Arbitrum Joins Paxos Network Around USDG
Through USDG, Arbitrum wants to benefit from stablecoin activity, with support from DeFi players like Morpho, GMX, and Kraken. There is also a DAO proposal to put 100 million ARB to work for liquidity and growth.
Key Takeaways
- Arbitrum is joining Paxos' Global Dollar Network and launching USDG on its Ethereum layer-2.
- USDG is a dollar-reserve-backed stablecoin and, according to the project, has more than $3 billion in circulation.
- ArbitrumDAO is discussing a proposal to prioritize USDG growth, add 100 million ARB, and support liquidity.
Arbitrum is joining Paxos' Global Dollar Network. With that move, the Ethereum layer-2 is looking for a new way to earn from stablecoin activity on its network with USDG. The stablecoin went live on Arbitrum on Tuesday and immediately got support from several DeFi and payments players.
USDG Comes to Arbitrum
USDG is issued by Paxos and is backed one-to-one by dollar reserves. According to the project's information, the stablecoin now has more than $3 billion (€2.7 billion) in circulation across multiple networks. On Arbitrum, integrations have been set up with Fluid, Morpho, GMX, Maple, Li.Fi, Gauntlet, Steakhouse, LayerZero, and Kraken, among others. Uniswap and Fhenix are expected to follow later.
For Arbitrum, the main thing is that the network can now get a share of the economy around that stablecoin. The network currently holds about $3.8 billion (€3.4 billion) in stablecoins, with Circle's USDC making up about 60%, according to DefiLlama. So far, the reserve income tied to those tokens has not flowed directly to Arbitrum itself.
New Split of Reserve Income
The Global Dollar Network now has more than 150 partners, including Robinhood, Kraken, Mastercard, and OKX. The model splits rewards from the USDG reserves among parties that help grow usage and distribution, instead of leaving those proceeds only with the issuer.
Brendan Ma, head of investment strategy at the Arbitrum Foundation, said that Arbitrum and builders on the platform now have a stake in the network's growth through USDG. At the same time, since Tuesday there has been a governance proposal at ArbitrumDAO to strategically prioritize USDG growth, add 100 million ARB to the DRIP incentive program, and use treasury assets to support USDG liquidity.
Why This Matters for Europe
The move fits into a broader trend where stablecoin consortia spread more power and revenue across multiple parties. That also matters for European crypto followers, because similar models are emerging in Europe, such as Qivalis, which gets support from 37 banks. In a market where USDT and USDC together still hold most of the stablecoin market, networks like these show that distribution and reserve income are becoming more and more important in the race for digital dollars. Circle also sees stablecoins shifting into digital cash as a broader trend: stablecoins are increasingly moving from trading tools to payment and settlement infrastructure.
