Good day Arbitrum DAO,
Time flies when building good stuff with good people in the DAO, and we’re excited to present our first forum update since completing the Tally vote. We will be submitting these every two weeks, with every other update aligning with the monthly reporting governance call.
First and foremost, we’d like to thank everyone who has supported us thus far! We appreciate you and would not be here doing what we love without you. We’re committed for the long run, and with your valuable input, we’ll continue striving to provide meaningful contributions to the DAO.
With this in mind, we want to prioritize your input.
As we continue to research the market landscape, please feel free to refer to us (With use of our referral link: https://link.farstar.co/avi):
- Projects and protocols relevant to the Arbitrum ecosystem that are actively raising funds (or planning to)
- Investment teams that already are, are interested, or are a good fit to be capital allocators in the Arbitrum ecosystem across all stages
Update #1 Tl;dr
Since the snapshot, our initial steps forward have included:
- Completing the exchange of the grant into USD (via OTC desk, mid-August) - as promised we returned the excess ARB to the DAO on 27 August.
- Updating the original timeline
- Discovery and research
- Incorporating DAO feedback
Further Details
Timeline Updates:
Since the Snapshot vote, our team has been executing on the pilot, but external factors have led to some delays, such as:
- A delay in the Tally vote
- High market volatility (5 August crash) causing uncertainty around receiving the projected budget and leading us to progress with caution on making commitments for spending
- Reorganization of deliverables to prioritize emerging DAO needs
The timeline now runs until mid-November instead of mid-October. Please refer to this loom for more details. The items that have shifted include:
- The thesis development workshops being pushed later in the timeline, even though we are actively working on thesis development.
- Correspondingly, the market consultation interviews will be pushed later to ensure our efforts on structuring, thesis and ops are fully validated with the market.
- As a result, the end of the pilot is now planned to coincide with DevCon, instead of the mid October date proposed in the Tally vote text.
Discovery and Research Progress:
While adapting to the timeline changes, we’ve emphasized the early stages of thesis development. To date, we have successfully:
- Conducted over 20 discovery interviews and over a dozen stakeholder meetings.
- Progressed on thesis framework development, including portfolio construction and analysis.
- Worked on the market consultation deck and report, which will be used for the interviews in September (The market consultation interviews will provide further input on our primary thesis research.)
- Conducting secondary thesis research (desk research), enhanced by the primary research (20 discovery interviews).
Incorporating DAO feedback:
To ensure we are in alignment with the DAO’s strategic objectives, we have:
- Prioritized oversight board discussions input and involvement
- Worked on drafts of directional snapshot vote and flow of votes in the DAO leading to the setup of the ecosystem fund
- Brought in contributors to address DAO communications needs that were brought to our attention by delegates in the past month
Budget Actions and Updates
After completing all admin, we received the funds and returned the surplus ARB to the DAO on 27 August.
- Received 191.7K ARB (MS: 0x9271A08958C0406F59fc0E0510141563A2FFcD28)
- Liquidated 162.7k ARB for $87k with Wintermute OTC desk
- Sent excess 29k ARB back (transaction)
- Project budget became available w/c 19 Aug
We’re updating our budget and plan. So far we are aligned with the approved budget (see Additional Resources below), where we expect that the Project Management line item would become larger at the expense of some of the others ones. This is accommodated by key contributors agreeing to take on more work within the same or lower compensation commitment.
It was also raised that the Tally proposal didn’t make it clear that we’re leveraging resources beyond the key contributors mentioned there. Farstar has over 100 vetted contributors and it’d be impractical to list them all. We are leveraging some of them for project management, copywriting, design tasks, etc. Our understanding of that mandate is that we have discretionary use of the funds provided as long as they are used in alignment with producing the promised deliverables. In retrospect we should have made it more clear in the proposal that there are anticipated costs for other people and their expenses, beyond those listed. Accountability for the end result of course remains with the key people listed on Tally.
The AVI team is happy to offer interested parties detailed spending reports upon completion of the contract and will inform and consult the DAO if there are any substantial deviations from the approved mandate.
Risks and Concerns
We have experienced a delay in the projected timeline due to external factors. As covered by this Loom.
Dynamic DAO developments and their implications for the Pilot
The scope of the pilot has been set with the intention to set up some of the building blocks necessary for the successful operation and decision making around the selection, evaluation and investing in a number of initiatives that were brought to the DAO as well as scouting the broader market to uncover the best possible investment initiatives and operators for the DAO.
At the same time there have been dynamic developments within the DAO that require our attention and a step back, one example being aligning stakeholders towards how Venture should exist in the DAO, and ensuring full structural and cultural alignment with the DAO, incl. oversight board, treasury management, business model and strategy, legal setup of the CapCo.
We have prioritized being actively engaged with these developments all throughout July and August as these are vital factors impacting the success of the overall initiative. The ripple effects of which have impacted the original timeline and led to the reorganization of the timeline, as discussed above.
External implications → Oversight Board / Strategy / Treasury and other financial implications
While this is to be expected in any complex organization, ensuring full alignment with these external factors also represents an external risk. We’ve been working hard to minimize the impact on the project.
Defining of responsibilities
We would like to establish with the DAO that we understand that structuring the vehicle so that the DAO can invest, and the management, allocation and deployment of funds on behalf of the DAO are very separate stages that require possibly different sets of skills and that require separate decisions from the DAO. Our goal for the structuring of the vehicle is to work with the DAO and the Foundation on a structure that’s flexible and scalable for the management team to operate it. We are going to set up an RFP process for the management and active deployment of funds, so that as a DAO we can attract, select and engage the best possible team to allocate capital on behalf of Arbitrum DAO. The thesis, portfolio construction, ops plan and strategic recommendations to be delivered by this pilot are serving key guidance for the structuring of the fund and would be a starting point for the management team.
While at Farstar we are committed to the Arbitrum ecosystem and the DAO for the long run, we do not aim in any way to embed ourselves to run the fund purely because we worked on setting up the structure. For the avoidance of doubt, we started the AVI working group and have been working on the AVI pilot because as a team we are deeply passionate about reducing barriers to entry for founders to build great products in the space and we see Arbitrum as one of the best (if not the best) homes for talented teams.
We are actively working on defining and establishing the balance (and boundary) between how much should be done by the AVI working group (and the Farstar team) now, and which points affecting the execution should be decided by the future leadership of the unit. Our goal is to equip the delegates in the DAO with the knowledge and information to be able to make an informed decision.
September’s Agenda
- Begin the market consultation interviews and collating the key insights into a report to update the community with all relevant stakeholder needs.
- Continue development of the investment thesis report and validating it with the market.
- Produce and collect feedback on key assets, including:
a. A portfolio construction draft,
b. A directional snapshot draft.
- Stay actively engaged with stakeholders and manage external risks through active participation in programs for the set up of an Oversight Board / Strategy / Treasury, as it directly impacts operational plan deliverables.
- Produce educational content for the DAO and ensure it reaches the target audience.
Ask for delegates and contributors
Our primary request for delegates and contributors is to identify and refer projects and protocols relevant to the Arbitrum ecosystem that are actively seeking or planning to seek funding, along with investment teams that currently are or could meaningfully be capital allocators in the Arbitrum ecosystem.
Please use our referral link: https://link.farstar.co/avi
Additional reference material:
Talley Vote:
Budget proposal:
Original timeline:
