Arbitrum Treasury Management Council - Consolidating Efforts

Proposals
1

Abstract

The Arbitrum DAO’s treasury management strategy and execution have become fragmented due to the numerous committees overseeing various initiatives.

We propose phasing out the TMC, GMC, and STEP committees and replacing them with a canonical 3-unit committee (Arbitrum Treasury Management Council) to enhance the cohesion/effectiveness of the DAO’s treasury management strategy.

The new Arbitrum Treasury Management Council comprises:

  • Voting Body
    • OAT - Approves or denies allocation recommendations from the Execution Body, and, in rare cases, initiates emergency actions that it deems necessary to pull out capital from existing allocations
  • Execution Body
    • Entropy Advisors - Responsible for strategic financial management, data transparency, and procurement
  • Communications Body
    • OpCo (Entropy until entity operationalized) - Ensures council members are delivering with excellence, mandates are met, and relays information between the DAO and the council

In addition to the 3-unit council, the following AAEs will serve observatory roles to ensure wider ecosystem alignment and smooth operations as it relates to fund deployment:

  • Observatory Body
    • Arbitrum Foundation - Manages movement of funds/custody (Note that any of the AF’s deliverables can be moved to OpCo over time through a DAO vote)
    • Offchain Labs - Inform the aforementioned council members of any ongoing BD efforts that may conflict with fund allocations

Delegates will approve high-level strategies and capital allocations to the council. More granular decisions suggested by the Execution Body (e.g., reallocating capital across providers, or allocation recommendations) have to be approved by the OAT, which has DAO representation as well as key members from OCL and the AF.

All of the council members have funding sources in place, so there will be no additional overhead related to paying these contributing entities. In terms of the remaining balance to pay the previous councils/committees (TMC & GMC) that currently sits with the AF, this will be repurposed to cover service providers’ costs for specialized deliverables that the new canonical council does not possess competency to fulfil, e.g., granular risk, legal, etc. The roles of each council member are further defined below.

Rationale

The Arbitrum DAO now has 3 separate initiatives related to its treasury management strategy between the TMC, GMC, and the STEP committee. The TMC focuses on ARB and stablecoins, while the GMC focuses on ETH allocations, and the STEP committee focuses on RWAs. The following entities/individuals sit on councils overseeing these initiatives, with their respective pay defined below:

  • TMC
    • Austin Campbell
      • $20k per milestone, total of $60k earn-able, $20k already claimed
    • Make Markets
      • $20k per milestone, total of $60k earn-able, $20k already claimed
    • Three Sigma
      • $20k per milestone, total of $60k earn-able, $20k already claimed
  • GMC
    • Callen (Formerly Wintermute)
      • $20k per milestone, total of $60k earn-able, $20k already claimed
    • Llama Risk
      • $20k per milestone, total of $60k earn-able, $20k already claimed
    • Entropy Advisors
      • Waived Payment
  • STEP I
    • Committee (mandate completed):
      • Karpatkey, GFX Labs, Steakhouse, Nethermind, North Lakes Legal, Treasury WG Lead (Devansh)
        • 150k ARB, 25K for each member
      • 50k ARB to the Arbitrum Foundation for conducting due diligence/drafting legal agreements
    • Program Manager (mandate ends in September ‘25)
      • Steakhouse original allocation: 100k ARB
        • Faced a shortfall due to fees being denominated in USD. $174K (total fee) - ~$87K (received from ARB liquidation) to be paid from yield earned through the program
  • STEP II
    • Committee (mandate completed)
      • Karpatkey, GFX Labs, Entropy Advisors, Nethermind, North Lakes Legal, Treasury WG Lead (Devansh)
        • 125k ARB in total (Entropy Advisors waived payment, thus 25k ARB less than STEP 1)

To summarize, the DAO has ~$581,000 of overhead associated with treasury management activity, assuming an ARB price of $0.285 (realised dollar-denominated spend is higher, as ARB price has fallen since previous payments to contributors). The total AUM amongst all of these programs is approximately $50M, with the total yield earned on the underlying thus far amounting to ~$590k. The DAO has just recently broken even on its treasury management initiatives. However, it is worth noting that not all of the funds have been deployed from the TMC and GMC proposals, which are expected to accelerate passive yield inflows.

Entropy Advisors has been involved in all 3 committees, and we see some areas in need of improvement. Outside of cutting down on the dollar-denominated expenses associated with running these programs in a way that only scales with the size of the programs, the sheer number of people involved in the act of treasury management without clear responsibilities is counterintuitive. It is difficult to coordinate calls across so many teams’/individuals’ calendars, none of the committees actually speak to one another thus resulting in a fragmented strategy for the Arbitrum DAO’s treasury, each committee usually ends up in a state where a minority of members ultimately produce a majority of the work required for execution, communication between applicants and individual committees/their members often becomes fragmented (the applicant may not know who to reach out to in order to discuss certain things relevant to the application process), etc. Additionally, all of these committee members have varying degrees of insight into things in the pipeline for the Arbitrum ecosystem, which often sets these contributors up to make misinformed decisions due to missing context.

