Entropy Advisors: Exclusively Working With Arbitrum DAO

Proposals Finalized AIPs
44

gm, I am voting AGAINST this proposal.

I think the size of the proposed team and the suggested tasks are inappropriate for our state as a DAO, and the proposed budget is not justified. I’ll elaborate.

First, I believe an operational function within the DAO is absolutely needed for all the reasons mentioned above by others: lack of proactiveness and overall coordination, and information overload for DAO members.

However, I second the comments from @GFXlabs and @DisruptionJoe - It’s not hard to see how many of the proposed tasks can be executed by other teams and create a more cooperative environment.

  • New proposals: I think this area should heavily lean on the Arbitrum Research & Development Collective [ARDC]. Identifying new initiatives need to come from people that are immersed into the DAO (where Entropy can shine) and then elaborated, analyzed by an entity we already fund

  • Attracting high-quality companies and individuals within the ecosystem: I believe this should be an independent entity that works mostly on bonuses, like a proper BD team. Not sure why we envision this function to be mixed with an operational arm.

  • Improving the ability of the DAO to spend money effectively: again, once specific needs are identified, we can leverage the ARDC and ARPC (which we already funded!).

I agree. I have not been in touch with the Entropy team, and I trust the judgement of others who did and have positive reviews.

What we need is a lean, small team able to proactively identify where improvements are and delegate the tasks to other sub teams.
A $5m yearly budget is way too excessive for that - we only risk losing focus and operational efficiency.

2 Likes
45

Hello @maxlomu - thank you so much for taking the time to make a comment and cast your vote.

We just want to make very clear that we are not seeking a $5m annual operating budget. We are requesting $2.47M for the year - with all additional ARB set aside as future incentives and to give the DAO the ability to retain us exclusively for an additional year. As mentioned in the proposal, the DAO spends a disproportional amount of ARB on grants and protocol incentives versus operations. We believe this needs to change.

In reference to your other concerns, please refer to the other replies made above. We regreat not having the chance to speak with you prior to the casting of your vote, but we appreciate your feedback and are happy to hop on a call any time to discuss your concerns more deeply. Either way, we hope to change your opinion on us (or shall we say, our proposal) through actions taken by our team as we continue to serve the Arbitrum DAO.

46

I voted “FOR” the proposal.

Entropy adjusted it reflecting the feedback received and provided a solid reasoning to justify not changing some items (or doing it later on the Tally vote). I support the initiative, and I believe that an enhanced version will come up from further discussions.

47

After consideration, Treasure’s Arbitrum Representative Council (ARC) would like to share the following feedback on the proposal.

Vote: FOR

The ARC is firmly in support of Entropy Advisors, believing them to be a top-tier team that has a vital role to play in the DAOs future success. This is aligned with my personal perspective shared previously:

Despite the calibre of the Entropy Team, we have some reservations about the commercial structure and incentive alignment.

  • Under the current structure, $1.96 million is allocated for salaries.
  • If the full salary budget is not utilized (e.g. if Entropy hires six people at a total cost of $1.5 million), the remaining $460,000 becomes profit for Entropy.
  • This commercial structure puts the DAO at risk of paying for resources which are never utilized
  • Consider a scenario where:
    • Entropy is in the ninth month of the contract.
    • The contract seems unlikely to be renewed.
    • Salary costs are running under budget.
  • In this scenario, if I were a business owner, I would likely:
    • Avoid hiring an additional person in the later months of the contract.
    • Keep the salary budget as profit to keep my business costs low and shore up my firm’s financials for the future.

Our recommendation is to adjust the commercials as follows:

  • Tie staff costs directly to actual spending.
  • At the end of the contract, Entropy required to:
    • Produce financial statements showing actual staff expenditures.
    • Return 75% of the unused funds to the DAO.
    • Keep the remaining 25% as a bonus for prudent financial management.
  • This approach aligns incentives by ensuring:
    • The DAO spends money only on actual resources hired.
    • Entropy does not benefit too greatly from staffing underspend, but it does provide incentives for prudent financial management.
  • The dynamic then shifts from:
    • Current: 100% of unused salary budget going to Entropy as profit, 0% returned to the DAO, to
    • Proposed: 25% of unused salary budget going to Entropy as profit, 75% returned to the DAO.
  • This mechanism would:
    • Increased flexibility for Entropy and the DAO, resulting in a more equitable commercial agreement between our two organizations.

Despite these reservations, we acknowledge Entropy’s crucial leadership role within this DAO and support advancing this proposal beyond Snapshot; and we hope the Entropy team considers these recommendations before the Tally vote.

The DAO needs them, and we want a future where Entropy is embedded and able to drive meaningful change within Arbitrum.

4 Likes
48

I’m voting in favor. First of all, I appreciate how the Entropy team has integrated some of the feedback over time, showing a real commitment in shaping a good quality proposal.
I support this proposal because I think that more coordination should be a key component for the development of the DAO. More coordination means more efficiency and less waste of resources and this proposal would certainly make the difference.

