ETHPrague 2026

Sustaining a DAO beyond its initial treasury allocation requires a fundamental shift in how capital is thought about, not just as a reserve to spend down, but as an asset to manage, grow, and deploy in ways that generate measurable returns. Arbitrum DAO began like most: a large native token allocation, spending driven by growth pressure, and sustainability as an afterthought. Over the past two years, that has changed meaningfully, and this talk shares what that transition has looked like in practice, the decisions made, the tradeoffs encountered, and the open questions still being worked through.

The starting point is treasury diversification. Arbitrum DAO’s treasury peaked above $7 billion in early 2024 and fell below $1 billion by late 2025, driven almost entirely by market prices rather than token usage, a dynamic that pushed the DAO toward building revenue streams that compound independently of ARB price. Today, roughly 30% of DAO income comes from Timeboost, a sealed-bid MEV auction that captures value by allowing users to bid for transaction priority, and treasury yields generated through deployment across real-world assets, ETH-correlated positions, and stablecoins. More than $90 million has been deployed across different categories, generating approximately $2.8 million in cumulative interest so far, with the program continuing to evolve through options strategies, ongoing allocation of ETH earned from transaction and Timeboost fees, and reallocation across existing positions. The tradeoffs in this space are real and worth examining honestly: deploying into RWAs generates stable yield but contributes nothing to the onchain ecosystem; deploying into ETH LSTs supports network security but introduces price correlation; deploying into ecosystem protocols generates alignment and potentially outsized returns but carries concentration and governance risk. There is no clean answer, and a credible framework requires holding all of these in view simultaneously.

The more important reframing, however, is about how DAOs think about all of their capital expenditure, not just treasury management. Grants and incentive programs are genuine levers for bringing users, liquidity, and protocols to an ecosystem, and when that activity translates into increased network usage and revenue, they are positive-sum. The challenge is not the spending itself but the design. Historically, these programs have been structured as subsidies, capital deployed outward with outcomes measured in TVL and activity metrics that don’t directly flow back to the DAO. The industry has matured enough to ask for more than that. The next generation of program design should tie expenditure to DAO outcomes through revenue-sharing arrangements, protocol partnerships, cross-ecosystem agreements, and integrations that embed the DAO as a stakeholder in the activity it funds rather than simply a funder of it.

Some of this is already emerging in practice. Toward the end of Arbitrum’s DRIP Season 1 incentive program, which deployed 14.6M ARB across six lending protocols over 12 epochs, a partnership between a CEX, a lending protocol, and a vault manager began generating fee flows with revenue-sharing back to the DAO. Small in scale relative to the overall program, but significant as a proof of concept for what incentive design tied to DAO revenue can look like. The program also produced findings that speak directly to how future programs should be structured: that debt liquidity is a more effective lever than supply-side deposits for growing lending markets, that incentives have the highest marginal impact at the zero-to-one stage of market development, and that participant selection should prioritise operational readiness and product-market fit over market size. These are not Arbitrum-specific conclusions and are transferable to any ecosystem thinking about how to make incentive spend work harder.

Looking forward, the convergence of disciplined treasury management, expenditure tied to measurable DAO outcomes, and emerging revenue from Orbit chains and protocol partnerships points toward a model where a DAO functions as a financially self-sustaining institution rather than a foundation spending down a fixed endowment. These initiatives on Arbitrum are still ongoing, but the direction is clear, and the frameworks being developed are relevant to any DAO asking the same question: how do you build an organization that can fund its own future?