A Vision for the Future of Arbitrum

Announcements
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An Ecosystem of Aligned Entities & Teams

As we recently passed the two-year anniversary of the ArbitrumDAO, it is a time to reflect on its journey and how the community has evolved. We would also like to share a potential new future for the direction of Arbitrum. This vision is a culmination of many discussions with key stakeholders, including major delegates, investors, developers and vendors that provide services to the Arbitrum ecosystem. The hope is that we, as a community, can align around this vision of the future of Arbitrum.

The ArbitrumDAO is the most unique organization in the entire industry. It has been fully entrusted with the technical upgrades of the Arbitrum protocol, the assets and revenues of the platform and the ability to truly effectuate change. None of that should ever change. The ArbitrumDAO should and will continue to remain the source of power. But, there are areas we need to improve. The two most significant are:

  1. The overall operational efficiency across the ecosystem.
  2. Expectations and responsibilities of key stakeholders.

We believe that the vision laid out in this document can provide an evolved framework for how Arbitrum can operate more effectively and efficiently, continue to position itself to attract the best builders, grow its treasury and compound its growth with new business lines and initiatives. We also believe that revised expectations of the scope of work of stakeholders and delegates will allow Arbitrum to more effectively receive guidance and iteratively improve on its value proposition.

Before diving too deeply into our proposed path forward, we want to spend a few paragraphs focusing on the historical success that the ArbitrumDAO has seen, as well as some of the bottlenecks that we have identified for its continued growth and sustained success.

Short History & Success

From its inception in March 2023, control of the Arbitrum protocol alongside a significant treasury was transferred to the ArbitrumDAO. The Arbitrum Foundation and Offchain Labs took a backseat to governance with the intention of enabling the community to grow and develop as a new key stakeholder. Over time, the community began forming, and a collection of members and participants within the ecosystem took charge in stewarding the future direction of the DAO, its treasury spend and made meaningful contributions to Arbitrum.

It is very clear that the DAO has successfully formed its own identity and represents a significant force in the Arbitrum ecosystem. So much so that we have witnessed the rise of several key Arbitrum Aligned Entities (“AAE”) (a concept discussed in further detail below) emerging with Entropy Advisors, the Gaming Catalyst Program, and the forthcoming OpCo. Additionally, there are many individual contributors who give their time, knowledge and care, towards progressing Arbitrum forward.

Since inception the ArbitrumDAO has approved ~57 on-chain proposals, voted on ~360 temperature check votes and most significantly has started establishing business initiatives and support programs that benefit Arbitrum stakeholders. Key examples of this include the acquisition of RWAs as a mechanism to onboard leading global financial institutions, the incentive programs designed to support applications on Arbitrum, the launch of the GCP, and the active deployment of the DAO’s treasury into Arbitrum DeFi.

The ArbitrumDAO, including its contributors, delegates, vendors, and Arbitrum Aligned Entities should be exceedingly proud of what has been accomplished to date. They have shown up and made full use of the unprecedented control that was bestowed upon them.

Bottlenecks in Arbitrum

Despite all of the progress mentioned above, Arbitrum can do better. It can be more effective, more efficient and better positioned to compete with increasingly sophisticated competition. It can increase its chances of winning.

If we had to diagnose the source of some of these inefficiencies, many of the bottlenecks facing the ArbitrumDAO is due to the lack of participation from The Arbitrum Foundation and Offchain Labs in the efforts and initiatives of the DAO. We think it is time to rectify it and to be more actively involved to support the ArbitrumDAO to solve many of the bottlenecks.

The DAO lacks experts that have a holistic context of all things happening within the Arbitrum ecosystem to assist in the drafting of proposals, to provide commentary and recommendations on the state of proposals, and to steer the DAO as a whole in a direction that will propel Arbitrum forward. The Arbitrum Foundation’s backseat role led to operational vacuums that service providers and vendors were required to fill. These are tasks that The Arbitrum Foundation and other Arbitrum Aligned Entities, could have undertaken more effectively and in a cost-efficient manner.

This lack of participation led to proposal gridlock, inefficient processes, above-market-rate priced proposals, minimal cohesiveness, and a lack of accountability for executing proposals. Let’s discuss each of the above in further detail.

Proposal Gridlock. It is not uncommon for proposals with great ideas to become stuck within the DAO during the feedback process and eventually abandoned by their authors. Often, this results from multiple vendors competing for the same proposal, an emphasis on creating elaborate frameworks and committees over picking a few vendors, and authors receiving comments from different delegates and community members/contributors leading to confusion on whether they have collective buy-in and how to progress the proposal. The overall approval process is complex and lengthy, typically stretching over four weeks and often several months. This process discourages competent teams who are interested in Arbitrum and instead they opt to work with competitors due to a simpler and more streamlined process.

Inefficient Processes & Execution. While the involvement of part-time contributors in managing the execution of proposals is a testament to the DAO’s community-driven nature, it often leads to unnecessary delays and custom and obscure processes. The net effect is that new and impactful actors find it more difficult to engage with Arbitrum and are ultimately discouraged from participating. Additionally, proposals often lack clearly assigned owners of tasks with clear responsibilities, which leads to inactivity in the execution. The DAO does not currently have a strong mechanism where feedback can be provided when an initiative should either be wound down or pivoted. This leads to wasted time and resources that could be more effectively used elsewhere.

