Changes on 7/7/25:
Revised 15M ARB Alignment Structure
- The original 15M ARB vesting allocation is now split into:
- 5M ARB for Entropy Advisors (1-year cliff, 3-year vest)
- 10M ARB reserved for the OAT to negotiate milestone-based incentives (KPIs), equity investment, time-based bonuses, or other short/medium/long-term alignment mechanisms.
OpCo as Entropy’s Counterparty
- Detailed that upon sufficient operationalization, OpCo will serve as our counterparty/client as a proxy representing the DAO.
Other Minor Changes
- Unclaimed Year 1 funds (~$423k) and the nullified 1.5M ARB bonus will be applied to Year 2-3 payments, at the Foundation’s discretion, to help minimize ARB sales.
- Clarified termination terms: all unearned ARB of the 10M ARB would return to the DAO treasury if the DAO terminates its relationship with Entropy.
- Added language to the transparency reporting to make clear that the Arbitrum Foundation can request transparency reports.
Entropy Advisors: Exclusively Working with the Arbitrum DAO, Year 2 and Year 3
Non-Constitutional
Abstract
Entropy Advisors was started by Matt Fiebach and Sam Martin with the vision of turning DAOs into sustainable and efficient organizations, and was bootstrapped via an Arbitrum Foundation grant. As the first two employees at Blockworks Research, we felt the vision of what DAOs could deliver versus what they actually resembled in reality warranted more dedicated attention from a team passionate about the potential impact DAOs could have on an ecosystem. It has now been 14 months since Entropy Advisors was incorporated, and while we have accomplished a lot, there is a vast amount of work that remains.
As this term comes to a close on August 31st, we want to take the opportunity to say thank you to those in the Arbitrum community who have supported our team and given us a path to make an impact on such a large stage by funding us through our first DAO proposal. Without the Arbitrum DAO, Entropy Advisors would not have been possible.
This proposal is to extend our partnership with the DAO for two additional years. If passed, our second official engagement would go into effect on September 1, 2025, immediately following the conclusion of our first mandate. Entropy Advisors’ exclusive focus over the next two years is transforming Arbitrum into the most effective capital allocating DAO in crypto, leveraging treasury strategy, incentives design, data, and special projects to drive compounding, sustainable ecosystem growth
Motivation and Rationale
Year 1 Retrospective
We invite everyone to review our initial proposal and reflect on our successes and failures, and to provide candid feedback to our team as we begin the process towards a second term.
Full-time Arbitrum DAO: We grew the team from just Sam and Matt to 8 full-time and 1 intern, and we remain laser-focused on attracting the highest quality talent in the space to commit themselves exclusively to Arbitrum. While we believe that we have formed a very strong team thus far, the composition of our team will always be a top priority to ensure we have the tools at our disposal to serve the ecosystem with high-quality execution. In the coming year, we would like to continue growing as needs arise: more data analytics help, applied researchers, TradFi converts, and those with early-stage experience are at the top of mind, with a goal of scaling beyond 10 members on our team.
Beyond Proposals: Over the past year, Entropy has evolved beyond just a proposals shop and become a recognizable, consistent face of the Arbitrum DAO in the broader crypto community. From press to partnerships, conferences to committees, we’ve built a strong reputation for professionalism, reliability, and alignment. Our ability to foster trust across stakeholders from Offchain Labs and the Foundation to top investors, asset managers, and builders has been one of our most important assets, and something we intend to amplify in years 2 and 3. We recognize that this is where we have produced the most value throughout our first year and aim to continue to grow into our strengths. On countless occasions, we have joined Offchain Labs and Arbitrum Foundation’s partnerships teams in helping outline strategy and closing deals. With some blue-chip ecosystem partners, Entropy works as their main point of contact in Arbitrum. We have grown into a trusted tool augmenting existing AAEs.
Syncing Stakeholders: We are happy with our output over the past ~year in regards to the first two deliverables we outlined (see above). We hosted three (a fourth is planned for EthCC) “Delegate Days” in Brussels, Bangkok, and Denver over the past year, where we gathered large delegates, members from Offchain Labs and the Arbitrum Foundation, and other stakeholders to align on key objectives over the subsequent quarter(s). We also hosted key stakeholder calls with the same groups once per month in an effort to align on high-importance topics that require attention in the near term. Entropy has also been speaking with OCL, the AF, and key delegates and ecosystem contributors every two weeks to streamline communications across the ecosystem. These efforts are quite time-consuming, but have proven to lead to some of our most impactful work over the past year.