With Timeboost officially live, the DAO treasury has again reached >7,500 ETH since the last TM v1.2 proposal passed on Tally, as well as other ongoing initiatives such as the GCP that will generate additional revenue over time, we must be able to deploy some of these assets into yield bearing strategies as they accrue to the treasury. It’s time to reduce fragmentation and streamline the decision-making processes.

Four open discussions on this matter were hosted on April 30, 2025, May 14, 2025, May 28, 2025, and June 11, 2025, with recordings available here, here, here, and here. We recommend watching these, and joining future calls on the topic if you have strong opinions to share.

Specifications

In line with the new vision laid out by the Arbitrum Foundation, we propose that Entropy Advisors serves as the “Treasurer” with the OAT in place to approve/deny usage of budgets allocated to treasury initiatives, with the council including two of the most aligned AAEs, the AF and OCL, as observatory members to help inform and execute on strategy. This will enable the DAO to approve high-level strategies that do not go against Arbitrum’s broader strategy, considering the insight the AF and OCL will have in regards to ongoing BD efforts/opportunities as well as any operational complexities related to deploying and custodying funds. It will also reduce overhead, unify strategy, and empower Entropy to outsource specific needs to service providers with concrete deliverables on an as-needed basis, thus decreasing the principal-agent problem we face under the current structure with fragmented committees.

Entropy Advisors will have the autonomy to make decisions with funds pre-approved by the DAO, but all decisions must be passed by the OAT with ⅗ approval. Any decision that does not receive ⅗ approval from the OAT will be considered denied and no funds will be allocated. This includes reallocating from one asset/strategy to another, thus giving the DAO the ability to respond to changing market conditions and to hold vendors accountable. Any/All fund movements will be accompanied with an update on the forum in order to keep the wider community informed. Again, this process only pertains to funds that have already been approved for allocation by the DAO, but the standard governance process will always be required to earmark funds for deployment. Assets already approved by the DAO for deployment (STEP I&II, TMC, GMC) will be eligible for reallocation, in accordance to the process herein, per this proposal’s passing.

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The non-exhaustive, high-level responsibilities of this council and its observers will include:

Voting Body

Allocations Review - OAT

  • Approve or Deny allocation decisions presented by the Treasurer
    • The OAT will also be able to initiative emergency actions E.g., Alert the custodian to perform emergency withdrawals due to an exploit, or other emergency actions that it deems necessary to pull out capital from existing allocations

Execution Body

Treasurer - Entropy Advisors

  • DAO Budget Creation
  • Financial Forecasting
  • High-level KPI development / Data transparency through analytics
  • Net Working Capital Management
  • Quarterly Reporting
  • Strategy Formation / Allocation Recommendations
  • Protocol & Active/Passive Treasury Funds Manager Procurement

Risk Management & Miscellaneous - Likely areas for outsourcing to SPs

  • Additional legal/compliance assistance beyond the Arbitrum Foundation’s scope (we expect the custodian, so in this case the AF, to lead this SP onboarding given their insight into what is needed beyond their in-house competency)
  • Develop and maintain a comprehensive risk framework/monitoring system for treasury allocations (e.g., liquidity, counterparty, smart contract risks, etc.)
  • Coordinate stress-testing and scenario modeling for treasury assets under various market conditions
  • Evaluate traditional financial assets under consideration, such as tokenized MMFs, private credit instruments, etc., and determine their viability/safety as a DAO-treasury asset
  • Miscellaneous needs that may arise from time to time

Communications Body

DAO Orchestration - OpCo (Entropy Advisors in the interim)

  • Responsible for every party delivering with regard to their respective responsibility areas
  • Post updates related to council votes and DAO allocations
  • Create proposals and present them to the DAO as they relate to funding requests, with direct input from the rest of the council
  • Contract SPs, taking in feedback from the wider council, to fulfill the work related to the “Granular Risk Management & Miscellaneous” functions defined below. Note that the AF will assume this responsibility until the OpCo has been operationalized.
  • Inform proposers whether they should be requesting to-be-monetized ARB from treasury, or stables currently deployed in strategies through coordination with the Arbitrum Foundation.

Observatory Body

Operational Execution - Arbitrum Foundation

  • Accounts payable/Payroll (ensure service provider payments are processed)
  • ARB to stable/dollar conversions
  • Compliance (KYC/KYB)
  • Custodian of the funds on behalf of the DAO

Ecosystem Support - Offchain Labs

  • Lead institutional adoption of RWAs on Arbitrum, and help inform the wider council on ideal STEP allocations in the future based on strategic goals
  • Connect the “execution body” of the council with relevant app developers through their deep network of Arbitrum builders
  • Ensure the “execution body” is informed of any ongoing BD efforts that may conflict with allocation decisions

The remaining funds from the TM v1.2 proposal that were allocated to pay TMC and GMC members for their work (1M ARB) will be repurposed to this canonical treasury council to contract SPs to fulfill required duties as they arise, likely related to the “Risk Management & Miscellaneous” deliverables defined above.