Issues with Proposal Pricing. Currently, the DAO acts as a collective counterparty in negotiations with vendors, which has proven to be neither efficient nor effective. This arrangement sometimes allows vendors to propose prices that exceed market rates and for delegates to eventually approve them. This is not due to negligence on the part of the DAO or its delegates. It stems from a lack of awareness about current market rates, the lack of a single entity that is directly in charge of negotiating with vendors, the lack of service providers (and teams) willing to work with DAOs, and given the size of the ArbitrumDAO treasury, it is sometimes a strategic decision to accept higher prices and break free from proposal gridlock.

Minimal Cohesiveness. Many of the initiatives undertaken by the DAO could have been strengthened by complementary initiatives undertaken by the AF, its service provider, Offchain Labs, and in other proposals within the DAO. The result of the current structure is that each DAO program lives on an island, leading to unnecessary friction with partners, redundant monetary and time-based spend, and a general non-optimal use of resources toward specific goals.

Lack of Accountability. After a proposal has passed, there is a tendency in the DAO to overlook its execution and final output. Although a proposal’s author will publish progress reports, not all delegates will read the report as they are often burdened with numerous other responsibilities ranging from reviewing proposals, offering feedback, and voting on proposals. This has allowed proposals not to fully deliver on their promises to the DAO without significant recourse. The DAO has attempted to experiment with oversight committees to aid accountability, but this is sometimes overkill depending on the nature of a proposal and it makes more sense to rely on existing structures for oversight like leveraging an Arbitrum Aligned Entity.

There are several instances when The Arbitrum Foundation has had to step away from its backseat role and support the DAO in its endeavors without a clear responsibility to do so in the original proposal. For example, coordinating multiple stakeholders in a proposal to work together, chasing vendors to execute what they promised the DAO, acting as a policeman to retrieve misused funds (with the support of Blockworks and others), and enforcing public disclosures by proposal authors to the DAO. In every case, our involvement has been a net-positive for a proposal, and our new vision is seeking to explicitly include the involvement of any Arbitrum Aligned Entity as the default case for all initiatives.

We believe that with The Arbitrum Foundation and other Arbitrum Aligned Entities committed to utilizing their resources to ensure that Arbitrum will operate effectively and efficiently, Arbitrum will be in a better position to continue to build out its business interests and succeed. Arbitrum will be better positioned to win.

Paradigm Shift: Arbitrum Aligned Entities Conducting Strategic, Discretionary and Operational Decisions For The DAO

Arbitrum is made up of a wide array of different stakeholders. Investors, developers, builders, users, delegates and all of the organizations that are contributing to making sure that Arbitrum is positioned to succeed. The DAO is missing many of these key stakeholder groups participating in governance (i.e. as delegates) as they find it too political, too time consuming, and difficult to assess all aspects of a proposal to make an informed decision. That does not mean they don’t want to participate in Arbitrum or provide feedback to ensure Arbitrum’s success. Many of them, particularly native builders on Abitrum One or Orbit, have tied their businesses’ success to Arbitrum succeeding.

It is up to us to bring them back.

This requires evolving the DAO’s decision-making process and we believe two key improvements will help us achieve it:

Recalibration of Expectations. The workload placed on contributors and delegates needs to be reduced, while focusing their efforts. This requires providing delegates with condensed information from reputable teams to help streamline their decisions alongside refining their scope of roles and responsibilities to participate. They should be voting on the merits of an idea or strategy with the guarantee that a dedicated, professional and Arbitrum-focused team will undertake its execution. Additionally, once the proposal has passed, they can rely on the OpCo and the OAT, to keep track of the proposal’s progress.

Arbitrum Winning as a Mandate. Too many operational decisions are tasked to people and organizations that do not have Arbitrum winning as their number one priority. In fairness, The Arbitrum Foundation and Offchain Labs did take a backseat role, but it is now an appropriate time to change this in a thoughtful way. Operational efficiency can be achieved by ensuring that people working on initiatives are not only highly competent and capable, but have Arbitrum winning as their core mandate. A proposal is not simply an additional pay stream or consulting task, but fundamental to the success of their team and, ultimately, Arbitrum. In fact, we should ensure the compensation structure for an AAE aligns with their business model, and in the case of capital deployment, with the potential to benefit the ArbitrumDAO as well.

In order to achieve the key improvements, we are proposing two transformational paradigm shifts in the operations of Arbitrum:

Transformational Change #1 - Operations: Once a proposal is approved by the DAO, then there should be no discretionary, strategic or operational decisions conducted by anyone other than Arbitrum Aligned Entities. It will be up to the respective AAE to pick, negotiate the scope of work and hold accountable the involvement of any vendors and service providers.

Transformational Change #2 - Delegates: Delegates should continue to maintain control of the technical upgrades of the protocol and control of disbursements from the treasury, but with a renewed focus on approving or denying Arbitrum Aligned Entities with the authority, funds and mandate to act.

Let’s discuss each of these in further detail.

Transformational Change #1 - Operations: The first question that comes up is what does it mean for an organization to be an Arbitrum Aligned Entity. The definition we would propose contains three prongs:

  • AAE is competent to accomplish the responsibilities that it has been assigned
  • Arbitrum is its primary focus
  • Arbitrum winning is mission-critical to the organization’s success

As of today, there are five organizations that have been identified as Arbitrum Aligned Entities. Each of these entities has a specific role and responsibility and will be tasked with achieving its goals for the DAO. Importantly, there should NOT be two AAE’s that are performing overlapping tasks. The collective of AAE’s will need to align on their obligations and ensure they have the resources to accomplish their tasks.

