The following reflects the views of GMX’s Governance Committee and is based on the combined research, evaluation, consensus, and ideation of various committee members.

The proposed allocation of 500 million ARB tokens for an airdrop raises significant concerns regarding its effectiveness, sustainability, and impact on the DAO’s long-term financial health.

1. Lack of Justification & Evidence – No clear rationale has been provided to demonstrate that a large-scale airdrop will lead to meaningful, long-term ecosystem growth. Without strong evidence of retention or sustained engagement, this approach risks being an expensive, short-lived distribution event rather than a strategic investment.
2. Treasury Impact & Sustainability – Allocating such a substantial portion of the treasury in a single event is risky and could severely limit the DAO’s ability to fund future initiatives, including critical infrastructure, developer incentives, and long-term ecosystem support. This level of spend is unjustified given the lack of proven outcomes.
3. Exploring Alternative Incentive Models – More targeted and outcome-driven approaches should be considered: ◦ Retroactive Grants similar to Optimism’s RetroPGF model, incentivizing builders and creators based on impact. ◦ Stronger and Wider Grants Program that links pre-grant support (via hackathons) to post-grant scaling opportunities (VCs, accelerators).

Instead of a one-time, high-risk airdrop, the DAO should focus on incentive structures that ensure long-term alignment, sustained engagement, and ecosystem resilience.

The following reflects the views of GMX’s Governance Committee and is based on the combined research, evaluation, consensus, and ideation of various committee members.

The proposed allocation of 500 million ARB tokens for an airdrop raises significant concerns regarding its effectiveness, sustainability, and impact on the DAO’s long-term financial health.

1. Lack of Justification & Evidence – No clear rationale has been provided to demonstrate that a large-scale airdrop will lead to meaningful, long-term ecosystem growth. Without strong evidence of retention or sustained engagement, this approach risks being an expensive, short-lived distribution event rather than a strategic investment.
2. Treasury Impact & Sustainability – Allocating such a substantial portion of the treasury in a single event is risky and could severely limit the DAO’s ability to fund future initiatives, including critical infrastructure, developer incentives, and long-term ecosystem support. This level of spend is unjustified given the lack of proven outcomes.
3. Exploring Alternative Incentive Models – More targeted and outcome-driven approaches should be considered: ◦ Retroactive Grants similar to Optimism’s RetroPGF model, incentivizing builders and creators based on impact. ◦ Stronger and Wider Grants Program that links pre-grant support (via hackathons) to post-grant scaling opportunities (VCs, accelerators).

Instead of a one-time, high-risk airdrop, the DAO should focus on incentive structures that ensure long-term alignment, sustained engagement, and ecosystem resilience.

gm, I find myself aligned with the comments from @pedrob @Argonaut and @Entropy and strongly against this proposal despite our urgent need to attract new builders to Arbitrum.

The goal is right, but airdrops are the wrong approach IMO. Creating a builder flywheel requires structured support systems, not scattered token distributions that have proven to only retain (users and builders) short term.

What we need is a comprehensive builder incubation program that provides resources, mentorship, and targeted incentives tied to development milestones.

I have the highest respect for builders like the OP and want to see more innovation on Arbitrum. Let's channel our resources into programs that actually give builders what they need to succeed long-term.

Thanks

Below is the perspective of the UADP:

The motivation behind this proposal makes sense, and we are on board with establishing more programs to appreciate builders. However, it seems irresponsible to conduct a second airdrop round because the benefits of such a program seem flimsy, leading to nothing more than exacerbated sell pressure.

The crux of the issue really is the amount of long-term value that the 500M would bring to the ecosystem. More than likely, giving protocols with high usage—based on gas for example—will reward large, existing protocols as opposed to bringing in new talent. That is, unless, we conduct this operation on a continual or tranched basis where newer builders enter due to future expected rewards. Dividing the 500M up over time would make more sense. A lump sum retroactive distribution would not prioritize new entrants and would concentrate sell pressure into a short timespan.

