What are the governance functionalities of Arbitrum (ARB)?

Product/Service Line Decisions (Partial): Right to govern product-level decisions (e.g., adopting Timeboost ordering), and can approve new service-line actions via proposals (e.g., deploying additional DAO-governed chain); scope and process of proposals are defined by the Arbitrum Constitution and bylaws. | Actor Set Permissioning (Partial): Right to appoint/remove privileged actors, primarily the Security Council who hold multisig authority over emergency switches, and governance power over key operator sets like sequencer selection and Nova DAC membership/powers. The Security Council itself can also remove a member by an internal 9-of-12 vote and Arbitrum Foundation gates who can enter the election by means of compliance requirements. | Technical Parameter Control (Partial): Right to vote/delegate on-chain to enact changes to DAO‑governed chains (including changes implemented via smart contract upgrades), recognising some actions are off-chain operational tasks. | Economic Design/Parameter Control (Partial): Right to set or amend economic parameters that directly change monetary flows in DAO‑governed chains (e.g., ARB supply increases within defined limits; protocol fee distribution parameters where changeable by DAO proposals). When the DAO approves economic changes, implementation depends on executor entities operating within predefined mandates and technical constraints. | Treasury Control (Partial): Right to govern Arbitrum DAO treasury, and able to make decisions on allocations and distributions of assets.

Arbitrum (ARB)

System: Arbitrum — Blockspace Production

Arbitrum is an Ethereum-based Layer 2 system comprising Arbitrum of One, an Ethereum Layer 2 rollup, and Arbitrum Nova, an optimised high-throughput blockchain, along with Arbitrum Orbit, a framework that enables teams to launch custom blockchains with varying features and integration with the Arbitrum System. Founded in 2018 by Offchain Labs, Arbitrum uses the Nitro rollup framework, and both One and Nova use ETH for transaction fees. The system boundary includes the Arbitrum rollup blockchain contracts on Ethereum, the Arbitrum DAO governance contracts and treasury, the Security Council multisig, the foundation, and Offchain Labs as a supporting off-chain entity, while excluding Ethereum, independent Orbit chains unless directly governed by the DAO.

Market Data

Price	$0.078354
Market Cap	$518.24M
Fully Diluted Valuation	$783.54M
30d Change	3.10%
365d Change	-80.10%

Token Functionalities

Governance

Product/Service Line Decisions (Partial)
Right to govern product-level decisions (e.g., adopting Timeboost ordering), and can approve new service-line actions via proposals (e.g., deploying additional DAO-governed chain); scope and process of proposals are defined by the Arbitrum Constitution and bylaws.
Actor Set Permissioning (Partial)
Right to appoint/remove privileged actors, primarily the Security Council who hold multisig authority over emergency switches, and governance power over key operator sets like sequencer selection and Nova DAC membership/powers. The Security Council itself can also remove a member by an internal 9-of-12 vote and Arbitrum Foundation gates who can enter the election by means of compliance requirements.
Technical Parameter Control (Partial)
Right to vote/delegate on-chain to enact changes to DAO‑governed chains (including changes implemented via smart contract upgrades), recognising some actions are off-chain operational tasks.
Economic Design/Parameter Control (Partial)
Right to set or amend economic parameters that directly change monetary flows in DAO‑governed chains (e.g., ARB supply increases within defined limits; protocol fee distribution parameters where changeable by DAO proposals). When the DAO approves economic changes, implementation depends on executor entities operating within predefined mandates and technical constraints.
Treasury Control (Partial)
Right to govern Arbitrum DAO treasury, and able to make decisions on allocations and distributions of assets.

System Attributes

Operating Model

Arbitrum's One/Nova services are delivered via Ethereum-secured on-chain rollup contracts that enforce settlement, bridging, and fee accounting, but production of the service currently depends on a centralised off-chain operator; a single sequencer for both Arbitrum One and Nova is operated and maintained by off-chain corporate entities. Rollout of Orbit instances further adds an off-chain, programmatic/licensing layer (AEP, Rollup-as-a-service) to system operations that requires Arbitrum off-chain entities to enable others to deploy blockchain infrastructure, which is intentionally operated externally to the Arbitrum system.

Value Creation

Value is created by selling Ethereum-compatible Layer 2 blockspace to applications and users seeking lower-cost and higher-throughput execution on Arbitrum One, as well as benefiting from other systems that deploy blockchain infrastructure as Arbitrum Orbits. The Arbitrum One blockspace with Ethereum assurances is produced through a combination of on-chain and off-chain components. Rollup contracts on Ethereum enforce state validity, dispute resolution, and final settlement, while transaction ordering, batching, and data coordination are performed off-chain by the sequencer of Arbitrum One and, in the case of Arbitrum Nova, a Data Availability Committee.

Value Capture

Transaction fees are paid in ETH for execution on Arbitrum One and Nova. Fees accrue off-chain and are discretionarily distributed to Arbitrum's on-chain DAO treasury after reimbursing sequencer operator operational expenses and Ethereum posting costs. In addition, under the Arbitrum Expansion Program, certain Orbit chains may route a contractual share of profits to the DAO through an on-chain fee router.

Governance

Token-Based: Governance authority is distributed across: (i) the ARB token DAO, which governs DAO-owned chains and the treasury, (ii) a Security Council multisig with emergency authority delegated under the DAO’s constitution, and (iii) the Arbitrum Foundation, which administers programmes such as Orbit and AEP, manages budgets, and maintains critical infrastructure such as the sequencer. Arbitrum therefore has a mixed governance structure, with distinct bodies independently handling important system-wide decisions across both on-chain and off-chain components. When the DAO approves economic changes, implementation still depends on executor entities operating within predefined mandates and technical constraints. Participant-Based: Governance authority is distributed across: (i) the ARB token DAO, which governs DAO-owned chains and the treasury, (ii) a Security Council multisig with emergency authority delegated under the DAO’s constitution, and (iii) the Arbitrum Foundation, which administers programmes such as Orbit and AEP, manages budgets, and maintains critical infrastructure such as the sequencer. Arbitrum therefore has a mixed governance structure, with distinct bodies independently handling important system-wide decisions across both on-chain and off-chain components. When the DAO approves economic changes, implementation still depends on executor entities operating within predefined mandates and technical constraints. Entity-Based: Governance authority is distributed across: (i) the ARB token DAO, which governs DAO-owned chains and the treasury, (ii) a Security Council multisig with emergency authority delegated under the DAO’s constitution, and (iii) the Arbitrum Foundation, which administers programmes such as Orbit and AEP, manages budgets, and maintains critical infrastructure such as the sequencer. Arbitrum therefore has a mixed governance structure, with distinct bodies independently handling important system-wide decisions across both on-chain and off-chain components. When the DAO approves economic changes, implementation still depends on executor entities operating within predefined mandates and technical constraints.