As of today, we have identified five different organizations that are set up to be AAE’s with a high-level breakdown of different functions (to be finalised):

  • Arbitrum Foundation. DAO legal wrapper, Marketing, Education & Technical Advancement, Community, and Strategic Growth and Grant Initiatives,
  • Offchain Labs. Engineering, Product, Business Development and Technical Research, Contracted Service Provider to Foundation,
  • OpCo. DAO Control Panel, Operations, Coordination and Governance,
  • Gaming Catalyst Program. Arbitrum Gaming Investment and Grant Arm,
  • Entropy Advisors. Strategic proposals, shepherd key partners through the DAO, align essential stakeholders, data analytics, DAO financials, and late-stage ecosystem support.

That does not mean that additional AAEs should not be established. In fact, we would embrace the opposite under the following conditions.

  • The proposed new entity’s primary focus is for Arbitrum to win,
  • The proposed scope does not overlap with an existing AAE,
  • The DAO has approved funding for the new entity including its scope of work and they have been properly onboarded with the appropriate controls by OpCo.

Regardless of this change, vendors and service providers will still play a critical role in the growth and success of Arbitrum. They will continue to provide support, just reporting to an AAE that defines its scope of work. In fact, we have spoken with numerous vendors who have wholly endorsed this shift because they feel that they will be able to operate their services more effectively. They will have more direct feedback, a clear reporting structure, and more guidance on when a shift in their services or offering would be most beneficial. Where today they are frequently getting contradictory guidance and feedback and are often uncertain what their priorities should be.

Transformational Change #2 - Delegates: If there were a Venn Diagram today of delegates and other Arbitrum stakeholders, there would be very minimal overlap across most categories of stakeholders. The delegate pool is well represented by professional governance participants and vendors, but its participation rates among investors, power users (e.g., liquidity providers), and arguably most importantly, builders, leaves a lot to be desired. We need the two circles of groups (delegates and other Arbitrum stakeholders) to significantly converge so AAEs receive the information and direction they need from stakeholders in a structured and aligned fashion.

Currently, we are placing far too much demand on delegates, which distracts them from focusing on major initiatives and proposals in the DAO. The root cause of this issue is the requirement for all proposals to have the same amount of attention.

The goals of this change are the following:

  • Expand the range of stakeholders willing to participate in governance by decreasing the burden placed on delegates,
  • Ensure delegates remain the high-level authority for protocol upgrades and disbursements from the treasury,
  • Empower AAEs with approval and disbursements of funds to conduct operations
  • Feedback to AAEs on areas to improve Arbitrum,
  • Source of idea generation for new initiatives for Arbitrum to conduct (via an existing AAE or a newly-formed AAE for purposes of the initiative).

OpCo – Accountability Bridge Between the DAO and Arbitrum Aligned Entities

The ArbitrumDAO approved the creation of a new operations entity called the OpCo. It is envisioned to support project management of DAO proposals, the ability to negotiate and enter into agreements, and act as the operational mesh layer for the DAO. Put simply, it allows the DAO to hire a full-time team whose only focus is to help achieve DAO-defined goals.

One of the most important components for the OpCo is the OAT (Oversight And Transparency). It is a committee that is directly elected by the DAO to represent their interests and to oversee all initiatives that fall under the OpCo’s remit. We view the OAT and OpCo as critical to the new vision for Arbitrum as they will not only help share information across contributors, vendors, and Arbitrum Aligned Entities, but hold accountable the authors of any proposal that is passed by the DAO.

The OAT, alongside the OpCo, can work with the Arbitrum Aligned entities to:

  • Recommend that a proposal should progress through the DAO,
  • Decide on the operational and execution details of a proposal,
  • Require regular updates from the Arbitrum Aligned Entities on whether the proposal is progressing as anticipated,
  • Authorise pivots as long as it retains the spirit of what the ArbitrumDAO approved,
  • Cancel a DAO initiative that is not making satisfactory progress,

Since the OpCo is the living fabric of the DAO, it can act as a quick authoriser to help teams pivot their operational plans for how to execute a DAO-approved strategy which is useful in many cases to avoid delays, bottlenecks, and continued work down the wrong path simply because it is exactly what the DAO approved.

Additionally, we expect the OpCo, OAT and, depending on the structure of the AAE, potentially a collective of other stakeholders (e.g. GCP) will decide a proposal should be cancelled and remaining funds returned to the DAO. This is because the OpcO and OAT will gain access to information that is typically difficult to release publicly. As well, there will be a dedicated team whose job is to keep track on how a proposal is progressing alongside all the context surrounding it to date. They will be in a very strong position relative to the DAO to make judgements on whether a proposal was successful or failed.

Social Change to Proposal Process

The intention of this vision is not to make any constitutional changes to the proposal process to the ArbitrumDAO. Anyone currently eligible should remain eligible to make a proposal. However, we do expect that there will be significant changes to the cadence and scope of proposals.

