L2BEAT will be in NYC this week for the Institutional Ethereum Forum, Digital Asset Summit, and EY Global Blockchain Summit. The following week, we’ll also be attending ETHCC in Cannes.

If you’d like to meet to exchange ideas or simply catch up, feel free to DM @kaereste on X or Telegram.

TL;DR

In Optimism, Arena-Z proposed an administrative migration of its chain-servicer roles, while governance activity also highlighted a shift toward more concentrated grant funding in Season 9 and the execution of the first OP buyback, linking protocol revenue to token demand.

In Arbitrum, the Security Council election process opened, and several ecosystem programs published updates: DRIP Season 1 concluded with strong incentive efficiency, the Watchdog Program continues recovering misused funds, and the Stylus Sprint is nearing completion. The Arbitrum DAO program also closed its active phase, transitioning toward reporting and milestone management.

In ZKsync, governance focused on ecosystem and infrastructure developments, including the extension of the ZK Stack Content Program, a new institutional narrative experiment, the closeout of ZARP v1, and the introduction of ZK Capped Minter V3, improving flexibility in token program execution.

Elsewhere, Starknet announced the v0.14.2 upgrade; Polygon is discussing priority fee sharing for delegators and preparing the Giugliano hard fork; and Scroll introduced its first cohort of Verified Delegates.

Optimism

Maintenance Upgrade Proposal 18a: Arena-Z Chain Servicer Migration

Arena-Z submitted a maintenance upgrade proposal requesting that the Optimism Security Council execute two administrative updates on its OP Stack chain: migrating the proposer address in the DisputeGameFactory and updating the fee vault recipient addresses on both Arena-Z’s mainnet and testnet. These changes are required as Arena-Z transitions its chain servicer operations.

The proposal states that the updates are purely administrative and will not affect protocol behavior, dispute game mechanics, or end users. It is currently undergoing a 7-day veto period ending March 19, 2026, after which the Security Council may execute the transactions if no veto is raised.

S9 Grants Council Communication Thread

The Optimism Grants Council introduced its Season 9 communication thread, outlining its role in reviewing and processing Governance Fund Mission applications under a delegated mandate from the Token House. For this season, the Council will take a more focused approach, selecting fewer projects with larger allocations, with a clear priority on initiatives building directly on OP Mainnet.

This shift suggests a move away from broad capital distribution toward more concentrated funding, potentially aimed at improving impact and accountability. The Council will publish reports after each review cycle and a final report at the end of the season.

Cycle 49 Grants Council Report

Optimism’s Grants Council shared the Cycle 49 report, marking the early stages of Season 9. As expected, submission flow has been slower due to the more specific scope of Missions, with the Council continuing its strategy of funding fewer projects with larger allocations and prioritizing OP Mainnet initiatives.

In this cycle, 1 application was conditionally approved (350k OP), 4 remain under review, and 7 were declined, out of over 2.1M OP requested. With a total Season 9 budget of 3.69M OP, the report reflects a more selective funding approach, alongside operational adjustments, such as redistributing reviewer workload following a council member’s departure.

OP Buyback Execution Update

Optimism reported that the first monthly OP buyback funded by protocol revenue has been successfully completed. The program allocates 50% of the Collective’s 2026 revenue to purchasing OP, with executions taking place monthly.

For the first cycle, using January 2026 revenue, the Foundation purchased 1,574,817 OP for 95.8 ETH during the scheduled OTC execution window. The buyback marks the program’s initial implementation, intended to return protocol revenue to the ecosystem through token purchases while maintaining transparency through public updates on execution.

Arbitrum

March 2026 Security Council Election: Contender Submission

Arbitrum has opened the Contender Submission phase for the March 2026 Security Council elections, which will run from March 15 to March 22, 2026 (12:00 UTC). During this period, individuals or entities interested in serving on the Security Council can apply by submitting a candidate registration using a newly created hardware wallet address and publishing a forum post outlining their background and credentials.

