ARDC Communication Thread

Arbitrum Research & Development Committee (ARDC) Supervisory Council
16

ARDC V2 Update - March 27, 2025

Introduction

Hello everyone! We’re pleased to provide the latest update on the ARDC’s activities. This past month has been productive, with several key research deliverables on the horizon.

Recent Research

OpenZeppelin - Security Council Recommendations

Last week, OpenZeppelin presented their comprehensive analysis on enhancing the Arbitrum Security Council. During our bi-weekly call on March 20th, they shared key findings including:

  • Ideal Council Member Qualities: Members should demonstrate impartiality, trustworthiness, and technical competency
  • Technical Requirements: Council members must be capable of independently assessing threats and validating remedial actions
  • Governance Attack Definition: Proposing that governance attacks be explicitly defined in the Constitution as actions that “irrevocably exhaust DAO resources to benefit a select few acting in bad faith”
  • Council Composition: Recommendations to limit anonymous council members to three, and allow organizations as members with 1-of-N multisig configurations (N≤3)
  • Powers and Terms: Maintaining emergency action capabilities rather than restricting to veto-only powers, and preserving the current 12-month staggered terms

The full report provides detailed analysis of how the Security Council serves as the last line of defense for the Arbitrum ecosystem, safeguarding billions in bridge assets. OpenZeppelin’s recommendations balance security, decentralization, and operational effectiveness to enhance the Council’s capabilities.

Nethermind - Sequencer Revenue Report

Nethermind has completed their analysis of Arbitrum’s sequencer revenue sustainability. Their report includes:

  • Revenue Concentration: 46.4% of sequencer revenue comes from the top 10 highest-earning days since the Dencun upgrade
  • Shifting Revenue Sources: DeFi’s contribution declined from over 50% in late 2023 to 20.4% year-to-date, while CeFi (primarily MEV/bot transactions) now accounts for 21.8%
  • Market Challenges: Arbitrum’s market share has decreased from 22% to 10% due to rising competition
  • Competitive Strengths: Arbitrum maintains advantages as the L2 with the highest Total Value Secured ($14.2 billion) and dominant share in DeFi volumes
  • Strategic Opportunities: The report identifies emerging verticals like RWA, DePIN, AI agents, and memecoins as potential growth areas

Ongoing Research Projects

Governance Attack Analysis

Nethermind and Castle Capital are collaborating on a comprehensive analysis of potential governance attacks. Phase 1 of this research focuses on:

  • The state of Arbitrum governance
  • Analyzing various forms of governance attacks and their associated costs
  • Examining the impact of growing quorum thresholds on proposal success
  • Projecting the probability of proposals failing to reach quorum under varied participation rates
  • Studying how market conditions and voter concentration impact governance

The initial findings from this research should be ready soon, and we look forward to sharing them with the community.

Incentive Programs Analysis

DefiLlama Research and Castle Capital continue their in-depth analysis of Arbitrum’s incentive programs (STIP, STIP Backfund, LTIP, STIP Bridge). Following their highly regarded grants program analysis, this research aims to provide actionable recommendations for optimizing future incentive structures.

DL Research has published a survey to gather insights for this research, and we encourage all delegates to complete it to help inform their findings. Found here, and here.

Pricing of Vote Buying Services

DefiLlama Research is also working on analyzing the pricing economics of vote buying in governance systems. This research will help understand the mechanisms and potential implications of services that facilitate vote buying or delegation in the ecosystem.

Upcoming Events

  • April 3rd, 2025 (Thursday), 4:00 PM UTC: X/Twitter Space featuring Jared from OpenZeppelin discussing the Security Council recommendations in depth
  • April 3rd, 2025 (Thursday), 5:00 PM UTC Next Bi-weekly Call: We’ll be presenting Phase 1 of the Governance Attack analysis findings by Nethermind

Community Input Needed

We’re excited to share our ARDC Research Priorities Survey that will help guide our future research focus.

ARDC Research Priorities Survey

The survey takes approximately 5 minutes to complete and covers:

  • Importance ratings for specific research topics
  • Prioritization of research areas for the next 2-3 months
  • Preferred balance between tactical and strategic research
  • Suggestions for additional research topics

Your input will directly influence which topics the ARDC focuses on in the coming months. Results will be shared in our next bi-weekly call.

Communication Channels

We appreciate your continued engagement and look forward to sharing more research findings in the coming weeks!

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