Arbitrum, one of Ethereum’s top Layer 2 scaling solutions, is in the news again with some governance activity and technical upgrades.

Its Timeboost mechanism, which gives users extra time when submitting on-chain transactions, is moving to the next phases of its economic design—something the Arbitrum DAO (decentralized autonomous organization) will need to govern.

On May 3, 2025, the Arbitrum DAO announced that it had passed a series of key proposals, generating quite a bit of revenue as a result. Let’s look a bit closer at what’s behind all this fuss and what it means for the future of decentralized governance.

By engaging with institutional governance, growing smart contract revenue, and aligning with the Ethereum network’s latest standards, Arbitrum is strengthening its standing as one of the most technically sophisticated and financially viable Layer 2 blockchain ecosystems.

Governance Strengthened with Five Proposals and Watchdog Program

In May, the Arbitrum DAO confirmed five proposals—two of which passed through on-chain voting on Tally and three via Snapshot. A total of 3,422 unique wallet addresses participated in the voting process, attesting to the network’s vibrant governance.

A standout among the proposals was the approval of the “Watchdog Program,” a transparency-focused initiative aimed at improving the DAO’s fund oversight. This measure received overwhelming support with 99.94% of votes in favor, totaling over 211 million ARB–far surpassing the quorum requirement of approximately 131 million ARB. Major participants included respected institutions such as Entropy Advisors, L2BEAT, Gauntlet, and Wintermute, and these entities collectively contributed over half of the required quorum.

The Watchdog Program brings forth bounties that are not centralized, reporting mechanisms that allow for privacy, and outside auditors—all designed to make sure that DAOs are transparent, compliant, and secure when it comes to assets that they control. This move positions Arbitrum very much at the forefront of governance in the Layer 2 space, where the need for operational clarity and accountability is becoming more pronounced.

Timeboost Revenue Surges as Usage Grows

Debuted in mid-April, Arbitrum’s Timeboost mechanism—a new-fangled, auction-based model for ordering rights in transaction blocks—has swiftly emerged as a potentially considerable revenue stream. By early June, it had racked up a total of 593.58 WETH (roughly $1.43 million), with 575.769 WETH (about $1.39 million) landing in the DAO as pure profit. Meanwhile, the contract’s total value locked was 692.05 WETH—again, roughly $1.74 million.

The design of Timeboost allocates 97% of revenues to the DAO and 3% to the Developer Guild. Thus, creating a balanced incentive structure that benefits both governance and development communities. The revenue and fee performance of Timeboost from the DApp side closely mirrors what we see from DEX activity generally. And that is to say, we see revenue and fees spiking during the weekdays—Monday through Thursday, particularly—before dropping 5% to 17% over the weekend.

The system shows a surprisingly strong demand across auction rounds, with plenty of volatility and a number of rounds that aren’t empty, which you can observe on a daily basis. This is taken as a sign that the on-chain transaction prioritization that Timeboost provides is being more and more requested by both traders and developers.

Strategic Upgrades and Adaptive Governance Shape Outlook

At the same time, when it was moving forward and correcting past mistakes in governance and the economy, Arbitrum also advanced technical development. It introduced ArbOS 40 “Callisto.” This is really important because it moves Arbitrum One and Nova into full compatibility with the recent Pectra hard fork on Ethereum. Callisto layered in not just the ubiquitous EIP that enhances Ethereum’s ongoing smooth functioning (these days, smart contract users kind of live or die by the presence of such EIPs), but also some major performance enhancements.

Ensuring that Arbitrum remains tightly coupled with Ethereum mainnet development is an increasingly vital factor for developers onboarding to Arbitrum and for applications migrating from Ethereum to Arbitrum. Beyond that, the implementation overall increases performance, increases compatibility, and decreases friction for builders deploying across chains.

At the same time, the DAO is looking into a proposed amendment to the quorum in its constitution—that is, how many people have to show up in order for the vote to count. Because quorum is such a fundamental part of governance, this was a soft proposal that went hard as soon as it was suggested and was not really agreed to by everyone in the DAO, which seems to indicate that governance in the Constitution DAO is tenuous at best, with some making a better argument than others for the idea of having a quorum.

Arbitrum is a well-placed entity to continue its lead among Layer 2 networks looking forward. The Watchdog Program has been integrated successfully, Timeboost revenues are on the upswing, and a promise remains to keep in step with Ethereum’s core development (even if the latter sometimes marches to a different drummer). All in all, the Arbitrum ecosystem seems set to scale in both secure and efficient ways.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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The post Arbitrum Approves Five New Proposals Amid Rising Timeboost Revenues and Strategic Upgrades appeared first on The Merkle News.

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Filed under: Bitcoin - @ June 16, 2025 4:25 pm