Arbitrum Launches DRIP Program to Reward DeFi Activity with ARB Tokens

Arbitrum has introduced the DeFi Renaissance Incentive Program (DRIP), a $40 million initiative designed to promote productive decentralized finance (DeFi) activities on its platform. Users can earn ARB tokens by engaging in lending and looping strategies within the Arbitrum ecosystem.

Key Takeaways

Arbitrum's DRIP program offers $40 million to incentivize DeFi activities.
The program consists of four seasons, starting with Season One from September 3 to January 20.
Users earn ARB tokens by employing leverage looping strategies in DeFi lending.
Participants must bridge their assets to Arbitrum One and choose from various lending markets.
The initiative aims to boost total value locked (TVL) in the Arbitrum ecosystem.

Arbitrum DRIP program launches to reward productive DeFi activity with ARB tokens

Main Content

Arbitrum has officially launched the DeFi Renaissance Incentive Program (DRIP), an initiative worth $40 million aimed at encouraging productive DeFi activities on its network. This program is managed by Entropy Advisors and supported by Merkl, structured across four distinct seasons.

Season One, which runs from September 3 to January 20, emphasizes leveraging looping strategies in DeFi lending markets. Users can earn ARB tokens by borrowing against qualifying ETH and stablecoin assets, redepositing them, and repeating this process to enhance their exposure.

For instance, a user could deposit syrupUSDC into an approved lending protocol, borrow USDC against it, swap the borrowed USDC back into more syrupUSDC, and then redeposit it. By continuously looping over the two-week epochs, users can amplify their total borrowed position, with ARB rewards calculated based on the time-weighted average of the borrow balance. Certain markets also reward users just for providing assets like ETH derivatives (weETH, wstETH, rsETH) or stablecoins, not solely for borrowing.

To get involved, users need to bridge eligible assets to Arbitrum One, select a participating market—such as Aave, Morpho, Fluid, Euler, Dolomite, or Silo—and then deposit collateral, borrow, loop, and finally claim ARB rewards at the conclusion of each two-week epoch.

The Arbitrum DRIP program is phased, with the first two epochs serving as a discovery phase that allocates only 15% of the budget to identify which markets perform the best. In the subsequent performance phase, top-performing markets will receive a larger share of the incentives, fostering healthy competition and enhancing liquidity growth throughout Arbitrum's DeFi ecosystem.

By promoting productive borrowing and looping activities, the Arbitrum DRIP program aims to elevate the total value locked (TVL) in Arbitrum’s DeFi ecosystem, which currently stands at about $3.21 billion, as reported by DefiLlama. This positions Arbitrum in 7th place globally in terms of DeFi TVL share at 2.1%, trailing just behind Base.