrum Everywhere” strategy gives rise to an economic and governance model that can be understood through three core components: a diverse set of constituents and stakeholders, valuable digital resources, and economic zones of opportunity that arise from treasury deployment.

  • Constituents & Stakeholders: The first pillar consists of Arbitrum’s constituents and stakeholders, which include developers, users, and investors, all represented by ArbitrumDAO. Arbitrum’s model is distinct in that it grants full power to ArbitrumDAO, which has complete onchain control over protocol upgrades and treasury holdings. This control is foundational to enabling the Digital Sovereign Nation.
  • Valuable Digital Resources: The second pillar is Arbitrum’s valuable digital resources. In this context, the resources are Arbitrum’s blockspace and execution environments, which function as a high-margin digital commodity. The economics of L2s allow them to retain an outsized portion of network revenue, unlike L1s, which distribute the majority of network revenue and issue new tokens to incentivize validators to secure the network. With average gross profit margins on Arbitrum One transactions exceeding 95%, and additional revenue generated from programs like Timeboost and the Arbitrum Expansion Program (AEP), value from activity on Arbitrum Chains accrues directly to the ArbitrumDAO Treasury.
  • Economic Zones of Opportunity: The third pillar features economic zones of opportunity that feed a growth flywheel. The ability to generate and retain revenue allows ArbitrumDAO to reinvest assets to fund new initiatives. These initiatives, in turn, drive more demand for blockspace and activity on Arbitrum, further fueling the flywheel and reinforcing the long-term vision of a Digital Sovereign Nation.

The Growth Flywheel

Arbitrum’s evolution into a Digital Sovereign Nation features a growth flywheel that drives value back to its constituents and stakeholders. First, revenue is generated through digital resources like blockspace and execution environments. This revenue is distributed back to the treasury, which is fully governed by ArbitrumDAO. The DAO invests in ecosystem investment programs and economic zones of opportunity, leading to compounding demand for its products, while growing its asset base.

Core Protocol Revenue

ArbitrumDAO captures value directly from the usage of Arbitrum’s core products, including Arbitrum One and Arbitrum Orbit. This model of direct value accrual to the DAO-controlled treasury is a key differentiator for Arbitrum. Arbitrum One and Arbitrum Nova contribute 100% of sequencer profit to ArbitrumDAO. All other Arbitrum Chains are required to share 10% of sequencer profit as part of the Arbitrum Expansion Program (AEP) licensing fee, with 8% going to ArbitrumDAO and 2% to the Arbitrum Developer Guild. Notably, L3s that settle to an Arbitrum Chain like Arbitrum One are exempt from profit sharing. As of May 31, 2025, ArbitrumDAO has received $7.5 million in year-to-date revenue (USD) attributed to these revenue sources.

Timeboost

In March 2023, Offchain Labs announced the development of Timeboost, a protocol that would modify sequencer transaction ordering. This modification aimed to keep the equitable first-come, first-served model historically present on Arbitrum, while simultaneously creating a new source of revenue for ArbitrumDAO through auctions for prioritized transaction inclusion. Timeboost added approximately 250ms of latency to introduce a transaction express lane that is auctioned off, enabling the capture of maximal extractable value (MEV) from strategies like atomic arbitrage and liquidations.

Timeboost went live on April 17, 2025, first on Arbitrum One and Arbitrum Nova. After 44 days of being live, Timeboost generated over $1 million in all-time revenue (USD). As of May 31, 2025, Timeboost was on schedule to generate an annualized revenue of $11.3 million, based on the 30-day moving average. The majority of this revenue, 97%, is distributed to ArbitrumDAO, while the remaining 3% goes to the Arbitrum Developer Guild.

Timeboost auctions have consistently made up over 50% of Network REV (Real Economic Value) generated on Arbitrum One, and over 99% of auctions have active bidders. However, other Arbitrum Chains also have the option to implement Timeboost as part of their Arbitrum Nitro implementations. Timeboost is likely to grow in relevance as it becomes adopted by other Arbitrum Chains.

Ecosystem Investment Programs

Any application built on Arbitrum One and all Arbitrum Chains are eligible to be supported by Arbitrum’s ecosystem investment programs. Throughout ArbitrumDAO’s history, ecosystem investment programs have disbursed ARB tokens to spur Arbitrum’s long-term growth and increase demand for Arbitrum as a platform, and are a critical piece of Arbitrum’s vision of making Arbitrum Everywhere and becoming a self-sustaining Digital Sovereign Nation.