Given that all 5 of the entities involved in the Arbitrum Treasury Management Council are DAO-funded AAEs (or in the case of OCL, project founders), it does not make sense to have a mechanism in place to remove specific members. However, it is important to ensure the DAO remains in complete control over its treasury assets. As such, any DAO contributor can disband the Arbitrum Treasury Management Council entirely by getting a proposal through Snapshot that garners 3% of the votable token supply in favor of the council’s disbandment. The onus of replacing this initiative with a new structure i.e., council members, budgeting/forecasting/ reporting cadence, risk management, SP procurement, etc., will fall on the contributor that is proposing the abolishment of the Arbitrum Treasury Management Council. The contributor seeking abolishment will also need to define what happens to the currently deployed assets e.g., funds pulled from strategies and returned to the treasury. We expect delegates to be cognizant of this, and to hold contributors that seek abolishment of the Arbitrum Treasury Management Council to high standards in regards to the defined transition from the proposed structure herein to its proposed replacement. Also note that the responsibility of fund movement and custody can be transferred to OpCo via a DAO vote on Snapshot that garners 3% of the votable token supply in favor/abstain of the shift of responsibility.

Hypothetical Workflow Example:

The council identifies additional ETH in the DAO’s treasury that is not currently being utilized and wishes to allocate these funds to begin earning additional yield. The "DAO Orchestration” member works with the “Treasurer” member to draft a proposal to the DAO seeking to earmark these funds for deployment, taking into account various risk factors and the current treasury composition. The AF and OCL would be charged with providing input on the draft based on compliance and deployment feasibility, as well as any upcoming strategic partnerships that could align well with a DAO deployment of capital. The general goals of the deployed capital will be loosely defined in these proposals, as to provide the treasurer with flexibility, but also to impose guardrails/ensure the capital is deployed in a manner that achieves the goals the DAO desires. Prior to the DAO Orchestration member posting this proposal to the forum, a ⅗ consensus amongst the OAT will be required.

Assuming this proposal passes through the standard Arbitrum DAO governance process and the funds are transferred to the AF’s control, the Treasurer would begin drafting outbound materials to conduct protocol outreach/SP procurement for fund deployment. Similar to the proposal above seeking funds from the DAO, a ⅗ consensus will be required amongst the OAT prior to any funds being deployed. Likewise, if the Treasurer wishes to reallocate funds from STEP I/II to a different provider because the initial provider did not execute on what was originally promised (e.g., failing to deploy the tokenized asset on Arbitrum One), this will require ⅗ approval from the OAT. This ensures that funds can be moved without hurting relationships with existing vendors due to the negative PR that could stem from a reallocation that currently requires a high-profile DAO vote.

Note that, as always, the DAO remains in ultimate control. Any allocations made by this council can be clawed back to the DAO treasury, or be forced to be reallocated by the Execution Body, via a Snapshot vote that garners 3% of the votable token supply in favor of the clawback or forced reallocation. Also note, the OAT will be able to initiate emergency actions with ⅗ approval to pull out funds from a prior allocation, with the rationale posted to the forum immediately.

DAO’s Checking Account

It was made evident in the recent community call, as well as on the forum, that the DAO needs to have a process for spending stables/cash during periods in which it would rather not monetize treasury ARB to cover dollar-denominated expenses, or to cover service provider shortfalls that arise due to downward ARB price volatility.

Moving forward, we propose the “DAOs checking account” is taken over by the Arbitrum Foundation with full discretion on how it can be spent. For example, it can be used to cover service provider shortfalls or to cover dollar-denominated expenses in proposals that pass through Tally. Note, if a draft DAO proposal wants to access the funds, then it is recommended they contact the Arbitrum Foundation who will decide whether the assets can be used, before putting the DAO proposal up for a vote.

The Arbitrum Foundation will be required to adhere to any future structures that arise, including, but not limited to, a DAO budget or Net Working Capital requirements. This requirement is only related to the DAO’s treasury management initiative, and does not pertain to the AF’s current operations / existing budget. The AF will be required to confer with the Treasurer (Entropy) and inform the DAO Orchestration member (OpCo once operationalized) so that financial frameworks are followed, capital movements can be accounted for, and the DAO stays informed. The Treasurer will continually evaluate Net Working Capital developments, and make proposals to the DAO accordingly to ensure short-term liabilities can be met.

Please note that after speaking with the AF on May 30th, some changes to the “DAO’s Checking Account” section were made.

