Arbitrum DAO Gaming Catalyst Program: Tally Draft
This draft was completed after a successful Snapshot temp check for the Arbitrum DAO to empower gaming with a three year, 200m ARB with the goal of powering the Arbitrum gaming ecosystem with the best studios and games in the web3 industry.
The temp check showcased the enthusiasm to support web3 gaming, but also revealed important questions to answer when launching an ambitious, multi-year plan requiring not only a strong team to run the program, but transparent, flexible collaboration between many stakeholders.
Introduction - Gaming Catalyst Program
What changed: Added additional data points and market sizing.
The Gaming Catalyst Program (GCP) is designed to immediately expand awareness and adoption of Arbitrum/Orbit/Stylus by builders and players in the Gaming community.
Arbitrum has emerged as a leader in the competitive network race through a dynamic formula of innovation, robust technology, organic builders, and a variety of short and long-term incentives.
The proliferation of DeFi on Arbitrum showcases how quickly a snowball effect can onboard builders, users, and ultimately value for the Arbitrum DAO and other stakeholders (i.e. Offchain Labs, Ethereum, etc.). The TAM for DEFI has surged to $50B and is projected to surge to over $120B by 2030 and Arbitrum is leading the way.
We believe that the same opportunity exists to attract the best builders that will in turn create sticky high quality games that bring and retain new users within Arbitrum. The gaming vertical has a $250B TAM today that is projected to grow to $500B+ by 2030. Though the “web 3 + games” segment of today’s game TAM is relatively small, it is poised to grow exponentially this decade.
Several L1s and L2s see this opportunity (most notably Solana, Cardano, Opstack, Optimism, to name a few) and are moving to claim the builders with grants and investments.
GCP Hypothesis
What changed: General content, enhanced GCP goals.
Arbitrum has had immense success in the decentralized finance vertical, but the branding of Arbitrum as a home for gamers and game builders is nascent. As a network, Arbitrum falls behind major competitors (Immutable X, Ronin, Solana, etc) across total games migrated, games launched, and total gamers.
This educational post shares some of the pain points and metrics within the gaming ecosystem in regards to Arbitrum.
Through the Gaming Catalyst Program, we aim to establish a dedicated team and fund to provide technical and strategic support to the game industry. This dedicated team is key to attracting and retaining the best established and independent developers.
We will know we are succeeding when we achieve the following:
Rapidly Increase the number of Game Developers using Arbitrum/Orbit/Stylus
The GCP aims to provide support and resources to developers interested in building on the Arbitrum network. This includes access to funding, mentorship by vetted experts, and other forms of assistance to expedite the development process and contribute to success in the market post-launch.
Strategic Allocation of Resources via Grants and Investments
By allocating resources strategically, the program can maximize its impact by focusing on proven publishers and developers as well as promising independent projects within gaming. This ensures that resources are used efficiently and effectively to foster the growth of high-quality games on Arbitrum.
Attracting and retaining Top Talent
Just as DeFi projects have flocked to Arbitrum due to its innovative technology and incentives, the GCP aims to attract the best game developers in the industry. By offering support,incentives and game industry specific tools, Arbitrum can position itself as an attractive platform for game development, leading to a surge in high-quality gaming experiences on the network.
Expanding the Use Cases of Arbitrum
While DeFi has been a major focus of Arbitrum’s success so far, expanding into the gaming vertical opens up new opportunities and use cases for the network. By supporting game and gaming infrastructure development, Arbitrum can diversify its ecosystem and appeal to a broader range of users and developers, with results that include but are not limited to Orbit chain and Stylus adoption.
Facilitating the Development of Sticky, Quality Games
The ultimate goal of the GCP is to encourage the development of sticky, high-quality games that not only attract users but also retain them over the long term. A dedicated GCP Team and Council representing the interests of the DAO will serve as quality control mechanisms to make sure the best applicants receive the full support of the GCP.
Proposal Summary
What changed: Extended timeline to three years from two years to ensure program has room to show more results.
We are asking the DAO to earmark 200m ARB over a three year period to expand the gaming ecosystem on Arbitrum and establish the network as the top choice for game builders across the landscape.
