AIP-1: Arbitrum Improvement Proposal Framework

[enzo7]

While more transparency and better communication is a MUST NEED from the team, this present occasion is being used by competitors and those against Arbitrum to attack an opponent.

Regarding the 750m tokens for Arbitrum Foundation, its not an unreasonable propsal. As the team have said in their clarification, many token foundations have big allocations. Polygon is able to partner with big web2 companies like Starbucks and Nike and pay to get projects like DeGods to Polygon chain. These cant be done without funds. Polygon controls a huge % of their token supply and there is no DAO, none of the decisions are subject to oversight. All the decisions are made by the team in centralized manner. The same can be said about any other sizeable project in the Defi/web3 space.

Another L2 chain, ImmutableX has also been making big payments to companies like GameStop. ImmutableX gave GameStop $100m IMX tokens to further the adoption of ImmutableX.

https://www.sec.gov/Archives/edgar/data/1326380/000132638022000012/a991-partnershipannounceme.htm

As soon as GameStop received the tokens, they dumped a third of it.

GameStop Dumps $47M in Immutable X Tokens Following Ethereum NFT Marketplace...

These are business decisions that are required if any web3 project has to grow today.

Similarly, even Optimism Foundation is well funded and they are able to get partners like Coinbase.

Do we wish to see Arbitrum not have any future growth?

Crypto especially L2 space is fast heating up with heavy competition. Many projects are in the space trying to tie up web2 companies to move to web3, launch NFTs, tokens, use dapps etc.

Arbitrum is already in partnership with big companies like Reddit.

These things cost a lot of funds to nurture and grow. One cannot immediately put a fixed cost on nurturing such partnerships over the long term. Usually, they are the result of several weeks or months of work, backed by a team that does not have financial constraints.

Presently, Arbitrum is the 4th largest DeFi project in terms of TVL, only behind Ethereum, BSC and Tron. If we have to grow this even further, the Foundation must be able to bring in the kind of partnerships and adoption that other teams like Polygon, Immutable, Avalanche etc are able to get.

Considering these and the need to bring about adoption of Arbitrum chains, so that the Arbitrum DAO can eventually benefit, the 750m token grant to Arbitrum Foundation is not unreasonable. Arbitrum DAO at present controls 42% of the total token supply in its treasury. Making the 750m token grant to seed Arbitrum Foundation will bring Arbitrum DAO Treasury’s holdings down to ~34% while Arbitrum Foundation will be in a strong position for few years to grow the network, onboard well known partners to the Arbitrum ecosystem and bring about wide adoption of the network.

The opposition towards the 750m funding to seed Arbitrum Foundation seems to be misplaced. At the moment, many competitors are using this occasion to attack Arbitrum, while they themselves have a big centralized treasury that they control and use to onboard partners. If Arbitrum Foundation is not well funded, the Arbitrum chains and networks will be left behind completely and Arbitrum DAO as a whole will suffer.

However, the main things needed from the team are transparency around actual unlocked token at present, future unlocks and transparency on how they intend to use the 750m tokens. They cannot just claim the tokens are locked, then the community finds out that its not actually locked but has been sold. That is a bad situation that must be completely avoided.

[DisruptionJoe]

These are my recommendations to move Arbitrum DAO forward successfully.

Triage

Stop the governance process until clarification happens

The special council & foundation directors are already set. Immediately pause all governance for 2 weeks. Let it be known that any attempts to pass a proposal on Tally will be stopped until a constitution and proposal process is ratified.

Clarify that the 750 million was an initial allocation decision

The DAO didn’t get to decide how much went to team/investors either. Whether the DAO likes it or not, if this had been an allocation decision it would all be mute. I do believe the foundation or whoever is driving this governance process (very mistakenly) thought this was a more democratic way to launch. It wasn’t. Let’s get over that.

Ratify the constitution and AIP proposal process and a start date.

Set a date that a new AIP-1 will establish a voting process and pass that proposal without the pork. I’d also recommend adding 1 week on the forum for discussion with at least 5 stewards commenting in support of a proposal before it goes to snapshot.

Interim Guidance

Foundation/Arbitrum/Off-Chain

Show us how we can guarantee that 750 million ARB immediately available will not fully own the DAO making all of our participation moot. Maybe a vesting schedule. Maybe give some of that number up as a show of understanding. The way it is done isn’t important outside of it being enforced onchain.