OAT Term & Next Elections

OpCo published an update clarifying the term timeline for the Operation Company Advisory Team (OAT). While the OpCo proposal was executed in February 2025 and the legal entity was established in May 2025, different interpretations of the start date created uncertainty around when the next election cycle should begin.

After discussions with the OAT, it was decided that the OAT term will run until August 2026, aligning with the operational start of OpCo. As a result, the next OAT election process is expected to begin in May 2026.

Arbitrum DAO Program - Active Phase Completion

The Arbitrum DAO program has officially concluded its active phase, with submissions now closed after receiving over 1,200 applications. The team will finalize remaining reviews while transitioning the program into a lower-capacity mode focused on milestone evaluations, fund disbursement, and supporting grantees through final reports.

Looking ahead, an Impact Report summarizing the program’s results is expected soon, while reporting will shift toward broader outcome analysis. The team is also coordinating with the Arbitrum Foundation to extend support to selected projects, with further updates on the program’s future anticipated later this month.

DRIP Season 1: Final Update & Retrospective

Entropy published the final update and retrospective for DRIP season 1, which concluded on February 18, 2026, after 12 epochs. Of the 24M ARB budget, approximately 16.7M ARB (~$4M at allocation) was distributed across 6 lending protocols and 2 asset pools, primarily incentivizing looping strategies using yield-bearing collateral.

The report indicates an estimated of $51 increase in the leading market size per $1 in ARB incentives given. During the program, USD markets grew by ~38%, while ETH markets increased by ~25%. The season also coincided with the new deployment of Morpho, Euler, and Maple, alongside growth in stablecoin supply and DEX liquidity. At the moment, incentives are currently paused, with Season 2 expected to launch in Mid/Late April 2026.

Watchdog Program: March 10 Update

Entropy shared a monthly update on the Arbitrum Watchdog Program, reporting 1 new submission, bringing the total to 68 reports (50 unique cases). Over the past month, the committee completed 6 investigations, identifying 4 valid cases of misuse and rejecting 2 reports. In total, 39 investigations have been completed, with 28 confirmed cases of misuse.

The program also reported recovering 95,865 ARB since the last update, bringing the total recovered to 352,289.5 ARB. Entropy is currently preparing the program’s 6-month retrospective, expected to be published later this month, which will evaluate the program’s performance and summarize misuse cases and recovered funds.

Stylus Sprint Program Update

Entropy shared a progress update on the Stylus Sprint program, reporting that 5.9M ARB (~65.5% of the 9M ARB budget) has been distributed to participating teams as of March 10. Based on submitted milestones before the February 28 deadline, the committee estimates that around 7.4M ARB will ultimately be allocated.

The committee also reported 30 milestone submissions in the final phase of the program and continues reviewing deliverables to ensure quality. A Stylus Sprint retrospective report is currently being prepared to summarize the program’s outcomes, developer tooling progress, and lessons learned for future Stylus initiatives.

CASP Feasibility Report

Tempe Techie published a feasibility report commissioned through an OpCo Firestarter grant to assess whether Arbitrum DAO should launch a Consumer Apps Support Program (CASP). The research, conducted between December 2025 and February 2026, included interviews with 17 consumer app teams as well as conversations with Offchain Labs, the Arbitrum Foundation, and DAO stakeholders. The report finds that while consumer apps in Arbitrum can access grants, audits, gas subsidies, and investment support, this assistance is often fragmented, with many teams reporting limited follow-up and difficulty navigating the ecosystem after onboarding.

After evaluating four possible models, the report concludes that Arbitrum should not create a standalone CASP program. Instead, it recommends that existing Arbitrum Aligned Entities improve coordination and strengthen the consumer app support they already provide. The report also argues that supporting consumer-facing apps, especially those targeting non-crypto-native users, will be increasingly important for Arbitrum’s long-term growth.

Arbitrum Foundation 2025 Transparency Report

The Arbitrum Foundation published its 2025 Transparency Report, highlighting a year marked by strong ecosystem growth and increasing institutional adoption. The report notes that Arbitrum surpassed $20B in total value secured, exceeded 2.1B lifetime transactions, expanded its builder ecosystem to over 1,000 projects, and supported the launch of new Arbitrum chains.

