We want to start off by saying that we appreciate the critical work that the Arbitrum Foundation does on behalf of the DAO to ensure that Arbitrum One stays operational and the DAO as a whole can perform functions that require an established entity that can interact offchain. While Entropy does not believe it’s prudent to be pulling from the ATM portfolio given its importance to the DAO’s long-term financial stability, we recognize the importance of the Foundation and the work it does on behalf of Arbitrum. As such, we will be voting for this proposal as is, but view it as a one-time injection. Future requests of this scale, particularly those that draw from the ATM portfolio in excess of its returns or that notably exceed such a large % of the DAO’s annual revenues in non-native assets, will be difficult for us to support absent a clear path toward tangible return-generating activities for token holders. We look forward to continuing to work with the Foundation and the rest of the DAO on building toward a more sustainable funding model over time.
While we understand that not a vast amount of details can be given on the specifics around exact fund usage, our team wants to be candid about our two main concerns with the proposal. First, we would have wanted to see a more tangible plan for reaching profitability in the medium term. Second, the usage of the ATM portfolio as the funding source for this proposal. The portfolio is intended to operate and exist into perpetuity, such that it can be used to facilitate ongoing DAO operations, ecosystem growth, and financial sustainability in the long term. Similar to an endowment, principal should never be drawn down, which has the added benefit of providing ARB with an increasing floor through growing non-native assets and diversified income sources.
Funding recurring operations and growth budgets from the ATM portfolio at this stage works against both of the above-mentioned purposes. Absent large structural changes, each annual funding request draws the floor down further. Looking forward, our preference would be to identify an alternative funding source for these types of proposals, in addition to stressing the need to both reduce OpEx and accelerate toward a positive bottom line.
If this proposal passes in its current form, we note that it leaves the appropriate bucket for each allocation to the ATMC and OAT to determine. We intend to fund it in a way consistent with proper portfolio management, which we will detail separately following the proposal’s outcome.
To answer @JoJo’s comment, we’ve included an overview of the DAO’s financial situation, granular breakdowns for DAO-side expenses, as well as net burn and runway estimations in each previous quarterly treasury management report, which can be found in this thread. These estimations include figures for the AF/Offchain, OpCo, as well as AGV, and are based on the most recent publicly available numbers and guidance at the time of publishing the reports. Given that Offchain will be funded separately from the AF going forward, and there are no historical figures publicly available to base estimations on, all-encompassing budget forecasting for 2027 would currently be speculative. Excluding OCL, assuming the price of ARB stays stable, no new initiatives are introduced that have costs attached to them, and incorporating AF’s new guidance, total expenses for 2027 should be expected to land at around $80M.