Costs

There will be no additional overhead related to these contributing entities, as they aren’t being compensated for their services in relation to the treasury management strategy and execution under this proposal. As such, the costs associated with this proposal, excluding SP expenses required to fulfill Risk/Miscellaneous-related work, will be zero. The budget already approved to pay the GMC and TMC members is expected to cover all overhead related to needed SPs over the near-to-medium term.

There are likely to be indirect costs associated with each fund deployment (treasury management fees, tokenized RWA fees, etc), and all of these costs will be disclosed in quarterly updates from the Treasurer or in the regular updates posted by the DAO Orchestration member.

Note that this proposal will only require a Snapshot vote that garners 3% of the votable token supply in favor/abstain of the Arbitrum Treasury Management Council’s implementation, and thus mark the wind down of the GMC, TMC, and STEP committee mandates. This is in-line with terms laid out in the treasury management v1.2 proposal.

Closing Thoughts

Through our proposed architecture herein, the DAO will deploy assets from its treasury with lower overhead and more accountability over each member’s contributions, develop a more cohesive overall strategy, provide applicants with clear points of contact with streamlined channels for receiving proposal feedback, have comprehensive financial reporting/live monitoring, will not make any decisions without maximum context through the AF’s and OCL’s involvement, and will have dedicated resources to ensure risk evaluation over all treasury management initiatives in order to maximize safety over the DAO’s assets.

We look forward to the community’s feedback.

Disclaimer: Although Entropy Advisors and the rest of the Arbitrum Treasury Management Council will do everything possible to ensure the safety of deployed assets, crypto is experimental technology from a security and economic design perspective. Entropy Advisors, or other members of the Arbitrum Treasury Management Council, cannot be held responsible/liable for any of the risks associated with fund deployment.

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2

Three discussions actually, where the last one happened 2 days ago, May 28th, and the recording is here.

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Thanks for the proposal, and for the lenghtly discussion in calls.

A first feedback on the overarching scope, having a single body managing the treasury of the DAO.
We need this. We have a lot of assets deployed in RWA, we are now starting to utilise the Ethereum of the treasury as productive assets, and we have a cash account. It does only make sense, from both a cost and management perspective, to have a unified approach to all of this.
Would still like to explore a few points mentioned, both here and also in the calls that we had.

We want, and need, AF/OCL to be perfectly aware of what we are doing and eventually inform us of potential opportunities.

While there are several entities in the DAO that have treasury expertise (thinking KPK, Avantgarde to name a couple) there is for now only one entity that is exclusive to our DAO and so has the most aligned nature. So it makes sense to have if any external SPs as executor/risk consultant, with strategic planning coming from Entropy.
We have also seen how Entropy does have financial capacities, so I think this choice is the right one. One hope, not necessarily a request, is that Entropy, in evaluating over time how to deploy assets, will also take in consideration the secondary goal of using these assets also for growth. As long as we are in proper risk parameters, allocating for example for a slightly lower APR but utilsing a protocol deemed key in our ecosystem would be, to me, the optimal outcome.
To reiterate: this can be a secondary goal not a primary one. But I am pretty sure that this will be taken in consideration, knowing that also OCL and AF are involved.

This point can likely be considered controversial at first glance by some. But I think is a somehow pragmatic approach to the reality that we have, which is

  • as of today, AF is the only entity really capable of converting both small and large sum of ARB into stables
  • AF has internal policies, rules and framework to do so, which might (conditional because I have no knowledge but makes sense to theorize) include converting only up to a certain amount of ARB per day/week/month, understanding market conditions and volatility etc
  • for this reason, the cash flow needs of new proposals might just be inconsistent with the policies of AF, policies that we collectively don’t know, and that we don’t need to know in my opinion.

Going back to the initial point, this solution seems pragmatic with a reality that has seen several proposals not being funded in a timely fashion due to these externalities.

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Thank you for your comments, JoJo.

We wanted to point out that the last quote in your comment has been changed after conferring further with the Arbitrum Foundation on the best path forward.

On the point of sacrificing a bit of yield to support our most important protocols - the goals of funding requests will be very clearly outlined in the proposals the DAO votes on. In TMv1.2, we made the mistake of conflating the goals of the funding request with growth and passive yield, which we intend to make much more clear moving forward when submitting requests for funds (which eventually, the OpCo will actually do). Ultimately, the DAO will determine via vote what the goal of each funding allotment will be, which will steer allocation decisions.

Additionally, given the diversity of the OAT, we feel confident the goals set out by the DAO will be strictly enforced. We definitely agree that supporting our most important protocols is of utmost importance. Whether that is achieved through treasury management or other programs will ultimately be up to the DAO.

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Understood and feels more streamlined now, thank you i would have not noticed the change.

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We love the idea of consolidating treasury management. While centralizing responsibilities within a DAO warrants scrutiny, the current treasury management structure suffers from a lack of accountability due to excessive fragmentation. Implementing this proposal would increase accountability over treasury management, and provide the DAO with a clear point of contact (Communications Body).

