gm, I am generally aligned and this sums up my view.
Inefficiencies are clear. Could you outline the misalignments you’ve observed so the DAO and the new Treasury Committee can address them?
This is a great call and I think it should be added into the requirements. It’s much more effective than a static report, and I’m sure Entropy’s data team can craft a useful interface.
I want to emphasise the points raised by Camelot, JoJo and TID.
The treasury has four objectives IMO:
Generate yield so the DAO is self-sustaining. This is the core of the Entropy plan and matches the focus of previous committees.
Grow the DAO’s real-world-asset exposure and diversify risk.
Support established Arbitrum protocols.
Bootstrap liquidity for new Arbitrum projects. Early liquidity means other users feel confident to deposit funds, and all the DeFi flywheels that protocols enable can actually work.
One million dollars spread across nascent protocols is probably far more valuable than the same sum parked in T-bills.
This is distinct from the DRIP incentives proposal; here I am speaking about direct liquidity provision, for example:
• The DAO provides backstop liquidity to tokenised houses from Estate Protocol at a predefined floor to anchor prices.
• $200k of liquidity is supplied to a new perpetual exchange to compress funding costs.
• $500k is lent to solver pools so intents can settle promptly (RIP Chain Abstraction Proposal).
The Treasury Management Council should publish its intended allocation split for the year and retain discretion to redeploy capital quickly into high-impact liquidity pools.
First, thank you to everyone who has taken the time to comment/provide feedback on this proposal, and for those who have attended the open governance calls related to treasury management to go over this proposal live. We would like to address some of the comments
We have already spoken with all of the OAT members individually prior to posting this proposal to ensure their buy-in on the role described within the proposal.
To clarify: while the proposed structure does position OAT as a final reviewer for decisions made by the Council, this is meant to function more as a governance backstop rather than a body actively driving asset allocation decisions. The day-to-day financial strategy and execution will fall on Entropy and third-party SPs, as well as the AF for operational related tasks.
This is likely to be a large lift in terms of hours required by Entropy and the OpCo, but very minimal hours required of the OAT, OCL, and to some extent, the AF (whose role will likely shift over to OpCo over time).
The proposal repurposes the budget that was previously approved by the DAO to pay GMC and TMC members to hire third-party SPs that can help execute on tasks that members of the Arbitrum Treasury Management Council do not possess. Additionally, each time the council goes to the DAO with a new proposal seeking funds from the treasury to allocate, it can carve out a portion of the budget for outsourcing certain tasks to SPs, depending upon the goals of the allocation. We are not concerned with resource constraints for these reasons.
Entropy will be taking on the role of reporting under this proposal. We will have live dashboards (ideally with a custom frontend rather than just living on Dune to increase the DAO’s professionalism) available to anyone for free to track treasury positions, and will also post quarterly reports with insights related to treasury performance/the DAO’s financial health. We also hope to host regularly cadenced calls to go over these dashboards for the community to ask questions/learn how to leverage the insights.
In terms of the STEP II and TMC/GMC funds, nothing will change as it relates to the previously DAO-approved allocations. These are still in the process of being deployed by the AF, and an update will be posted to the forum regarding the status of these assets soon. In short, no allocations here will be changed prior to deployment, although they will be subject to reallocation over time as we collect data on their impact/performance.
Entropy will be handling the asset allocation recommendations, which will require OAT approval in order to ensure checks and balances are in place. The risk monitoring component will likely be outsourced on a case-by-case basis to qualified SPs, dependent upon the goals the DAO approves in the treasury allocation proposal. In terms of the process of procuring these SPs, Entropy will be leveraging its network to contract the best talent at the fairest price on behalf of the DAO, and the OpCo will be posting communications/rationale for vender selection on the forum to ensure transparency.
In terms of reporting timelines, this information is in the proposal and answered above.
In terms of KPIs, this will be defined in the proposals to the DAO that seek treasury allocations, which then go through the normal voting process. The DAO will essentially approve each allocation’s goals, and the success of the council should be measured based on how well it accomplishes these goals. This is another reason the OAT made sense as the approval body, as it serves as a check on recommendations made by Entropy that the allocations do in fact align with the DAO’s desires.
In terms of disputes, the proposal was recently modified to enable the OAT to make emergency actions, and the DAO has the ability to refute/reverse/clawback any allocation via Snapshot (Defined in the proposal).
Under the proposed structure, the DAO will approve the goals of each treasury allocation prior to moving funds to the AF and its subsequent deployment in line with recommendations from Entropy that are finally approved by the OAT. The OAT’s primary role is ensuring that the allocation recommendations are in-line with what the DAO approved. We agree with these 4 treasury goals.
In terms of the allocation split, we will attempt to establish a high-level target allocation structure in tandem with our budget creation process.
The current fragmentation between the different committees has resulted in operational inefficiencies, overlapping mandates, and elevated overhead. We welcome the proposal to consolidate these functions under a single, unified body - as an important step toward streamlining treasury governance. The proposed council introduces a more agile, accountable, and strategically aligned framework with reduced bureaucracy.
Given the DAO’s substantial holdings across Real-World Assets (RWA) and DeFi, consolidating asset management is both logical and beneficial from a cost-efficiency and oversight standpoint. This move would centralize responsibility, enhance transparency, and provide the DAO with a singular point of contact for treasury operations.
That said, we would appreciate further detail on how the council plans to measure and report performance. Considering the scale of the treasury, implementing a real-time dashboard for visibility into asset allocations and key metrics would significantly improve transparency.
We strongly support a transparent and merit-based selection process for future service providers. Outsourcing specific responsibilities to qualified experts, while maintaining cost discipline, will ensure the DAO benefits from high-quality management with minimal operational overhead.
