I have worked closely with Entropy Advisors both in my capacity as Treasure Delegate and on the MSS Proposal’s design. Additionally, I was invited to review this proposal before its publication. The recommendations echo some of my positions and add further reflections based on a second review of the proposal review. Please note that these comments represent my personal perspective and do not necessarily reflect the views of Treasure’s ARC.
What’s up with Arbitrum?
Right now, I believe the DAO is floundering. An organisation with ~$2.5 billion in its Treasury is kept afloat largely by a group of part-time individuals. These are typically either:
- Delegates who usually have their own protocols to build, OR
- Service providers who have other clients to support and new businesses to win.
The delegates and service providers are trying their best. However, they are fighting a losing battle against a tidal wave of things to do. We need change urgently.
The DAO lacks the organisational infrastructure needed to stay ahead of the competition and ensure this world-class technology stack gets the success it deserves. We have Delegates and Programs, but we lack the full-time senior leaders and established teams required to turn the DAO into an engine that can MOVE.
Our current model has led to:
- Delegate information overload: As a delegate, it is difficult to know what to pay attention to amid a tidal wave of requests for input.
- Governance overload: Too many low-budget proposals run directly through governance. This distracts leaders of our ecosystem from making their projects, and therefore the Arbitrum DAO, a success.
- Lack of coordination: Coordination across the DAO is poor. Take Treasury Management; clearly, this is needed in some form. However, service providers lack clear individuals to engage with on this important topic. This is frustrating for everyone. In the meantime, nothing is getting done.
- Lack of impact: Major programs have lacked the dedicated resources they needed to become industry-defining. Take User Incentives (STIP, LTIP, STIPb). Despite the hard work of the people involved, these programs have lacked the firepower needed to conduct continual review, refinement, experimentation, and iteration. As a result, at times it has felt like “spray and pray” with no clear long-term strategy or framework to ensure high ROI on spend. A similar pattern will occur across other programs unless full-time support resources are onboarded to consistently execute on the DAOs’ behalf.
Arbitrum needs to take a breath and consider the long-term organisational structure it wants to adopt, or it risks being left behind.
This should be a holistic process, and I would urge caution in resisting the temptation to make incremental quick fixes. For example, the introduction of oversight committees may provide a partial fix. However, it does not address the fundamental problem of a lack of unified vision for the structure of the organisation we want this DAO to be.
Why Entropy is important
Sam and Matt are among the most intelligent, diligent, and knowledgeable individuals I have ever worked with. More than that, they truly care about making Arbitrum a success.
I see Entropy as the tip of the Spear for Arbitrum—a team dedicated to driving progress forward and turning the DAO into an organization that can execute.
They have the capability, respect and network needed to progress important conversations and make our vision for a future DAO structure a reality. They want to do this work, and the six core focus areas highlighted (effectively: Project Management, Governance, Change management, Communication, Procurement and People) represent the essential ingredients needed to conduct the large-scale change program I believe this DAO needs.
What I don’t agree with
Directionally, I am 100% in support of the Entropy team.
However, it is worth recognising some inherent challenges with a proposal of this nature.
- Scaling team: They are pitching for a contract without a team in place to fully deliver it. That is unusual. However, it does not derail this proposal, given that hiring a world-class team for Arbitrum is an essential part of this work scope. A-Team players attract A-team, and voting FOR should indicate a conviction that the Entropy team can recruit top talent in service to the DAO.
- Undefined Deliverables: This proposal lacks clear deliverables or KPIs. This might feel strange, but it is natural, given the proposed services’ fluid nature. Funding a service provider in this way requires trust that the team can turn an overarching aim into concrete outputs.
However, details matter. For this reason, I would recommend the following commercial adjustments:
- Salary Budget = Actuals. Monthly payments for Entropy will be directly tied to the Entropy wage bill. These payments can be invoiced to the Foundation at the end of each month, with an upfront buffer to ensure timely payroll while invoices are processed. This approach alleviates some of my concerns about the large requested salary budget, as Arbitrum will only pay for the actual services received.
- “Marketing” removed: I’m unsure whether this is needed. I would rather see a marketing function stand up as part of the DAO’s new organisational structure or OpCo versus allocating a budget to Entropy to perform this role.
- Reduce bonus to 1 million: Whilst the DAO will ultimately decide the bonus level, the upper threshold is still high. This proposal may be more palatable if the upper threshold is set to 1 million ARB instead.
- “Margin / Contingency” removed: This is a significantly sized contract and the other budgeted items should adequately cover miscellaneous Entropy expenses. Year 1 profitability should not be guaranteed regardless of impact, but be driven by the unlocking of an Arb bonus if the Entropy ships great work.
Despite some commercial reservations, this proposal’s transformative potential for the DAO is undeniable. I trust the Entropy team and am eager to see them continue their relentless efforts to help Arbitrum win.