DeFi Renaissance Incentive Program (DRIP)

Approved on June 23, 2025, the DeFi Renaissance Incentive Program (DRIP) aims to incentivize DeFi activity on Arbitrum One in pursuit of specific goals, such as becoming the “best place to borrow USDT, USDC, and ETH against wstETH.” DRIP will introduce up to four 3-month seasons, with up to 20 million ARB (0.2% of the total token supply) allocated per season. Entropy Advisors, Arbitrum Foundation, and Offchain Labs will serve as stewards of the initiative, which is slated to begin in July 2025.

Onchain Labs

In March 2025, Arbitrum Foundation and Offchain Labs established Onchain Labs, an entity “aimed at accelerating innovative onchain experiences on Arbitrum.” The first project incubated by Onchain Labs, Talos, was announced in July 2025. Talos is an upcoming protocol that will be controlled by an AI agent that autonomously manages treasury assets, tokenomics, and protocol mechanics. However, the agent will be governed by its future tokenholders, who will propose upgrades via GitHub as the community votes publicly on X.

Other Ecosystem Investment Programs

Arbitrum Foundation and ArbitrumDAO also support grant programs. In the past, these have included the Trailblazer AI Grant Program, Stylus Sprint, Arbitrum x Farcaster Buildathon, Uniswap-Arbitrum Grant Program, Pluralistic Grants Program, and ArbiFuel.

After running for two seasons from October 2023 to November 2024, Season 3 of the Arbitrum D.A.O. (Domain Allocator Offerings) Grant Program was approved in February 2025. Season 3 spans one year until March 2026, and will distribute 23.4 million ARB (0.23% of the total token supply) via Questbook to five categories of projects.

Historically, ArbitrumDAO has also approved several incentive programs that distributed ARB tokens across the Arbitrum Orbit ecosystem:

  • Short-Term Incentive Program (STIP): Approved in October 2023, STIP allocated 50 million ARB (0.5% of the total token supply) to 30 Arbitrum Orbit projects to be distributed as incentives to their users.
  • STIP Backfund: Approved in November 2023, the STIP Backfund allocated 21.5 million ARB (0.22% of the total token supply) to 26 Arbitrum Orbit projects that were approved for STIP but did not receive funding because they fell outside of the top 30 receiving “For” votes.
  • STIP Bridge: Approved in May 2024, the STIP Bridge allocated an additional 37.5 million ARB (0.37% of the total token supply) to previous recipients of STIP or the STIP Backfund.
  • Long-Term Incentives Program (LTIP): Approved in February 2024, LTIP allocated up to 45 million ARB (0.45% of the total token supply) to projects that were recipients of STIP.

Economic Zones of Opportunity

The assets held in the ArbitrumDAO Treasury are valued at $1.21 billion as of May 31, 2025, and are continually growing from core protocol revenue. ArbitrumDAO leverages these assets to invest in economic zones of opportunity that lead to new revenue streams. This strategy of active capital deployment is a core component of the growth flywheel, enabling the DAO to continue reinvesting in Arbitrum’s growth.

Stable Treasury Endowment Program (STEP)

In December 2023, a proposal was approved to establish a Treasury and Sustainability Working Group that would support ArbitrumDAO’s treasury operations. In January 2024, kpk published Arbitrum Treasury and Sustainability Research that assessed the impact of potential ARB token sales, explored potential utilization of sequencer revenue denominated in ETH, and developed guidelines for effective treasury management.

Efforts to diversify treasury holdings and generate yield began with the Stable Treasury Endowment Program (STEP). This program aims to diversify a portion of treasury holdings into yield-generating, stable real-world assets (RWAs) and has spurred major growth in RWA adoption on Arbitrum One.

  • STEP 1: Proposed by the Treasury and Sustainability Working Group and approved in April 2024, STEP 1 converted 35 million ARB (0.35% of the total token supply) to RWAs. There were 33 applications received, of which six were approved via offchain votes on Snapshot. The sale of ARB yielded $29.3 million, which was then converted to Securitize’s BUIDL ($9.6 million), Ondo’s USDY ($5.2 million), Superstate’s USTB ($5.2 million), Mountain’s USDM ($3.5 million), OpenEden’s TBILL ($3.5 million), and Backed Finance’s bIB01 ($3.5 million).
  • STEP 2: Proposed by the Treasury and Sustainability Working Group and approved in February 2025, STEP 2 will convert 35 million ARB (0.35% of the total token supply) to RWAs, specifically, WisdomTree’s WTGXX, Spiko’s USTBL, and Franklin Templeton’s BENJI.