However, I share the same doubts as @Pepperoni_Jo3 on the commercial structure. I hope that it will be revised before the vote on Tally.

1 Like
49

I will hesitantly vote yes on this proposal.

I couldn’t agree more.

I LOVE the Entropy team, they are doing GREAT work and I would love to see them well paid. I love working with them, and I fully trust them to do what is best for our DAO.

I especially love the vesting component for this proposal.

However, I hope they scale slowly… bringing on an admin person and maybe one or max two more leaders would make sense, because, just like my fears around the ARDC, we have to be careful not to create some sort of shadow government.

I think the 100k a month for their services is well worth it, even at the size they are now!

I hope they don’t prioritize hiring too hard and stay small as long as they can, I don’t think they need to be bigger than 6 people to be an incredible force for good inside our DAO.

3 Likes
50

After reviewing the proposal and comments from other delegates, we are in favor of this proposal. The Entropy Advisors team has shown valuable past contributions. We believe that Arbitrum DAO needs dedicated full-time members to tackle organizational challenges. The proposal’s six core focus areas are essential for transformation. The exclusivity ensures focused efforts, and the budget plan ties payments to actual wages for transparency. Additionally, all the problems raised by JO regarding the DAO have been on point and need to be addressed. We believe this proposal will significantly benefit the DAO’s long-term success. Therefore, we will be voting FOR the proposal.

51

The following reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

We’ll be voting FOR this proposal.

First, we would like to state that we had a very good experience working with Entropy so far and that we believe their services are a value-added to the DAO. However, we were initially hesitant to vote in favor of the proposal as we found the requested amount to be fairly large and couldn’t see a reason for the 10-person team that was outlined.

To better assess their request, we looked for similar benchmarks in the industry to compare it to, and we concluded that it would be a good idea to compare Entropy’s proposal with Optimism’s Grants Council — an entity we have personal experience with. Although it’s not a direct comparison since Optimism Grants Council (OGC) has a well-defined and narrow scope, while Entropy’s proposal is more open-ended, and its scope is rather loosely defined.

As things are, the OGC is running point on the operations of Optimism’s grant program, it’s writing mission requests, reviewing mission proposals, and assessing the results of the completed missions. While not exactly the same, we find the scope of work quite similar to that of Entropy’s work as outlined in the proposal.

OGC is now comprised of 12 mission reviewers, 3 milestone and metrics reviewers, 2 audit reviewers, and a lead, with a budget of 610,000 OP (~$1M) for 6 months. Given Entropy’s request is for more than double the duration, we find the amount requested reasonable by comparison. It’s important to note, though, that the comparison doesn’t guarantee that Entropy’s proposal and subsequent work will be successful. It simply goes to show that a similar structure proved to work well in a different ecosystem, and therefore, we’re willing to give it a chance.

With that in mind, we would like to make it clear that we still believe the amount requested is on the large side, and therefore, our expectations for Entropy’s performance are also high. The way the proposal is structured, Arbitrum’s DAO is basically bootstrapping Entropy’s company as an independent consulting agency, covering all costs and taking up all associated risk, while the ‘only’ benefit the DAO receives is 1-year exclusivity, with a possible extension to 2-years of exclusivity depending on the approval of the bonus and compensation structure.

Given the structure, we think it would be sensible for the DAO to perform a business justification check halfway through the engagement (6 months after an on-chain vote passes) to see whether Entropy is meeting the expectations.

5 Likes
52

Below are the opinions of the UADP:

We are voting For this proposal due to the need for DAOs, especially those behind an entire ecosystem of applications, to invest more time and capital in operations. Entropy’s leading team has a strong track record in working with DAOs and conducting intimate due diligence on various protocols. At the end of the day, if Entropy can help minimize net costs, including the costs paid out to Entropy, then this partnership is a net positive. Full-time contributions to a DAO are not very common, and there will likely be a need for more immersed individuals contributing to DAOs–especially if the DAO would like to over time become less reliant on a singular Foundation. We’re curious to see if this proposal prompts similar teams to apply for such partnerships. Exclusivity to a particular DAO is also uncommon. Many paid contributors aren’t able to run their businesses if they don’t have diversity across numerous ecosystems–which could create incentive misalignment.

There are aspects of the proposal that we have reservations regarding, however. The list of previous proposals that the team has proposed assumedly took three people maximum to conduct. A team of 10 people does sound a bit overkill. Employees are expensive to manage. Perhaps it’s better to hire 2-3 new people, perhaps focused more on the technical and data analytics side. That would round out the team pretty well, while prioritizing quality over quantity. Specialized expertise can be consulted on an ad-hoc basis, and the Entropy team can always leverage the Arb community for attaining opinions and perspectives on certain proposals. This lean setup would potentially cut some of the overhead. The whole legal, tax, etc side of this proposal is currently one of the justifications for the large budget. It’s questionable if the DAO should be subsidizing these entity formation and overhead costs.

2 Likes
53

I’ve closely followed Entropy’s work over the past few months, and I’m impressed by their significant influence within the DAO and their strong commitment to execution.