On that note, we are curious about how the Council will measure and report on its performance. Will there be written reports released periodically, or will there be a dashboard for DAO participants to view real-time treasury information, similar to the one Entropy has?

We are super excited to see the development of this proposal

Michigan Blockchain | Jack Verrill | TG @JackVerrill

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7

This proposal signals a significant maturation in how Arbitrum manages its treasury and I’m fully aligned with the direction.

Fragmentation across TMC, GMC, and STEP has long created inefficiencies, overlapping scopes, and excessive overhead. The proposed unified structure, the Arbitrum Treasury Management Council introduces a cohesive and agile framework with clear accountability, minimal bureaucracy, and strategic foresight.

Why this makes sense:

  • One council, one strategy: Consolidating governance into an aligned 3-body structure brings clarity and eliminates operational silos.
  • DAO still in control: Every deployment still requires DAO sign-off via the OAT and remains clawbackable — decentralization is preserved.
  • Lean, cost-effective ops: No added expenses, with pre-funded contributors and repurposing of unspent funds for targeted service provider support.
  • Built-in context awareness: With AF and OCL serving as observers, fund deployment won’t miss ecosystem-level nuances or BD conflicts.
  • Execution capacity: Entropy has already proven its dedication (waived payments across multiple mandates) and has been involved from day one. Giving them autonomy — with oversight — seems both earned and rational.

My main takeaway: This proposal offers a streamlined, scalable, and DAO-aligned framework that keeps Arbitrum’s treasury nimble, secure, and yield-optimized, exactly what’s needed as the ecosystem grows.

Let’s evolve past operational sprawl and into a more coherent future. Full support.

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TL;DR

Overall, we support the proposed direction, and we would like @Entropy to further clarify two crucial elements within this proposal: first, the transparency and accountability of the service provider selection process, and second, the explicit governance process surrounding medium- to long-term financial planning. By clearly addressing these points and adjusting the proposal, we believe that the proposed Arbitrum Treasury Management Council can become an exemplary governance structure, providing Arbitrum DAO with distinct strategic advantages and fostering greater trust and clarity among all stakeholders.

Our Reason for Support

We support the proposed direction of simplifying Arbitrum DAO’s treasury management structure. The current environment, characterized by multiple committees operating independently, has clearly led to inefficiencies and misalignment among treasury strategies. Consolidating these structures into a unified council will undoubtedly improve coordination and overall strategic alignment within the DAO.

In particular, we recognize significant value in Entropy taking responsibility for the creation of medium- to long-term financial planning and forecasting. This is critical because many DAOs struggle with effectively aligning their strategic business objectives with clear financial constraints and goals. By having Entropy model these financial plans, Arbitrum DAO can benefit from increased clarity regarding budget constraints and individual objectives, enhancing strategic coherence across the ecosystem, which is far beyond doing asset management for DAOs.

We also broadly agree with the proposed three-part governance structure comprising the Voting Body, Execution Body, and Communications Body. Given Entropy’s strengths and past experiences, we find it appropriate and beneficial that they assume responsibility for strategic financial planning, as this has been an area of need and aligns well with Entropy’s competencies.

Utilization of External Sevice Providers

At the same time, we recognize the importance of having specialized external service providers involved in detailed treasury management operations, such as risk management and asset allocation execution. While Entropy plays a critical strategic role, external service providers will specialists are essential for robust, effective, and transparent treasury management. We appreciate that the proposal explicitly highlights the outsourcing of these responsibilities to dedicated experts and consider this approach both appropriate and necessary.

However, we have important concerns regarding the process by which these service providers will be selected. Since detailed asset allocation and risk management expertise will no longer reside directly within the council, the selection process for external providers becomes even more critical. We strongly advocate for a clearly articulated, transparent, and accountable selection mechanism. Specifically, we recommend implementing procedures that involve the DAO directly, such as comparative evaluations or collective deliberation on multiple provider proposals. This level of transparency and accountability is essential to mitigate potential conflicts of interest, favoritism, or any perception of preferential treatment toward closely associated projects or parties.

Importance of Long-term Financial Planning

Our primary reason for supporting the inclusion of Entropy in this proposed treasury management structure is not merely to optimize asset management, but rather to significantly elevate strategic alignment and strengthen the DAO’s medium- and long-term governance capabilities. We believe that having Entropy facilitate comprehensive financial planning tied directly to Arbitrum DAO’s overall strategic and operational goals will enable higher-level decision-making within the DAO. Without this strategic alignment, we see limited value in inserting an intermediary between the DAO and external service providers.

Thus, it is crucial to clearly define how medium- and long-term financial plans will be developed, managed, and revised. These financial strategies must be explicitly aligned with Strategic Objective Setting (SOS) and receive formal DAO approval. This approval might not need to involve strict commitment to specific budgetary line items for some part, given market volatility, but should establish a broadly supported consensus on strategic objectives, budgetary guidelines, and financial constraints. Regular cycles of planning, evaluation, and adjustment should be clearly established, with periodic reviews to ensure alignment remains robust and responsive to changing conditions.