Community: Shift our focus to what is most important

Let’s keep the eye on the prize, our ability to direct a massive amount of funding for the Arbitrum ecosystem. If the top stewards can gain consensus on the initial allocation being just that, then the community can shift to thinking about all the development and innovation 3.5 billion $ARB can support! Forgive the foundation for making an error in how they approached this.

We also need to understand that just like other initial allocations, we may have lock-up info shared, but not doxxing of each individual.

If you are here to govern the funds that are allocated to the DAO, and you accept the mistaken approach was just that, then you should be ok with the Foundation maintaining some level of acceptable cover. Other DAOs have not doxxed every single director and multisig keyholder.

Solution

Ensure the viability of community governance

If the foundation has 750 million ARB and the turnout for this vote is 100 million ARB, then the governance we have is meaningless. Fix this for the next version.

Another way you can address this would be to enact a novel mechanism for making participation governance something that must be earned through staking $ARB. Perhaps something like I mention here: Active Governance - #2 by DisruptionJoe

The ability of the DAO to replace foundation directors

This is great. If the foundation can clean up this mess, then let’s give them a year to get it right. If things are moving in the right direction (not talking about price), then we wouldn’t vote them out.

Saving face through competency

The only way for the foundation to save face now is to actually support decentralization and proper functioning of the DAO. We have learned a ton in the space over the last year. Here are a few things the foundation can do to hopefully survive the first year and maybe gain back the trust of the community.

• Commit to pluralistic funding. The one model of funding at a time thing isn’t working. Have some workstreams for long term projects where high context and low turnover are needed. Start running Quadratic Funding and Quadratic Voting rounds at a regular cadence. Commit to using new mechanisms which run on Arbitrum. Actually LEAD the space as you have done so far with tech!
• Own the fuck up and the brash solution. We all hate long political answers that don’t say anything. This launch of governance fucked up. Thats ok. The overall ideas and premise were mostly in line with industry standards (which have a lot of room for improvement). Maybe adjusting the overton window in favor of the people isn’t your thing, but make it reasonable for people to want to govern by fixing the overt governance problem with issuing 750 million ARB immediately.
• Talk with any partners you might have previous arrangements with and find another way. Trying to have confidential deals is not going to work. Everything is on chain. Its tough seeing you stumble on this 101 shit, but get it together. One more issue like this Wintermute thing is going to crush the DAO.

In Conclusion

Pause governance. Own the fuck up. Present a viable solution. Win with competency from here forward.

I do trust the intentions of the Offchain team and the foundation, but at this point they will need to earn back the trust from the community. It sucks when you try to do something great for others but it wasn’t done perfectly and you get shit on for it. This is an opportunity for you, us, and DAOs as a whole to get our thumbs out of our collective asses and do something right. Or not… that is up to you.

One last thing

Remember that assholes are the loudest people. The people that will help this project succeed are the constructive ones who aren’t saying ridiculous things about being owed some commitment to making number go up.

[TrainL2DAO]

Thank you so much for taking the time and effort to put your communities thoughts forward here. Appreciate the in depth analysis and your teams experience in this process.

[Michigan_Blockchain]

Blockchain at Michigan is committed to improving protocol transparency and ensuring the long-term sustainability of the Arbitrum protocol and the Arbitrum DAO. After reviewing the proposal in its current form and discussing it with our fellow delegates, we stand with the opinions of @BlockworksResearch and many others that AIP-1 does not promote this transparency that is deserved by the community.

We appreciate members of the Arbitrum team’s communication throughout this process, but the lack of clarity surrounding the 750 million $ARB token transfer to the Foundation when describing the initial token distribution is a failure on the Arbitrum Foundation’s part and has led to considerable complications with the initiation of this DAO. It is our current understanding that this transfer of 750 million $ARB has already occurred and that AIP-1 serves as a retroactive ratification of preordained decisions carried out without the DAO’s input.

