Introduction

As decentralized governance systems mature, ensuring their long-term security and resilience becomes increasingly critical. In the case of Arbitrum, one of the largest Layer 2 ecosystems, the rapid growth in votable supply and evolving governance dynamics present both opportunities and systemic risks. Maintaining a secure, credible, and attack-resistant governance process is essential for the protocol’s future.

This report seeks to analyze key vulnerabilities within Arbitrum’s governance framework—particularly as it relates to quorum thresholds, voter participation, and the economic cost of governance manipulation. With quorum requirements rising in tandem with the protocol’s expanding token supply, the risk of proposals failing due to insufficient participation—or worse, passing due to collusion or manipulation—has become a significant concern.

We structure this report around two major areas of investigation:

1. Potential Cost of Governance Attacks

   We quantify the cost an attacker would incur to gather enough ARB tokens to submit and pass a proposal, considering varying quorum thresholds and participation levels. This section outlines the potential pathways an attacker could use to accumulate voting power and examines how these dynamics influence the feasibility of a governance attack.

2. Arbitrum Governance & Quorum Analysis

   This section assesses the current health of Arbitrum’s governance by analyzing delegation trends, participation rates, and the growth of votable supply. Using historical data and Monte Carlo simulations, we project the probability of future proposals failing to meet quorum under different scenarios. The analysis reveals structural risks—especially for constitutional proposals—as quorum thresholds rise and participation stagnates.

Throughout this report, our goal is to provide a clear, data-driven view of governance health. We conclude by offering potential recommendations aimed at improving resilience—such as boosting delegated supply, encouraging higher participation, and reducing structural attack surfaces—ensuring that Arbitrum’s governance remains robust and future-proof.

Key Takeaways

Cost of Attack Analysis

• Attackers can use multiple channels to gather enough ARB tokens for a governance attack. Based on current participation rates and delegate votes, an attacker would need 200M ARB to pass a non-constitutional governance vote. Here are the various acquisition methods, ranked from least to most expensive:

  1. Borrowing ARB from lending protocols and CEXes is the cheapest way as users would only pay a small interest rate. Based on current market conditions we estimate that 50M could be borrowed.
  2. Using bribing platforms like LobbyFi, where the cost is a percentage of the proposal value. This method could secure 20M tokens.
  3. Acquiring tokens directly through CEXs and DEXs. Buyers face slippage costs that increase quadratically relative to average daily volume. Under current liquidity conditions, 100M ARB could be hedged at low cost through perpetuals and derivatives markets to limit depreciation risk.
  4. The remaining 30M ARB tokens would be unhedged, exposing the attacker to price fluctuations. With ARB's historical weekly average depreciation of 13%, an attacker could lose approximately 3.9M ARB.

  Attack costs increase quadratically with the number of ARB tokens needed. For 200M ARB, the cost is relatively modest at 18M ARB (~$7M at current prices), making attacks profitable when governance proposals exceed 20M ARB in value. However, attackers must have substantial financial resources to provide loan collateral and purchase tokens, limiting this strategy to large players.

• The price of ARB is a crucial factor in determining attack profitability. A lower ARB price reduces the cost of attacks aimed at redirecting WETH from sequencer revenue.
• The number of ARB tokens an attacker needs to pass a vote depends on the expected participation rate.

Quorum Analysis

• Votable Supply Is Rapidly Increasing: Votable supply has grown 44.8% YoY, from 2.8B to 4.3B ARB, driven by token unlocks and DAO/Foundation expenditures. Projected votable supply could reach 5.9B ARB by Mar 2026, raising quorum thresholds proportionally.
• Quorum Thresholds Are Rising Faster Than Participation: By March 2026, the Constitutional quorum may increase from 210M to 295M ARB, while Non-constitutional quorum may rise from 126M to 177M ARB
• Participation Rates Are Stagnant or Declining: Delegated participation rates hover between 40–60%, with no clear upward trend. Participation as a % of votable supply dropped from 8% to 4–5% over the past year.
• Quorum Margin Is Eroding: The margin by which proposals reach quorum has been eroding. Non-constitutional quorum margin shrank from ~100% (2023) to ~35% (early 2025). Constitutional proposals now operate with just a 10% buffer over quorum, down from 30%—leaving little room for voter drop-off.
• Delegated Supply Is Falling as a % of Votable Supply: Delegated supply dropped from 15% to 7.5% of total votable supply in the past year. Total delegated votes decreased 12%, from 360M to 320M, despite an increase in token supply. This divergence threatens proposal success rates, especially as thresholds climb.