We are not convinced that loyalty through an airdrop would increase either—that's why increasing the builder cohort may be more important than retaining existing builders. Large protocols who are entrenched in Arbitrum are more than likely to stay in the ecosystem. And if a protocol is more fickle and is thinking about existing Arbitrum already, they may just see this as a final payday before exiting.

If we want to appreciate builders, it’s likely best to continue expending capital on either developer tooling/operations (this is more salient for newer builders) or through user-oriented incentives like the LTIPP/STIP because builders, at the end of the day, would be highly appreciative of an opportunity to attract more users to their protocol. A team that’s aligned with staying on Arbitrum, upon reception of an airdrop, may even decide to use that allocation for incentives. So why not just give out more user incentives at that point?

If an argument can be made that simply airdropping more tokens to builders leads to more loyalty which would otherwise wane, we'd be open to hearing that perspective. But no matter which way we twist this, the justification for going forward with an airdrop to builders over more developer grants/user-based incentives seems subpar.

gm, I find myself aligned with the comments from @pedrob @Argonaut and @Entropy and strongly against this proposal despite our urgent need to attract new builders to Arbitrum.

The goal is right, but airdrops are the wrong approach IMO. Creating a builder flywheel requires structured support systems, not scattered token distributions that have proven to only retain (users and builders) short term.

What we need is a comprehensive builder incubation program that provides resources, mentorship, and targeted incentives tied to development milestones.

I have the highest respect for builders like the OP and want to see more innovation on Arbitrum. Let's channel our resources into programs that actually give builders what they need to succeed long-term.

Thanks

Below is the perspective of the UADP:

The motivation behind this proposal makes sense, and we are on board with establishing more programs to appreciate builders. However, it seems irresponsible to conduct a second airdrop round because the benefits of such a program seem flimsy, leading to nothing more than exacerbated sell pressure.

The crux of the issue really is the amount of long-term value that the 500M would bring to the ecosystem. More than likely, giving protocols with high usage—based on gas for example—will reward large, existing protocols as opposed to bringing in new talent. That is, unless, we conduct this operation on a continual or tranched basis where newer builders enter due to future expected rewards. Dividing the 500M up over time would make more sense. A lump sum retroactive distribution would not prioritize new entrants and would concentrate sell pressure into a short timespan.

We are not convinced that loyalty through an airdrop would increase either—that's why increasing the builder cohort may be more important than retaining existing builders. Large protocols who are entrenched in Arbitrum are more than likely to stay in the ecosystem. And if a protocol is more fickle and is thinking about existing Arbitrum already, they may just see this as a final payday before exiting.

If we want to appreciate builders, it’s likely best to continue expending capital on either developer tooling/operations (this is more salient for newer builders) or through user-oriented incentives like the LTIPP/STIP because builders, at the end of the day, would be highly appreciative of an opportunity to attract more users to their protocol. A team that’s aligned with staying on Arbitrum, upon reception of an airdrop, may even decide to use that allocation for incentives. So why not just give out more user incentives at that point?

If an argument can be made that simply airdropping more tokens to builders leads to more loyalty which would otherwise wane, we'd be open to hearing that perspective. But no matter which way we twist this, the justification for going forward with an airdrop to builders over more developer grants/user-based incentives seems subpar.

Being builders who are committed to Arbitrum ourselves, we obviously have a strong bias.

Therefore, we don't want to comment too much on the idea aside from being supportive in general.

Though, given that all the essential details regarding the execution are still outstanding, we're not sure what could be voted on at this moment.

In our opinion, 500M ARB is a lot, yet could make sense under certain conditions. But depending on the execution strategy, a smaller amount could be more adequate, so we don't think that voting on the airdrop amount can be separated from the execution strategy.

At this moment, a temperature check for the general idea with an attached expense, workload & timeline estimation seems most appropriate?

Would you be the project manager for this? @cupojoseph If not, we would prefer if there was someone volunteering as PM or ideally even the whole working group being assembled before voting on the expenses to avoid approving the budget before execution can be assumed.

My initial gut reaction is 'damn, this is a lot of money'. I understand the sentiment from this proposal but something tells me that its a bit too early for another airdrop.

I want to take a step back here. What is the problem we are trying to solve here? The motivation points to other programs and encourages us to copy them -- but why are we copying them?