The remainder of AIP-1 provides a proper framework for the establishment of the Arbitrum DAO. While 7.5% of the total supply is fairly common for protocol teams/foundations, Arbitrum is a highly valued protocol, with this transfer currently valued at around one billion USD. This issue opens the door to discussion on the % allocation a foundation is to receive versus the objective dollar amount they should be allotted. In other words, rather than stating that a 7.5% token allocation to the foundation is on par with industry peers, we should look at objective dollar amounts. Even more, we should critically analyze the true costs of funding a foundation along with the amount of money that is required for grants. Perhaps a better setup is to lock a fixed amount of tokens in a wallet for the foundation, only to be distributed by the DAO when and if they are needed, such as on a quarterly basis, for instance. This would require the foundation to become more lean and transparent. Nevertheless, amounts this large must be disclosed during the initial launch of the tokenomics. We understand, however, that prior to the establishment of a DAO, decisions need to be made for the aspects discussed in this “proposal” such as the establishment of the security council and constitution (Arbitrum spoke on this “chicken-egg problem” extensively in their response.

With all of this in mind, on behalf of our delegates, we have decided we will be voting AGAINST on AIP-1: Arbitrum Improvement Proposal Framework in its current form. This experience has shown the Arbitrum Foundation that there is a need for complete transparency throughout the governance process as well as the expectations we and our fellow delegates have for the Foundation to remove any ambiguity from future decisions on Special Grants and other usages of this token distribution. We look forward to continuing to work with our fellow delegates, the Arbitrum team, and the community as a whole to improve DAO and set up Arbitrum for long-term sustainability.

[stonecoldpat]

Thanks to all the DAO participants and delegates for their feedback on AIP-1. It likely will not pass and we are committed to addressing the feedback received from the community.

Before we dive in, we want to clarify why 10m ARB tokens were sold by The Arbitrum Foundation.

The Foundation is a separate entity to Offchain Labs and it was established with no funds. The 10m ARB tokens were sold to fiat to fund pre-existing contracts and to pay for near-term operating costs. For example, the $3.5 million setup costs outlined in AIP-1.

The Foundation does not exist to sell tokens, only sold enough to fund its current operating expenses and has no near-term plans to sell more tokens.

There are four central points of feedback raised by the DAO and we will cover them one-by-one here:

1. AIP-1 is too large and covers too many topics. We will follow the DAO’s advice and split the AIP into parts. This will allow the community to discuss and vote on the different subsections.

2. 750m ARB (7.5% supply) being sent to The Arbitrum Foundation. This will be voted on in its own AIP and we’re working on options to add more accountability. For example, a vesting period of 4 years. Furthermore, tokens held by the Foundation cannot be used to vote.

3. AIP-1 does not discuss transparency over how the funds will be spent. As part of the budgeting AIP, we will propose transparency reports to make the community aware on how the funds are spent over time.

4. The Special Grants program is vague/lacks DAO involvement. We will rename it “Ecosystem Development Fund” and provide context on how the funds will be used to benefit the Arbitrum Ecosystem. Separately, the DAO can initiate new grant programs from its treasury at any time.

We look forward to proposing the new AIPs early this week and participating in an open discussion with the DAO. Arbitrum is the only L2 to seek DAO ratification of the initial Foundation funding and that transparency sparked this important discussion.

The objective in setting up the Arbitrum DAO was to lead by example to create the most decentralized rollup, and despite this blunder of communication, we will continue to aggressively pursue this goal.

To our knowledge, Arbitrum is the only L2 where tokenholders can simultaneously (1) control upgradability via on-chain executable governance, (2) appoint and remove Foundation directors and (3) directly control an on-chain treasury.

We believe that having a Foundation that is empowered to act in the service of the DAO is important for Arbitrum’s success. We clearly could have communicated that better, and will take this opportunity to improve and continue to build Arbitrum as the most community-centric L2.

We have also tweeted the above message.

[MXer646]

As a DAO member. The 750M arb tokens should be sent back to the DAO Treasury as the approval of AIP-1 is not set to pass. This is I believe, the probably that has caused so much backlash. Once the problem with the 750M tokens has been address, which they have not, I believe the DAO should take vote to remove foundation members that approved his transfer of tokens before an approval even happened.

[Bob-Rossi]

I am voting “Against”

First, I want to speak to AIP-1 as it stands on it’s own. So for a second, ignore the now known issue at hand and presume the Arbitrum Foundation had not moved tokens yet. I would have still voted “against” in this case, with request for the AIP to be broken into smaller pieces.