The GCP is meant to serve as a catalyst, not a comprehensive program, with a focus around onboarding and supporting high quality builders. After the roll out of the GCP, the aim is to use its learnings to mature the organization into a longer-term gaming program with a comprehensive approach to game ecosystem growth.
Strategically, we believe that attracting, retaining, and supporting builders with a dedicated team and an ongoing investment in game developers and the technical solutions they need will be a key differentiating factor vs other competitive networks. This commitment to gaming will lead to high quality game launches that will in turn attract large numbers of engaged gamers.
Part of the fund will be utilized to co-invest into promising studios and games along with approved, Arbitrum-aligned publishers, with the belief that the business model, industry expertise, and track record of publishers will streamline the outreach, vetting, negotiation, onboarding, and support process for builders. The fund will also be available for all other game builders seeking to create games on Arbitrum.
Controls
Publishers and developers will be subject to a robust set of checks and balances to ensure alignment with this proposal’s goals and Arbitrum DAO’s values:
- A GCP Council of 5 individuals with deep gaming, venture experience, analytics / reporting, and/or DAO governance skills will be elected by the DAO and will be responsible for holding the Catalyst GCP Team accountable - with powers including general oversight, hiring / firing of staff (think of them as a Board )
- A GCP Team will be created with the support of the Arbitrum Foundation, and will collaborate with the GCP Council (which will serve as oversight):
- An investment committee of 3 individuals including 1 Council member will approve investments
- Funding for projects will be contingent on achieving milestones
- A quarterly transparency report will be created with summary data on GCP performance
- Funding of projects will include terms that are market competitive
Program Outcomes and KPIs
What changed: Adjusted KPIs to account for a three year period and more aggressive goals, added Year 1 goals.
The Gaming Catalyst program has an overarching goal to bring in talented builders, and help the builders accelerate their games through the lifecycle stages.
The highest level metric we will be tracking is studio / builder onboarding into the Arbitrum ecosystem. However, there will be a variance in the realized outcome due to publisher applications, types of builders targeted, and variables from network competition.
Primary expected outcome:
Within the initial time frame of the program (3 years), the goal is to establish Arbitrum as a de facto leader for on-chain gaming. Specifically:
- 400-600 applications
- 100-200 net funded games
- Win net migrations to Arbitrum vs other L2s
- 50+ new Orbit launches
The GCP will take time to reach its full potential, and setting milestones vs maturity of the program is prudent:
| KPI | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Daily Active Users | 40,000 - 50,000 * | To be set by the GCP Team | |
| Orbit Launches | 15 | ||
| Studio Deals | 20 |
- Most games will be in dev and not (yet) live in 2024
The GCP team will set appropriate OKRs and KPIs internally to align with the goals and milestones listed above.
An additional outcome that the program aims to achieve is incremental movement through the gaming lifecycles illustrated by the Helika presentation on 2/2/24 here (slide 15) during our open office hours.
Initiatives
What changed: Removed publisher earmark, split the Builder Onboarding & Growth section into grants and investments. RFP details adjusted.
We are asking the DAO to earmark 200m ARB to develop the gaming ecosystem on Arbitrum and establish the network as the top choice for game builders across the landscape.
The funding will be allocated towards the following initiatives over the span of a three year period:
1. Builder Onboarding & Growth (160m ARB)
Focused on bringing the best game builders into Arbitrum - open to publishers, established studios, and independent builders.
- Grants to accelerate ecosystem growth (25m)
- Generally for smaller asks and projects
- Commercial terms may not be required
- Reviewed by grants manager
- Investments with commercial agreements (135m)
- Generally for larger deals
- Managed by an internal GCP venture team, via commercial terms (recoup + revenue share, equity, tokens, gas fees, etc…) with ROI as a main KPI
- Full funding of projects tied to achievement of milestones
2. Infrastructure Bounties (40m ARB)
Focused on creating game specific tech needed to make Arbitrum the best choice for game builders. Deals will follow grant or investment classifications based on the same sizing requirements as the Builder Onboarding and Growth program.
- Allocated by RFP or decided by the Council on a per proposal basis for any tooling and infrastructure needed to support gaming within Arbitrum (i.e. account abstraction solutions and gasless transactions for games, payment rails, web and game engine SDKs, data analytics and attribution, etc.)