The rationale is the standard rationale for any incentive program IMO. We should analyse the period of significant growth a lot more deeper too -- was it actually tied to that? how long did it last? why was it short lasting?

I think the author is aware of that this is a massive task and there's a lot to figure out and I appreciate that. There really is a lot to figure out here. Start small, research the problem and the effect of the prev airdrop.

Maybe I'm out of the loop here too, so it might be a dumb question, but doesn't the dao employ a team to help with these tasks before getting another working group?

I must say this is a well intentioned proposal. Rewarding builders based on their activity can motivate them to create valuable products/ services for Arbitrum.

That said, with 500 million ARB, this is quite a financial strain :). The DAO has already funded many builders from the start to encourage new ideas to integrate with Arbitrum, and now we’re rewarding their success (which is great), but it feels like double funding :)

I agree with other delegates, this could put selling pressure on ARB, leading to inflation and a decrease in ARB's value.

Also, the $100K cost for a 2-3 month project with 6 people seems a bit high to me, to be honest.

I also think future airdrops should be forward looking, for example announcing them in advance and inviting builders to build, rather than rewarding past activity.

Not ready to say yes yet.

incentivizing builders is a good thing to do, and doing it related to gas fees generated is a really interesting idea which seems to be working for Sonic.

That being said this proposal is a massive amount of ARB, at a time when ARB doesn't have otherwise equal buying pressure to offset it.

If the proposal could be designed in a way where the fees generated offset the ARB distributed it would be a lot more sustainable.

Without a more sustainable economic design there's no way we'd support this as ARB holders and delegates and I think many other holders and voters would say the same .

Being builders who are committed to Arbitrum ourselves, we obviously have a strong bias.

Therefore, we don't want to comment too much on the idea aside from being supportive in general.

Though, given that all the essential details regarding the execution are still outstanding, we're not sure what could be voted on at this moment.

In our opinion, 500M ARB is a lot, yet could make sense under certain conditions. But depending on the execution strategy, a smaller amount could be more adequate, so we don't think that voting on the airdrop amount can be separated from the execution strategy.

At this moment, a temperature check for the general idea with an attached expense, workload & timeline estimation seems most appropriate?

Would you be the project manager for this? @cupojoseph If not, we would prefer if there was someone volunteering as PM or ideally even the whole working group being assembled before voting on the expenses to avoid approving the budget before execution can be assumed.

My initial gut reaction is 'damn, this is a lot of money'. I understand the sentiment from this proposal but something tells me that its a bit too early for another airdrop.

I want to take a step back here. What is the problem we are trying to solve here? The motivation points to other programs and encourages us to copy them -- but why are we copying them?

The rationale is the standard rationale for any incentive program IMO. We should analyse the period of significant growth a lot more deeper too -- was it actually tied to that? how long did it last? why was it short lasting?

I think the author is aware of that this is a massive task and there's a lot to figure out and I appreciate that. There really is a lot to figure out here. Start small, research the problem and the effect of the prev airdrop.

Maybe I'm out of the loop here too, so it might be a dumb question, but doesn't the dao employ a team to help with these tasks before getting another working group?

I must say this is a well intentioned proposal. Rewarding builders based on their activity can motivate them to create valuable products/ services for Arbitrum.

That said, with 500 million ARB, this is quite a financial strain :). The DAO has already funded many builders from the start to encourage new ideas to integrate with Arbitrum, and now we’re rewarding their success (which is great), but it feels like double funding :)

I agree with other delegates, this could put selling pressure on ARB, leading to inflation and a decrease in ARB's value.

Also, the $100K cost for a 2-3 month project with 6 people seems a bit high to me, to be honest.

I also think future airdrops should be forward looking, for example announcing them in advance and inviting builders to build, rather than rewarding past activity.

Not ready to say yes yet.

incentivizing builders is a good thing to do, and doing it related to gas fees generated is a really interesting idea which seems to be working for Sonic.

That being said this proposal is a massive amount of ARB, at a time when ARB doesn't have otherwise equal buying pressure to offset it.