Strategic Proposals: We successfully passed a plethora of proposals authored internally, as well as assisted third parties in drafting proposals to the DAO or submitting applications to DAO-led programs. Some examples here include Govhack Brussels, the MSS, The Ethereum Attackathon Sponsorship, leading the ARB staking working group and bolstering the quality of contributors to the research (bringing in Vending Machine and ASXN to assist), the Delegate Code of Conduct, establishing an events budget, getting treasury management moving forward after a long stagnation through the v1.2 proposal, leading the STEP II committee, moving forward with the MVP exercise to align stakeholders, our DRIP proposal to reignite incentives/support for builders and users, the Stylus Sprint, assisting Max Lomu with his chain abstraction proposal, etc. We can’t touch on all of them here, but please refer to our forum profile for more information.
Importantly, in many cases, we evaluated whether supporting external contributors/committees or internalizing portions of execution made the most sense for the DAO. In some instances, we chose to execute internally, not because we wanted less external contribution, but because we deemed it the most efficient, high-context, and cost-effective way to get things done. Our north star has always been to make DAO execution smoother, more strategic, and resource-efficient. Sometimes that meant helping third parties structure their ideas, but other times it meant owning the process ourselves to ensure tighter execution, lower overhead, and greater accountability.
OpCo Groundwork: We also laid the groundwork for a more expedited proposal process by helping mold the new direction for the Arbitrum DAO, which was recently posted by the AF, and we also created the OpCo proposal that should make working with the DAO a much smoother process from the perspective of service providers.
We expect OpCo to pick up the portion of the aforementioned work that relates to key stakeholder alignment and coordination once it is fully operational. Aligning all the largest stakeholders in the ecosystem in order to allow for more effective operations was a massive undertaking and took a large amount of our bandwidth over the course of our first year. Despite the large investment of time and resources, we believe the groundwork has been laid for a more fruitful future for the Arbitrum DAO.
Learning from Mistakes: While we feel as though we did a great job on setting the DAO’s future, more efficient path, we certainly fell short on numerous occasions. For example, there were some instances in which we poorly communicated with certain ecosystem participants during application processes. As members of the GMC, many protocols that have sunk significant resources into the ecosystem felt overlooked and undercommunicated with. Our team has since shifted focus to improving our relationships with Arbitrum builders and to being more mindful in providing feedback to applicants by overcommunicating. We also realize that our scope of work was extremely wide in our first proposal, and our deliverables have evolved quite a lot since our engagement started, which might have led to some confusion in the wider community around what Entropy’s role actually is. Our wins have taught us a lot, but our mistakes even more, and we are committed to making corrections based on our learnings throughout our first year in our second engagement.
Arbitrum Analytics: In terms of data and brand building, we are very happy with our output over our first ~year. Our data team has created the go-to Dune catalog for those looking for greater insight into the Arbitrum ecosystem. It is worth noting that our data team did not begin work until around the end of December, so we have accomplished a lot here in very little time. We have had numerous investors not currently involved in the Arbitrum ecosystem reach out in admiration, which we believe will have a positive downstream impact that is not easily quantifiable. We have also seen our charts shared across dozens of large accounts on X, featured in blogs and news articles, and referred to during big moments for the ecosystem, such as the rollout of Timeboost. We have created a DAO financials dashboard to give delegates better insight into how the DAO spends/earns money, a dashboard that enables delegates to dissect various proposals at a granular level, an RWA case study, a DAO treasury dashboard showing all the assets it owns, and more.
Data as a Growth Support Mechanism: We also learned that data transparency can serve as a great tool for both increasing our reach across various crypto communities as well as improving relationships on the BD front with builders. This complements the goal stated in the previous section of helping to onboard 3rd parties into the ecosystem. For example, we created the most comprehensive data overview of Ethena, which caught the team’s attention. Members of Entropy then worked with OCL to coordinate a trip to the UK at the end of 2024 to meet the Ethena team as they were deciding which tech stack to deploy Converge on. In April 2025, we saw these efforts pay off with Ethena and Securitize choosing the Arbitrum stack.