- Promote Orbit, Stylus, and other development and infrastructure growth on top of new Arbitrum technology releases
The numbers proposed represent an upper bound of ARB that could be deployed to catalyze gaming on Arbitrum. In the event there is unused ARB at the end of the GCP across any of the two initiatives, funds will be transferred back to the DAO.
A. Builder Onboarding and Growth
Total Budget: 160m ARB
Use of Funds: This funding is proposed to be reserved for established publishers, game studios and independent builders on Arbitrum to help scale the DAO’s ability to attract, secure, and accelerate talented teams on Arbitrum.
Thesis / Experiment: We are allocating a large majority of the budget to empower growth of publishers and studios on Arbitrum.
Build Grants (25m)
Grants will primarily be used to empower teams that are aiming to accelerate early stage development on Arbitrum, or to incentivize user onboarding. Other grant uses may be reviewed on a case-by-case basis.
Guidelines & Details:
- Teams may apply via the GCP Grants form
- Grants have a maximum size of 500k ARB
- Preference for user onboarding incentives or early stage development
- The grants manager has final approval on grants
- Scorecards and details must be shared with the GCP Council
- Proposed: early grants period until legal entity is formed for GCP
- Onboard interim grants allocator
- Interim council of 5 members votes on individual grants
- Maximum allocation of 10m ARB prior to GCP entity formation
- Each grant must have specific milestones agreed upon before funding
Investments (135m)
Teams seeking more than 500k ARB or additional funding for development beyond initial development must work with the GCP investment team to align on deal terms.
Publishers may submit multi-game deals to the GCP for consideration - allowing them to be more efficient and create more strategic plans for their ecosystem. As a packaged proposal, publishers and the GCP team may collaborate to set milestones, funding, kpis, etc in aggregate form or by each game, allowing for more flexible launch, development, and operational capabilities.
Guidelines & Details:
- Builders or publishers must agree on a commercial agreement value share through tokens, equity, revenue share (post recoupment), or other pathways.
- Other considerations include active use of Orbit chains with significant sequencer revenue share as part of the default licensing structure
- More detailed deal structure guidelines will be created by the GCP Team upon its formation
- By the end of the program term, any unused ARB will be returned to the DAO
B. Game Infrastructure Bounties
Budget: 40m ARB
Use of Funds: This will be allocated by RFP or per proposal for any tooling and infrastructure needed to further support gaming within Arbitrum (i.e. gaming-centric boilerplates for Arbitrum Orbit, game contract libraries built via Stylus, account abstraction and gasless transactions solutions, payment rails for games, web and game engine SDKs (Unity, Unreal, Godot), etc.)
Thesis / Experiment: Web3 gaming is still nascent and there exists key gaps for game builders to build games and bring them to market. By incentivizing development for such infrastructure projects and tools, or accelerating development of Stylus as an Arbitrum native framework, this will help set Arbitrum further ahead in the competitive network landscape.
Current Gaps: A non-exhaustive list of gaps that currently exist within the Arbitrum ecosystem:
- Custom gaming-centric implementations of Orbit chains
- Mobile App Infrastructure with wallet that is optimized for games and asset management (See Ronin Wallet on mobile as an example)
- Web and game engine SDKs (Unity, Unreal, Godot) that allow for in-game contract calls
- Desktop launcher and distribution solutions
- Game analytics, optimization, and related tooling (tying together on-chain, off-chain, social, and player activity)
Funding Guidelines:
- The GCP Team will establish initial RFPs and funding guidelines
- An infrastructure specific rubric will be established by the Council to assess proposals
- Independent proposals that do not fit within RFP guidelines are welcome to apply separately for GCP Team consideration
- Any approved applicants for RFPs may be selected for vendor whitelisting, which allows vendors to be marketed to GCP participants
- By the end of the program term, any unused ARB will be returned to the DAO
GCP Org Structure
What changed: Added proposed org structure and relationship between each stakeholder / partie(s).
