Thank you for the detailed report and reasoning behind the suggested changes of calculating Quorum.
It’s important to acknowledge that the suggested changes are not a quorum reduction by definition. The suggested minima of 100m & 150m for non-/constitutional are understood as fail-save values, not as limits that are expected to be relevant in normal day to day operations or at all.
This fail-safe mechanism is appreciated and the values seem alright. Negotiating a few million up or down seems to miss the bigger picture.
The real weight of this report/pre-proposal is the material change in quorum calculation, so we want to focus on that.
Ideally, changes to quorum happen extremely rarely, if ever. We just had a reduction in May and yet here we are again.
It’s important to future-proof the mechanisms so that we avoid changing the system back and forth every year or two on a fundamental level. Stability is important.
To simplify a bit, the current situation demands a participation of 3%/4.5% of ARB’s circulating supply during important decision making processes. One could also frame the situation as “at most, 95.5% of our token holders are allowed to be completely checked-out before we arrive at a stand-still”.
This is a low bar to meet.
In a functioning system, there are incentives at play (intrinsic and/or extrinsic) to motivate a significant share of stakeholders to participate in important decisions. If this is not happening, it’s a sign that the incentives are not structured in alignment with the operational goal (voter involvement, aka decentralized decision making & economic safety).
The proposed changes appear solid on surface. A change towards quorum based on delegated votes means that only active governance participants matter for governance. This makes sense from a practicability point of view, but not from an economics point of view. Every ARB holder has the option to participate in governance.
The Arbitrum network is more secure the more ARB actively participates in governance.
Hence, the goal must not be to make cosmetic changes on quorum just to avoid a stand-still but to improve the overall situation towards greater ARB delegation.
Instead of trying to treat a symptom (hard to get proposals through) we would challenge everyone to think about ways to cure the underlying disease (low stakeholder involvement overall).
The current voter landscape seems to have intrinsic motivation for the most part - large ARB holders, long time enthusiasts & ecosystem leaders.
The recent downturn of voter involvement since DIP 1.6 shows that extrinsic incentives, i.e. compensation of some sort, are important to activate voters.
However, sustainable incentives must be financed with a sustainable business model for ARB.
In conclusion, the real problem is not quorum.
It’s not even voter apathy.
The problem is a lack of economic energy attributed to ARB, the token, which could be harnessed to solve the above issues via various mechanisms.
In our opinion, this challenge is of outmost priority and, if not solved, makes cosmetic changes to the governance system irrelevant.
Building innovative DeFi protocols from scratch on Arbitrum for over 2 years, we’ve sharpened our understanding of the importance of economic incentives to drive outcomes. In crypto, that’s >80% of the result.
When the DAO and/or the AF is ready for this discussion, we’ll be happy to get involved and explore, analyze and discuss various value accrual and incentive models that can sustainably drive voter participation and value accrual for the DAO & individual ARB holders.