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9

On behalf of the UADP, we think this proposal to consolidate the Arbitrum Treasury Management Council is a strong step toward better coordination and clarity across treasury initiatives. The revised language from the Foundation and the open dialogue here show encouraging signs that stakeholders are aligned in principle and willing to refine implementation details together. Consolidation should reduce redundancy and improve accountability — especially important as treasury oversight matures and external scrutiny grows.

One area that hasn’t been explicitly discussed enough we think is the opportunity for the TMC to maintain a live dashboard or periodic public reporting portal, providing real-time or near-real-time visibility into treasury allocation, deployment status, and performance metrics. While high-level reports are valuable, a standardized interface for community members to track movement of funds, manager performance, and market exposure would significantly enhance transparency. It would also align with the ethos of on-chain finance and reduce informational asymmetry between the council and delegates or token holders.

As this Council structure comes together, it may also be helpful to predefine an annual or biannual external audit requirement, conducted by a third-party DAO-native treasury auditor. While this could be lightweight in scope, it would ensure continuous alignment with best practices and create pressure for high standards.

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Camelot supports this proposal as we believe in consolidation principles and avoiding waste of resources to streamline organizational efficiency.
The current fragmented approach across TMC, GMC, and STEP committees has proven, at least on the side of cost, inefficient so far, and likely will show limitation in coordinating effort over time.
We understand that Entropy is stewarding this initiative and that Entropy responds to the DAO, so it is natural that they lean toward acting in the best interest of the DAO and, specifically, in making the DAO independent and positive revenue generating ofr itself. However, we want to avoid the same situation as previous GMC and TMC rounds in which inclusion of protocols, and especially Arbitrum native protocols, was extremely low.

Camelot believes there is significant margin to create yield strategies for the DAO with well-balanced risk through the utilization of Arbitrum protocols, so that we realize both revenue for the DAO and growth of the ecosystem. We think this point should be of primary importance in the initiative.
There is even more merit to this approach because Entropy is positioned to manage the DRIP initiative if that vote passes. While the initiatives are totally different, from a practical standpoint Entropy would then be able to manage both incentive assets and treasury assets. This creates even more reason for accountability and for also being sensitive toward growth goals for the whole ecosystem rather than focusing solely on traditional yield optimization. We sincerely think there is room for both.

We also want to be mindful about how this initiative represents another key one in which AF/OCL/Entropy have the lead. While it makes sense for AAEs to have this lead, since they are best positioned from a business, technological and ecosystem standpoint, we also need to remind ourself how these are just more reasons to keep the AAEs accountable since, at this point, all leverages are there for them to operate effectively. As expected from the Vision post, all strategic initiatives are now slowly transitioning in the hands or will be in the hands of AAEs. We won’t be able to have proper accountability without spelling out clearly what success looks like, and if something doesn’t play out as expected, the AAEs will have to properly analyze what happened, why, and find countermeasures that the DAO will have to agree upon.

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11

First of all, thank you for this proposal. How the treasury management is handled has been a long and complex process for Arbitrum, which led to the formation of many different committees. Therefore, addressing and organizing this issue is very important. In particular, the fragmented treasury management structure can cause communication difficulties between committees, potentially leading to conflicts in decision-making and challenges in risk management. For this reason, the idea of unifying the scattered structure under a single umbrella is quite sensible. Additionally, the establishment of an oversight and coordination body — composed of representatives from AF and Offchain Labs — is one of the key factors that increases the proposal’s reliability and feasibility. We also believe it is critical for this oversight body to regularly share reports and serve in an advisory role. For all these reasons, we support the proposal.

ITU Governance, @harryvors

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12

On June 10th, we made the following (minor) edits to this proposal before we hopefully proceed to Snapshot on June 12th:

  • Removed 50k ARB of expenses under the “rationale” section related to STEP II and the Arbitrum Foundation, as this expense actually never occurred
  • Stipulated that the Arbitrum Foundation’s responsibilities could be moved over to OpCo over time via DAO vote
  • Added a link to the 3rd open DAO discussion call recording
  • Changed language under the “Costs” section in accordance with OCL/AF feedback (nothing material changed)
  • Clearly stated that the AF would only be required to adhere to NWC requirements/DAO budgets as it relates to the Arbitrum Treasury Management initiative, in an effort to avoid confusion with the AF’s previously approved budget / ongoing operations.

As a PSA, there will be a fourth open discussion call related to this proposal tomorrow (Wednesday, June 11th). This call link can be found on the DAO’s open calendar, or alternatively, here.

3 Likes
13

Hi this is Brook from TiD Research. Thank you for this proposal to streamline Arbitrum’s treasury management. I strongly support consolidating STEP, TMC, and GMC into a unified Arbitrum Treasury Management Council. This restructuring will enhance efficiency and enable more informed, cohesive decisions, preventing issues like those in the Reallocate Redeemed USDM Funds to STEP 2 Budget, where millions in funds sat idle for months.

