Arbitrum is backing the Paxos-issued Global Dollar (USDG) to earn a share of stablecoin reserve income, as a new wave of stablecoin alliances competes for distribution, users and reserve economics.

Arbitrum has joined the Global Dollar Network, the Paxos-led stablecoin consortium behind USDG, as the Ethereum layer-2 network looks to capture a slice of the economics generated by the stablecoins already circulating on its rails.

USDG launched on Arbitrum on Tuesday with integrations spanning trading, lending and payments across the network's DeFi ecosystem. Launch partners include Fluid, Morpho, GMX, Maple, Li.Fi, Gauntlet, Steakhouse, LayerZero and Kraken, with Uniswap and Fhenix set to follow. Kraken, the crypto exchange, is providing on- and off-ramps that allow users to move funds into and out of the token.

The stablecoin is issued by Paxos and backed one-for-one by dollar reserves, with more than $3 billion in circulation across networks. The Global Dollar Network counts more than 150 partners, including Robinhood, Kraken, Mastercard and OKX.

Central to the consortium's pitch is its economics model, which distributes the rewards generated by USDG's reserves among the partners that help drive adoption, rather than leaving those earnings solely with the issuer. That structure gives Arbitrum a new way to make money from the stablecoin activity taking place on its network.

Arbitrum currently hosts about $3.8 billion in stablecoins, with Circle's USDC accounting for roughly 60% of that total, according to DefiLlama data. Under existing arrangements, the network does not receive a direct share of the reserve income generated by those tokens.

"With USDG, Arbitrum and builders across the platform now have a stake in the growth upside," said Brendan Ma, head of investment strategy at the Arbitrum Foundation.

A governance proposal published Tuesday asks ArbitrumDAO to make USDG growth a strategic priority, add 100 million ARB to its DRIP incentive program and use treasury assets to support USDG liquidity. The measures would move forward only if ArbitrumDAO members vote to approve the proposal.

Stablecoin Alliances Multiply

The push comes as stablecoin consortiums become an increasingly prominent part of the battle over digital dollars. Stablecoin alliances have been multiplying across the industry: Open Standard is building around OpenUSD, drawing support from major payments and commerce firms including Mastercard, Visa, Stripe, Coinbase and Shopify, while in Europe the Qivalis consortium is backed by 37 banks.

The common idea is to spread issuance, distribution and economics across a broader network of partners rather than leave control with a single company.

Arbitrum itself has attracted fresh attention in recent months. Its technology underpins Robinhood Chain, the brokerage's planned Ethereum-based network, with Robinhood agreeing to share a portion of the revenue generated by user activity with the Arbitrum ecosystem. Robinhood is also among the Global Dollar Network's more than 150 partners, tying the brokerage to both the consortium behind USDG and the Arbitrum ecosystem through its planned chain and revenue-sharing arrangement.

Source: CoinDesk