Arbitrum weighs 100M ARB boost for USDG strategy

Arbitrum DAO is considering a proposal to make Paxos-issued USDG a core strategic initiative, with the decision tied to a requested 100 million ARB expansion of the DRIP program. The primary governance proposal, developed by Entropy Advisors with Offchain Labs, The Arbitrum Foundation and OpCo, sets out changes to treasury deployment, fee routing and ecosystem incentives.

The forum discussion began October 6 and is scheduled to run through October 15, followed by offchain and onchain votes. The proposal lands alongside DRIP Season 2, which went live on October 6 with USDG arriving on Arbitrum One.

Entropy’s case is that Arbitrum has already joined the Global Dollar Network with Paxos, giving builders “an ecosystem-aligned dollar with committed liquidity, incentives, and integration support behind it from day one.” The proposal asks the DAO to back a coordinated effort across the Arbitrum Aligned Entities, or AAEs, to grow USDG adoption.

The stated payoff for the DAO is direct economic participation. “The DAO becomes the steward of USDG’s growth on Arbitrum and the recipient of the economic value that growth creates,” Entropy wrote in the proposal.

The structure would put the Arbitrum Treasury Management Committee, or ATMC, to work on USDG growth. It would deploy assets in support of the initiative, including by seeding protocol-owned liquidity. The ATMC would also be authorized to convert incoming and accrued AEP fees to USDG, with the Arbitrum Foundation executing those conversions.

Fee routing is part of the proposal’s core mechanics. All AEP fees, after the 20% allocation to the Arbitrum Developer Guild, would flow to the TM Portfolio. That would give the treasury a defined path for converting part of its fee income into USDG rather than leaving those fees in their incoming form.

The requested DRIP increase is the clearest ARB-holder exposure. DRIP was originally approved with an 80 million ARB budget across four seasons over one year, and its mandate was recently extended through July 1, 2027. The program has about 65 million ARB remaining under its existing budget. Adding the proposed 100 million ARB would produce 165 million ARB in available program funds:

65M ARB remaining + 100M ARB requested = 165M ARB.

That arithmetic describes the combined remaining and requested allocation, not a new 165 million ARB approval. The immediate governance question is the additional 100 million ARB.

DRIP Season 2 is already putting the plan into market-facing form. Incentives are active for two USDG opportunities: GMX’s GMX Dollar Vault and Morpho’s Gauntlet USDG Premium vault. Rewards are distributed through Merkl and are generally claimable through arbitrumdrip.com or the Merkl App. USDG supply and activity on Arbitrum One are listed at arbdata.com/usdg.

For traders and protocols, that makes the proposal more than a budget vote. GMX and Morpho already have active USDG incentive destinations, while approval could give the program another 100 million ARB to direct toward adoption. The concrete beneficiaries are protocols selected for future incentives and users who qualify for Merkl rewards; ARB holders bear the governance exposure to the additional allocation.

The treasury side is larger than DRIP alone. The ATMC currently holds about $66 million in tokenized MMF and stablecoin positions, and the proposal would place asset deployment and USDG conversion inside that existing treasury-management framework. The fact sheet does not publish the full strategy parameters or the KPIs that the OAT is expected to establish, so the size and timing of any USDG purchases, liquidity seeding or other deployments remain open.

Entropy’s role would remain inside its existing Year 2-3 scope of work. The USDG initiative is designated a Special Project, and Entropy wrote that “USDG’s success will become one of Entropy’s core responsibilities under its existing mandate, and the OAT will establish KPIs for the initiative.” Entropy also requests no additional compensation.

The proposed stablecoin comes with a stated regulatory and distribution profile. USDG is issued by Paxos Digital Singapore under supervision from the Monetary Authority of Singapore. In the European Union, it is supervised by Paxos Issuance Europe under FIN-FSA supervision and in compliance with MiCA. The proposal says Paxos has recorded more than $245 billion in tokenization activity since 2018, while USDG currently sits near $3.2 billion in supply across Ethereum, Robinhood, X Layer, Solana, Ink and Mantle.

The Global Dollar Network has grown past 150 enterprise partners, including Kraken, Robinhood, OKX and Mastercard, according to the proposal. Those figures are presented by the proposing parties; the governance decision will determine how much Arbitrum treasury capital and ARB incentives are committed around that network.

The initiative also follows an earlier treasury allocation. In late 2024, Arbitrum DAO approved a 250 million ARB investment to bolster the Arbitrum Foundation’s strategic partnerships budget. The proposal says that investment helped the DAO accrue $6.19 million in protocol revenue in the first half of 2026. For related context on the treasury’s exposure to ARB’s spot price, Crypto Desk previously covered Arbitrum treasury runway calculations.

Until the new proposal passes, Season 2 operates under DRIP’s existing parameters: roughly 65 million ARB remains in the current budget, and the mandate runs through July 1, 2027. The next hard checkpoint is therefore the governance process itself: discussion ends October 15, after which the offchain and onchain votes will decide whether USDG becomes a DAO-backed strategic priority and whether the extra 100 million ARB is released.