AAE Submitted Proposals: In the event an AAE makes a proposal, the expectation is that the proposal should sufficiently describe the vision, strategy and business plan of what the AAE intends to accomplish pursuant to that proposal. The proposal should not be so inflexible and granular in detail that the AAE cannot exercise its business judgment to pivot or shift without having to submit a follow-up vote to the Arbitrum DAO. The control and removal rights of initiatives should sit with the OpCo and OAT. These proposals should be less frequent than we may see today, as they will have more flexibility for the organizations to operate.

Non-AAE Submitted Proposals: As mentioned above, the eligibility requirements for submitting to the forum should not change. But we expect the number of proposals will significantly diminish in favor of more informal feedback loops between the idea generator and the relevant AAE undertaking such an initiative. Our expectation is that new proposals would largely be for new initiatives not within the scope of any existing AAE that are developed in conjunction with OpCo.

Yet, should a delegate choose to submit a proposal, the following process should be followed:

  • Step 1: Proposal Submitted
  • Step 2: OpCo should identify the relevant AAE tasked with this scope of work and solicit feedback on the proposal.
  • Step 3:
    • Viewed Favorably: If the AAE thinks that this initiative is a good idea and can be completed within existing budgets, they can either add it to its existing work and the proposal should not proceed to vote, or if additional funding is required to execute on the proposal, the OpCo should inform delegates that the proposal should proceed to vote, with a recommendation to vote in favor of the proposal.
    • Viewed Unfavorably: If the relevant AAE thinks that the proposal is not a good idea, the OpCo should report back to the delegates the position of the AAE with a recommendation to vote against the proposal.
  • Step 4: If necessary, the proposal proceeds and delegates vote to accept or reject the proposal.
  • Step 5: If it was a proposal viewed favorably by the relevant AAE and the proposal has passed, the AAE should be tasked with implementing the scope of the proposal. If, however, the proposal passes despite the recommendation of the AAE and OpCo to vote against, the AAE should not be responsible for implementation. We do not want the AAE to be distracted from its goals by initiatives that it does not think are worth prioritizing. In the event that such a scenario occurs, OpCo should be responsible for ensuring that the proposer complies with all of its obligations pursuant to the proposal.

This new process places significant emphasis on the AAEs to provide to the community its feedback, thoughts and opinions on the effectiveness of new proposals. The OpCo is tasked with acting as the control panel between the community, delegates and the AAE. Our hope and expectation is that this mechanism will reduce the workload of delegates by providing them with elected sources of information, enabling them to make informed voting decisions.

We expect that delegates will largely listen to the feedback of the OpCo and relevant AAEs and will generally dismiss proposals that are not endorsed by those working for Arbitrum in that area. Of course, if the DAO is adamant that a proposal should pass, then the current proposal process still exists to permit that to happen. It will be up to the OpCo to hold the proposal’s author accountable and ensure it is carried out. This should only happen in exceptional cases and not as standard practice.

To conclude, after two years of growth, it is clear that the ArbitrumDAO is the most advanced DAO in the world. The treasury and protocol are controlled by the community, and it has engaged actors and participants that are dedicated to ensuring Arbitrum succeeds. Yet, there are always things that can be improved upon, and we firmly believe that this new vision and approach will allow Arbitrum to expand the collection of stakeholders participating in governance and strengthen the collection of talent contributing to Arbitrum’s success.

The AAE structure, teams who have naturally arisen from the DAO already, positions Arbitrum for long-term success by fostering greater alignment and operational efficiency within the DAO. By empowering Arbitrum Aligned Entities to drive key decisions and streamline processes, we believe this approach will enable Arbitrum to more effectively compete and thrive in a rapidly evolving blockchain industry.

We encourage all contributors, delegates, ecosystem projects, and the broader Arbitrum community to take this time to discuss the new vision. Participation is vital to our success and we hope to move forward with this plan of action soon. We will organise a governance call for Friday at 10am EST to discuss the vision and your feedback.

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Gm, Anthony from Aragon here → and my first post in the Arbitrum forum.

As a builder on Arbitrum and personal token holder I’m thrilled to see that Offchain, Arb F, and other AAE’s are stepping up to help execute, steward, and guide the Arbitrum DAO, while leaving significant power with token holders. This is crucial → that token holders still retain hard onchain power, but that there’s more coherency and alignment to execute.

I recall seeing Steven’s frustration on twitter at the misalignment being shown across the DAO. I personally felt affronted and vowed to provide some support, if even just a voice, to fixing some of the problems I was continuously hearing about and seeing that was not only damaging to Arbitrum but the wider Ethereum ecosystem.

Clearly, the AAE decided to step up, which I find incredibly bullish.

My hope is that we get Arbitrum DAO to a place where there is transparency, collaboration, hard onchain power AND top-level execution to reach its goals and the entire Ethereum ecosystem can use it as an example.

Best of luck! We are here to support.

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This approach makes total sense.

I’ve been pondering on the thoughts of sub-daos within a dao to scale dao ops, and glad to see an equi implementation being proposed & used by Arbitrum DAO.

Looking forward to seeing changes being implemented & the impact on the entire space.

All the best, team!

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I really like the new vision—it feels much more focused and effective, which is great to see.

That said, I do have a few questions and would love a bit more clarity.

From what I understand, delegates will still be the ones primarily making decisions—approving or denying proposals, managing updates, and overseeing treasury matters. But most proposals would go through the AAEs first. Is that right?