We had a chance to speak with the Entropy team, and this proposal looks like a cost-effective solution for the DAO. Right now, Entropy has enough resources to manage the program on their own. As the program grows, they plan to bring in more people. They also addressed our concerns about centralization. The nomination process for selecting the treasury provider will be public and transparent.
The following reflects the views of GMX’s Governance Committee, and is based on the combined research, evaluation, consensus, and ideation of various committee members.
We’re mostly on board with this proposal, with only a few comments.
We would suggest considering letting Entropy still manage things as whole but bringing in SPs as advisors with lesser roles to help continue to manage the allocations that were started with the original TMC as well as the risk monitoring that was already mentioned. We don’t think Entropy would do a bad job, but the team did suggest three members to handle this as part of the TMC in the first place, while acknowledging that they would fit better on the GMC side and as far as we’re aware there hasn’t been any large changes there. As Matt mentioned during the most recent Open Proposals call, Entropy did not yet have anyone on the team that was specialized in handling allocations and while we are confident they’ll pick someone talented, that person could probably use some outside help as well.
We don’t quite understand this answer in the context that it was replying to, is the quarterly reporting for all the initiatives? The monthly reporting done on STEP was mentioned specifically, which already has a dashboard built by Steakhouse. Entropy may rebuild this in a better way or with a different frontend but we don’t see why that would mean reducing the reporting from monthly to quarterly. As I’m sure most people who have had jobs where they built dashboards are aware, there are a lot of users who will never go look at a dashboard but do still expect information synthesized for them, and we’re not sure that changes across domains or with more training. We can see how quarterly might fit better for the TMC/GMC parts, but we don’t see much of a reason why that couldn’t also be monthly too.
Lastly, we want to note that as mentioned during the most recent treasury management call, this proposal assumes Entropy continues to function in its current capacity for the DAO going forward. We think that’s a reasonable assumption but would not want this to go beyond a temp check until the other proposal is figured out or this one is changed such that another entity could step into Entropy’s role.
Consolidation makes sense. There are too many parties involved in managing the DAO treasury for it to operate efficiently. The current fragmented structure clearly isn’t working.
However this change would give Entropy considerable control over the treasury (even with veto oversight from OAT). It’s the basic tradeoff between decentralization. We understand that Entropy is a trusted party in the Arbitrum ecosystem and they appear to have the skills and capabilities to effectively manage the treasury, or at least do a better job than the previously fragmented approach.
But we think it’s important to regularly evaluate whether Entropy remains the best entity for this role long-term. Without periodic reassessment the DAO risks capture and excessive centralization. The 3% disbandment threshold is high but necessary as a backstop. Though the burden of proposing alternatives could deter legitimate challenges to underperformance.
Overall FranklinDAO is supportive of the consolidation, but we want to ensure the DAO maintains meaningful oversight mechanisms and doesn’t become overly dependent on any single service provider, including Entropy.
I support the general goal of the proposal - to streamline Arbitrum DAO’s treasury management and reduce fragmentation. However, I would like to highlight several key risks that should be addressed as part of future on-chain implementation.
I see several key risks here:
Too much power in the hands of a single entity (Entropy Advisors)
Entropy is granted an exclusive and central role as Treasurer without a clear mechanism for replacement. This creates a potential dependency, where the DAO could face increased costs in the future without alternatives.
Lack of cost transparency
There is no breakdown of Entropy’s internal expenses. The DAO has no visibility into how much time and money is actually being spent, making it difficult to evaluate whether this structure is more cost-effective than previous ones (TMC, GMC and STEP)
Fixed salary regardless of performance
Under the current structure, Entropy receives payment regardless of performance outcomes. There are no KPIs or metrics to ensure accountability or to link compensation to impact.
What I suggest to improve this ATMC:
Make the Treasurer role replaceable
Define the “Treasurer” role as a DAO-delegated position.
Allow for open competitive applications for this role every 12 months.
Enable the DAO to consider alternative teams with better terms or strategies.
Benefits: The DAO retains flexibility and independence, while encouraging competitive efficiency from Treasurer
Introduce KPIs and detailed reporting
Require quarterly reports, including:
Number of hours spent on ATMC
Direct and indirect costs
Set minimum performance KPIs, such as 5%+ annualized return on managed assets.
Benefits: This gives the DAO objective tools to measure ATMC performance and make informed renewal or replacement decisions of Treasurer
Implement budget caps
Define a maximum operating budget for the Execution Body, relative to total AUM or yield.
Require an independent audit once per year
Benefits: Spending is kept under control, and trust in the structure increases through independent verification
All these suggestions and risks were raised to ensure that Arbitrum can be confident about its future. This doesn’t mean that Entropy is doing a poor job or that I find their work unsatisfactory - on the contrary, their work has greatly benefited Arbitrum.
However, they are a private company with their own financial interests, while Arbitrum must prioritize its own interests and have the ability to protect them when necessary
As someone who suffered deeply the issues that the previous design had and had to jump through too many hoops just to continue doing a program already approved, this proposal is a welcome improvement.
I second Camelot point about how adding more responsibilities to OCL, Entropy, and the AF means further accountability is needed.
Without additional transparency from AF and alignment from Entropy (see Tanara’s recommendation for Entropy’s renewal), I’m genuinely concerned we’re moving into an unsound governance structure that will look bad as the space matures and more analysts assess the soundness of Arbitrum as an investment (institutions) and infrastructure (enterprise).
Good governance is a nice-to-have when we’re dealing with degens, but the pressure will increase from now on if Arbitrum is to become key infrastructure for enterprises and a sound investment asset for institutions.
I’m voting yes because this proposal makes things more organized. Right now, there are too many separate groups handling the treasury, and it’s confusing and costly. This new setup brings everything under one council, which should make it easier to manage funds and make smarter decisions for the DAO.
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