I agree strongly with the first set of a DAO’s AIPs being about setting ground rules for the DAO moving forward, especially with one as large as this. Not having a formal process in place can lead to disaster, so this is important. However, I’m against trying to lump in too much at once. The obvious one is the 750M ARB to the Foundation Admin Budget, however things like squeezing in a very loosely defined “Special Grants” process aren’t a great idea either. Those are things that need fleshed out in their own debates / AIPs. This AIP should have been broken into about 3 or 4 separate things.

Now, with that said and as it stands now, I’m still continuing with my ‘Against’ vote. The issue I had before has only been exacerbated by moving funds before the vote. Others have surely said it better, but the fundamental issue is we can’t accept funds being moved without DAO approval or else what is the point of this process?

The best case moving forward is to do an AIP that singularly addresses the voting process. Then re-visiting the other aspects of this AIP in separate votes once that precedent is set. In the meantime, the already moved funds should be returned. Without that, there doesn’t seem to be any teeth behind those who vote.

[PhiMarHal]

Rock solid answer. Touches on all the pain points. Exactly what I hoped to see, personally.

[sluicejuice1]

Thank you for your response! A lot of the people used this forum today to run campaigns to make the token go the way they wanted with leverage today. If you go to chan/reddit/discord/twitter, you’ll see the coordination wall. It’s predictable people game ups and downs but this past week has really showed the mercilessness of speculative traders. I think you guys handled this situation well. You made markets and that was all the point of the wintermute funds and the 10m sell to keep the foundation making partnerships, like with service providers like Lemma. I know I’m probably misarticulating my points, but I’m appreciative. Thank you.

[brincnomics]

I think what is important here is that the criteria for selecting recipents and details about how all of the funds are going to be distributed need to be disclosed upfront. For example, how were the DAOs selected and what was the criteria for that? I think there were a lot of projects excluded from without explanation.

[Zeb]

As a long term DAO participant, I would like to add my 2 cents. There has already been plenty of discussion around the ARB sold and the vote being meaningless, so I won’t go into that. There are two things within the AIP that as a DAOist I think are not the way to go about it.

• 750M ARB in 1 vote, and as first action is way too much. Either a team does a premine and proclaims they know what is best, and the market will have to price it in / judge for itself, or a DAO slowly but steadily builds trust with DAOplomats.
  Since this Foundation is claiming to give out grants and fund overhead costs, it should have come up with a clear budget and a trial period with a way lower amount. Let’s say, a couple 100k perhaps. The Balancer Grants subDAO of which I was a founding member shows how a small initiative can build trust and grow to a larger entity.

• co-founders of Offchain Labs are part of the Security Council (aka Admin Key multi-sig) and will get paid $5000 per month for this role. Didn’t these founders get a huge pre-mine allocation already? Why do they need to get a stipend for being on an admin key position for a project they created, got a premine of and are working on and got VC funding for to work on anyway?

These kind of brazen moves are not the way of a DAO. Arb team, you can do better.

[sluicejuice1]

The March Cohort getting paid $5,000/month each in ARB tokens is fair I think given they are all doxxed and have been known and trusted in the crypto community for years, each of them. I trust these people because their work records speak for themselves I believe. You can click the links of each of them and find their socials and the work they’ve done.

[01124816]

Why shouldn’t we delegate to a third party that does not own tokens or build any projects on Arbitrum? Because:

• If Arbitrum develops strongly, we - holders and delegates - also benefit.
• If Arbitrum unfortunately faces any incidents, we - holders suffer the most financially, but the delegates do not. Does that sound fair? You should think about it yourself!

I delegate my voting power to CamelotDAO because they are a native project on Arbitrum and, of course, they also own ARB. I trust that all decisions made by CamelotDAO are for the purpose of developing the ecosystem because only when Arbitrum develops strongly will they also develop strongly.

Regarding AIP-1, I vote “FOR” because it is necessary for the ecosystem, and I believe that the creators of ARB understand the benefits of ARB better than third parties who have no obligations towards its benefits.

And surely, i am an ARB holder and also an active member of the ARB ecosystem.