When designing the organizational structure of the GCP, two major dynamics were considered:
- Enabling autonomy of the GCP team while setting safeguards for program success
- Empowering the DAO to have transparency and representation without impacting compliance, disclosure, and other necessities for a grants program with commercial ties within the gaming industry
Decision making process
-
Decision is made by GCP team
- Investment committee decision, staffing, etc
-
Council meetings every two weeks to discuss / veto any decisions
-
Decision is ‘ratified’ and activated
-
Every half year, aggregate summary of data as applicable shared in a report to DAO
GCP Team
What changed: Added roles / responsibilities, section on entity setup, team incentives, and overall costing estimates.
The GCP Team will be the primary operator of the GCP program.
Team members may join the program through a few pathways:
- Nomination through the proposal process (to help accelerate standup of the program)
- Hiring by the GCP team, with veto capabilities held by the Council
The below team roles and responsibilities are illustrative of an initial proposed structure, but may change based on industry / program demands.
GCP Team Roles & Responsibilities
1. Fund General Manager / Venture Lead
Responsibilities:
- Presents deals to the investment committee
- Responsible for strategic planning and the overall success of the program
- Managing and staffing the GCP Venture team
- Providing leadership and oversight to the Venture team
- Driving deals, partnerships and being the public face of the GCP program
- Compliance
KPIs:
- Overall investment milestones
- Deal flow
- Venture team performance
2. Program Director
Responsibilities:
- Member of investment committee
- Ensuring overall program success and sustainability
- Managing and staffing the overall GCP program (in collaboration with the Venture Lead)
- Leading marketing / program development efforts
- Establishing internal metrics for OKRs & KPIs with the Venture and Grants programs
- Align with Arbitrum DAO and other key stakeholders on strategic direction
KPIs:
- Overall program milestones
3. Venture Partner
Responsibilities:
- Member of the investment committee
- Providing support for the GM
- Negotiating with publishers and studios on deal terms
- Working with General Counsel to ensure compliance
- Overseeing portfolio management and providing strategic guidance to portcos
- Preparing deal memos for the GCP Board
KPIs:
- Funded deals
- Successful game launches
- Venture milestones
- Compliance
4. General Counsel
Responsibilities:
- Ensuring legal compliance/diligence
- Managing legal operations
- Managing documentation for investment deals
- Serving as the liaison between the GCP and DAO
KPIs:
- Average time to complete deals
- Operating within budget for Legal
5. VP Finance
Responsibilities:
- Managing all GCP council required reporting and tax requirements
- Modeling of potential deals
- Ensure budget compliance
- AR/AP, payroll, vendor management
- Maintain token calendar
KPIs:
- Budget compliance
- Program sustainability
6. Analyst x 2
Responsibilities:
- Sourcing top deals in the market
- Providing in-depth market research
- Running due diligence for deals
- Geographical focus:
- 1-2 - Asia-focused
- 1-2 - US/Europe-focused
KPIs:
- Venture partner satisfaction
- Number of fundable deals
7. Producer
Responsibilities:
- Establishes milestones
- Providers additional DD support for GM / Investor
- Tracks performance for games
- Collaboration with Program Director and Director of Technology to create infrastructure RFPs
KPIs:
- Games shipping at quality
- Game progress through development funnel
8. Director of Technology (implementation engineer)
Responsibilities:
- Documentation for tech onboarding of game projects
- Connect the dots with vendors and gaming teams
- Helps frame infrastructure RFPs for bounty program
- Shortlists preferred vendors
KPIs:
- Implementation throughput, onboarding pace
- Builder advancement across development phases
9. Grants Manager
Responsibilities:
- Due diligence for submitted grants
- Presentation of grants to the council in written form
- Contribution to transparency reports
KPIs:
- Performance of projects receiving grants
- Efficient distribution of grant funds
Investment Committee (separate from Council!)
The investment committee’s role is to provide extra perspective on deals brought forth by the Investment Lead and other team members, and make a final decision on investments.
The proposed investment committee structure consists of two GCP Team Members and council members - however the size and composition may change based on needs.
Our current proposed committee has 3 seats:
- Program Director
- Venture Partner
- 1 GCP Council Member (extra pay for this position)
Team Incentives
GCP team members may receive incentives every 6 months based on performance.
These incentives will be established with the approval of the Council and KPIs will be set for each team member.
The council must approve the bonus / incentives after each 6 month period (this time period may evolve over time).
GCP & Legal Compliance
The GCP will retain qualified counsel and coordinate with the Arbitrum DAO to ensure that it operates in a legally compliant manner at all times.