As of May 31, 2025, the ArbitrumDAO Treasury’s RWA holdings (USD) totaled $27.6 million. Since its inception, STEP has generated total interest revenue (USD) of $745,000.

Arbitrum Gaming Ventures (AGV)

Approved in June 2024, Arbitrum Gaming Ventures (AGV), formerly known as the Gaming Catalyst Program (GCP), allocated up to 200 million ARB (2% of the total token supply) to be invested in Arbitrum Orbit gaming studios, apps, and chains. AGV’s aim is “to bring in talented builders, and help the builders accelerate their games through the lifecycle stages.” Funding falls under one of three categories:

  • Build Grants: 25 million ARB (0.25% of the total token supply) to “empower teams that are aiming to accelerate early stage development on Arbitrum, or to incentivize user onboarding.”
  • Investments: 135 million ARB (1.35% of the total token supply) for “teams seeking more than 500,000 ARB or additional funding for development beyond initial development.”
  • Infrastructure Bounties: 40 million ARB (0.40% of the total token supply) for “creating game-specific tech needed to make Arbitrum the best choice for game builders.”

AGV also included 25 million ARB (0.25% of the total token supply) to fund its operations. AGV is an Arbitrum-aligned entity that leads in accordance with its Bylaws and KPIs, with oversight from a five-person CGP Council.

The vast majority of ARB allocated to the GCP is intended to be allocated toward venture investments that will return multiples to ArbitrumDAO. AGV announced its first investments on May 8, 2025, totaling $10 million invested in Wildcard, Hyve Labs, T-Rex, Xai, and Proof of Play. AGV’s most recent update, released on May 31, 2025, highlights that over 70 projects are in the investment pipeline. A full list of Arbitrum Gaming Ventures’ investments can be seen on Messari Fundraising.

Arbitrum Technology

The Arbitrum tech stack powers Arbitrum Chains that make up the Arbitrum Orbit ecosystem. At the core of Arbitrum’s technology is Arbitrum Nitro, a tech stack developed by Offchain Labs. Arbitrum Nitro has become an ever-evolving tech stack able to cater to a variety of emergent use cases. A key tenet of Arbitrum Nitro is its focus on customizability and opinionated blockspace, which allows developers to make network-level customizations that align with the needs of their protocol, supporting the Arbitrum Everywhere vision.

Stylus

In February 2023, Offchain Labs announced the development of Stylus, an upgraded virtual machine to be run in parallel with the EVM. Stylus went live in September 2024, first on Arbitrum One and Arbitrum Nova. It allows developers to utilize non-EVM programming languages like Rust, C/C++, Zig, and Bf to compile to WebAssembly (WASM), which maintains interoperability with the EVM. Thus, smart contracts written in different languages can interact with one another (e.g., a smart contract written in Solidity can call a smart contract written in Rust). Protocols that leverage Stylus include the likes of Renegade Finance, Superposition, Uniswap, and Fairblock.

Bounded Liquidity Delay (BoLD)

In August 2023, Offchain Labs announced the development of Bounded Liquidity Delay (BoLD), a protocol that would introduce a permissionless fraud proof system where a single honest validator could defend a rollup against a malicious sequencer. BoLD’s dispute protocol allows anyone to post claims about an Arbitrum Chain’s state on its parent chain, such as Ethereum for L2s or Arbitrum One for L3s. In the case of a successful challenge, the malicious party’s posted bond is forfeited. For a deeper dive, Offchain Labs has authored a Protocol Whitepaper, Technical Whitepaper, and Economic Whitepaper on BoLD.

After ten months on testnet and an approval by ArbitrumDAO, BoLD launched in February 2025. Arbitrum Chains that implement BoLD achieve one of five requirements necessary to be classified as being in Stage 1 of decentralization as defined by Vitalik Buterin’s “proposed milestones for rollups taking off their training wheels.” As of May 31, 2025, Arbitrum One and Kinto are the lone Arbitrum Chains that have reached Stage 1 of decentralization, which requires:

  1. A functional fault proof system like BoLD.
  2. At least five actors that can submit fault proofs.
  3. A permissionless bridge to Ethereum mainnet.
  4. A functional Security Council.
  5. An implementation delay for Security Council-approved upgrades that provides an exit window of at least seven days.