Their full-time dedication to the DAO is particularly valuable, especially given the need for senior expertise in creating and managing initiatives of this scale. Entropy clearly possesses this experience.

As part of the onboarding working group, we recognize this need and are exploring ways to support this initiative as we move forward.

For these reasons, I voted FOR this proposal.

54

We’re voting FOR this proposal. Entropy has proven valuable, driving key initiatives for Arbitrum DAO. Their full-time dedication will professionalize operations, crucial for growth. The $2.47M budget, while substantial, aligns with industry standards. Performance-based bonuses and transparency reports mitigate risks. This investment should drive efficiencies and sustainability for Arbitrum DAO.

55

I will be voting “For” this proposal.

To put it simply, I think it’s clear the DAO has needed something like this for a while. There have been numerous discussions / proposals / attempts at this, but nothing has materially improved. While I know that isn’t a great sell for a project like this, but realistically we can’t stop trying to fix this issue just because it hasn’t been figured out yet.

Editing my post here to save forum space: I will continue my support for this project on Tally by voting “For”. My reasons have not changed since the Snapshot vote.

56

Voting ‘FOR’ this proposal

Support this unequivocally. We need to scale resources for operations, for the DAO and for Arbitrum. Entropy will be a force multiplier in us finally getting activities off the ground, and i’m really excited that we are building a group of Arbitrum aligned support structures.

57

Voted FOR as this is a special opportunity to lock in some great talent to focus on key DAO infrastructure.

Looking forward to seeing the contributions Entropy provides to Arbitrum!

58

We vote FOR the proposal on Snapshot.

We believe the dedicated and capable actor that focuses on operations, strategy alignment and key coordinations is clearly demanded in the DAO governance, and Entropy has proven to be the one in Arbitrum. We are very excited to have them exclusively work with Arbitrum DAO.

We have similar concerns about the hiring part, which is rare for this kind of proposals. We would ask them to consider a short-term pilot project with the currently hired or to-be-hired members to further prove the results that they can provide, but we would still vote for the proposal on Tally even as it is because we believe it’s practically better to have Entropy with a little over-budget rather than losing them or delaying them to fully focus on their operations.

1 Like
59

Voted For this proposal on Snapshot.

The Team at Entropy Advisors is clearly capable.
While the budget is on the high side, I see listening and adaptation to feedback being provided here. In addition the opportunity cost of not making this investment is high, in a highly competitive industry, if we want top talent to devote to the DAO we need to reciprocate that with compelling compensation.

The DAO is placing a lot of trust in Entropy and I want to encourage a key operating principle of collaboration, interim centralisation and progressive decentralisation for DAO ops functions.

To that end I’d like to see:

  1. a more explicit scope of services: functions that Entropy does, and more importantly functions Entropy explicitly does not do such that Entropy occurs as friendly and collaborative to other service providers, not in a privileged position as catch-all for everything.
    A clear anti-pattern for the DAO would be all new and fast needed capability for the DAO centralises intro Entropy and stays there.

  2. Entropy adopt an operating principle of interim centralisation in the name of speed i.e to interim hire and fill a void in DAO’s capacity and that should always be paired with a view and second step to then source/develop a proposal that effectively “fires itself” from that role, and spreads capability and responsibility to many actors by bringing in a service provider, a technology, structure or process that then obviates the need for Entropy to hold that function internally and indefinitely.

In this way, Entropy functions as a catalyst and agent that temporarily concentrates and centralises needed capability for a period and then oscillates that out through decentralised handover and setting up others to share the load thereby ensuring the DAO is a horizontally aligned cohort of collaborative partners acting with collective capability and responsibility.

3 Likes
60

I will vote in favor of this proposal during this initial temperature check.

The Entropy team is highly skilled, and the DAO needs them to focus on Arbitrum’s success.

However, I would like to reiterate my concern about the renewal terms. In my opinion, the high price being paid for exclusivity also requires a commitment from Entropy not to condition the renewal option on the DAO agreeing to pay a bonus. I would like to see these terms modified in the tally vote.

61

I voted yes for this proposal.
Entropy is clearly a net benefit for the DAO and strongly involved in basically every proposal and thread.
As mentioned by others already, the budget may seem high. But I think the quality will speak for itself.
I hope they are going to help to push the DAO and create a clear path.

62

Blockworks Research will be abstaining on this proposal on Snapshot.

We cannot participate in this vote due to a conflict of interest as several of the members of Entropy were previously at Blockworks Research. As such, we will be abstaining; however, we would like to note a few things about this proposal that we would like to see changed going forward. Similar to what other delegates have outlined, we want to see an explicit outline about what Entropy will provide so that there is a clear distinction between Entropy’s position and other committees like the ADPC, ARDC, etc. Additionally, given the quality of work that Entropy has proposed prior, we see value in the hiring scheme, but would recommend to slow the hiring process so that funds are used properly.

2 Likes
63

Gm Arbinauts! :sunny:

The results are in for the Entropy Advisors: Exclusively Working With Arbitrum DAO | Dhive proposal.

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