Team and GCP Board Costs
The GCP’s operating budget will be capped at $20m USD (excluding additional legal and financial expenses specifically required to ensure compliance with DAO/Foundation requirements).
ARB will be converted to USD or USDC by the Foundation before each quarter and sent to the GCP program account or multi-sig for disbursement.
Entity Setup and Model
The GCP working group and Arbitrum Foundation are actively exploring entity setup to ensure DAO transparency while following the rigorous compliance guidelines that surround any entity focused on investments.
This effort also involves DAO members from the M&A, Ops Co, VCDAO, and other initiatives.
GCP Council
What changed: Revised descriptions of GCP Council’s role and responsibilities that portrays it more as a collaborative body vs a governing board.
The GCP Council will be a DAO elected group of trusted professionals with backgrounds ranging across gaming, venture, grant allocation, web3 technology, and DAO relations. The group functions as a braintrust that offers their accumulated knowledge to empower the GCP Core Team.
Primary responsibilities of the GCP Council:
-
Collaborate with the GM and IC on deal proposals by providing insights and identifying potential risks (can challenge based on deals not meeting very clear requirements).
-
Offer recommendations on proposed deals after reviewing relevant data and analysis (this analysis would be a standard for all deal memos).
-
Escalate concerns regarding deals to designated oversight bodies if necessary.
-
Review and provide feedback on GCP team member nominations submitted by the GM and Program Director.
-
Advise the GM and Program Director on long-term strategic plans for GCP.
Requirements:
- Council members must not be from publishers or studios intending to apply to GCP programs
- Council members with advisory, investor, or other relationships to applicants must disclose these conflicts
- Council members will go through mandatory yearly elections
- The DAO may call a snapshot vote to remove / replace council members
- Must sign NDAs and respect confidentiality agreements
Next Steps
What changed: Adjusted based on current estimates on timeline.
- [Done] Post Open Draft (Shared on 2/15/24, link within Arbitrum Gaming Education Post [Arbitrum and the Future of Web3 Gaming 89]
- [Done] Post GCP proposal to forum (3/11/24)
- [Done] Snapshot vote (3/15/24) for general delegate agreement on GCP commitment, start entity setups, and to receive detailed feedback: Snapshot 304
- Tally vote / ratification (May 2024)
- In parallel with Tally vote and /or post-ratification, GCP working group and authors will work with the Arbitrum Foundation for entity setup
- Collaborate with Arbitrum Foundation resources and vendors for due diligence
- Stand up legal framework and entity to support GCP
- Initiate on elections, team recruitment, and other procedures after completion of entity setup
- GCP Council Elections (May 2024)
- GCP GCP Team formation (April - May 2024)
- Grant applications and RFPs open (May - June 2024)
Total Cost
What changed: Adjusted total cost breakdown, added more details to Program Admin and Operations.
We estimate the total cost to equal 200m ARB + operations costs detailed below under Program Administration & Operations.
This is a three-year program and forecasted amounts may change / require amendment(s) as the program evolves. Any unutilized ARB at the end of the program duration will be returned to the DAO treasury.
- Total Incentives: 200m ARB
- Builder Onboarding and Growth: 160m ARB
- Infrastructure, Tooling & Stylus Development: 40m ARB
- Program Administration & Operations - $20m
- Council Members (5): $630k
- 30k each member per year
- 60k for investment committee representative
- MultiSig Signers (5): $180k
- Team Salaries: $18m
- Legal / Compliance: $1m
- Expecting usage for vendors, entity setup, adjustments for fast evolving regulatory environment
- Proposal Authors and Contributors: 100k ARB
- Council Members (5): $630k
Proposal Contributors
What changed: Added new contributors.
Djinn (Dan Peng) - PM / Author
Karel Vuong - Author (Co-Founder, Treasure)
Marcus Segal - Contributor
Rick Johanson - Contributor
Xai Games - Advisor / Contributor
Helika - Advisor / Contributor
Jason Lee - Advisor / Contributor (ExPolygon Games, current web3 gaming founder)
Resources & Content
What changed: -
GCP AMA / Open Office 3/15/24 - https://twitter.com/i/spaces/1RDGllYMYvOGL?s=20 26