[Constitutional] DVP Quorum for ArbitrumDAO: Implementation & Parameters
Changelog
Changes made on February 18, 2025:
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Added more detail on the implementation and smart contract changes this upgrade entails, notably section 3.1.4.
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Added link to the temperature check vote in the Abstract section.
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Non-material revisions to ArbitrumDAO Constitution Adjustments for clarity and to fix minor typos.
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Other minor edits to proposal text as it moves from a temperature check to an on-chain vote.
1. Abstract
The ArbitrumDAO recently expressed strong interest in moving towards a delegated voting power (DVP)-based quorum model with the parameters now finalized in an offchain vote. Consequently, this upgrade, if implemented, will define quorum as:
Quorum = min{max quorum, max{ɑ*DVP, baseline quorum}}
where ɑ, baseline quorum, and max quorum are constants.
Updates to the quorum computation model will also be reflected in the ArbitrumDAO Constitution - executing this proposal will update the on-chain constitution hash given the adjusted text.
2. Motivation & Context
As it stands, ArbitrumDAO’s quorum is computed based on the total voteable supply, which has no relationship to the tokens registered to vote. This proposal introduces a better approach by basing quorum on delegated voting power (DVP) - a metric that more directly represents the amount of ARB participating in governance and available for voting.
All of the relevant context and motivation may be found in the previously published posts on this topic. The first report focuses on the rationale for the change, the historical performance of quorum, and the security implications of this upgrade. The second report is a comparative analysis of quorum across other large DAOs, as well as shareholder voting in public companies, aimed at presenting insights into ArbitrumDAO’s position relative to comparable systems. The motivation around this update is captured in the initial temperature check.
3. Specification
3.1.1 Definition - DVP
This AIP proposes upgrading to the following quorum computation logic:
Quorum = min{max quorum, max{ɑ*DVP, baseline quorum}}
where ɑ, baseline quorum, and max quorum are constants.
3.1.2 How the Formula Works - DVP
The proposed formula works as follows:
- When ɑ* DVP is lower than baseline quorum, baseline quorum applies.
- When ɑ* DVP is higher than baseline quorum and lower than max quorum, ɑ* DVP applies.
- When ɑ* DVP is higher than max quorum, max quorum applies.
In short, baseline quorum and max quorum form fixed lower and upper bounds for quorum.
3.1.3 Proposed Parameters - DVP
We suggest the following parameters:
For constitutional proposals:
- {ɑ = 0.5; baseline quorum = 150m ARB; max quorum = 450m ARB}
For non-constitutional proposals:
- {ɑ = 0.4; baseline quorum = 100m ARB; max quorum = 300m ARB}
A Trail of Bits audit of the proposed changes can be found here.
3.1.4 Implementation - DVP
This upgrade will introduce the following changes to the ARB token contract and the governor contracts:
ARB Token contract upgrade
The ARB token contract will be upgraded to keep a running total of DVP, updated upon each delegation change and token transfer.
- What is tracked:
Total DVP = sum of balances of all accounts with a non-zero delegation at a given block.
- Initialization process:
To initialize the running total, an estimate of the total DVP must be provided as part of the upgrade proposal. A followup proposal can correct any error in the initial DVP estimate if needed. This doesn’t change user balances or individual delegate voting power, only the aggregate DVP.
- Query interface:
getTotalDelegation() to obtain the latest value.
getTotalDelegationAt(uint256 blockNumber) to obtain historical value at a snapshot block.
Governor contract update
- The DAO governor contracts (Core Governor and Treasury Governor) will be upgraded to use the new total DVP metric. This replaces current percentage calculations with DVP-based thresholds.
- Use getTotalDelegation() from the token contract for quorum calculation.
4. Rationale for Parameter Selection
(i) Participation threshold (ɑ)
For non-constitutional proposals, our recommendation of ɑ = 0.4 ensures continuity with the current non-constitutional quorum. At the current DVP of 348.61m ARB, non-constitutional quorum will equate to 139.4m ARB, which is very close to its current value of 145.56m ARB.