BoLD also achieves one of three requirements necessary to be classified as being in Stage 2, with the other two requirements being that users should be provided at least 30 days to exit a network in case of unwanted upgrades, and the Security Council should only have power to intervene in the case of serious protocol flaws that could cause significant harm if unaddressed.

Research & Development

Founded by Ed Felten, Steven Goldfeder, and Harry Kalodner, Offchain Labs has raised over $120 million to fund development. The company serves as a core technical developer that invests in Arbitrum Nitro’s research and development. Currently, Offchain Labs is developing a Universal Intents Engine that would improve interoperability across Arbitrum Orbit, strengthening the Arbitrum Everywhere value proposition:

  • Intent-Based Interoperability is planned for H1’25 and would enable cross-chain token swaps and token transfers in “less than three seconds.”
  • Cross-Chain Operations is planned for H2’25 and would internalize interoperability at the protocol level to enable cross-chain operations in a “fast, cheap, and trustless manner.”

Additionally, Offchain Labs is working on adding support for decentralized sequencer sets and introducing native interoperability across Arbitrum Orbit. Offchain Labs also aims to continue pushing Arbitrum Chain performance by adding support for alternative EVM clients like Reth, Erigon, and Nethermind in the future. In May 2025, Erigon and Nethermind formally committed to supporting Arbitrum Nitro alongside the development of their execution clients.

Other significant upgrades to Arbitrum Nitro include those that impact the State Transition Function (STF) and subsequently, the execution environment, ArbOS. These upgrades often coincide with Ethereum mainnet hard forks and must be approved by ArbitrumDAO prior to implementation. Historically, there have been three major ArbOS upgrades, including ArbOS 11, ArbOS 20 Atlas , ArbOS 32 Bianca, and ArbOS 40 Callisto.

Arbitrum Ecosystem

Arbitrum’s economic engine and Digital Sovereign Nation strategy are validated by the platform’s demonstrated ability to attract a wide range of participants. The combination of its technology, ecosystem investment programs, and economic zones of opportunity has resulted in tangible adoption across several key verticals.

Institutional and Real-World Asset (RWA) Adoption

A primary area of growth has been the tokenization of RWAs, with several major traditional finance institutions deploying products on Arbitrum One:

  • BlackRock: The USD Institutional Digital Liquidity Fund (BUIDL) launched on Arbitrum One in November 2024, reaching a supply (USD) of $31.1 million on the network as of May 31, 2025. BUIDL is a tokenized U.S. Dollar money market fund developed by BlackRock, and is held in the ArbitrumDAO Treasury as the largest portion of the STEP portfolio.
  • Franklin Templeton: The OnChain US Government Money Fund (FOBXX) invests in U.S. government securities, cash, and repurchase agreements. The fund is tokenized on Arbitrum One as BENJI by Franklin Templeton. With a supply (USD) of $92 million on Arbitrum, BENJI was selected as the largest allocation recipient in STEP 2.
  • WisdomTree: WisdomTree Connect launched on Arbitrum One in April 2025. It offers access to 13 tokenized funds across money market instruments, equities, fixed income and asset allocation strategies, expanding institutional access to tokenized assets.

Tokenized Asset Platforms

An ecosystem of crypto-native platforms providing yield-bearing RWA products has expanded to Arbitrum One:

  • Ondo Finance: Operated by Ondo Finance, USDY is deployed on Arbitrum One and is backed by U.S. Treasuries and bank deposits, designed to function as a yield-bearing stablecoin with broad accessibility. USDY’s supply (USD) on Arbitrum One was $6.3 million as of May 31, 2025.
  • Spiko: Operated by Spiko, the Euro T-Bill (EUTBL) and U.S. T-Bill (USTBL) are tokenized money market funds deployed on Arbitrum One. Spiko’s TVL (USD) on Arbitrum One was $94 million as of May 31, 2025.
  • OpenEden: Offered by OpenEden, U.S. Treasuries are tokenized through TBILL on Arbitrum One, and include real-time proof of reserves and custody through licensed third parties. TBILL’s supply (USD) on Arbitrum One was $5.7 million as of May 31, 2025.