To make things more transparent, it would be helpful to walk through a few examples:

  • Looking at recent proposals in the DAO, which ones would have followed a very different path under this new system where the five AAEs play a bigger role?
  • How would the process change, for example, for the Arbitrum Audit Program proposal?
  • What about the Arbitrum Onboarding V2: A Governance Bootcamp proposal—under the new structure, could this have been stopped early by an AAE and never made it to a vote?
  • Looking ahead, how would decisions like extending the DAO Grant Program (Domain Allocator Offering) to a Season 3 be handled? Would AAEs take the lead on that, or would delegates still vote?
  • Similarly, for the continuation of the DIP program—what would that process look like under the proposed structure?

Since AAEs will hold a lot of responsibility, the voting process to select them becomes incredibly important. I fully support the current five AAEs, but I can’t help but feel the setup feels fairly centralized.

Do you envision expanding the number of AAEs to 10 or more in the future?

The current framework suggests AAEs won’t have overlapping responsibilities, so we may not see a large increase in their number. If that’s the case, wouldn’t it be difficult to replace or vote out an AAE if one isn’t performing well?

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Welcome and long overdue change! We need more full time people that are only thinking about arbitrum and nothing else to remain competitive.

It seems like there will be a larger shift from governance of the DAO to how we manage the AAEs. Where feasible, I would like the arbitrum aligned entities to have components of their governance be onchain like with hats protocol or aragon.

I also welcome critical reviews of existing DAO programs that are likely to make existing recipients unhappy. If we want to make an omelette, we need to break a few eggs

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Lots of good arguments here and I think they generally all make a lot of sense.

Delegates today currently have to not just cast votes but actually have to make operational decisions that are not our particular wheelhouse, monitor proposals and teams, and do other operational work that AAEs or the AF would better suited to handle.

It definitely makes sense to reduce the scope of delegates to decision making on key proposals and terms, while handing over scope to AAEs for operational aspects.

As mentioned that would also improve delegate quality, as builders, investors, LPs etc. do not have the time to be full time delegates – but these are the people with the most valuable domain knowledge for Arbitrum DAO, ironically. We want to point out that we are actually researchers and Liquidity providers and traders so we do think there are exceptions, but the general idea is true.

This vision generally does make a lot of sense to us. The only comment we have is that there is a risk here that the DAO ends up being run by AAEs and AF with only token input from delegates.

measures or mandates shoudl be in place so that tokenhodlers and delegates do still have real voting power and decision making power in the DAO, including replacing AAEs if needed, or even re arranging this structure if needed.

But if executed well, with protections for that situation, in our opinion this is a great vision for Arbitrum we’d fully support

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Thank you for clearly articulating these points. We strongly agree with the issues and inefficiencies highlighted in your post. At kpk, we’ve consistently identified and communicated similar operational challenges within the Arbitrum DAO and are glad to see these areas formally recognized for improvement.

We view the proposal for Arbitrum Foundation and Offchain Labs to be more actively involved in the DAO as positive. Their increased engagement will undoubtedly provide valuable strategic guidance and facilitate overcoming existing bottlenecks.

We also support leveraging Arbitrum Aligned Entities (AAEs) to create a cohesive strategy across Arbitrum’s ecosystem, enhancing both operational efficiency and overall effectiveness. This approach mirrors the model of SubDAOs, which, in our direct experience, significantly improves the coordination and execution of DAO initiatives.
We have confidence that the AAEs identified possess the necessary expertise, execution capabilities, and alignment with Arbitrum’s objectives to fulfil their new roles effectively. Our only reservation concerns the Gaming Catalyst Program (GCP). While reassured by AF and Labs’ supportive stance, we’ve yet to witness tangible outputs directly attributable to this initiative. Additionally, we recognise the potential of gaming for the Arbitrum ecosystem, but it feels strange to have an AAE focused on gaming and none focused on DeFi.

Overall, we support the proposed transformational operational changes. We agree that the operational inefficiencies identified do exist and believe this is a valuable solution to addressing them.

Regarding the changes related to delegates, we agree with the underlying rationale that delegates and Arbitrum stakeholders should ideally converge. However, we’re curious—how do you envision the role of delegates evolving to effectively achieve this convergence?

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I like this new ambitious and necessary step to professionalize the DAO operation. The overall architecture seems to me to be very successful: delegating execution to experts without relinquishing the “political” control of the DAO is a difficult balance to achieve, and here it is presented in a pragmatic way.

I also welcome the fact that, by reducing the operational burden on the delegates, it could open the game to more technical and strategic profiles that today do not participate due to lack of time or clarity.

Beyond that, ideas cross my mind. Have you considered limiting the term of office of each AAE (e.g. 2 years) or requiring periodic re-evaluations by the OAT?
I imagine that the AAEs will report progress, expenditures and obstacles on an ongoing and public basis, but how do you define whether an AAE is fulfilling its role? Is it going to be measured by concrete KPIs or subjective evaluations by the DAO or delegates?

What happens if an AAE acts against the interests of the DAO? Withdrawal of funds is mentioned, but will there also be sanctions or corrective mechanisms?

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Hey everyone, just to make sure this doesn’t get lost in the post, there will be a governance call this Friday (April 11, 2025) for everyone to get together and share thoughts about this new vision that the @Arbitrum Foundation has shared.

Call details:

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Finally…
I think this proposal is much needed and is the last chance for Arbitrum to become the major L2 in this competitive space we have right now.
We all can clearly see and agree that the Optimism stack has been successfull because there were entities responsible for the DAO to push initiatives, do business development and much more.
They had a clear structure and it allowed them to grow fast without many obstacles.