We have ambitions to aid more builders within the Arbitrum ecosystem as a support mechanism, and to continue building resources that serve as both marketing material and a BD tool. Where we fell short on brand relative to our original proposal was podcast content/weekly newsletters. While we view this content as valuable, we simply did not have the bandwidth to prioritize these types of initiatives when considering the high-importance items we needed to facilitate. Additionally, we see room for growth as we expand our content outside of solely Arbitrum core and into the Arbitrum ecosystem. Over the next 2 years, we will create more dashboards that cover apps and infra that are well-positioned to support the expansion of the Arbitrum tech stack, with the goal of encouraging more partners to consider an Arbitrum deployment/support.
Recognition by News Outlets: We regularly post threads on X and LinkedIn that highlight important initiatives that are ongoing in the Arbitrum DAO, but we do know that we need to expand our reach to maximize our impact. Members of the Entropy team have been quoted in The Block, Blockworks, CoinDesk, Unchained, and Yahoo Finance about our work in Arbitrum on numerous occasions. Additionally, we have represented Arbitrum on a few podcasts. at multiple conferences, and even in an official Arbitrum marketing video. Although we have plenty of room to keep improving our public brand, we are happy with the growth in the first year.
Acknowledgment by Investors: Large ARB token holders have evidently taken notice of our ability to push forward initiatives, be more critical of each individual spending request, and our focus on ecosystem growth, long-term sustainability, and revenue diversification, which has manifested through our rise in voting power. Our ascension to the top of the ARB delegates by voting power is a responsibility we do not take lightly, and is something we are really proud of. In our opinion, this signals to us that we are prioritizing the right things and are in the early stages of helping steward the DAO’s path forward.
Specifications
Vision for Years 2 and 3
Now that it’s increasingly likely that the DAO’s operational structure will include officially recognized AAEs, the path has been paved for Entropy Advisors to shift our focus more fully toward growth, sustainability, and strategic execution. While the OpCo comes to fruition, Entropy will continue to support operations- and oversight-focused initiatives that require continuity. Topics like administering the ARB Staking Working Group, supporting ARDC v2, leading programs like Watchdog and MSS, and maintaining the Delegate Code of Conduct will likely transition over to OpCo, and we will be here to ensure a smooth handoff. We expect this transition to be ongoing throughout the entirety of 2025, with the operations-related workload easing on Entropy’s end by the beginning of 2026.
Entropy Advisors’ singular focus over the next two years is to help the Arbitrum DAO mature into a disciplined capital allocator. We will spearhead building an organization that drives compounding, sustainable ecosystem growth.
Arbitrum is now positioned to act more like a sovereign wealth fund: managing a composable treasury, deploying capital with strategic intent, and aligning incentives to deepen protocol adoption and ecosystem loyalty. Entropy’s work across treasury design and management, incentive architecture, data transparency, and ecosystem relationships will operate in tandem to realize this vision.
The strategy boils down to:
- Build a high-quality treasury of productive, composable assets (LSTs, T-bills, etc.)
- Deploy a large share of holdings across DeFi as protocol-owned liquidity to generate yield, support aligned builders, and establish Arbitrum leverage. This function will also help onboard new partners, as the DAO will act as an initial source of demand
- Layer in structured, app-agnostic incentives (DRIP) to attract usage and reinforce protocol alignment
- Use analytics and reporting to increase visibility, optimize decision-making, and build external trust
- Leverage relationships and special projects to scale adoption, reinforce values, and extend reach
In short, we stop throwing darts at the wall and start designing growth: capital-efficient, data-informed, and strategically aligned.
Our high-level objectives to achieve the above strategy are as follows, with more details in each deliverable section below:
- Smooth handover to OpCo of DAO operations- and communications-related tasks, while filling the gaps in the interim as needed.
- Maximize the number of dapps and RWAs that “call Arbitrum Home” by designing treasury management and incentive programs that support BD efforts. Bolster this through data analytics support as a white glove services offering.