For constitutional proposals, our recommendation for an ɑ value of 0.5 aims at creating a safer buffer between voter turnout and quorum while retaining a high voter turnout. Most large DAOs operate with quorum thresholds well below fifty percent of delegated voting power, and corporate and legislative systems rarely employ supermajority quorum requirements. As concluded by research report #2, when quorum is expressed as a percentage of DVP, its value at ArbitrumDAO (~62% of DVP) is roughly double that of the next highest DAO benchmarked. Even after the proposed upgrade, ArbitrumDAO’s quorum would remain higher than all comparable DAOs reviewed by the report.
(ii) Baseline Quorum
Historical participation data of ArbitrumDAO provides strong support for the baseline quorum values proposed. Over the last two years, the average quorum for non-constitutional proposals amounted to ~104m ARB, which motivates our recommendation of a 100m ARB baseline for non-constitutional proposals. For constitutional proposals, the average quorum, excluding periods in which quorum was structurally difficult to reach, falls around 156m ARB, motivating our recommendation of a 150m ARB baseline. These values preserve continuity with observed voting behavior while creating a sufficiently large lower bound for quorum.
Note that baseline quorum values will not apply until DVP drops below a certain threshold. For the constitutional baseline quorum to apply, DVP would need to drop below 300m ARB. At all values of delegation below this threshold, a constitutional proposal will require a quorum of 150m ARB. For the non-constitutional baseline quorum to apply, DVP would need to drop below 250m ARB.
(iii) Maximum Quorum
The implementation also includes an explicit smart contract setting to configure a maximum value of constitutional and non-constitutional quorum. This is a static parameter that can be updated through a DAO vote if needed. A maximum quorum of 450m ARB for constitutional proposals and 300m ARB for non-constitutional proposals are proposed. These values are fully consistent with the current maximum quorum values (where they are defined as 3% and 4.5% of the maximum voteable token supply) and as such aim to retain the status quo on the upper bound. For additional context, DVP would need to go over 750m ARB for the non-constitutional max quorum to be triggered and to over 900m ARB for the constitutional max quorum to be triggered.
Going forward, these thresholds may further act as checkpoints for the DAO to reconsider the DVP-quorum model’s performance in a high-DVP scenario.
5. ArbitrumDAO Constitution Adjustments
Due to the upgrade’s nature, the following updates will be made to the Definitions and DAO Proposals and Voting Procedures sections of the ArbitrumDAO Constitution, in order to reflect the new way quorum is calculated.
Change 1: Definitions
Old Text
Definitions:
- AIP: An Arbitrum Improvement Proposal
- ArbitrumDAO-governed chains: The Arbitrum One and Arbitrum Nova chains and any additional chains authorized by the ArbitrumDAO
- DAO Treasury: All $ARB tokens held in a governance smart contract governed directly by the ArbitrumDAO and/or the Security Council of The Arbitrum Foundation via on-chain voting mechanisms.
- Governed Chains: Any ArbitrumDAO-approved chains that are governed by the $ARB token
- Non-Governed Chains: Any ArbitrumDAO-approved chains that are not governed by the $ARB token
- Votable Tokens: All $ARB tokens in existence, excluding any tokens held by The Arbitrum Foundation and any unclaimed airdrops
New Text
Definitions:
- AIP: An Arbitrum Improvement Proposal
- ArbitrumDAO-governed chains: The Arbitrum One and Arbitrum Nova chains and any additional chains authorized by the ArbitrumDAO
- DAO Treasury: All $ARB tokens held in a governance smart contract governed directly by the ArbitrumDAO and/or the Security Council of The Arbitrum Foundation via on-chain voting mechanisms
- Delegated Votable Tokens: The number of all Votable Tokens that have been delegated and eligible to vote on AIPs
- Governed Chains: Any ArbitrumDAO-approved chains that are governed by the $ARB token
- Non-Governed Chains: Any ArbitrumDAO-approved chains that are not governed by the $ARB token
- Votable Tokens: All $ARB tokens in existence, excluding any tokens held by The Arbitrum Foundation and any unclaimed airdrops
Change 2: DAO Proposals and Voting Procedures
Old Text
Phase 3: DAO votes on AIP, on Arbitrum One (14–16 days): During this Phase 3, the ArbitrumDAO will be able to vote directly on-chain on a submitted AIP.
