The following reflects the views of L2BEAT’s governance team, composed of @krst, @Sinkas, and @Manugotsuka, and it’s based on their combined research, fact-checking, and ideation.
After extensive internal discussion and deliberation, we would like to share our thoughts on the vision outlined by the Arbitrum Foundation regarding the future of the DAO. We do not directly support nor object to the high-level changes suggested in the original post. However, we would like to offer our perspective on the expectations that those changes may bring.
Arbitrum Aligned Entities
First and foremost, we wanted to touch on the concept of Arbitrum Aligned Entities (AAEs), as their role is at the forefront in this new vision. We understand the need for AAEs to lead all the different initiatives, as opposed to having third-party service providers act as the front of Arbitrum. Having entities whose mandate is Arbitrum winning be both the strategy-setters and the operational arm of the ecosystem makes absolute sense.
However, it’s essential to clarify what exactly constitutes an ‘Arbitrum Aligned Entity’ in the scope of the DAO. In our minds, the AAEs used as examples in the post have several fundamental aspects that make them such, but they also have some key differences that we want to highlight.
Contrary to the Arbitrum Foundation, GCP, and the OpCo, Offchain Labs and Entropy are not controlled by the DAO in any way or form. We do not question their alignment in Arbitrum—if anything, they have demonstrated it multiple times. However, we think it might be a good idea to clearly state how an external entity can be considered an Arbitrum Aligned Entity. Does it require a vote? Does it require consensus within existing AAEs that they want to work with this new AAE? The three prongs of the definition provided appear to be open to interpretation, and we do not feel they sufficiently cover what is, otherwise, a very important part of this overall vision.
Operations and Execution
According to the vision:
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.
Similar to the concept of AAEs, we understand the basis for this decision, and it makes sense. However, one thing that we should address is the fact that many vendors and service providers, including individual contributors, work on drafting and submitting proposals solely so they can execute them if and when a vote is successfully carried out.
Currently, it falls on service providers to convince delegates of the importance of a proposed initiative, which, as we know, is a very strenuous and time-consuming task. The reason they go through the process is that they will be rewarded if the proposal is approved, typically by being compensated to carry out the proposed work.
We understand that this causes a lot of inefficiencies, and one of the goals of introducing AAEs is to lower the burden on the service providers’ side by pushing it towards AAEs. On the other hand, this should result in better cost of services for the DAO. However, it is clear to us that this also introduces the risk that any new ideas and initiatives can only grow within AAEs, potentially stifling activity within the DAO and its surrounding ecosystem.
We want to emphasise that we see it as the responsibility of the AAEs (especially the OpCo) to mitigate this risk and actively work to reduce it. It is the AAEs’ responsibility to interact with the community transparently and openly. It is also the AAEs’ responsibility to reject initiatives that they don’t see fit to pursue, along with an explanation of why they don’t support them (other than just “it’s not on our priority list”), so that the community can then decide whether they want to give that initiative a chance outside the AAE structure, or let it go altogether.
Accountability and reporting
It is the AAEs’ responsibility to establish sufficient accountability and reporting standards for the DAO and to set the right expectations. We recognise that while DAOs are public and open environments, not all information should be made public, particularly in terms of strategy and operational details, for companies running multi-million-dollar businesses. However, at the same time, if delegates are expected to make decisions about funding allocations and whether to terminate ongoing initiatives, they need to be able to make informed decisions. With this new vision, we view it as AAE’s responsibility to ensure that delegates are well-informed and able to stay up-to-date with what’s happening. We recommend building on the existing monthly GRC calls and bi-weekly proposal calls, as they are already well-established in the DAO and have very good attendance.
Next step
Lastly, in terms of next steps for the proposed vision, we think it makes sense to first experiment with how the vision works in practice before attempting to ratify it via a vote. We can see the AAEs in action, adjust the DAOs procedures based on the new reality, and make changes to the vision itself as needed, based on the feedback loops that will be created. Only once we’ve done all that does it make sense to ratify the vision with a DAO vote.