- Formalize the DAO’s financial processes, optimize and introduce revenue streams, ensure AEP licensing fees are paid and idle non-native assets are put to work in DeFi in accordance with portfolio management policies, and continually monitor key protocol revenue drivers like Timeboost and the transaction fee mechanism.
- Professionalize and iterate on various areas within the Arbitrum DAO, such as the early-stage support funnel or data transparency, by altering their structures and implementing custom front ends.
Ultimately, our primary goal through 2027 is to make Arbitrum the leading tech stack for builders, institutions, innovators, and users alike; powered by a sustainable flywheel of compounding growth leading to value generation.
Financial Planning, Analysis, and Guiding Capital Deployment
Entropy will work closely with AAEs, vendors, and ecosystem teams to build out the DAO’s core financial infrastructure. We believe that the long-term viability of the Arbitrum DAO hinges on prudent asset management, disciplined budgeting, and strategic cash flow deployment to generate additional income, compound growth, and deepen our ecosystem’s liquidity while supporting integral builders. It’s worth emphasizing that while we work on financially sound structures, growth will always be at the forefront of our work in the ecosystem.
Our responsibilities here will include:
- Tracking and consolidating key financial figures, including revenue sources (AEP Licensing Fees, Timeboost, Transaction Fees, Treasury Management activity, and others that may arise), the DAO’s assets/liabilities, as well as realized expenses to set up and maintain in-depth financial statements.
- Building models to project DAO financials and scenario-plan various budget configurations.
- Providing recommendations for capital allocation, including ecosystem-growth targeting activities, income-generating initiatives, cost-cutting opportunities, and diversified treasury strategies.
- Procuring service providers and conducting outreach to protocols for initiatives classified under the Arbitrum Treasury Management Council (GMC, TMC, STEP)
- Supporting the DAO with real-time, bespoke financial dashboards, posting quarterly DAO financial reports to the forum, and ensuring the proper risk analysis measures are in place. This reporting will take place across all of the DAO’s financial and asset-allocation activity, including the assets that currently fall under STEP, TMC, GMC, and other future initiatives.
- Working cross-functionally with all of the AAEs to create aligned, sustainable cross-functional capital deployment plans across the DAO’s initiatives.
Ultimately, our goal is to provide the DAO with the tools, data, and guidance necessary to fund innovation responsibly, while positioning Arbitrum to be financially self-sustaining over the coming years.
Incentives
We believe incentives will play a major role in Arbitrum’s next phase of growth, especially given the increased attention on dapp performance and ecosystem competitiveness. Our team will build upon the groundwork laid in the DRIP proposal to establish a long-term incentives strategy.
Key areas of focus:
- Continue leading incentive design frameworks, being the main party responsible for the success of approved programs
- Draft and refine incentive programs, ensuring data-driven optimization throughout the programs’ lifecycle and that low-return programs are swiftly discontinued
- Work with ecosystem teams (dApps, infra, new deployments) to scope incentive programs that accelerate high-growth opportunities sustainably.
- Facilitate real-time data for the DAO to follow the progress of incentive programs, analyze the effectiveness of implemented programs, and deliver actionable feedback loops to improve upon them.
- Interface with Offchain Labs and the Arbitrum Foundation to ensure growth programs run by the aforementioned entities and the DAO are synergistic.
Entropy’s goal is to bring structure and discipline to a chaotic incentives landscape. We see ourselves as the party relentlessly focused on continuous iteration, eliminating inefficiencies, and driving outcomes.
Ecosystem Data
We plan to double down on our ecosystem data work, expanding the scope and sophistication of our analytics to support every aspect of DAO decision making, while also serving as a protocol support mechanism that endorses native builders and attracts new builders, with the added benefit of increasing the ecosystem’s social presence. Both of the prior-listed roles around treasury management and incentives include analytics, but the data team will have an expanded scope outside of these 2 already time-intensive categories.
Key priorities:
- Continue building world-class dashboards and reports for delegates, investors, and DAO programs across all verticals.
- Expand to more dapp-specific dashboards that showcase usage, traction, and ecosystem synergies in an effort to attract new protocols to Arbitrum while also supporting existing ones. These same efforts will apply to significant Orbit chain deployments.
- Assist partners like OCL, the AF, and OpCo with analytics that track protocol upgrades, monitor the health of the network, and/or help track operational metrics. OCL, the AF, and other key stakeholders have already regularly reached out to Entropy for help with custom analytics, and we would love to continue this work.