[cattin]

SEEDLatam Statement

Hey everyone,

@cattin here, representing SEEDLatam and L2 en Español, after discussing this AIP with our community during our first governance call carried out in our Discord, we decided to vote AGAINST AIP-1, for the reasons stated below.

Rationale

As a self-sustaining organization that encompasses other communities, each with different interests, we understand how difficult it is to have clear communication in these scenarios where there is a lot to do (airdrop, forming the DAO, maintaining decentralization, etc.), nobody said that running and forming a DAO was an easy task.

Therefore, we want to thank @stonecoldpat for his post “Clarity around the ratification of AIP-1” which brought more clarity to what is happening in ArbitrumDAO to our community.

However, this does not remove the great dissatisfaction of the community that was expressed during our governance call regarding this situation. Additionally, we believe that AIP-1 encompasses several proposals together which should be voted on and dealt with separately, as it has already been recognized in the latest statement made by Arbitrum on twitter.

While we understand that this is not now a “proposal” but rather a “ratification” of the initial DAO configuration, we will express the will of the Latam community on each point.

On Special Grants

We believe that this point is very vaguely explained, although it is clarified that the Special Grants process and criteria will be published in the future, we do not believe that voting for this point now is correct.

Establishing the scope of these Special Grants and the processes we believe is crucial, as these are funds intended for organizations/institutions or individuals who have somehow helped or supported the Arbitrum ecosystem. We believe that transparency in the processes and that those funds truly have an impact that benefits the Arbitrum ecosystem is really important.

On Directors

We understand that at this point there is a legal and regulatory margin that is beyond our reach and it is necessary for Arbitrum Foundation to assign its board.

However, we would like to have more information regarding the names mentioned before proceeding with this proposal or at least for Offchain Labs/Arbitrum explain why these directors where elected, with some background about them. Also, these directors could introduce themselves in the forum as such, explaining what’s their background, what relationship they have t0 Arbitrum/Offchain Labs, etc. It is important to maintain trust among all parties that make up Arbitrum DAO, the DAO as such has the right to know who is behind this Foundation and why they were appointed.

On the Security Council

On this point, there’s nothing we would really change, just congratulations to Patricio Worthalter for being part of the Council, since he’s pretty close to our community and an important voice from our region. Our community members are big fans of POAP, and we are proud that this attestation tool has emerged from this side of the world!

On the Data Availability Committee (Arbitrum Nova chain only)

Regarding the Data Availability Committee, we would like to have more clarity on the selection criteria of each member and their relationship with Offchain Labs.

We also believe that it is necessary to vote on a removal or appointment process, just in case there’s a scenario where one member should be replaced, such as what happened last year with FTX.

On The Arbitrum Foundation Administrative Budget Wallet

This is what has generated the most debate and dissatisfaction, on the one hand, it is not an exorbitant amount for a DAO Foundation since they have to pay administrative costs and grant funding as mentioned earlier. On this point, our community is completely in favor of the Foundation being funded, and we don’t necessarily have any issues with the amount requested. The problem here, as mentioned earlier, is communication.

We consider that it’s too risky to have 7.5% of the total supply on a multisig, we know this is unlikely to happen, but after what happened with Ronin we don’t think we should run the risk. This allocation should be distributed gradually, and discussed in a separate proposal, with proper guidelines on how these funds are going to be used and what roles would the directors have in all of this. The main issue we had, as a community, is the way that arbitrum carried this out, doing first and asking for permission later. Even if it was just a “ratification”, then at least they should’ve been transparent since day 1 about the Foundation’s wallet being funded at the time of the distribution and regarding funds going to a market maker, which again, we don’t see an issue with this, but we simply don’t understand why couldn’t this be communicated openly in a transparent way.

So how should we proceed?

To fix this error and due to everything that has happened during this temperature check, we believe that if the proposal is rejected, Arbitrum should take another approach, go point by point, and have it voted on by Arbitrum DAO.

Conclusion

Our community is convinced that we are in time to remedy the first misstep that Arbitrum has taken. On the other hand, we are also pleased with the general reactions, we believe that this type of situation is always good for progressing as an ecosystem, we are in very early stages and it’s better to make these mistakes now than later.

