Thanks for the detailed proposal! Here is our analysis and thought on this proposal.
TL;DR
We agree that a quorum misaligned with voter participation can paralyze ArbitrumDAO, but we believe lowering the constitutional threshold from 5 % → 4.5 % exposes the treasury to avoidable economic risk. Under today’s conservative prices (ARB = 0.31 USD), the cost to buy the new quorum nearly approaches the 57 M USD of liquid assets in the treasury; a modest ETH rally or further ARB weakness could flip the cost‑benefit equation in favor of an attacker.
Numbers & Assumptions
| Parameter | Value | Note |
|---|---|---|
| Votable supply (conservative) | 4.75 B ARB | |
| ARB price (conservative) | 0.31 USD | conservative assumption |
| Treasury USD stables | 33.9 M USD | STEP report Apr‑2025 |
| Treasury ETH | 12.9 k ETH ≈ 23.2 M USD | ETH @ 1 799 USD STEP report Apr‑2025 |
| Total liquid assets | 57.1 M USD | Sum of the above |
The proposed 4.5 % quorum equates to roughly 213.8 M ARB ≈ 66.3 M USD, only ~9 M USD above the treasury’s liquid holdings. If ARB fell below 0.27 USD or ETH printed new local highs, the attack could turn profitable.
Why a lower quorum creates a larger target
Lowering the quorum reduces the number of tokens required to govern, so the cost of a hostile take‑over falls one‑for‑one with the threshold. Because the treasury holds liquid ETH and stablecoins, an adversary could, in theory, borrow or purchase the necessary ARB, pass a withdrawal proposal, and exit with more value than they spent. This scenario is not merely academic; it is the same playbook that almost succeeded in Compound when a single whale (known as humpy) accumulated voting power and tried to funnel funds to a personal address, only to be stopped by emergency guardians and community outcry (see the incident analysis).
Limitations of the simple break‑even model
The calculation above is intentionally conservative. In reality,
(1) acquiring >200 M ARB would likely push the price up and inflate the attacker’s bill;
(2) a hostile actor could also dump the treasury’s own ARB on the market, extracting value well beyond our 57 M USD estimate; and
(3) OTC liquidity premiums and on‑chain slippage further distort the arithmetic.
At the same time, Arbitrum’s Security Council can pause malicious execution, so an incentive alone does not equal instant compromises, but the narrower the economic margin, the greater the reliance on emergency intervention.
Possible alternative – Treasury Delegation
Rather than lowering the quorum, we advocate treasury delegation. By delegating a slice of the DAO‑owned ARB. say ≈ 22 M ARB, to a curated set of active, accountable delegates, the DAO lifts effective participation while keeping the constitutional threshold intact, as described by @cupojoseph.
To be more concrete, we believe a treasury delegation scheme should follow three principles. First, it must avoid over-concentrating voting power: the allocation should be evenly spread across a fixed, moderate-sized cohort of delegates. Second, delegate selection should rely on transparent, objective metrics, such as past voting attendance and alignment scores, so that anyone can independently verify fairness. Third, every delegation should carry a hard expiry that auto-revokes voting power unless the DAO explicitly renews it, preventing perpetual entrenchment.
At the same time, we understand that this is not the ideal solution, but rather something temporal. We also believe that there needs to be a fundamental solution implemented so that token holders are encouraged to vote/delegate to strengthen this DAO governance.
Conclusion
Lowering the quorum fixes a short‑term participation symptom, but it shifts systemic risk onto the Security Council and narrows the economic moat around the treasury. Delegating dormant ARB from the treasury to proven delegates achieves the same practical goal, more votes, while preserving the cost of a buy‑out. We therefore oppose the 4.5 % proposal and urge the DAO to pursue treasury delegation or other alternatives instead.