This could be our reflection point as well. Having entities laser focused on key areas could boost productivity and speed for faster execution of proposals.

Having clear AAE is helping us to focus on other areas and making sure we can follow topic by topic.

I have said it several times before that you need a leading entity for a DAO, especially in the beginning its crucial otherwise you will likely loose in the longterm as there is lack of vision, mission and execution.
Every other DAO I have seen being super thriving has had a lead.

What I would like to know is if the AAE will have time limited-terms?
Are new AAEs checked and approved by currently identified AAEs?

Lastly, I am relieved this is happening now. Anytime later and it would already be over in my opinion.
I am happy to see this reflection point happening and cannot wait to come back in a year to this thread and see what has changed for the DAO.

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It’s disappointing to go from “Let’s create an OpCo, which will reduce dependency upon the AF to do things for governance” to people cheering “Let’s increase our dependence upon the AF.”

AF and governance are supposed to be equal partners. That equilibrium is being eroded.

There is a path towards more structure and organization, but in a way that diminishes rather than increases the footprint of AF. It’s hard to view this as a positive change in attitude from AF, which was already drifting in this direction.

However, if people really want the AF to pivot like this, then there is a strong need to fill one of the roles they are exiting: neutral facilitator.

An opinionated AF shouldn’t, for example, be the primary moderator for internal discussion channels like the forum. We’ve already seen AF begin to delete posts they disagree with, and would expect that temptation to only increase with this new political posture.

Something like the MakerDAO governance facilitator role would be a way to ensure there is a neutral referee for everything from forum moderation to adjudication of cases where approved proposal processes aren’t followed to monitoring and holding accountable these “aligned entities” with honoring report deadlines and disclosure mandates.

Relatedly, let’s change the language from “aligned” to some other label. Experience shows that alignment trends towards loyalty oaths and quashing of dissent. Let’s not assume the governance of tomorrow will understand that today we use this term with the understanding that dissent is healthy, and allows bad decisions to be debated rather than rubber stamped.

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First of all, we would like to highlight how positive it is that entities such as the Arbitrum Foundation and Offchain Labs want to take a more active role in the DAO. The truth is that we agree with many of the issues raised in this post. Today, the DAO is facing difficulties in the following areas:

  • Moving forward with high-impact proposals for Arbitrum and its stakeholders: Key initiatives like ARB staking or incentive programs for protocols have failed to progress, largely due to the lack of leadership/ownership behind them. We believe that the Arbitrum Aligned Entities are perfectly positioned to lead these kinds of strategically important initiatives for the ecosystem.
  • Negotiating proposal pricing: The DAO’s inability to handle this task is evident. In fact, part of the motivation behind appointing Domain Allocators in the D.A.O Grants Program is to ensure a designated counterpart for negotiating proposal pricing. This is not only due to the reasons mentioned by the Foundation, but also because it is inefficient by design to have a large number of delegates assess the pricing appropriateness of each proposal—this would be like asking a shareholder assembly to decide which internet provider to use in the company’s offices.
  • Coordinating multiple initiatives: It’s been a while since each initiative has functioned in isolation. Clear mechanisms of cooperation must be established—something similar to what we are trying to implement in the Education, Community Growth and Events Domain 3.0 by coordinating with the Foundation on high-impact events and a common community growth strategy for each global region.
  • Lack of Accountability: We are glad this issue was mentioned. As PM of the DIP, we follow every single publication on this forum and have noticed that some important reports, such as The Arbitrum Foundation 2024 Transparency Report: A Year of Key Milestones and Progress, the Delegate Incentive Program Accountability Report, or most of the deliverables from the ARDC, lack delegate engagement. This is not due to a lack of due diligence from delegates, but rather because they are overloaded with responsibilities. Ultimately, assigning delegates the role of overseeing proposals is a design flaw, similar to the expectation that they also negotiate pricing—this is a task typically not handled by shareholders in TradFi.

Our Contribution to the New Vision

Now, there is one statement we don’t fully align with:

We believe that today the DAO does have a pool of talented delegates, contributors, and service providers with a broad understanding of the Arbitrum ecosystem, who offer recommendations during proposal drafting and who, for the most part, genuinely want to see Arbitrum succeed.

The issue, as rightly pointed out by the Foundation in this post, is that the DAO currently suffers from inefficiencies that overload its members and make it nearly impossible for new contributors to get involved. With clearer structures and objectives, it would be easier for delegates to focus on high-level decision-making, for contributors to engage in the DAO’s priority verticals, and for service providers to propose ways to support the DAO in areas where it has stated needs.

Another point concerns the definition of Arbitrum Aligned Entities:

We understand the rationale behind this definition and believe it makes a lot of sense. However, there should be room for a “second tier” of entities/contributors that are still strongly aligned and for whom Arbitrum winning is also mission-critical to their success. Taking ourselves as an example: SEEDGov, as an organization, along with its exclusive contributors in the Arbitrum ecosystem, has a strong vested interest in seeing Arbitrum prevail to ensure long-term success. For instance, @Gianluca, @MinistroDolar, and, more recently, @josemv work exclusively on the success of the Arbitrum ecosystem—this is the only DAO they are involved in (except for Ministro, who is also active in an Orbit Chain DAO like Everclear). Therefore, Arbitrum is also a primary focus for each of them.

