ArbitrumDAO may put 100 million ARB behind Paxos' USDG stablecoin, aiming to make it the main dollar on Arbitrum and shake up stablecoin rewards for builders and users.
ArbitrumDAO is looking at a plan to send 100 million ARB tokens toward Paxos' Global Dollar (USDG) stablecoin. The goal is to speed up USDG adoption and change how DeFi builders get rewarded on the network. This comes right after USDG launched natively on Arbitrum One. Supporters want USDG to become the main dollar for Arbitrum's DeFi projects.
Builder incentives and treasury plans
Entropy Advisors posted the proposal on the Arbitrum DAO forum. They call the 100 million ARB request an investment in a new revenue stream for the DAO. At the time of posting, the plan was still up for debate. Forum discussion was set for October 6 to 15, 2026, with off-chain and on-chain votes running through mid-November. The document makes clear: the 100 million ARB is extra funding being asked for, not yet approved. The plan would merge DRIP seasons 2 to 4 into one season focused on USDG growth. If the DAO says yes, unspent DRIP funds would jump from about 65 million to 165 million ARB. That would make the incentive pool much bigger for people building on Arbitrum.
USDG was launched on Arbitrum One with native issuance, not by bridging tokens from another network, and debuted with integrations from Fluid, Morpho, GMX, Maple, and support from Kraken.
The proposal says network partners would get rewards based on how much USDG they hold, mint, and accept. In the early phase, most USDG rewards would go back into builder incentives. Any net proceeds would go to Arbitrum's treasury management. For the launch, about 7 million ARB was already set aside to promote USDG. This included liquidity rewards for GMX pools, with some pools offering yields above 8% APY for eight weeks. These launch rewards are separate from the extra 100 million ARB now being discussed.
Stablecoin market share goals
Entropy Advisors set a big target: they want USDG to grab 15% to 20% of the roughly $4 billion in stablecoins on Arbitrum One in the first year. If that happens, USDG supply on the network could reach hundreds of millions of dollars. The proposal's timeline calls for forum debate through October 15, an off-chain vote from October 15 to 22, and an on-chain vote from October 29 to November 12. ARB, ArbitrumDAO's governance token, would be used for the vote.
USDG's position and rivals
Paxos' USDG, now issued natively on Arbitrum One, is being pushed by the Global Dollar Network as the main dollar for DeFi on the network. The network says it has over 150 partners and more than $3 billion of USDG in circulation. At the time of writing, USDG's market cap was about $3.16 billion, according to CoinMarketCap. Distribution has grown, including through OKX's new money app, which pays yield on eligible USDG balances. Other stablecoins are also moving fast. Open USD launched on four chains in late September. ARB was trading near $0.20 at the time of writing, based on CoinMarketCap data.
The economic motivation for the USDG initiative is tied to the Global Dollar Network model: Arbitrum and its partners can earn a share of revenue from USDG reserves, unlike with many existing stablecoins where the network does not benefit from reserve economics.
Governance and industry context
The proposal follows a wider trend: DAOs are using token rewards to drive stablecoin adoption and bring in protocol revenue. Most rewards would be recycled into ecosystem growth, not just stored in the treasury. This approach is similar to what other token projects have tried. EgonCoin's earlier breakdown showed how high minimum fees can keep smaller players out. For ArbitrumDAO, this proposal will test if big token allocations can really shift stablecoin market share and bring in steady revenue for decentralized governance.
Stablecoins like USDG are built to keep a fixed value, usually tied to the U.S. dollar, by holding reserves or using other methods. Fiat-backed stablecoins use custodial reserves. Algorithmic and hybrid models use on-chain tools to manage supply and demand. How incentives, governance, and reserve transparency are set up can change how a stablecoin is used, how much liquidity it has, and what risks it faces. For users and builders, knowing how these pieces fit together is key to judging the real promise and limits of new stablecoin projects on networks like Arbitrum.
