Arbitrum Gaming Ventures (AGV) is a strategic investment initiative created to accelerate the adoption of gaming and entertainment on the Arbitrum network, while also generating long-term value for the DAO. As we continue to work diligently toward this mandate, AGV remains committed to transparency, communication, and accountability.
This document outlines our general operations approach, asset deployment protocol, investment return pathways, risk mitigation strategy, and performance tracking framework–though some proprietary information has been withheld to protect our competitive positioning. It includes contextual information about how AGV operates and what stakeholders can expect over the course of the initiative.
If you have any questions, please feel free to engage in this thread; the AGV team is available for comment, as well as the Council, which serves as a key observer and advisor for the AGV team to ensure operational excellence.
Educational Primer: How AGV Operates
AGV is first and foremost a venture initiative which follows a structured investment process designed to responsibly deploy DAO capital while maximizing long-term upside for the Arbitrum ecosystem. From sourcing and diligence through to deployment and post-investment support, each step is grounded in established venture practices and adapted for Web3’s unique dynamics.
Investment Process
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Sourcing – AGV sources deals through a combination of inbound applications, proactive scouting of emerging companies, and referrals from partners, founders, and other venture funds. Currently, referrals from AAEs comprise ~50% of early funnel opportunities.
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Due Diligence (DD) – Each investment opportunity is evaluated against AGV’s investment criteria, rooted in our Investment Thesis, which was published in our last Transparency Report. During this phase, we also determine the appropriate investment instrument based on the company’s stage, revenue, and potential return model.
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Deal Review – Deals that clear the diligence process are presented to AGV’s Investment Committee (IC) for review. Following IC approval, deals are optimistically approved. Throughout this process, council members have access to deal memos and IC decision documents, along with any supporting DD materials, and may give feedback / hold a vote in extreme cases to further review the IC decision. In parallel, legal / further DD review proceeds.
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Final Legal / KYC / Closing – Once an opportunity is approved by the Investment Committee and terms are finalized with a project, investment documents are then reviewed by our legal and finance partners to ensure that terms are clear, enforceable by GCP foundation, and aligned with DAO interests.
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Deployment – Upon finalization, capital is deployed in accordance with deal terms and includes fund transfers, documentation on record, and the beginning of formal portfolio onboarding.
Post-Investment Life Cycle
Investing is just the beginning. AGV plays an active role in guiding portfolio projects toward success by combining structured oversight with flexible, founder-friendly support.
Portfolio Monitoring & Support – Each company is assigned an AGV investment team lead who remains a close point of contact. Ongoing engagement includes:
- Regular check-ins of the investments (bi-weekly/monthly/quarterly)
- Milestone reviews of the investments (TGE readiness, launch metrics, retention data, etc.)
- High-level strategic guidance as needed (tokenomics, user acquisition strategy, go-to-market strategy)
Quarterly Scoring Framework – AGV applies a standardized internal scoring framework every quarter to evaluate:
- Product and market progress
- User growth, retention and engagement
- Financial performance and token runway
- Ecosystem contribution and alignment with Arbitrum’s strategic goals
This enables AGV to proactively identify projects that are performing well, those that require additional support, and those that may benefit from strategic intervention or roadmap pivots, or adjustments to the AGV’s thesis.
Capital Strategy and Adaptive Support – Based on performance signals and qualitative insights, AGV determines the appropriate next steps
- Exercising pro-rata or super pro-rata rights to increase ownership
- VC, publisher or exchange introductions
- High level guidance on go-to-market strategies
- Legal and compliance guidance
- Cross-promotional support within the Arbitrum ecosystem
Recovery Support and Exit Planning – For underperforming teams, AGV will work to realign priorities, support pivots, manage soft-exits or structured wind-downs when appropriate.
Performance variation is a natural part of early-stage investing. AGV uses these signals to recalibrate support and safeguard DAO capital while maximizing outcomes.
Evolving our Portco Support Structures (Venture Platform)
AGV’s portfolio support strategies are actively evolving. We will continue to formalize our approach to founder enablement and ecosystem integration, using ongoing engagement and feedback to develop targeted resources, tools, and partnership opportunities that help portfolio companies scale successfully within Arbitrum.
Capital Timeline: Deployment, Realization & Exit Planning
Investment Period (Q1 2025 – Q2 2027)
AGV aims to deploy approximately 80% of allocated capital within this window. This timeframe is on par with crypto venture capital, but is much shorter than traditional 7-10 year VC timelines, the compressed cycle demands front-loaded diligence, faster decision-making, and tighter capital pacing. A reserve pool will be retained for opportunistic follow-ons, particularly within the first 24 months, to support top-performing teams reaching clear inflection milestones (e.g., user growth, early revenue, etc.)