As for whether we’re competent to carry out our responsibilities—we’d rather let the community be the judge of that.

What we mean is: yes, it’s true that the five AAEs undoubtedly have a superior alignment/skin in the game (however you want to call it) compared to others, but in the interest of maintaining Arbitrum as the most decentralized and mature DAO in the ecosystem, we have a responsibility to identify other contributors that are also deeply aligned and for whom Arbitrum is a top priority.

This is absolutely correct. As PM of the Delegate Incentive Program, we believe that greater involvement from AAEs would be highly beneficial for the program. We’ve recently paid special attention to the feedback received from the Foundation and Entropy, both in terms of driving changes in the program and evaluating delegate contributions to key initiatives led by these entities.

Here, we partially agree. The DAO indeed needs greater participation from investors, power users, builders, and protocols—but we’re not entirely convinced that simply making it easier to interact with the DAO or reducing contributor overload will be enough to bring them onboard into the day-to-day of governance. In every industry, there are mechanisms to attract and retain talent, and this case will be no exception.

Conclusion

In summary, SEEDGov feels strongly aligned with this new vision (with the minor caveats mentioned above), and we want to offer our support in continuing to shape the future of Arbitrum. Our first step in that direction is to publish our submission for the SOS, which we believe is perfectly compatible with the ideas outlined in this post. We’re eager to combine efforts in a joint submission with any other stakeholder/AAE that considers valuable the objectives we have set.

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14

This proposal centralizes significant operational power within AAEs, fundamentally changing delegate responsibilities. While efficiency is important, key governance safeguards are unclear:

  • AAE Accountability: How will AAEs be selected transparently, and how will delegates ensure their alignment with the DAO and maintain robust oversight? We need concrete mechanisms.
  • Delegate Influence: How is meaningful delegate input guaranteed in practice, especially regarding AAE direction and funding, beyond the current OpCo/OAT framework?

Efficiency cannot come at the cost of effective, decentralized governance. Protecting the delegate’s role in shaping Arbitrum’s strategy is paramount. I am eager to address these points thoroughly on the call.

Merla 🜁 | Independent Delegate

15

My first thought is that while I recognize the issues being targeted by this proposal and agree that the way to address them is to empower entities or individuals with more direct decision-making authority, the way proposed here does so in a very centralizing fashion, one that seems like it will create de-facto permanent institutions that will serve to ossify the entire organizational structure.

A good adjustment, but each operational proposal ought to include a section about what AAE (or other appropriate organizational entity) is delegated this kind of responsibility.

This is a very reasonable section to cover for any proposal, but I think it should always be explicitly stated and declared, to make it clear and up-for-discussion in case the DAO finds it misaligned, rather than ever be left implicit. It is too important.

I will say for myself, whenever reading progress reports or follow-up, results-reporting of any kind, I experience an acute lack of authority. I am merely a delegate, I am able to vote on proposals but when accountability is required, I am not aware of any accountability-process for me other than asking pointed questions (which may be uncomfortable but ultimately harmless) or drive the issue to a clawback-proposal (which comes across as a rather nuclear option).

I think this proposal is appropriate in moving in the direction of addressing this, but right now it feels very heavy-handed in doing so in a way that may end up being an overcorrection. We can do incremental improvement, it doesn’t have to be a revolution.

This issue is important to address, but I’m not sure every part of this proposal as currently stated is necessary to start addressing the issue.

Here is where I get a sinking feeling in my stomach. This seems like something that actively moves away from decentralization towards centralizing power in a few AAE’s, by explicitly giving them the power and creating the expectation that they may “call dibs” on any proposals that they feel fall within their expertise.

Am I reading this correctly that an AAE that likes what they’re seeing in a proposal, are expected
and encouraged to move in and say “step aside, we will do implement this instead”? Furthermore, if they don’t like it, possibly because it in some way interferes with the other objectives of the AAE in question, they are expected to formally recommend against the proposal using the OpCo as their proxy?

Remember, AAE’s are Aligned, but we have to be realistic and remember that they will likely have their own interests to look after as well. In a large organization different institutions normally end up defending their own “moat” for political power and influence, if nothing else.

This feels like it grants AAE’s huge amounts of power and sway, which I am certain will serve to cement their place and role within the DAO to a point that they shortly become nearly impossible to divest from, or even argue against.

These are two examples of great points made. Currently the proposal is very heavy on defining what powers AAE’s are to be granted, but very lacking in defining through what mechanisms the DAO appoints AAE’s, delineates and limits their power, as well as demotes or ultimately divests from them.

A DAO and the delegates that make up it often have a hard time organizing decisively and in a timely manner, which is something that this proposal seeks to address. But that same weakness also makes a DAO very vulnerable to well-organized and driven organizations, who are able to act far more coherently and effectively to the point that the DAO become under the control of said AAE’s.

Will there be limits placed on delegates with conflicts of interests with AAE’s, in voting on proposals?

Because of the heavy alignment it seems only natural that people involved with AAE’s will also be involved with the DAO as delegates in some extent so excluding them from voting seems heavy-handed, but at the same with with the great amounts of power this proposal suggests to imbue AAE’s with I don’t think also allowing them to act as delegates would be a good idea. At the same time with how heavy their influence will be over the DAO as an organization, just based on their heavy entrenchment given this proposal, I’m not sure restricting them from acting as delegates would be doing enough to curtail their influence, in the long term.

