After much internal deliberation, and striving to stay in line with our general philosophy of refraining from establishing a precedent wherein votes are cast on onchain proposals that lack finalization and absolute clarity, Blockworks Research has decided to vote AGAINST this proposal on Tally.
While we at Blockworks Research believe Arbitrum should make a strong attempt at becoming the gaming ecosystem in the space, and think the high-level direction of the proposal is sound, there is some ambiguity related to the operational structure of the program, the size of the potential market opportunity, as well as risks associated with such a large upfront investment in this initiative that we cannot ignore.
First, we would like to point out the things we are in favor of with respect to this proposal:
- The co-fund mandate imposed on the Game Publishers
- The anti-poaching clause to ensure we see net new growth in the ecosystem
- Multi-year KPIs (the studio deal KPIs in particular) with the flexibility to refine the 3rd year KPIs
- The high-level structure between the Council, Core team, and IC
Generally, Blockworks Research is not against earmarking notable capital on catalyzing the gaming ecosystem on Arbitrum, but we are unsure if the market opportunity for deploying 200M ARB is there today.
While we are in favor of an “optimistic governance” approach, we think giving all 200M ARB upfront is not a best practice and is not a good precedent to set. We believe giving a sizable amount upfront to give the program contributors latitude in making operational decisions is warranted and propose giving 50% of the total ask in advance, with the ability for the GCP Council/Core team to come to the DAO at a later date to unlock the remaining 50%. Even if the multisig has clawback functionality, having to use that clawback is much more politically and socially difficult than putting the onus on the GCP Council/Core to prove that the remaining 50% of funds are needed. We think this is a compromise and having 100M ARB upfront at the team’s disposal should give certainty to the eventual GCP team that Arbitrum is serious about this initiative while creating an incentive for core contributors to perform at a high level.
Additionally, there is currently no Conflict of Interest clause for the Core team members, only the Council members. Seeing as the Core team is the one predominantly handling the capital allocation on behalf of the DAO (majority of the seats on the Investment Committee), we believe this is a gap in the proposal that needs correcting before we would feel comfortable voting in favor. Moreover, there are no details in the proposal around the hiring process of the Core team, which feels like a gap we’d like to have more insight into.
Lastly, we’d like to see more detail on the revenue-sharing agreements between the game developers and the DAO. Our understanding is that these will be outlined in the quarterly transparency reports given to the DAO, but ideally, the DAO is given more transparency on what these deal structures could look like.
After a conversation with the GCP contributors, our understanding is some of our concerns highlighted above will be resolved and brought forward to the DAO post-approval (primarily around Conflict of Interest/hiring policies for the Core Team members). We appreciate the time all proposal contributors have taken over the past 6mo to move this initiative forward and look forward to hopefully seeing these as well as other community members’ concerns addressed in the future.