Finally, we want to thank our community, more than 60 members showed up to our governance call, and also thank you to our contributors and delegates @axlvaz_SEEDLATAM.eth @Manugotsu_SEEDLatam @SEED_Latam_Joxes @Phenrril @Noa and @ArbiGod.eth for participating and helping us form this statement. Any member of this DAO who wants to participate in our governance calls and open to discuss Arbitrum-related topics is welcome.

Also, if you want to watch our first governance call click here.

[sluicejuice1]

Good post and thank you for representing Spanish-speaking community!

[Igor9999]

I don’t think the issue here is whether the Foundation should have a budget for BD (or the possibility of lending to MM).

These points are necessary for the arbitrum to be successful.

For example, if the document had clearly stated that the foundation would get 750m airdrops (even better if there was an implication in the vesting), I don’t think there would have been much discussion here.
People would have just been arguing about what is the best and most efficient way for the Foundation to use them. There is nothing more to it than that.

The problem is simply that
i) the documentation didn’t mention it
ii) The volume in circulation and the resulting market capitalization, which everyone used and made investment decisions on, was simply false. The volume of tokens in circulation was more than 1.25 billion, not 1.25 billion. What should be used now? Do we add another 50 million tokens to reflect the 10 million tokens sold and the 40 million tokens used by MM (which would make sense)? Or is it an additional 750 million tokens if, from the use of the word “ratify”, it could be in circulation as early as today without a vote?
iii) What was the rush to sell 10 million tokens, which could cover the costs of running such a foundation for quite some time, without transparency?
iv) By saying that AIP-1 is a mere “ratification”, the governance power of the ARB token is undermined and hence the value of the token. What governance power does the token have if the proposal is implemented as is despite token shareholders voting against it?

What is done is done and cannot be undone. However, it is clear that the ARB token shareholders do not agree with the AIP-1 proposal.

I am just a retarded anon with a completely irrelevant amount of tokens. However, assuming my IQ to be 60, it seems to me that the best approach would be as follows
i) Never say again that voting is not important.
ii) Hold the bulk of the remaining 700 million tokens in contracts with linear vesting (I wouldn’t need to spend $1 billion in ARB tokens on day one). The contracts are not immutable and can be amended by subsequent governance votes.
iii) Increase the number of foundation directors to five. This is to improve decentralization and to provide token holders with reassurance that their grant money will be used for the success of the ecosystem rather than for back taxes (as happened with some Alt-L1s).
iv) Provide transparency and details about the first year of the budget (or at least the set-up costs and expenses for the next few months) so that people better understand why we rushed to sell 10 million tokens.
v) Propose a grant application process and general criteria (does not need to be extremely detailed, just a framework).

This would pass the AIP-2 easily and goodwill would be sufficient.

[Zeb]

I was specifically talking about Offchain Labs members, not other ‘outside’ members.

[sluicejuice1]

The September cohort?

[Igor9999]

I don’t think the issue here is whether the Foundation should have a budget for BD (or the possibility of lending to MM).

These points are necessary for the arbitrum to be successful.

For example, if the document had clearly stated that the foundation would get 750m airdrops (even better if there was an implication in the vesting), I don’t think there would have been much discussion here.
People would have just been arguing about what is the best and most efficient way for the Foundation to use them. There is nothing more to it than that.

The problem is simply that
i) the documentation didn’t mention it
ii) The volume in circulation and the resulting market capitalization, which everyone used and made investment decisions on, was simply false. The volume of tokens in circulation was more than 1.25 billion, not 1.25 billion. What should be used now? Do we add another 50 million tokens to reflect the 10 million tokens sold and the 40 million tokens used by MM (which would make sense)? Or is it an additional 750 million tokens if, from the use of the word “ratify”, it could be in circulation as early as today without a vote?
iii) What was the rush to sell 10 million tokens, which could cover the costs of running such a foundation for quite some time, without transparency?
iv) By saying that AIP-1 is a mere “ratification”, the governance power of the ARB token is undermined and hence the value of the token. What governance power does the token have if the proposal is implemented as is despite token shareholders voting against it?

What is done is done and cannot be undone. However, it is clear that the ARB token shareholders do not agree with the AIP-1 proposal.