Enterprise and Fintech Integration

Arbitrum One also serves as a critical infrastructure layer for other established companies and protocols:

  • Robinhood: Integrated Arbitrum One-based swaps into its self-custody wallet in February 2024, providing its user base with access to Arbitrum One’s DeFi ecosystem. In June 2025, the partnership expanded as Robinhood announced it is launching Stock Tokens on Arbitrum One. Stock Tokens will include exposure to private companies like OpenAI and Space X, with future plans to bring the product to the upcoming Robinhood Chain.
  • Hyperliquid: An L1 specialized for perpetual futures trading that has seen incredible success utilizes Arbitrum One as its primary USDC entry point. The Hyperliquid Bridge sources $3.42 billion in USDC liquidity from Arbitrum One as of May 31, 2025.

Arbitrum Orbit

Average monthly transactions across the 48 publicly announced Arbitrum Chains live on mainnet have totaled 135.8 million as of May 31, 2025. Aside from Arbitrum One, the most active Arbitrum Chains include:

Several new Arbitrum Chains that are still growing have launched in 2025, including:

Arbitrum Orbit’s growth is primed to continue with various Arbitrum Chains that have been publicly announced, but are not yet live on mainnet as of May 31, 2025, including:

With a host of Arbitrum Chains preparing to launch on mainnet, Arbitrum’s ability to generate core protocol revenue derived from blockspace that fuels its growth flywheel will continue to strengthen.

ArbitrumDAO Governance

ARB serves as the governance token of ArbitrumDAO, which collectively governs protocol upgrades, treasury spending, and steers the Digital Sovereign Nation growth flywheel. Assets in the ArbitrumDAO Treasury are often deployed through ecosystem investment programs like DRIP, STIP, and LTIP to spur Arbitrum’s growth. Economic zones of opportunity like STEP and AGV create new revenue streams that combine with core protocol revenue and feed the flywheel.

ARB tokenholders can participate in offchain governance via Snapshot and onchain governance via Tally by delegating voting power to themselves or to another delegate, some of which can be rewarded through the ArbitrumDAO Delegate Incentive Program (DIP).

Arbitrum’s onchain governance system allows tokenholders to enact changes to Arbitrum One and Arbitrum Nova smart contracts, allocate treasury funds, amend the ArbitrumDAO Constitution, authorize new Arbitrum Chains (except L3s settling on Arbitrum One which can be deployed permissionlessly), and influence other critical aspects of Arbitrum. As of May 31, 2025, there have been 74 onchain Arbitrum Improvement Proposals (AIPs) in ArbitrumDAO’s history, with 59 having passed. There are two types of AIPs that delegates with at least 1 million ARB in delegations can propose:

  • Constitutional AIPs: Proposals that modify the Constitution or procedures set out in AIP-1, modify Arbitrum parameters, introduce new Arbitrum Chains, or take any action that requires “chain ownership.”
    • For a Constitutional AIP to pass, the proposal needs to receive a simple majority of votes, and the “in favor or abstain” votes need to amount to at least 5% of all votable tokens (220.9 million ARB as of May 31, 2025). However, this will reduce to 4.5% as per the vote on Constitutional Quorum Reduction, when executed.
  • Non-Constitutional AIPs: Proposals that do not set out to perform any Constitutional AIP actions (e.g., proposing to allocate treasury funds to an ecosystem investment program). As such, Non-Constitutional AIPs do not affect the behavior or technical architecture of Arbitrum.
    • For a Non-Constitutional AIP to pass, the proposal needs to receive a simple majority of votes, and the “in favor or abstain” votes need to amount to at least 3% of all votable tokens (132.6 million ARB as of May 31, 2025).

Arbitrum has a 12-person Security Council that has half its membership elected by ArbitrumDAO every six months. The council oversees technical risks for Arbitrum and is primarily tasked with making emergency response decisions that protect the interests of ArbitrumDAO and require consensus from 9 of 12 members.

Arbitrum-aligned Entities

ArbitrumDAO has been increasingly modularizing through the introduction of Arbitrum-aligned entities that support Arbitrum and serve as experts in their respective domains. At the DAO’s outset, much of this was led by Arbitrum Foundation. Having been allocated 750 million ARB (7.5% of the total token supply), Arbitrum Foundation acts as a neutral steward that helps to operationalize ArbitrumDAO initiatives in pursuit of its mandates to foster ecosystem growth, deepen developer education, lead community initiatives, and support technical advancements.