- Provide Entropy’s data infrastructure as a core asset for both internal DAO operations and external ecosystem engagement. Ideally, this will have its own custom Arbitrum-branded front-end rather than simply living on Dune.
- Support institutions (e.g., TradFi managers) with data services (e.g., analytics for managers’ tokenized RWAs live on Arbitrum One) to strengthen the DAO’s relationship with them and to help establish Arbitrum One as the prioritized destination for institutions’ future initiatives.
- Analytics around incentives and treasury management, outlined in prior sections of this proposal.
- Handle ad hoc data needs as they arise. A concrete example of this includes our Security Council dashboard, which was created quickly to support the election process.
Based on our experience, utilizing data services as a BD and support tool is an extremely powerful way to attract and entrench new protocols into the Arbitrum ecosystem. Providing these types of services is a valuable opportunity for Arbitrum to expand its brand reach and, as we’ve observed, having the ability to offer white glove treatment increases the likelihood of capturing interest from top-tier institutions and builders. Having said that, these white glow services are highly time-consuming on average, and under no circumstances do we want to divert our teams’ capacity away from facilitating initiatives that directly benefit the DAO without the certainty of conversion. Given these circumstances, there may be certain projects that are complementary to Arbitrum and are deemed as high potential for the ecosystem. In these cases, it may make sense to ramp up project-specific capacity and thus support the ecosystem both directly through ecosystem-focused efforts and indirectly through BD-related data services. In these scenarios, the Arbitrum Foundation will have the ability to waive Entropy’s exclusivity on a case-by-case basis.
Entropy Data will be the connective tissue that powers smarter treasury decisions, sharper incentives, and more compelling narratives, while serving as a support mechanism for builders, institutions, and partners entering the Arbitrum ecosystem.
Special Projects
Entropy Advisors will continue to act as a neutral strategic arm and flexible generalist operator for the DAO, identifying high-impact and ad hoc initiatives that fall outside traditional workstreams or require a novel approach. These are the thorny, under-owned, cross-functional, and/or politically sensitive deliverables that the DAO may struggle to tackle without a coordinated, trusted group stepping in. In many cases, the OpCo will be best suited to pick up some of this work with regard to occasional operational requirements, but given Entropy’s team composition, we may be best positioned for certain tasks based on our existing skillsets and relationships.
Examples of special projects include:
- Represent the Arbitrum DAO, when deemed appropriate by OCL or the AF, when dealing with external protocols that are considering deployments on the Arbitrum tech stack (similar to our involvement in the Ethena X Securitize deal to launch Converge on Orbit). Note that we’ve acted in a similar role several times throughout our initial term.
- Help educate traditional financial institutions, typically those who reach out with interest in STEP, on the shortcomings of current tokenized RWA designs and opportunities when it comes to ecosystem integrations, and offer our time and DeFi-nativity to inform upcoming product launches in the Arbitrum ecosystem.
- Work with relevant partners to enable DAO-owned products that can diversify the DAO’s revenue streams in tandem with improving the user experience on Arbitrum.
- Attend high-profile conferences and take on speaking opportunities to spread the Arbitrum brand. We will also continue to host “delegate days” in an effort to align key stakeholders.
- Iterate on Arbitrum DAO’s early-stage support structure by bringing in talent and making it a more professional and cohesive experience that affords the DAO upside in the projects it helps get off the ground.
- Miscellaneous projects as opportunities arise.
We will remain flexible in this vertical, focusing on initiatives that drive high strategic value but may lack an existing home within the DAO’s organizational structure. It may be necessary to approve ideas that Entropy will take on via a DAO vote if these initiatives require excess budgets beyond what Entropy itself can afford.
Termination Clause and Transparency Pledge
The DAO naturally retains the option to terminate this agreement through a standard forum → Snapshot process, requiring 3% of the votable token supply to vote in favor of the termination. Quarterly transparency reports will be directly shared with the Arbitrum Foundation at their request, which will have the ability to move a forum post forward with the same structure for termination. If the Snapshot proposal passes, the DAO can terminate the agreement with Entropy Advisors, effective on the last day of the month in which the Snapshot passes, effectively stopping any future payment from accruing at that moment. In this scenario, all funds earmarked (but unearned) for Entropy Advisors’ future base payments and the remaining funds of the 10M ARB set aside for incentive alignment will be returned to the DAO by the Foundation.