A key milestone was the onboarding of institutional players such as Robinhood, which began offering tokenized equities on Arbitrum. The report also highlights progress in governance, with increased participation, the introduction of Arbitrum-Aligned Entities, and new revenue streams such as Timeboost contributing to DAO sustainability.

ZKsync

[Community Activation RFP 2 – Extension] ZK Stack Content Program

The ZKsync Foundation announced a 13-week extension of the ZK Stack Content Program, running from March 16 to June 12, with a 1,000,000 ZK budget allocated to creators from the original RFP 2 cohort. The program continues an earlier 8-week experiment that tested community-driven content strategies and identified creators capable of producing high-reach ecosystem narratives.

Participants are expected to publish 20–30 pieces of content per month, primarily on X, focusing on themes such as ZKsync’s privacy stack (Prividium), institutional infrastructure, and broader ZK ecosystem positioning. The program includes mid-program and final reports, with performance evaluated through engagement metrics such as views, interactions, follower growth, and overall narrative impact.

[Community Activation RFP 3] ZKsync Institutional Narrative Experiment

The ZKsync Foundation launched RFP 3 under the Community Activation Program, seeking a team to run a 10-week experiment to strengthen ZKsync’s institutional narrative within the Ethereum ecosystem. The initiative aims to test coordinated community-driven content strategies that highlight themes such as ZKsync as Ethereum’s institutional extension, privacy infrastructure through Prividium, and regulatory-aligned blockchain applications.

The selected team will receive up to 833k ZK (~$15k) to design and execute a phased campaign combining analytical content, discussions, and community engagement. Proposals must outline methodology, KPIs, reporting plans, and quality control mechanisms, with submissions open until March 20, 2026.

ZARP v1 Retrospective — ZIP Audit Reimbursement Program

The ZKsync Security Council published the closeout report for ZARP v1, the ZIP Audit Reimbursement Program launched in May 2025 to subsidize security audits and related reviews for ZKsync protocol upgrades. The program was funded with $5M in ZK tokens and operated through two capped minter contracts that reimburse eligible audit costs associated with executed ZKsync Improvement Proposals (ZIPs).

During the program, $2.74M worth of security reimbursements were distributed across several ZIP-related audits and reviews, while about $1.95M remained unspent due to timing mismatches between audit execution and ZIP submission processes. These operational lessons were incorporated into ZARP v2, which introduces a revised reimbursement structure and a one-time reconciliation mechanism to cover eligible 2025 security work that was not reimbursed under the original program.

Introducing ZK Capped Minter V3

ZKsync announced the deployment of ZK Capped Minter V3, a new version of its token minter framework designed to enhance flexibility in Token Program Proposals (TPPs). The upgrade introduces key improvements such as transferable admin rights and updatable mintable addresses, allowing programs to adapt more easily without requiring full redeployments.

V3 is intended to replace the previous version as the standard for future token mechanics, addressing prior limitations around configuration and scalability. The update also includes security considerations, recommending that the Security Council be granted pauser roles and that sensitive changes be actively monitored.

Starknet

Starknet v0.14.2 Pre-release

StarkWare announced the v0.14.2 pre-release for Starknet, scheduled for testnet on March 23, 2026, and mainnet on April 13, 2026. A key change in this version is the implementation of SNIP-36, which enables in-protocol proof verification. This allows transactions to reference off-chain execution proofs directly within the protocol, significantly reducing calldata and costs associated with submitting large proofs. The upgrade is designed to support new use cases such as privacy-focused applications and zk-thread architectures.

The release also introduces revised storage pricing (SNIP-37), increasing storage costs while lowering base L2 gas fees to better reflect the network resources used. Additionally, StarkGate token contracts will be upgraded to v3.0.0, aligning ERC-20 events with standard indexing practices and renaming the bridged USDC token to USDC.e following the launch of native USDC on Starknet. The update includes several breaking changes and internal improvements to prepare the network for future decentralized validation (SNIP-33).