I have questions for Entropy as the Execution Body regarding the investment mandate for the ~$50M AUM.

  • Would it be possible to describe how the allocation strategy will look? For example, will the AUM be divided into several sub-portfolios (e.g., stablecoins, ETH, RWAs) to diversify risk and align with the previous mandates of STEP, TMC, and GMC, or will you pursue a single, unified portfolio approach?
  • What are the key mandates guiding the allocation decisions—such as target yield ranges, risk tolerance levels, or ecosystem growth priorities (e.g., favoring Arbitrum-native protocols, as suggested by Camelot and JoJo)?
  • Will we maintain the distinct focuses of STEP (RWAs), TMC (ARB/stablecoins), and GMC (ETH), or integrate them into a new strategy?
  • Providing details on these aspects might help the community understand the vision for treasury optimization.

I also strongly support the “DAO’s Checking Account” under the Arbitrum Foundation’s management, which addresses stablecoin shortfall issues caused by ARB price volatility, as highlighted in the TMC Stablecoin Withdrawal Process and HCP Top-Up.

  • Would it be possible to clarify how the account will be funded moving forward (e.g., through treasury yields, ARB conversions, or periodic DAO proposals)?
  • What are the general guidelines for the management of the account? The proposal mentions that proposers should contact AF to access these funds before a vote, but what specific criteria will AF use to determine eligibility?
  • Greater visibility into these criteria might help to streamline future proposal development.
14

I’m supportive of this proposal and appreciate the effort to reduce fragmentation across the DAO’s various treasury management initiatives. It’s encouraging to see a shift from experimentation toward a more strategic and unified approach to asset management. This is a meaningful step forward for the DAO and one that can lead to more effective and responsible stewardship of the treasury.

That said, I would like to raise a concern regarding the proposed future structure of the Treasury Management Council, specifically the role of the OAT as the ultimate decision-maker in the allocation of funds.

While the OAT members are no doubt highly capable, respected contributors to the Arbitrum ecosystem, it’s important to highlight that the OAT was created to guarantee Oversight and Transparency over OpCo. The role description for OAT members did not explicitly include responsibilities related to financial oversight or asset management. Financial qualifications such as Corporate Finance, Capital Allocation, and Financial & Risk Management were listed only as “desired,” not as required. As a result, none of the currently elected OAT members appear to have a professional background in finance or capital allocation.

Given the significance of the DAO’s treasury and the complexity of managing digital assets at scale, I think it’s worth asking:

  • is the OAT best suited to serve as the final authority on fund allocation decisions?

Perhaps there is room to consider a structure where specialized financial expertise is more formally embedded in the decision-making process, or where checks and balances can ensure that asset management is guided by appropriate domain knowledge.

Overall, I support this proposal and view it as a much-needed evolution—but I believe it’s important we also think carefully about aligning roles and responsibilities with the skill sets required for sound financial governance.

3 Likes
15

First, we’d like to thank Entropy to consolidate fragmented treasury management processes into a cohesive, accountable council structure which is both timely and directionally sound.

Below are our key recommendations and feedback:

Integrate learnings from past committees

The proposal currently moves to sunset the TMC, GMC, and STEP committees, all of which were deliberately created by the DAO as decentralized treasury management experiments. This is not simply a technical consolidation but a significant governance decision that retires three separate DAO-designed mechanisms. Given the scale of this structural change, we believe it is critical that a formal post-mortem is conducted upon finalising the transition.

Beyond identifying operational shortcomings, this post-mortem should also capture what worked well under these decentralized structures: instances of effective vendor coordination, committee diversity benefits or vendor accountability achieved through distributed oversight. Understanding both the successes and failures of these decentralized committees will help prevent importing any systemic risks into the new, more centralized structure while preserving elements that added real value. We believe this institutional learning process is critical DAO information, especially for a DAO that may need to iterate on future governance experiments.

We strongly recommend publishing a formal Lessons Learned document as part of the final governance process.

Clarify the bandwidth and capacity strain this new model introduces

The proposal correctly highlights that Entropy, the Arbitrum Foundation, OpCo, and OAT are DAO-funded and thus no new salaries are required for this consolidation. However, this significantly underestimates the resource implications of centralizing treasury management into these entities. Treasury management is resource-intensive: requiring constant market monitoring, complex risk modeling, vendor oversight, compliance work, data transparency infrastructure, and high-touch coordination with BD, AAEs, service providers, and third-party vendors. Simply assuming that these new tasks can be absorbed without additional budget ignores the fact that human capital within these entities is finite. Time dedicated to treasury management will be time diverted from other mission-critical workstreams within these AAEs. Once current capacity is maxed, new hires or expanded operational budgets may be required. It is better to anticipate this now than defer inevitable resourcing issues.

