- Arbitrum has launched a $40 million token incentive program to encourage DeFi activity on its blockchain.
- The first phase will target “looping” traders who repeatedly borrow against the same collateral.
- 80 million Arbitrum tokens are allocated for this initiative.
- The price of Arbitrum’s token has declined about 80% from its 2024 peak.
- Base has surpassed Arbitrum in DeFi investor funds, though Arbitrum still leads in total blockchain value.
Arbitrum began a new incentive program on Wednesday, announcing the release of 80 million tokens, valued at $40 million, to increase decentralized finance (DeFi) activity on its network. The program, known as the DeFi Renaissance Incentive Programme, aims to attract DeFi traders by offering rewards for engaging in specific onchain lending and borrowing strategies.
The initial focus of the program is on “looping,” a method where traders borrow repeatedly against the same collateral to increase profit potential. This practice can drive recurring revenue for blockchains through transaction fees on each deposit and loan. According to Arbitrum, the campaign will include popular options for looping, such as Pendle derivatives.
Arbitrum’s token price has fallen almost 80% from its 2024 high of $2.39, reflecting a challenging period for the broader layer 2 market. Competing blockchains, including Optimism, Mantle, and Starknet, have also experienced slumps. There are concerns that introducing more token rewards could increase supply and stall price recovery.
The company has found some recent success in revenue generation from Timeboost, a transaction ordering system. Traders bid in auctions to have their trades processed faster, generating about $5.4 million in total revenue and $3.4 million in profit for the Arbitrum DAO since the system launched in April. More details can be found in the official announcement and Timeboost revenue data.
According to DefiLlama, Arbitrum currently has $4.5 billion in DeFi investor funds, while Coinbase’s Base leads with $6.8 billion. However, Arbitrum’s overall blockchain funds are higher when including externally bridged and natively minted assets, as reported by L2Beat.
For further figures and trends, more information is available on DefiLlama’s DeFi market data.
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