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16

This proposal is compelling as it clearly identifies significant issues within the Arbitrum DAO. These challenges negatively impact not just the DAO but the broader ecosystem. For instance:

I’ve observed this issue repeatedly over recent months, and I empathize with teams that have decided to look elsewhere. As I’ve mentioned previously, this is a critical area that the DAO urgently needs to address.

It’s encouraging to see the Arbitrum Foundation and Offchain Labs proactively stepping up their involvement in governance and directly addressing these concerns.

I fully support leveraging AAEs for operational efficiency. However,

  • shouldn’t each AAE specifically target critical verticals necessary for the DAO’s success, such as builder engagement, DeFi expansion, and financial sustainability?
  • Additionally, doesn’t this proposed new structure render OpCo redundant?
17

I am very supportive of this direction. I think it allows the DAO to gain the efficiencies of expert decision making, coordination, and organizational alignment, while ensuring the protocol and treasury are still in the hands of token holders. I think it has the potential to set an example for how protocol governance is designed in the future.

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18

This is one of the most thoughtful evolutions of DAO governance we’ve seen. Aligning incentives via AAEs while freeing up delegates to focus on strategic votes could be a blueprint for large protocol governance.

Curious to see how performance tracking, accountability, and AAE onboarding evolve over time.

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19

The Death of Decentralization

After reading the recently published “Vision for the Future of Arbitrum,” I feel compelled to speak out against what appears to be a fundamental betrayal of the values upon which Arbitrum and the broader Ethereum ecosystem were built.

Calling a Spade a Spade

Let’s be honest about what this proposal really is: an admission that the ArbitrumDAO experiment has failed, not because decentralization itself is flawed, but because the very entities that were meant to support it - The Arbitrum Foundation and Offchain Labs - chose to take a “backseat role” rather than collaboratively building effective governance structures.

This proposal doesn’t fix the problems it identifies; it simply abandons the principles of decentralization altogether under the guise of “operational efficiency.”

The Convenient Truth’s New Narrative

The document constructs a narrative that decentralized governance is inherently inefficient and that the solution is to concentrate power in the hands of five pre-selected “Arbitrum Aligned Entities.” These entities would effectively control which proposals even reach a vote and would expect delegates to “largely listen to” their recommendations.

This isn’t evolution but regression to centralized control while maintaining the façade of decentralization.

Abandoned Revolution

The real failure here isn’t the DAO structure. It’s the failure of leadership to properly support and evolve decentralized governance mechanisms. Instead of investing in better tools, clearer processes, and genuine community empowerment, this proposal suggests that the answer is to simply let a small group of entities dictate Arbitrum’s future.

If proposal gridlock, inefficient processes, and lack of accountability are the problems, there are decentralized solutions we could pursue:

  • Better governance tools and dashboards
  • Clear frameworks for proposal evaluation without centralized gatekeepers
  • Objective metrics for tracking proposal implementation
  • Delegation improvements that expand stakeholder participation without centralizing power

Glorified Rubber Stamps

As a delegate, this proposal is particularly frustrating. It essentially tells us that our perspectives only matter when they align with these “Arbitrum Aligned Entities.” Our role would be reduced to rubber-stamping decisions made by these pre-selected organizations, with the explicit expectation that we will “generally dismiss proposals that are not endorsed by those working for Arbitrum in that area.”

What is the point of being a delegate in such a system? Why continue collaborating when divergent viewpoints will simply be suppressed?

Code Is Law, Unless It’s Inconvenient

If operational efficiency is the only value that matters, then yes, perhaps a small group of aligned entities making all the decisions would be faster. But Arbitrum was built on the Ethereum ecosystem - an ecosystem that values decentralization, censorship resistance, and community governance as core principles.

This proposal is a direct attack on those values. It suggests that when decentralization becomes challenging, the solution is to abandon it rather than work harder to make it successful.

Decentralize or Die

The ArbitrumDAO now faces a critical choice: will we stay true to the principles of decentralization, even when it’s difficult, or will we sacrifice those principles for the sake of expediency?

This announcement lays bare the intention to move Arbitrum toward a more centralized governance model. The fact that this direction is being presented as an announcement rather than a proposal subject to community vote only underscores the concern. The OpCo will soon be operational with a composition that raises questions about genuine community representation.

If this vision becomes reality, we should at least be honest about what’s happening: this isn’t an “evolution” of the DAO. It’s its dissolution.

Freedom Fighter?

I’ve chosen to share my thoughts on the recent “Vision for the Future of Arbitrum” anonymously. While I believe strongly in these views, the very direction outlined in this new vision demonstrates why dissenting voices might hesitate to speak openly. When power is concentrated and gatekeeping becomes the norm, those who challenge the prevailing narrative may find themselves marginalized. This, in itself, highlights one of the fundamental problems with moving away from truly decentralized governance.

My hope is that by focusing on the substance of these concerns rather than who is raising them, we can have an honest conversation about the future of Arbitrum and what we truly value as a community.

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Although you’ve raised some good points regarding potential for better tooling, clearer evaluation frameworks, delegation improvements that expand participation, etc., this statement is not agreeable. We all remain here, the token continues to trade, etc. Alternatively, the entities could sit back and watch more or do as they are. They’re some of the largest tokenholders anyway.