Arbitrum DAO launches M&A Pilot to boost DeFi expansion

Arbitrum DAO has embarked on a pioneering mergers and acquisitions (M&A) pilot program. This move leverages the $3 billion Treasury's decentralized finance (DeFi) development and innovation.

This initiative, which received overwhelming approval from DAO members, demonstrates Arbitrum's commitment to exploring new ways to improve its ecosystem.

A strategic M&A initiative will begin

Bernard Schmid, Aretha's founding partner, is leading the eight-week pilot program. Areta provides investment banking services to crypto companies.

“In addition to in-depth strategic research on M&A value, the trial phase should serve as a platform for in-depth discussions based on data rather than opinions,” he emphasized.

The M&A pilot will form an independent division with a budget of $100 million to $250 million. This section identifies and achieves potential goals over two years. Participants will examine the fundamentals of DAO/DeFi M&A, discuss target areas, assess risks, and develop a conceptual framework.

Assessing the financial strength of Arbitrum

Arbitrum, the largest layer 2 of Ethereum, has the second largest treasury among DeFi projects. Financial strength makes it unique in exploring rare M&A opportunities in the crypto space. GlobalData shows just seven M&A deals in the crypto sector in Q4 2023, compared to 1,069 in the broader tech sector.

Schmid's vision includes acquiring technology talent and investing in additional infrastructure to accelerate Arbitrum's strategic goals.

“This is a largely untapped opportunity in crypto, we've only explored a few different projects in the space; so delving deeper into M&A will allow Arbitrum to get a jump start on its competitors,” he said.

However, some members of the arbitration community expressed cautious optimism. L2BEAT representative Krzysztof Urbanński expressed uncertainty about whether there are enough M&A opportunities to achieve the scale envisaged in the original proposal for the DAO.

Historically, crypto M&A has seen both successes and failures. Polygon's Mir and Hermes advanced its technology, demonstrating the benefits of strategic acquisitions. Claytin and Fincia, two of the largest L1 blockchains in Asia, recently merged in February 2024. With a total market capitalization of ~$887M and over 410,000 Web3 members, this integration has made them Asia's leading blockchain by combining infrastructure, burning 23.6% of tokens. and establishing large-scale Web3 administration. Conversely, Fey Protocol's integration with Flying Capital has been controversial, highlighting its concerns.

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The Arbitrum M&A Pilot aims to mitigate these risks through comprehensive exploration and structured planning. It could set the stage for M&A in the crypto sector by attracting interest from other DAOs and traditional financial institutions.