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

[Entropy]

Thank you to those who shared feedback on our renewal proposal. We have updated the draft to reflect community input and provide greater alignment with Arbitrum DAO. We plan to move this proposal to Snapshot Thursday.

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.

@AranaDigital

(ii) adoption of quarterly key performance indicators that track treasury yield targets, incentive-program retention, integration numbers, and dashboard usage, linked to a binding confidence Snapshot at month twelve with payments and vesting paused if goals are missed;

@WinVerse

We suggest implementing a hybrid milestone model.

@AranaDigital

(iii) explicit confirmation that any unvested ARB returns to the treasury if the engagement ends early;

@Juanrah

1. Tie the 15M ARB Allocation to High-Level, Strategic Milestones.

@TodayInDeFi

Some interim milestone check-ins are critical for:

We believe that Version 2 directly addresses these concerns and really appreciate all the feedback:

• 10M ARB is now held in reserve by the OAT to negotiate milestone-based rewards / other alignment mechanisms.
• Any unvested and unallocated ARB of the 10M will return to the DAO if the engagement ends early.

This structure provides the DAO with more flexibility while ensuring KPIs, stronger accountability, and clear levers to ensure Entropy’s work continues to deliver measurable impact.

@AranaDigital

(iv) a clear description of Entropy’s responsibilities relative to the future OpCo to avoid overlap.

We have added language that clearly shows OpCo as our counterparty which will further enable us to work effectively with them. Additionally, from our perspective, the OpCo functions as a “Quarterback” in the DAO to ensure AAEs function as a cohesive, effective team rather than necessarily doing a lot of the execution work themselves. That said, we are aware that OpCo’s role could be fluid and changing based on who is appointed to its leadership, and are committed to working closely with them to make sure we continue alignment.

@WinVerse

That starts with full transparency: a breakdown of costs (team roles, salary ranges, travel, etc.) would go a long way in helping the community understand where the money is going and how it ties back to outcomes.

@AranaDigital

(i) publication of a detailed budget covering headcount, salary bands, infrastructure, and reserves;

@Juanrah

2. Provide a More Granular Budget.

We understand the call for transparency but don’t believe publishing granular budgets or salary bands is the right mechanism. Our focus is on delivering outcomes, not micromanaging inputs. Highly detailed cost disclosures risk shifting the conversation away from measurable results. This level of transparency could also compromise our ability to attract and retain top-tier talent in highly specialized roles (applied research, fund management, etc), where public salary disclosure would undermine competitive hiring negotiations and create poaching risks.

Version 2 addresses alignment and accountability through milestone-based incentives (10M ARB reserved for OAT negotiation), a termination clause that returns unvested ARB, and robust reporting tied to deliverables. This gives the DAO real oversight while allowing us to focus on execution.

@Juanrah

3. Move to a 1-Year Term with a Performance-Based Renewal.

We considered this but believe a 2-year mandate is critical for the type of multi-year ecosystem growth initiatives outlined (treasury management, iterative incentive programs, etc). The updated structure with milestone-based rewards via the OAT provides sufficient performance-based accountability while giving Entropy and the DAO the runway needed to execute at scale. Additionally, the DAO always maintains the ability to end the engagement as it sees fit. Overall, we are ok with making this change, but it has been requested by multiple stakeholders at this point to do a minimum of 2-years so we believe this change would need broader support to do so.

@TodayInDeFi

Use competitive RFPs

@TodayInDeFi

Hold quarterly “calls for contribution”,

We fully support RFPs and broader calls for contributions across the DAO. We appreciate this comment and will always welcome collaboration and remain committed to building frameworks that enable more high-quality contributors to participate effectively in the DAO.