[Constitutional] AIP: DVP Quorum

[paulofonseca]

@stonecoldpat

Just because others have not implemented a solution does not mean that no one should. If this was the approach taken in crypto, then we as a community would not have Ethereum, Smart Contracts, Rollups, etc, which were all very controversial and even demonised when they were proposed.

I’m sure you’re not putting these example innovations in the same pedestal as this DVP Quorum proposal. Because they are not comparable, and even more importantly, they are moved by very different motivations.

It seems to me, more and more, that the motivation behind this proposal is to make it even easier to pass constitutional proposals. To the point where we would be able to pass existential protocol changes with very little legitimacy to do so. When all ARB is unlocked in a few years, we would be able to change the protocol with just a 150M ARB quorum, which would mean that just 1.5% of the tokens would be making a decision that impacts all token holders. That’s a very, very small percentage, for constitutional changes in Arbitrum.

@stonecoldpat

I do not see why a war room is even appropriate here?

I’m not talking about contract code security. I’m talking about increasing the surface for governance attacks. Just in the last call, I highlighted one potential new governance attack that this quorum method enables for less than half the price of what it would currently cost (according to @amanwithwings). And it’s the kind of attack that our direct competitors would be able to pull off pretty easily and with total deniability.
Obviously these are sensitive things to discuss in public, but since Arbitrum would be the first DAO in the world, that secures as many resources as we do, to adopt this quorum method, I think it is very much appropriate to run a war room with industry leaders in this regard.

Maybe even setup a public bounty for governance security researchers to report new vulnerabilities enabled by this quorum method.

@stonecoldpat

The DAO is not here for your entertainment. Please be more respectful* to everyone here. As you can imagine, people do not appreciate remarks like this.

I meant that it would be funny as in, it would be ironic.

And maybe it would force the AF to finally address the root of the issue, which is not how the quorum is calculated, but the fact that the largest token holders don’t care to delegate their tokens because there’s no incentive to do so.

Also, we did pay @CastleCapital and @Nethermind to research this issues a few months ago.
And their conclusion was:

@CastleCapital

Expanding re-delegation efforts to help mobilize dormant voting power and reduce the risk of concentrated or stagnant governance.

@Nethermind

Increasing Delegation and Participation is Essential: If participation and delegation don’t scale along with quorum requirements, governance proposals will increasingly fail to meet quorum. Reliance on social coordination to pass critical proposals is not a sustainable governance model.

And their recommendations were:

@Nethermind

• Partner with vote-buying platforms. LobbyFi, controlling 20M ARB, can help prevent governance attacks through their existing guardrails for proposal analysis. We recommend working with them to disable vote-buying and implement automatic “No” votes for proposals flagged by the Security Council or exceeding specific funding thresholds.
• Implement dynamic quorums. This balances the risk of not reaching quorum against having too low a threshold that enables attacks. Setting quorum requirements based on estimated attack costs reduces profitability. Smaller proposals can have lower quorums, with requirements increasing for larger proposals.

and

@Nethermind

• Focus on increasing delegated participation rates. Currently, only 40-60% of delegates’ votes are cast on proposals. We need to increase this participation rate through incentives for active voting or consequences for non-participation. Higher participation from honest delegates increases the tokens needed for attacks. The cost rises quadratically with required tokens—a 10% increase in participation (30M ARB) could double attack costs from 18M to 34M ARB.
• Encourage Delegation. ARB staking is a step in the right direction, requiring token holders to delegate to receive rewards. Additional similar programs should be devised to encourage and grow the number of delegated votes.

And that’s why I’m running my own kind of incentives for ARB delegation to me, in the open:

Paulo Fonseca – 10% Delegatoooor Kickback Program

TL;DR: By the end of each year, I pledge to pay every wallet that delegates ARB to me, a share of 10% of all the money I earn in that year, that originates from Arbitrum DAO. I quit my job at the end of June 2024 and decided to participate in GovHack Brussels the following week, where me and @andreiv submitted a proposal for how proposals.app could help the governance processes in Arbitrum DAO. We ended up winning the GovHack, and then in October 2024 got awarded a grant from the Questbook New P…