Once the OpCo has been sufficiently operationalized, Entropy Advisors will operate under the assumption that OpCo will be Entropy’s counterparty that will represent the DAO and act as its proxy. Moreover, we will continue sharing monthly updates with the DAO.
Overall Costs
Budget
After reaching out to some larger delegates and key stakeholders to get feedback on how Entropy Advisors should proceed forward, it has become clear that a 2-year term mandate is desired to ensure alignment over a sufficient period of time in order to accomplish the aforementioned goals. Therefore, we are proposing to work with the Arbitrum DAO for 2 years from September 1st 2025 through August 31st 2027. We propose a base pay of $3M per year, a ~$500k per year increase versus our first term, as we have ambitions to grow the team to internalize key functions related to data, incentives, and treasury management.
In addition to our base pay, and in an effort to achieve long-term alignment with the Arbitrum ecosystem, we propose a 5M ARB allocation to Entropy Advisors that will be locked in a vesting contract with a 1-year cliff and 3-year vest. In addition to the 5M ARB allocation, 10M ARB will be set aside for the OAT to negotiate directly with Entropy Advisors on establishing short, medium, and long-term incentive mechanisms. These mechanisms may include, but not be limited to, milestone-based payments, an equity investment into Entropy Advisors, bonuses related to Entropy exceeding expectations, etc. The Arbitrum Foundation will custody this 10M ARB, and must adhere to any agreement made between the OAT and Entropy Advisors. It is also worth noting that any terms related to an equity investment may fall under NDA. Our goal is to ensure the entire Entropy Advisors team has a large incentive to see Arbitrum win, and to ensure we remain committed to Arbitrum significantly into the future. It is also our goal to ensure the Arbitrum DAO can hedge its exposure to Entropy Advisors and enjoy the benefits of its future growth.
In total, we are requesting the transfer of $6M in ARB (covering 2 years) + a 100% buffer + 15M ARB to the Arbitrum Foundation. $6M worth of ARB will be liquidated immediately upon the passing of this proposal on Tally. 5M ARB will be put into a vesting contract by the Arbitrum Foundation in accordance with the vest above and 10M ARB to remain in custody of the Foundation for the OAT / Entropy alignment mechanisms. The remainder of the funds will be returned to the DAO treasury immediately thereafter. The vesting contract cliff will begin on September 1, 2025, regardless of the timing the actual vesting contract is launched (backdated if needed).
The Entropy Team will be eligible to claim regular monthly payments of $250,000 from the Arbitrum Foundation throughout the 24-month term. Payments that have accrued can be claimed at any time. If the DAO passes a Snapshot to end its engagement with Entropy Advisors, it will be considered binding on the final day of the same month it passes, and Entropy will be ineligible to accrue any further payments.
We are nullifying the terms in our Year 1 engagement proposal that stipulate the DAO will vote on a bonus for the first year of our services, and instead replace it with this structure. The ARB allocated as a potential bonus that is in the AF’s possession related to our first engagement should be repurposed at the Foundation’s discretion to cover this engagement proposal, or be returned to the DAO treasury if not required to do so. It is also important to note that Entropy Advisors did not claim the full $205,834 monthly allotments from the first engagement proposal for the first 4 months of service, so the Arbitrum Foundation should have ~$423,336 of additional funds slated to be returned to the DAO. However, we propose allowing the Arbitrum Foundation to use these additional funds to cover a portion of Entropy’s next 2 year engagement (assuming this proposal passes) to minimize ARB sales if it wishes to do so.
Entropy will be abstaining from voting on this proposal due to a clear COI. We look forward to the opportunity of continuing our work in the Arbitrum DAO over the coming years. Entropy Advisors is all-in on Arbitrum, and we look forward to winning together.
Targeted Timeline
- Forum Discussion: 2 weeks
- Snapshot Period: 1 week
- Pre-Tally Discussion: 1 week
- Tally: ~3 weeks
- If passed, 2nd mandate initiated: September 1, 2025