Hi all,
Thanks for the great questions and we do really appreciate the community interest/involvement!
We at the Arbitrum Foundation have taken the key questions posted in the forum and we have prepared answers to them.
Is there a reason this amount needs to be tied into this proposal? It seems like $750 million is a lot when there aren’t criteria yet. This industry is about creating systems where we don’t need to trust the operator. I would vote to fully reimburse the $3.5 million in setup costs to the foundation, but sending $750 million without criteria… it doesn’t seem as though this is necessary to bundle in with the passing of the first AIP.
Without clear criteria, I’d even approve the 750 million tokens, but funded through a vesting contract that releases them proportionally over the course of 10-20 years and the DAO has the ability to cut off the funding if they are not pleased with the foundation’s execution.
It is worth emphasizing that the Foundation’s treasury represents 7.5% of the token supply, which is in-line with, if not lower than, the majority of other peer foundations (see an answer below for more details).
The Foundation’s primary objective is to serve as a steward to the DAO, ensuring that the necessary guardrails are in place to maintain a safe and smoothly operating self-governing environment. To achieve this, the Foundation facilitates legal teams, personnel, and service agreements as part of its guardrail measures.
It is our intention to foster the growth of the Arbitrum protocol, decentralized networks, and ecosystem under the guidance of the Foundation’s directors. It should be noted, the DAO does hold the power, as outlined in its constitution, to change the Directors of the foundation. Their service to the Foundation is bound by its by-laws, which enshrine the mission of servicing the DAO community:
I think it is important for Tally to remain at a level where 10-25 people have enough delegations to be able to post on-chain actions. At Gitcoin, we had it at a level where only 3-4 people could post to Tally. This caused problems and it is now widely agreed that we should have loosened that setting.
The initial 5,000,000 ARB token for submitting a proposal on SnapShot was picked as a conservative number. We are still waiting for ARB tokens to be claimed and delegated. If it remains true that 3-4 people can post to Tally, then the community can propose a new AIP to fix this to 1 million or another suitable number.
Who are the people responsible for the 750M ARB tokens? Specifically, who are the signers on the designated Administrative Budget Wallet?
As the community is aware, there can be significant personal and operational risks involved with disclosing the specific signatories of any wallet. For that reason, we are required to be extremely cautious about identifying any particular individuals related to the Administrative Budget Wallet. What we can disclose is that this is a 4-of-6 multi-signature wallet with a mixture of unique individuals all suitably qualified for the role, who have each signed agreements with the Foundation.
Why is this 750M ARB taken out of the treasury, when it states that the ArbitrumDAO will have direct on-chain governance powers over the treasury?
The DAO will have direct control over ~3.5bn ARB tokens.
The 750M ARB in the Administrative Budget Wallet is to put the Foundation in a position of strength and quickly execute on initiatives. From an operational perspective, the ability to execute on grants, form partnerships and relationships that benefit the Arbitrum community. Again, the DAO can elect and remove Directors at any time. More information about that process can be found in the bylaws and the Foundation is legally bound to do that.
If we compare this allocation with other comparable arrangements in the ecosystem:
- Polygon currently owns 19% MATIC tokens,
- Avalanche Foundation was allocated 9.3%,
- StarkNet is allocating 10% to their Foundation.
We do not want to compare it with our competitors, but as you can see as a percentage of outstanding tokens, 7.5% ARB tokens for the Foundation is in line and/or below what is seen in the industry. It allows the Arbitrum Foundation to execute on beneficial initiatives and developments within the ecosystem and in accordance with the Foundation’s bylaws and in a manner that is consistent with its peers.
We would like further clarity on how the 750M ARB tokens will be used, and what the distribution will be.
All tokens held by the Administrative Budget Wallet can only be used in accordance of the Foundation’s bylaws:
The mission statement can give an overview on how the tokens will be used. We will focus on technical improvements for the Arbitrum protocol, help foster the ecosystem with grants, and organize educational initiatives that are Arbitrum (and Ethereum) aligned. In order to carry out this mission, the funds will help hire a top quality team, set up service level agreements with external companies working on the Arbitrum Protocol, and of course kick-start the much anticipated grant initiatives as soon as possible.
Instituting a Security Council without any election process is antithetical to the decentralized governance process. While having elections every 6 months does seem reasonable, there should be an election process for the initial council instead of them being appointed all at once by the foundation.
The Foundation’s goal was to instantiate the system with well-respected technical experts in the community who are qualified to participate in the security council. All the on-chain governance smart contracts are now deployed with the security council onboard. If we had waited to instantiate the security council with elections, it would have impacted how long it takes to transition control of the Arbitrum networks to the DAO. If the community believes the Security Council elections should be brought forward, this can be proposed as an AIP in line with the DAO constitution.