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.