Return Realization Horizon (2026 - 2032)
While early liquidity events such as Token Generation Events (TGEs), or strategic M&A may occur as early as 2026, AGV expects the majority of realizable returns to come between 2027 and 2032. These outcomes will be driven by the investment return pathways described below.
Extension & Exit Pathways
If a meaningful portion of the portfolio remains illiquid or in mid-lifecycle by 2030, AGV will present a formal proposal to the DAO with one or more of the following options:
- Program extension with defined continuation mechanics
- Reallocation of unutilized capital
- Structured wind-down tied to milestone-based exits or portfolio divestment
Investment Return Pathways
In order to establish strategic investment return pathways that will bring value to the DAO, AGV utilizes a mix of capital instruments depending on the opportunity, as deemed fit:
SAFE (Simple Agreement for Future Equity):
- AGV gains long-term exposure to a studio’s success through equity conversion at a future priced round. Returns are typically realized through acquisition, secondary share sales, or public listings. In some cases, subject to a board of directors approval, AGV may also receive distributions if the company achieves positive cash flow and decides to return capital to shareholders prior to exit.
SAFT (Simple Agreement for Future Tokens):
- AGV gains the right to purchase tokens at pre-agreed prices.
Token Warrants
- AGV secures the option to purchase tokens at a predetermined price if a token event occurs, typically structured alongside equity investments. This provides upside exposure to potential token launches without requiring immediate capital commitment.
Convertible Notes:
- AGV provides capital as a short-term loan that converts into equity (or tokens) upon predefined trigger events, typically the closing of a future funding round. This structure offers greater flexibility around timing, valuation, and downside protection compared to traditional SAFEs or SAFTs, while still enabling return generation through equity exits or token events, similar to the instruments above.
Advance + Recoup (Publisher Model — In Progress):
- AGV provides select studios with upfront capital for development, marketing, or user acquisition. Returns are generated through structured revenue share agreements based on on-chain activity or off-chain metrics, where initial capital is recouped from project revenue before profit sharing begins. While this model is not yet active, AGV is currently evaluating it as a flexible mechanism for funding content with clear monetization paths.
- Dividends are another return mechanism that requires less active management than a publisher setup, while allowing for another pathway towards value creation. Where reasonable, the AGV team often negotiates this function into equity and token agreements.
ARB Treasury Structure & Volatility Mitigation Strategy
AGV operates a treasury denominated in ARB. Given its volatility, managing exposure prudently is critical to sustaining AGV’s investment capacity. Any strategy updates will require the approval of the Council w/ support from our accounting/finance specialists.
Impact of ARB Price
The decline of ARB significantly reduces AGV’s deployable capital (e.g., 50% drop implies 50% fewer investments if unhedged). To address this:
- Our mitigation strategy ensures that AGV has the operational runway to competitively pursue the highest ROI deals
- We have aligned our portfolio sizing and investment pace with conservative ARB price estimates
- Should ARB price decline beyond risk parameters set with our accounting / finance partners, we will work with the DAO to evaluate potential adjustments, including reallocation of funds or program resizing
Mitigation Strategy Framework:
- Scheduled Conversions: ARB is converted into stablecoins on a recurring periodic basis to maintain stable deployable capital
- Threshold Triggers: Dynamic ARB price triggers (e.g., % based moves, above or below a moving average, etc.)
- Needs-Based Conversions: Treasury conversions may occur ad hoc based on capital needs for portfolio commitments, especially at higher ARB price bands
- Quarterly Treasury Reviews: The treasury strategy is reviewed every quarter alongside accounting partners to assess capital runway, rebalancing, and exposure
Opex Considerations
At its inception, AGV was provisioned with operational capital at a 1:1 ARB:USD rate, providing a stable foundation to support execution, staffing, and infrastructure. While ARB’s price has declined since then, AGV’s current runway remains sufficient for approximately three years of operations under conservative assumptions.
However, should ARB continue to depreciate or operational needs increase due to program extension or market dynamics, the AGV Council will evaluate mitigation options. These include:
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Reallocating a portion of investment or grant capital, subject to Council oversight and approval
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Submitting a proposal to the DAO for additional funding aligned with clear performance milestones
As AGV is structured to generate and return value over a longer horizon, spanning beyond 2027, it is anticipated that the program will require continued operational capacity beyond this initial three-year period. Any future requests for extended opex will be aligned with clear strategic outcomes, including:
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Demonstrated performance of the portfolio (e.g., follow-on rounds, user growth, ecosystem contributions)
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Progress against KPI benchmarks and strategic goals outlined in AGV’s reporting
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Evidence of meaningful advancement toward return-generating events (e.g., TGEs, M&A, secondary sales
Contingency planning is underway to ensure program continuity beyond the three-year window, if needed. In parallel, AGV is adopting a disciplined and conservative posture in its operating strategy. We are pacing hiring cautiously, prioritizing roles with the highest strategic leverage, and sequencing headcount expansion based on clear stage-gates tied to fund deployment and operational complexity. Operating expenses are being closely managed to preserve runway, with deliberate constraints on non-essential spend and vendor commitments. On the investment side, we are carefully structuring deals and pacing capital deployment to ensure alignment with evolving market dynamics, ARB volatility, and milestone-driven progress from portfolio teams.