We request further clarification on:

  • How many additional hours (weekly/monthly) are expected to be allocated to treasury management across Entropy, OpCo, AF, and OAT under this structure?
  • Are these teams currently close to capacity under their existing mandates?
  • What contingency planning exists for scaling headcount or adding budget once bandwidth constraints emerge?
  • Could resourcing gaps lead to bottlenecks elsewhere (e.g. protocol BD, program execution, or operational oversight)?

Without clarity on resourcing, we risk creating invisible operational debt that may impair both treasury management and other DAO functions long-term.

1 Like
16

Consolidating the treasury’s management efforts into a single body will help avoid further fragmenting the DAO’s organization.

We therefore agree with the change.

17

Thanks for the proposal!

IMO this is long overdue, and it is great that the DAO is seemingly willing to move towards this direction.

I have a few questions:

Regarding the funds already deployed:

  • I don’t see any mention of monthly reports like the ones done for STEP I. Who would be in charge of that for the other initiatives and for STEP I after the current funding ends in September?
  • The DAO voted for specific allocations for STEP II and TMC & GMC. If there is anything that has not already been deployed, will it be changed before the initial allocation? While I like the idea of Entropy eventually optimising the portfolio, I believe this should be done AFTER the initial deployment. Can you clarify this point?
3 Likes
18

AranaDigital supports the creation of the unified Arbitrum Treasury Management Council because merging the TMC, GMC and STEP programs into a single council removes the calendar clashes and fragmented mandates that have hampered coherent strategy, giving delegates one clear decision funnel and retiring the ≈ $581 k overhead tied to three separate groups. Entropy’s three open calls and the text revisions that followed show an iterative, collaborative design process that already aligns stakeholders around this structure. By re-using the 1 M ARB already budgeted for the legacy committees and adding no new salaries, the overhaul curbs administrative spend while still leaving room to hire specialist service providers when needed. Moving the DAO “checking account” under the Foundation lets invoices be settled in stables instead of liquidating ARB, which shields operations from price swings and smooths budgeting. Could the authors publish a concrete staffing and reporting plan, including expected monthly hours, live dashboards and an external-audit cadence, to demonstrate that the council has sufficient capacity and professional capital-allocation skill before the chance fully gets executed?

2 Likes
19

On June 16th, we made the following changes to this proposal before we hopefully proceed to Snapshot on June 19th:

  • Added language that enables the OAT to take emergency action in rare situations. This addition was requested on the most recent open discussion on treasury management.
  • Added a link to the 4th open DAO discussion call recording
  • Created flow chart-like images that should help the reader contextualize the high-level process for requesting DAO funds, as well as making reallocations from previously passed DAO treasury allocations
  • Inserted language that defined how the DAO could approve the transfer of the “fund movement and custody” responsibility away from the AF over to OpCo. This will require a Snapshot vote that garners 3% of the votable token supply in favor/abstain of the shift in responsibility.

We will be covering these changes on the DAO’s Open Discussions of Proposals call tomorrow, June 17th at 12pm ET.

1 Like
20

We’re supportive of consolidating the different treasury committees into a single council. The current structure is fragmented and hard to coordinate. Bringing everything under one roof makes sense and should help the DAO operate more efficiently.

That said, there are a few areas we think need more attention:

1. How Service Providers Are Chosen:

We fully agree with @Tane’s concern around the selection of external service providers.

Since the council won’t directly handle asset allocation and risk directly, who we bring in to manage those functions becomes even more important. There absolutely needs to be transparency around how service providers are selected but we don’t think it makes sense for Entropy to be the one defining those best practices.

A more neutral and structured approach would be for a group like the ADPC to oversee initial vendor engagement and negotiation. They could help standardize the selection process, run comparisons across providers, and ensure decisions are made in a way that’s fair and open. That kind of separation would go a long way in building trust and avoiding any perception of bias.

2. Defining KPIs and Performance Expectations:

With the creation of this new council, we’re effectively watching one of the first real tests of role separation between AAEs play out. That makes it even more important to clearly define how coordination will work between Entropy and the DAO, and what role OpCo will play in ensuring accountability.

At the moment, there are no concrete KPIs, reporting timelines, or clarity around how performance will be evaluated. We’d like to see a framework that outlines when and how updates are shared, what success looks like, and what mechanisms the DAO has to step in whether that’s through feedback, defunding, or replacing underperforming contributors. Without those checks and balances in place, we risk entrenching roles without recourse if expectations aren’t met.

3. Limited Options for Dispute Resolution:

If a decision turns out to be flawed or controversial, the only way to undo it is through a full council disbandment.

It would be helpful to have some middle-ground options like a review mechanism, lightweight dispute process, or a way for delegates to raise concerns and prompt re-evaluation without needing to burn the whole thing down.

We’re aligned with the general direction of the proposal and appreciate the work that went into it.

2 Likes