If the proposal could be designed in a way where the fees generated offset the ARB distributed it would be a lot more sustainable.

Without a more sustainable economic design there's no way we'd support this as ARB holders and delegates and I think many other holders and voters would say the same .

re: this needs a clear plan before we can support re: we need more analysis re: have you calcualted xyz re:this is not a fully flushed out plan we need more details to decide

I'm not responding to any of these^ kind of questions directly.

This project is MASSIVE. It will be extremely important to get lots of things right:

• vesting terms
• who to include
• exact amount
• delegation on claiming plan
• integration with ARB staking that is coming soon
• governance risk analysis
• price impact analysis
• any other strings we can attach to project distributions so these rewards are used to grow arbitrum
• lots more details

Figuring those things out shouldnt come from just me or any one person. It should be part of a long term discussion with input from hundreds of people. Getting that input and creating a solid plan is a full time job for several people for months. This is a proposal to specifically create and fund a working group to come up with the plan and different options for all the various details.

I like that this proposal is helping to open the discussion of airdrops and the possibility of a future airdrop. I think this topic needs to be thoroughly discussed to create the right incentive alignment, ensuring that the end result translates into a net benefit for the token and the ARB ecosystem. I am more inclined toward smaller, more targeted airdrops rather than a large new airdrop, which would create sell pressure and hurt the token price, ultimately lowering the treasury’s value.

As for the current proposal, I think it is too large, and anyone with some financial knowledge can synthetically sell the airdrop, so the unlock time becomes irrelevant. Also, I disagree with the motivation. Do you have any clear data to confirm that airdrops "attract builders"? Builders in the Arbitrum ecosystem already have access to grants, support, and new programs that are being rolled out to support them.

Lastly, I think the costs and details are a bit vague. I would like to ask who the six people in the group will be and how they will be chosen. What skill sets or experience should/will they have?

Thanks for opening the conversation.

In that case, why opt for an airdrop or retroactive funding instead of a forward-looking plan that incentivizes future work rather than rewarding past contributions?

Why not implement a more targeted distribution where recipients are required to add value and complete milestones? Why not use ARB to attract liquidity?

Why is half a billion ARB better invested on an airdrop instead of these programs?

Thanks for the proposal. While I'm curious about how this would impact governance dynamics, dropping 500M ARB seems too aggressive right now - especially since we hit ATL just 10 days ago as Argonaut pointed out.

I align with Tekr0x about wanting to see more innovative solutions rather than copying other L2s' retro funding.

Would you be open to exploring more targeted approaches that don't require such a large token distribution?

We don’t think distributing a second airdrop is a good idea. There’s a high chance that most of it will end up being sold on the market. The DAO needs to ensure ARB’s price remains stable, otherwise, there’s no incentive for people to hold it.

Check the price action of ARB:

Just 10 days ago, we were at All-Time Lows. As a DAO, we need to avoid initiatives that contribute to sell pressure. Otherwise, demand for ARB will decline, and people will lose trust in the DAO’s ability to create value for ARB holders.

There are far more effective ways to allocate 500 million ARB to drive growth. We could use it to incentivize liquidity to migrate to Arbitrum instead of competing networks or to encourage more protocols to deploy on Arbitrum (for example, Morpho and Euler).

Once people receive the airdrop, they’ll know there won’t be another one anytime soon. This won’t motivate them to keep building, as the incentive will have already been distributed.

This program presents issues of clarity. The allocation of 50% to "builders" based on generated gas fees is ambiguous, as it does not distinguish between valuable contracts and spam, potentially incentivizing artificial activity without real impact. Similarly, the 50% allocated to users lacks concrete metrics to assess their contributions, opening the door to speculative farming.

Furthermore, the precedent set by the first airdrop demonstrates that initial growth can be fleeting if the incentives are not designed for retention. Issuing 500M ARB could trigger massive sell pressure, especially if the funds for builders are not subject to vesting periods. How do they plan to mitigate this risk? Rather than repeating an approach that has already shown limitations, why not opt for more sustainable incentives such as recurring grants or technical support?