This conservative posture allows AGV to remain agile while upholding long-term accountability to the DAO. The Council reviews all hiring strategy and other major operations considerations, enabling the AGV to operate with strong oversight and advisory, with some Council members directly involved with certain workflows based on core competencies (ie Greg Canessa co-leading recruiting for executive hires, or Tim Chang serving on the investment committee).
Scenarios under consideration include further capital conversions, risk-triggered rebalancing, and narrowing capital pacing to prioritize high-ROI investments.
By linking opex sustainability to performance and return generation, AGV maintains accountability while ensuring its ability to steward DAO capital effectively over the program’s full lifecycle.
Performance Frameworks
AGV’s performance framework blends DAO-aligned accountability with adaptive venture-industry standards. As outlined in the original Tally proposal, AGV has committed to tracking a foundational set of key performance indicators (KPIs) over the first three years of the program (starting January 2025) focused on pipeline development, ecosystem traction and product activation.
Note: The following baseline KPIs were initially designed around a $200M AUM program. Given the current capital base, AGV treats these figures as directional benchmarks rather than fixed quotas.
As outlined in the original Tally proposal, AGV will be tracking a foundational set of key performance indicators (KPIs) during the first three years of the program (starting January 2025) which will serve as baseline targets for pipeline development, ecosystem traction and product activation within the Arbitrum gaming stack.
| KPI | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Orbit Launches | 5 ⍟ | 20 | 50 |
| Studio Deals | 10 ⍟ | 20 | To be set by AGV Team |
| Daily Active Users | 20,000 | 50,000 | To be set by AGV Team |
⍟ indicates AGV is on track to meet the listed KPI benchmark
To complement the baseline KPIs outlined above, AGV also tracks a broader set of venture-aligned performance indicators adapted for this program. This two-tiered approach enables AGV to assess both operational throughput and investment quality, ensuring that it is able to deliver long-term financial and strategic value back to the DAO.
Investment Performance & Capital Efficiency
AGV allocates capital with the goal of constructing a diversified portfolio positioned to generate meaningful outcomes within the program’s available resources.
Key indicators include, but are not limited to:
- Return on Invested Capital (ROIC) – Net return generated relative to capital deployed
- Capital Allocation by Instrument Type – Provides visibility into risk exposure across various instruments
- Graduation Rate – Percentage of portfolio companies raising follow-on rounds
- Portfolio Composition – Average cheque size, ownership percentage, and diversification by stage and category
Arbitrum Ecosystem Adoption & Activation
AGV is tasked not only with generating investment returns, but also with catalyzing tangible growth across the Arbitrum gaming ecosystem.
Key indicators include, but are not limited to:
- New Users & Builders – Wallets and developers onboarded through AGV-backed projects
- Daily Active Users (DAUs) – Aggregate player activity across live AGV games
- Orbit Chain Deployments – Number and activation of Orbit chains via AGV-supported teams
- Ecosystem Integration – Retention, integration into Arbitrum native protocols and tools, usage of Arbitrum technology, cross-pollination of audiences, etc.
Strategic Positioning & Ecosystem Leadership
AGV plays a critical role in positioning Arbitrum as a leading hub for Web3 gaming through strategic visibility and relationship-building.
Key indicators include, but are not limited to:
- Program Sustainability – Progress toward long-term financial sustainability through realized returns, treasury growth, etc.
- Co-Investor & Publisher Participation – Involvement of leading VCs, publishers, and strategic partners in AGV-backed deals
- Media & Brand Visibility – Presence across tier-1 media, gaming conferences, and thought leadership venues
- Strategic Partnerships – Depth and leverage of relationships with exchanges, infrastructure providers, and distributors
What’s Next
We are on track to publish our Summer Transparency Report in July, which will include a summary (if deemed non-sensitive) Council-approved KPI baselines, strategic updates, and further clarity on portfolio construction and treasury management.
Questions or feedback from the DAO community are welcome. We remain committed to transparency, strategic rigor, and long-term alignment with Arbitrum’s growth, so please let us know what’s on your mind.
