The Arbitrum Decentralized Autonomous Organization (DAO) is contemplating a $3.3 million memecoin fund to foster a memecoin-friendly ecosystem within the Ethereum layer-2 blockchain network, according to a March 24 proposal on the platform’s discourse forum.

According to the proposal:

“The motivation of the memecoin fund is to help the Arbitrum ecosystem as a whole. Draw attention, new users, more chain usage, more DeFi activity, and more.”

The author wrote the proposal in response to learning about new DeFi incentives, which they believe are throwing “more money at protocols so they can be farmed by whales/teams.” They further argued the DAO should “stop focusing on defi protocols” and “focus on bringing new participants that will inevitably use the defi protocols.” In a final call to action they declared,

“I just wrote a proposal on the arb forums so I don’t look like just a shit talker without any action But that’s my last attempt to kickstart the conversation. Up to arbitrum now what to do.”

Arbitrum is the largest Ethereum-based layer-2 network, controlling more than 40% of the market. The total value of assets locked on the network currently amounts to $16.84 billion, according to L2Beats data.

Proposal details

The proposal outlines the governance structure of the memecoin fund, consisting of five board members and three collaborators operating via a 5/9 multi-signature scheme. Notably, members of the board and collaborators would be barred from investing in tokens supported by the fund.

Furthermore, the proposal delineates criteria for selecting the memecoins, including secure contracts, widespread holder distribution, minimal whale holdings, ample liquidity, and a minimum market capitalization of $1 million.

The $3.3 million funding covers various expenses, including monthly compensation for board members, collaborators, and graphic designers. This funding also includes the initial allocation of $3 million worth of ARB, which will be used to start the fund for the first six months.

The proposed timeline anticipates the fund’s swift launch, followed by a six-month promotional period. However, the proposal allows for a reassessment after this period, with the Arbitrum DAO empowered to vote on increasing funding or terminating the memecoin fund entirely. In the event of dissolution, assets will be converted to the ARB token and returned to the Arbitrum DAO.

Memecoins popularity

The Arbitrum Foundation proposal comes when memecoins have become increasingly popular in the crypto industry.

Over the past weeks, these digital assets have driven network activity on the Solana blockchain and Coinbase-backed layer-2 network Base.

Earlier this month, the Avalanche Foundation acquired five memecoins, including Coq Inu, Gecko, Kimbo, NoChill, and Tech, as part of its Culture Catalyst program to promote broader blockchain adoption.