Polygon

PIP: Priority Fee Sharing for Delegators

This draft proposal suggests extending Polygon’s priority fee distribution (PIP-65) to include delegators, who currently receive none of these fees despite providing most of the network’s staked capital. The proposal argues this misalignment could weaken long-term staking incentives as emissions decline.

The plan would distribute priority fees via a trustless claim contract on Ethereum, with fees collected on Polygon PoS bridged monthly and distributed proportionally to delegators after the validator commission is deducted. The proposal does not modify existing staking contracts and is currently open for community feedback.

L2BEAT’s take

While delegators provide most of the capital securing the network, they currently don’t receive any share of the priority fees introduced after the Rio hardfork.

Sharing part of those fees with delegators could better align rewards with the capital actually securing the network, especially as emission-based rewards decrease over time. At the same time, it would also change validator revenue dynamics and could influence how validators compete for delegated stake going forward.

PIP-83: Giugliano Hardfork

PIP-83 proposes the Giugliano hardfork for Polygon PoS, which will reintroduce PIP-66 (Allow Early Block Announcements). This feature was previously included in the Bhilai hardfork but was later reverted due to behavioral issues observed on the network.

The new hardfork aims to deploy a revised implementation of PIP-66 that addresses the earlier problems. The upgrade is scheduled to activate on the Amoy testnet at block 35,573,500, while the mainnet activation block is yet to be determined.

Scroll

Verified Delegates Cohort 1

SEEDGov announced the first cohort of Verified Delegates in the Scroll DAO, recognizing 26 delegates for their active participation and contributions to governance discussions and ecosystem development. The initiative aims to highlight high-profile community participants who actively support Scroll’s growth and outreach.

The announcement also invites delegates to report any updates related to address changes, merges, or identity updates to ensure the registry remains accurate as the program evolves.

L2BEAT’s take

L2BEAT will be part of this first cohort of Verified Delegates. As with our participation in other governance ecosystems, we aim to approach this role with the same focus on responsible, transparent, and effective governance participation.

Uniswap

IL Hedge Hook — Automated Impermanent Loss Protection for Uniswap v4 LPs

BELTA Labs introduced an RFC proposing BELTA, a Uniswap v4 Hook designed to automatically hedge impermanent loss (IL) for liquidity providers. The mechanism would charge LPs a premium equal to 12% of their fee income and reimburse 35% of IL losses, funded by an Underwriter Pool composed of external capital providers who earn premiums and yield in return for assuming IL risk. The hook integrates directly with v4’s callback system to register liquidity positions, track swaps, calculate IL, and automatically settle payouts, aiming to remove the operational complexity of manually hedging LP exposure.

According to BELTA’s backtesting using ETH price data from 2020 to 2025, the model would increase LP returns from 4.0% to 7.8% annually on average. The proposal frames IL as one of the main reasons LPs exit Uniswap pools and argues that automated protection could improve LP retention and liquidity depth. No governance action is required at this stage, as the proposal is presented as a Request for Comment, with the team currently seeking feedback on the mechanism design, underwriting model, and technical implementation before proceeding toward testnet deployment.

Quiet Corner

Some ecosystems saw no meaningful governance developments this week.

• Everclear
• Hop
• Lisk
• Wormhole

As always, if we missed something important, feel free to reach out. We’re happy to dig deeper.

Upcoming Events

Arbitrum

• Open Discussion of Proposals Governance Call - on 17.03 at 16:00 UTC.
• Stylus Sprint Demo Day #3 - on 19.03 at 14:00 UTC.

Scroll

• Weekly DAO & Governance Call - on 18.03 at 14:00 UTC.
• Scroll DAO Office Hours - on 20.03 at 14:00 UTC.

Everclear

• Everclear Delegates Call - on 19.03 at 14:00 UTC.

Hop

• Hop Community Call - on 18.03 at 18:00 UTC.

ZKsync

• Standing ZKsync Proposal Review Call - on 18.03 at 16:30 UTC.

Discuss with L2BEAT

Join us every Friday at 3 pm UTC for our weekly Governance Office Hours to discuss proposals, ecosystem direction, and high-level governance strategy.