An AIP passes if the following 2 conditions are met:
a. More Votable Tokens have casted votes “in favor” than have casted votes “against” (“Threshold 1”); and
b. In the case of a:
- Constitutional AIP, at least 4.5% of all Votable Tokens have casted votes either “in favor” or “abstain”; or
- Non-Constitutional AIP, at least 3% of all Votable Tokens have casted votes either “in favor” or “abstain” (collectively, “Threshold 2”).
New Text
Phase 3: DAO votes on AIP, on Arbitrum One (14–16 days): During this Phase 3, the ArbitrumDAO will be able to vote directly on-chain on a submitted AIP.
An AIP passes if the following 2 conditions are met:
a. More Votable Tokens have cast votes “in favor” than have cast votes “against” (“Threshold 1”); and
b. (“Threshold 2”) In the case of a:
- Constitutional AIP, at least a number of all Delegated Votable Tokens have cast votes either “in favor” or “abstain”, determined in accordance with the below formula:
i. If the product of 0.5 and the Delegated Votable Tokens (“Preliminary Constitutional Quorum Value”) is less than 150,000,000, then 150,000,000 applies; or
ii. If the Preliminary Constitutional Quorum Value is greater than 150,000,000, but less than 450,000,000, then the Preliminary Constitutional Quorum Value applies; or
iii. If the Preliminary Constitutional Quorum Value is greater than 450,000,000, then 450,000,000 applies.- Non-Constitutional AIP, at least a number of all Delegated Votable Tokens have cast votes either “in favor” or “abstain”, determined in accordance with the below formula:
i. If the product of 0.4 and the Delegated Votable Tokens (“Preliminary Non-Constitutional Quorum Value”) is less than 100,000,000, then 100,000,000 applies; or
ii. If the Preliminary Non-Constitutional Quorum Value is greater than 100,000,000, but less than 300,000,000, then the Preliminary Non-Constitutional Quorum Value applies; or
iii. If the Preliminary Non-Constitutional Quorum Value is greater than 300,000,000, then 300,000,000 applies.
Change 3: Fixing Minor Typos
Old Text
A Non-Constitutional AIP is one that is not considered a “Constitutional AIP” including:
- Funding: Requests funds/grants or otherwise propose how to spend or allocate funds from the DAO Treasury and, so long as The Arbitrum Foundation exists, the Administrative Budget Wallet as defined in the The Arbitrum Foundation’s Amended & Restated Bylaws
New Text
A Non-Constitutional AIP is one that is not considered a “Constitutional AIP” including:
- Funding: Requests funds/grants or otherwise propose how to spend or allocate funds from the DAO Treasury and, so long as The Arbitrum Foundation exists, the Administrative Budget Wallet as defined in The Arbitrum Foundation’s Amended & Restated Bylaws
Old Text
Security Council members may only be removed prior to the end of their terms under two conditions:
1. At least 10% of all Votable Tokens have casted votes either “in favor” of removal or “abstain”, and at least 5/6 (83.33%) of all casted votes are “in favor” of removal; or
New Text
Security Council members may only be removed prior to the end of their terms under two conditions:
1. At least 10% of all Votable Tokens have cast votes either “in favor” of removal or “abstain”, and at least 5/6 (83.33%) of all cast votes are “in favor” of removal; or
Voting Options & Timeline
This on-chain proposal will include the following voting options:
- FOR
- AGAINST
- ABSTAIN
We aim to take this proposal to an on-chain vote starting 26/02/2025.