As Arbitrum evolves into a Digital Sovereign Nation, other Arbitrum-aligned entities like Offchain Labs, Entropy Advisors, and Arbitrum Gaming Ventures are providing operational excellence in their respective domains. Soon, the Operation Company (OpCo) will be fully operational to act as the “operational mesh layer” of ArbitrumDAO. OpCo will feature an Oversight and Transparency Committee (OAT) that will oversee Arbitrum-aligned entities, keeping them in check and ensuring they achieve their respective mandates.

On April 4, 2025, Patrick McCorry, A.J. Warner, and Frisson were elected as the initial members to chair the OAT Committee. Furthermore, the three council members have appointed Pedro Breuer and Gavin Wang as the other two members of the OAT Committee.

ArbitrumDAO Treasury

The ArbitrumDAO Treasury primarily consists of ARB, as 3.53 billion ARB (35.3% of the total token supply) was allocated to the treasury and is now being leveraged to fuel the Digital Sovereign Nation growth flywheel. However, efforts to diversify treasury holdings to generate yield through RWAs and DeFi are underway. The assets held in the ArbitrumDAO Treasury are valued at $1.21 billion as of May 31, 2025. ARB comprises 92.7% of the ArbitrumDAO Treasury (USD), ETH comprises 4%, RWAs comprise 2.3%, and USDC comprises 1%.

ARB Token

ARB is an ERC-20 equivalent token on Arbitrum One with a total supply of 10 billion. The token was airdropped to early users of Arbitrum to kickstart its decentralization:

  • User Airdrop: 1.16 billion ARB (11.6% of the total token supply) were airdropped to addresses in March 2023, with allocation amounts dependent on actions taken that met eligibility requirements.

Ecosystem Airdrop: 113 million ARB (1.1% of the total token supply) were airdropped to various Arbitrum Orbit projects and Ethereum contributors in April 2023, with allocation amounts dependent on protocol metrics.

ARB is vesting at a monthly rate of 108.6 million ARB (1.1% of the total token supply) and is slated to have all allocations fully vested by March 2027. However, in March 2025, Offchain Labs reinforced its commitment to Arbitrum by announcing a strategic purchase plan, where the company will purchase ARB tokens on the open market at its discretion.

ARB actively serves functions related to governance and funding:

  • Governance: ARB grants the ability for a tokenholder to delegate ARB to themselves or to another delegate, granting governance power within ArbitrumDAO and ultimate ownership over the ArbitrumDAO Treasury and the protocol.
  • Funding: Arbitrum stakeholders are often incentivized to contribute to the Arbitrum ecosystem through ArbitrumDAO-approved ecosystem investment programs. Furthermore, ArbitrumDAO-approved operations are funded with ARB tokens.

Closing Summary

Arbitrum’s trajectory over the past several years reveals a compelling evolution. It is no longer defined solely by Arbitrum One, but also by an expanding ecosystem of Arbitrum Chains powered by a feature-rich tech stack. Together, they position Arbitrum as a platform that supports the entire developer and user journey with the long-term aspiration of becoming the largest Digital Sovereign Nation. This vision is not merely aspirational, but is being operationalized through a methodical architecture of governance, technology, and incentive alignment, all centered around ArbitrumDAO.

Much of Arbitrum’s success stems from the deliberate advancement of its technical and economic foundations. The Arbitrum tech stack continues to innovate with upgrades like Stylus, BoLD, and Timeboost, which empower developers to deploy purpose-built rollups. Simultaneously, ArbitrumDAO’s approach to ecosystem investment programs and economic zones of opportunity has activated a flywheel where revenue, investment, and growth form a self-reinforcing cycle.

Arbitrum is everywhere, and it is building more than just infrastructure. The ARB token does not just govern the protocol; it governs an economic engine. ArbitrumDAO is a maturing entity with oversight structures, investment arms, and an expanding sphere of economic influence.

Arbitrum’s story now represents a broader ambition to redefine what is possible for decentralized, community-governed economies. Arbitrum is not only primed to emerge as a successful ecosystem, but also as a pioneer in how decentrally governed onchain entities can build long-term, sustainable value.

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