Entropy Advisors: Exclusively Working with the Arbitrum DAO, Y2-Y3

[Tane]

TL;DR

• We support the strategic intent. Entropy’s vision to make Arbitrum the leading capital-allocating DAO is valuable.
• We concern about concentration of power. A single, exclusive provider risks dependency and stifles competition.
• We see a need for hard, measurable outputs. Clear KPIs and quarterly reporting gates are missing.
• Budget transparency is thin. $6M cash + 15M ARB equity requires granular cost-breakdown and milestone-based vesting.
• The Term is too long, and safeguards are too soft. Two-year lock-in should be converted to one-year renewals with pass/fail checkpoints.

Introduction

We appreciate the comprehensive proposal and the dedication Entropy Advisors has shown to the Arbitrum DAO over the past year. The ambition to transform Arbitrum into the most effective capital allocator in crypto is compelling, and the focus on neutral proposal facilitation and strategic advisory is well aligned with the DAO’s needs.
That said, several points call for deeper clarification before we can give full support:

Exclusivity and accountability

Entrusting pivotal functions such as proposal incubation, treasury design, and incentive architecture to a single provider can streamline operations, yet it risks creating lock-in and suppressing healthy competition. How will Entropy ensure that its exclusive mandate does not crowd out alternative contributors or foster dependency if priorities shift or performance falters? Please outline review gates or competitive checkpoints that allow the DAO to reassess exclusivity at regular intervals.

Concrete outputs and measurable outcomes

Arbitrum already coordinates Offchain Labs, the Foundation, and the emerging OpCo, so overlapping mandates can easily turn into a bureaucratic cost center without contributing to the actual project’s progress. We therefore ask for a detailed list of deliverables and its outcomes, each paired with clear KPIs or some other measurable things, and expected ecosystem impact. Publishing these metrics up front will let the community evaluate progress without ambiguity. We are aware that some tasks or responsibilities are outlined like the one quoted below from “Financial Planning, Analysis, and Guiding Capital Deployment” section, but we’d like to have impact of Entropy itself measurable.

@Entropy

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.

Cost justification

The proposal requests $6M in ARB for payroll plus a 15M ARB vested allocation, more than doubling the cash component of the first term. A granular cost breakdown—headcount by role, salary bands, data-infrastructure spending, travel, and contingency—will help delegates judge whether the budget matches market rates and expected value delivered.

@Entropy

While the Entropy team scales, they will be eligible to claim a reduced $100,000 per month and after crossing the threshold of 7 employees dedicated to Arbitrum, will be eligible to claim regular monthly payments ($2,470,000/12 = $205,834) for the remainder of the 12 month term. Payments that have accrued can be claimed at any time.

A total of 6 million ARB will be sent to the Foundation, for them to monetize at their discretion to secure at least $2,470,000. Any Excess ARB not monetized (or stored for the potential bonus below) and excess stables from lower payments during the initial scaling of Entropy will be sent back to the DAO by the Foundation.

@Entropy

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 15M ARB allocation to Entropy Advisors that will be locked in a vesting contract with a 1-year cliff and 3-year vest.

Term length and safeguards

A two-year mandate brings welcome continuity, yet it may also reduce flexibility. Why is a single two-year tranche preferable to a one-year renewal structure tied to performance milestones? Detailing how the extended term improves execution, and why a shorter checkpoint would materially hinder the work, would strengthen the case.

Although some rationale for this is explained in the proposal, we do not believe that is sufficient enough to justify this length, considering the amount of budget.

@Entropy

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 recommend adding mid-term reporting cycles with pass-fail criteria, milestone-based vesting for the 15M ARB allocation, and the option to reduce or halt monthly payments if agreed KPIs slip. Clear escalation paths protect both the DAO and Entropy from misaligned expectations.

By addressing these points—exclusivity guardrails, deliverable-level KPIs, transparent budgeting, explicit term rationale, and robust performance safeguards—Entropy can reinforce community trust and demonstrate that this sizeable investment directly accelerates Arbitrum’s long-term growth.