Proposal 002: ARC Rewards

Abstract

This proposal introduces ARC Rewards as a core utility for $ARC holders. ARC Rewards are funded from a portion of ARC’s revenue, enabling token holders to support ecosystem growth and access variable, functional rewards, reinforcing $ARC’s utility-first positioning. The existing ARC–Matrix integration serves as the technological foundation for future projects built using ARC and Matrix infrastructure. In this structure, $ARC functions as a pass to Matrix, granting holders access to Matrix’s encrypted AI network and related decentralized services. At the same time, projects built on Matrix and ARC’s technology may introduce their own functional or participation tokens, with ARC operating as the base-layer asset that connects these ecosystems and facilitates interoperability between them. To encourage legacy ARC (pre-v2) holders to upgrade, a small ARC v2 airdrop will be allocated to legacy addresses. The airdrop serves primarily as a notification mechanism to inform holders about the token upgrade, direct them to official channels, and facilitate verification of the upgraded contract. This proposal establishes a precedent for subsequent agent and partner token launches within the ARC ecosystem, where similar ARC Rewards mechanisms can be introduced by projects and contributors to expand utility, cross-network participation, and long-term ecosystem alignment. Short notice: $ARC is a utility token. Rewards are variable and not guaranteed.

Motivation

The ARC ecosystem is entering a new phase where token utility is directly tied to network participation. ARC Rewards, funded from ARC revenue, provide a framework for holders to:

• support governance processes and network operations,
• engage with ecosystem contributors,
• demonstrate long-term commitment — subject to required infrastructure readiness.

Since some community members still hold the legacy ARC token, the ARC v2 airdrop ensures inclusivity by notifying holders of the upgrade and prompting migration. By establishing ARC Rewards, we create a consistent model for agent and partner tokens to adopt similar structures, attracting projects and expanding ecosystem-wide utility for the $ARC token.

Rationale

The proposed ARC Rewards and the ARC v2 airdrop will:

• Expand utility: Introduce ARC Rewards as a core use case for $ARC, funded from a portion of ARC’s revenue to support participation.
• Strengthen the ecosystem: Link token participation to network support functions that help secure and sustain ARC’s infrastructure.
• Notify legacy holders: Deliver a small ARC v2 airdrop to legacy addresses as a notification mechanism to inform holders about the upgrade, facilitate contract verification, and encourage migration.
• Set precedent for agent tokens: Enable future agent and partner token launches to adopt similar ARC Rewards mechanisms, enhancing interoperability and overall ecosystem utility for the $ARC token.

The initial ARC Rewards program will operate for 90 days following deployment, with additional functional enhancements and a future proposal planned thereafter

ARC Tokenomics: Preview of Utility & Participation

As $ARC continues to evolve, its tokenomics framework is designed to strengthen sustainable utility, network participation, and ecosystem interoperability. While Proposal 002 details ARC Rewards and the v2 airdrop model for ecosystem participation, this section outlines how $ARC functions as the connective layer of ARC’s technology stack and its broader network.

Token Functionality. $ARC is a multi-purpose utility token that powers a decentralized network of AI-driven projects. At the center of this ecosystem is Reactor and Matrix, ARC’s next-generation encryption layer that enables privacy-preserving AI computations and secure data collaboration. ARC’s integration with Matrix forms the foundation for future projects built on ARC and Matrix technologies. In this model, $ARC acts as a network access pass—granting holders entry to Reactor and Matrix-enabled infrastructure and the broader ecosystem of AI and encryption-based projects that adopt ARC’s framework. As these projects deploy within the ARC ecosystem, they may introduce their own utility or participation tokens, with ARC technology functioning as a base-layer asset that facilitates access, verification, and interoperability across the network. Participation & Rewards. ARC Rewards provide variable, utility-based distributions funded from ARC’s operational revenues, encouraging active engagement and network support without implying fixed or financial returns. Through ARC Rewards, participants contribute to the health of the ARC ecosystem while gaining enhanced access to platform functionality. Governance & Network Impact. $ARC holders can participate in governance decisions, help shape network policies, and support integrations involving AI agents, Matrix-based services, and ecosystem-level coordination. Governance participation is functional and transparent, reinforcing ARC’s role as a utility-first token. Ecosystem Growth Drivers. ARC’s utility derives from access to Matrix-powered AI services, API-level integrations, and opportunities for Network Contributors to engage with and enhance ARC’s infrastructure. As new projects leverage ARC’s AI and encryption technologies, ARC’s role expands—serving as both a gateway to Matrix and a linking asset across an interconnected ecosystem of decentralized AI tools and services. Liquidity & Market Presence. $ARC maintains liquidity across multiple exchanges, supported by ecosystem adoption and Matrix integration. As the ARC and Matrix networks grow and more projects onboard, functional demand for ARC is expected to scale in alignment with platform usage and contributor participation.

Key Terms & Definitions

ARC Rewards: A participation mechanism through which $ARC can be utilized to support the network and access variable rewards funded from ARC’s revenue. Participation serves a functional purpose—supporting network operations and governance—and does not confer ownership or financial rights.

Ecosystem Participation: The act of committing $ARC to support ARC’s ecosystem functions. Participants may receive variable rewards funded from the ecosystem revenue; these are not fixed or guaranteed.

Matrix Network: The decentralized encryption and communication layer that benefits from increased participation through ARC Rewards and related utilities.

ARC v2 Airdrop: A small allocation of ARC v2 tokens sent to holders of the legacy ARC token to notify them of the upgrade, encourage verification and migration, and provide direct access to the new contract.

Agent and Partner Tokens: Tokens launched by projects within the ARC ecosystem and Partners of the ARC ecosystem that may implement similar ARC Rewards-based participation models to expand utility.

Disclaimer

$ARC is a multi-purpose utility token designed for participation within the ARC ecosystem. It is not an investment. Rewards are variable, not guaranteed, and depend on transaction volumes and network performance. Participation may be subject to local laws and regulations. This proposal is for informational purposes only and does not constitute financial, investment, legal, tax, or any other form of advice. This proposal is for informational purposes only and does not constitute financial, investment, legal, tax, or any other form of advice. Participation in the ARC Rewards program, holding $ARC tokens, or engaging with agent tokens involves risks, including but not limited to market volatility, technical failures, operational risks, regulatory changes, and security vulnerabilities. The ARC team makes no representations or warranties regarding the accuracy, completeness, or suitability of this information.