There is also concern about the lack of alignment with long-term objectives. Doubling the TVL does not guarantee success if it is not accompanied by user retention and the development of critical infrastructure. Funds could be better allocated to audits, strategic grants, or developer education rather than rewarding transaction volume that lacks added value...

The execution process also appears rushed. Forming a working group, validating addresses, and approving lists within two months is risky, especially in light of previous errors like the exclusion of legitimate users in the first airdrop. Additionally, the selection process for the team is not detailed. How will they prevent capture by specific interests? Why not decentralize the process using community verifiers or transparent on-chain criteria?

Hi

In my opinion, airdrops are a terrible idea. They don't reward long-term commitment or contribute to the Arbitrum chain growth.

I don’t understand how you relate this rationale—which I could agree with (there's always room for improvement)—to conducting an airdrop to achieve it. If there's one thing airdrops attract, and the reason they are in decline, it's mercenary capital. At least the STIP and LTIPP tried to implement liquidity mining to bootstrap protocols, aiming for them to become self-sustainable afterward and put in place stickiness mechanisms.

The airdrop trend emerged due to regulatory uncertainty, as a way to distribute tokens to protocol users (after ICOs boom). This had some value in 2020 when airdrops became popular, but after 3 or 4 successful airdrops, it turned into a mercenary capital scheme aimed at gaming the system for maximum benefit at minimal cost—plus VCs dumping on retail investors. It’s not necessarily wrong, but I don’t think it’s the behavior that Arbitrum should be encouraging through the DAO.

I do find the builder appreciation approach adequate, though I believe it’s something Arbitrum DAO is focused on (which again, doesn't mean it cannot be improved): the Stylus Sprint, Questbook grants (New protocol ideas & Dev tooling + Orbit new one), the gaming investment initiative, and the upcoming incentive programs. The framework Entropy has been working on is particularly interesting (see working group calls for more info).

re: this needs a clear plan before we can support re: we need more analysis re: have you calcualted xyz re:this is not a fully flushed out plan we need more details to decide

I'm not responding to any of these^ kind of questions directly.

This project is MASSIVE. It will be extremely important to get lots of things right:

• vesting terms
• who to include
• exact amount
• delegation on claiming plan
• integration with ARB staking that is coming soon
• governance risk analysis
• price impact analysis
• any other strings we can attach to project distributions so these rewards are used to grow arbitrum
• lots more details

Figuring those things out shouldnt come from just me or any one person. It should be part of a long term discussion with input from hundreds of people. Getting that input and creating a solid plan is a full time job for several people for months. This is a proposal to specifically create and fund a working group to come up with the plan and different options for all the various details.

I like that this proposal is helping to open the discussion of airdrops and the possibility of a future airdrop. I think this topic needs to be thoroughly discussed to create the right incentive alignment, ensuring that the end result translates into a net benefit for the token and the ARB ecosystem. I am more inclined toward smaller, more targeted airdrops rather than a large new airdrop, which would create sell pressure and hurt the token price, ultimately lowering the treasury’s value.

As for the current proposal, I think it is too large, and anyone with some financial knowledge can synthetically sell the airdrop, so the unlock time becomes irrelevant. Also, I disagree with the motivation. Do you have any clear data to confirm that airdrops "attract builders"? Builders in the Arbitrum ecosystem already have access to grants, support, and new programs that are being rolled out to support them.

Lastly, I think the costs and details are a bit vague. I would like to ask who the six people in the group will be and how they will be chosen. What skill sets or experience should/will they have?

Thanks for opening the conversation.

In that case, why opt for an airdrop or retroactive funding instead of a forward-looking plan that incentivizes future work rather than rewarding past contributions?

Why not implement a more targeted distribution where recipients are required to add value and complete milestones? Why not use ARB to attract liquidity?

Why is half a billion ARB better invested on an airdrop instead of these programs?

Thanks for the proposal. While I'm curious about how this would impact governance dynamics, dropping 500M ARB seems too aggressive right now - especially since we hit ATL just 10 days ago as Argonaut pointed out.

I align with Tekr0x about wanting to see more innovative solutions rather than copying other L2s' retro funding.

Would you be open to exploring more targeted approaches that don't require such a large token distribution?