I am just a retarded anon with a completely irrelevant amount of tokens. However, assuming my IQ to be 60, it seems to me that the best approach would be as follows
i) Never say again that voting is not important.
ii) Hold the bulk of the remaining 700 million tokens in contracts with linear vesting (I wouldn’t need to spend $1 billion in ARB tokens on day one). The contracts are not immutable and can be amended by subsequent governance votes.
iii) Increase the number of foundation directors to five. This is to improve decentralization and to provide token holders with reassurance that their grant money will be used for the success of the ecosystem rather than for back taxes (as happened with some Alt-L1s).
iv) Provide transparency and details about the first year of the budget (or at least the set-up costs and expenses for the next few months) so that people better understand why we rushed to sell 10 million tokens.
v) Propose a grant application process and general criteria (does not need to be extremely detailed, just a framework).

This would pass the AIP-2 easily and goodwill would be sufficient.

[Curia]

Hello everyone, we are Curia, an Arbitrum delegate platform. It’s inspiring to see this proposal initiating the formal establishment of the Arbitrum DAO. We appreciate and support various aspects of the proposal, including the creation and funding of the Arbitrum Foundation, which resonates with our perspective on progressive decentralization. Nonetheless, we find it essential to express our agreement with the concerns raised in this thread.

At present, we will be voting Agasint the proposal due to transparency concerns and other issues raised by delegates in these forums. AIP-1 falls short in terms of clarity in several areas, including the pre-allocation of funds without community approval or input and the 750 million $ARB token transfer to the Foundation during the initial token distribution. This transfer has reportedly already occurred, making AIP-1 seem like a retroactive ratification of decisions made without the DAO’s involvement.

Taking into account the delegates’ concerns raised in these forums, we present a summary of concerns and recommendations for advancing with Arbitrum AIP-1:

Key Concerns:

1. AIP-1 is encompasses too many topics. Numerous potentially non-contentious and contentious items are bundled together under a single vote, which could set an unfavorable precedent.

2. Lack of communitcation regarding the pre-allocation of funds without community notice, approval or input.

3. Insufficient transparency and detail regarding the 750M ARB budget allocated for administrative purposes.

4. Ambiguity surrounding the Special Grants program, with unclear processes and criteria for awarding funds, which lacks DAO involvement and requires proper guidelines and context on how the fund will be used to benefit the Arbitrum ecosystem.

5. Lack of clarity around the Arbitrum Foundation’s directors and Data Availability Committee’s selection criteria and processes for member removal or appointment.

Recommendations for Arbitrum AIP-1 Moving Forward:

1. Improve the communication process regarding the governance updates and actions taken by the Arbitrum team.

• One issue we’ve noticed is the lack of proper announcements for proposals, both on the forum and Arbitrum’s Twitter. We suggest having an official process on the announcing updates of each proposal on the forum and creating a separate Twitter account focused solely on ArbitrumDAO’s governance-related matters, similar to SafeDAO.

2. Divide AIP-1 into separate proposals that can be voted on individually. This could include separate votes ratifying on:

   2.1 The relationship of Arbitrum foundation with ArbitrumDAO and clarity on issue regarding its directors

   • Clearly outline the appointment process for Directors, including their backgrounds, relationships with Arbitrum/Offchain Labs, and the rationale behind their selection.
   • Also encourage the Directors to introduce themselves in the forum to foster trust and transparency.

   2.2 The guideline or framework for Special Grants and clear process on how to enhance transparency and provide more detail on the 750M ARB budget by including allocation guidelines, timelines, and regular reporting to the community.

   • For Special Grants program, including a clear outline of the processes and criteria for grant selection, as well as the intended impact on the Arbitrum ecosystem.

   • Incorporate reimbursement for Foundation Setup Costs mentioned earlier in the initial AIP-1 proposal.

   • As a side note, since Arbitrum is promoting the incorporation of on-chain votes to directly control governance via smart contracts, consider employing smart contracts to control fund allocation and vesting of tokens, ensuring immutable enforcement and proper management of funds.

   2.3 Address the Security Council and Data Availability Committee

   • Offer more clarity on the selection criteria for the Security Council and Data Availability Committee, and establish processes for member removal or appointment. This will help ensure that the committees function effectively and can adapt as needed.

By addressing these recommendations, Arbitrum can create a more inclusive and transparent governance process going foward. This will help build trust within the community and ensure that future proposals are met with a more constructive and collaborative approach.