Arbitrum joins Paxos' USDG network as DAO weighs 100 million ARB incentive plan

Arbitrum, an Ethereum layer-2 network, has joined Global Dollar Network (GDN), the consortium behind Paxos' dollar stablecoin USDG. In an Oct. 5 announcement, GDN said USDG is now natively issued on Arbitrum One and is set to become the default dollar across Arbitrum's decentralized finance (DeFi) ecosystem. A day later, a proposal was posted on the Arbitrum DAO (decentralized autonomous organization) forum to spend another 100 million ARB on growing USDG.

A stablecoin that shares its rewards

USDG is issued by Paxos Digital Singapore and Paxos Issuance Europe. The former is a Major Payment Institution supervised by the Monetary Authority of Singapore (MAS); the latter issues the token under the supervision of Finland's Financial Supervisory Authority (FIN-FSA) in compliance with the EU's Markets in Crypto-Assets (MiCA) regulation. GDN said USDG is fully redeemable from Paxos one-to-one for U.S. dollars, with reserves held in cash and cash equivalents in segregated accounts and monthly reserve reports published.

What sets GDN apart is that the issuer does not keep the income from reserves to itself but shares it with partners. Partners receive rewards based on the USDG activity they contribute. As a network partner, Arbitrum now receives those rewards directly. According to GDN, more than $3 billion of USDG is in circulation and the network has more than 150 partners. CoinDesk reported that Robinhood, Kraken, Mastercard and OKX are among them. Besides Arbitrum One, USDG is live on Ethereum, Ink, Mantle, Robinhood Chain, Solana and X Layer.

GDN said Arbitrum One has processed nearly 3 billion transactions across almost 90 million addresses, with more than 193,000 verified smart contracts deployed. Robinhood Chain, launched in July, was also built on Arbitrum technology. According to CoinDesk, USDG launched with support from Arbitrum DeFi services including GMX, Morpho, Maple and Fluid, as well as deposits and withdrawals via Kraken. "With USDG, Arbitrum and builders across the platform now have a stake in the growth upside," Brendan Ma, head of investment strategy at the Arbitrum Foundation, told the publication.

DAO proposal seeks another 100 million ARB

The proposal was drafted by Entropy Advisors, an adviser to the DAO, together with Offchain Labs, the Arbitrum Foundation and others. At its core, it would add 100 million ARB to the budget of DRIP, a DeFi incentive program, raising the roughly 65 million ARB left to about 165 million. DRIP started with 80 million ARB, worth about $40 million when it was approved, and Entropy wrote that ARB's price decline since then has compressed the program's effective purchasing power. The remaining seasons 2 through 4 would be combined into a single season focused solely on USDG.

The proposal also calls for the DAO's treasury management body (ATMC) to use its roughly $66 million in tokenized money market funds and stablecoins to mint USDG and supply trading liquidity. Fees that other chains built on Arbitrum technology pay to the DAO under the Arbitrum Expansion Program (AEP) would be converted to USDG in full, net of the 20% allocated to the Arbitrum Developer Guild. Entropy said Arbitrum One holds about $4 billion in stablecoins, excluding the Hyperliquid bridge, and set a goal of converting 15% to 20% of that to USDG in the first year after launch.

Voting runs through Nov. 12

The schedule set out in the proposal is below. If the proposal passes the onchain vote, DRIP's mandate will also be extended to one year from that point.

Entropy cited the DAO's approval in late 2024 of 250 million ARB for a strategic partnerships budget, describing the new 100 million ARB as an investment in a revenue line. The DAO can end the program at any time by vote, and any unspent funds would return to the treasury.

ARB at 272 won on Upbit

ARB trades on the Korean won markets of Upbit and Bithumb. At 10:30 p.m. KST on Oct. 6, it traded at 272 won on Upbit, down 3.5% from the previous day, and at 271 won on Bithumb. At the same time, it was $0.2015 on Binance, which puts the proposed 100 million ARB at about $20 million. The Upbit price was about 0.6% above the Binance price converted to won, a gap known as the kimchi premium (the gap between prices on Korean exchanges and global markets). ARB's high on Upbit over the past year was 633 won, set on Oct. 8, 2025.