Arbitrum launches a $40 million DeFi incentive package focused on 'leveraged looping'
#ArbitrumDAO just kicked off Season One of the DeFi Renaissance Incentive Program (DRIP), with a plan to distribute up to 24 million ARB to boost leading lending protocols. This is the initial phase of a $40 million campaign that was approved by the community back in June, spanning across 4 seasons.
The goal of DRIP is to enhance capital efficiency on Arbitrum through a looping strategy – users deposit yield-generating assets, borrow collateral, and then reinvest in the same type of asset. According to experts, this activity currently accounts for 20–30% of the lending market on the Ethereum mainnet, but has only been occurring at a small scale on Layer 2s.
#SeasonOne will implement incentives on protocols such as Aave, Morpho, Euler, Fluid, Dolomite, and Silo, with collateral assets including weETH, rsETH, sUSDC, and syrupUSDC. Maple Finance has also just launched a high-yield stablecoin syrupUSDC on Arbitrum to leverage the benefits from DRIP.
Experts believe DRIP will attract 'quality liquidity', while being monitored for effectiveness through metrics like TVL, market share growth, and the ability to maintain liquidity after the program ends.
⚠️ Risk warning: While the incentive program may expand the ecosystem, using leverage in looping carries high risks. Investors need to consider carefully before participating.
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