Thanks for the proposal, was about time.
First, a small premise.
I have had the pleasure to work with Entropy in different degrees through different initiatives, either with an official role like in the Stylus program, or in a non official role/capacity as a delegate that just tries to chime into initiatives that I deem important. I specifically worked with Pruitt (even before in LTIPP), i have always found in Brick a counterparty willing to explain his vision, even when very different than mine and during weekends. I have spoke extensively with both Sam and Matt. And also clashed, privately, with Matt, more than I would like to admit cause we both have a certain personality, but is the type of clashes that comes from having strong opinions driven by a vision. Is the good type of clashes.
I have also grown appreciating the work of the Data team (Tom, Ali) that have always been open to suggestions.
All to say: i have confidence in my judgments, which are both related to Entropy, the entity, and the people working in Entropy. And that is why I see myself supporting them in this renewal.
I want to loosely comment on a few things. I am going to focus on what might be deemed by some controversial, and analyze past initiatives that might have not created the outcome the DAO wanted, and show why these imho have no material weight in the renewal.
2 years mandate
I think this is quite logical. In the program I run, the D.A.O. grant program, I moved the terms from 6 months to 1 year. I think initiatives that have a broad consensus and are perceived as important need to extend over time the time term because is the easiest way to allow the team to operate focusing on the mission, and not on the fact that in 12 months they will have to go all over this again.
Managing an initiative that moved from 6 months to 1 year, the above explains why having a longer term would be preferred. I also don’t see this as a deal breaker: either we renew entropy or we don’t, and them running for 1 or 2 years is less important than the DAO accepting them.
Budget: $2.5M to $3M per year
This is a bump on base cost of 20%. 1 year ago, in Bruxelles, the team was made by Matt, Sam, Pruitt, and if I recall Brick was recently onboarded or soon to be. Unsure if Tom was already there.
We now have double the personnel and a clear stated goals of hiring more people, accordingly to the infochart with one that is basically here and another 5 that are planned and might come.
Knowing how consultancy work, and even more how it works in crypto, I think the budget is extremely lean, even underpriced. But is partially compensated by the vesting bonus (see below). I won’t for sure push Entropy to ask for more capital, but I think they could have easily asked for $3.5M seeing how they are scaling.
Budget: 15M ARB bonus
I have never been a fun of the DAO voting on bonuses on people (not only on entropy). Yes, the DAO can evaluate if someone did the work it was supposed to do up to some degree. But voting on assigning/non assigning a bonus is tricky because it becomes an issue about quality of the job, if the people involved pushed into the last mile and more vs doing just the homework etc. I don’t think the DAO is well equipped to do this because is extremely difficult to be able to see the outcome as a function of the work behind, just like for an iceberg is easy to see the tip but you can only imagine the size of the submerged part. All of this to say: I think is fair to move to a bonus that is vested.
On the amount. This is quite difficult for me to asses. As it is today, the bonus corresponds to around $4.5M so 1.5 times the yearly budget. But this will be all available in 4 years, and in 2 years from now the amount of unlocked supply of arb should be 50% more than what it is now excluding DAO spending, with around 30M arb unlocked per month. It’s a fool’s game to try and project the notional dollar value. But let’s assume we have 15 people in entropy: it would basically mean an average of 1M bonus each after 4 years; of this, 333k would be unlocked in 2 years.
Comparing the numbers to OpCo, and knowing that Entropy has still a private nature so it can justify a premium to have them around exclusively for further 2 years, I don’t think the number is unreasonable. I will also let other speak on this number.
GMC/TMC proposal
This is explicitely mentioned by Entropy itself in the list of things from which there are mistakes from which they can learn from. Of the last proposals we have had, one of the biggest critique has been around the lack of flexibility and allocation in these proposals, and how protocols could have benefit from a broader framework.
I have been the first one expressing loudly this point. Was there margin for a better execution? Yes. Could Entropy have had this broader vision at day one and be put in the condition of executing this vision right away? Yes and no. The main problem was tied to not only a conservative vision (which is not necessarily a problem honestly, more like a different angle), but mostly on the outreach terms for protocol. If protocols have to take the time to create proposals, explain their strategy and then they get rejected, there is inevitably a bitter feeling as a consequence which also increases the negative sentiments. Entropy would have benefit from better communication with stakeholders like OCL that could have suggested (and I am not sure if this happened or not) allocations that were more oriented toward growth; they would have also benefit from the contributions of very entrenched, defi native people able to contribute to their team and program. All of this is likely solvable in the next iterations: we do have a lot of ETH to spend and this was the first programmatic initiative that weaponized our treasury and opened the path to several other in future. Expecting the first iteration to be already perfected and tailored to our collective needs is a bit unrealistic; plus, the other side of the coin is that our DAO has been live for 2 years (with the chain been live for 3.5 years) and there has been no other party trying to spin up an initiative such as this one.
TLDR: can we have objective critiques on the expectation vs actual outcome of the GMC proposal? Yes. At the same time, we should recognize how this initiative would have not even existed in the first place, how is a first 6 months iteration, and how it made us learn a lot on what we can do and in what areas we can improve.
Of the above mentioned, I think none is material through a renewal that takes in account the following points:
- first treasury program that directly utilizes the eth we have. While imperfect, it bootstrapped the initiative
- opco: everybody and their grandma in the dao now is eagerly expecting opco to be operating. This would not have happened without entropy. Worth noticing, them pushing for opco is a testimonial of their neutrality since they even voted against.
- Converge: while most of us was not aware, Ethena launching on top of our stack is an important milestone. Entropy having a role, with first the data unit and then bd work on the ground is notable
- Data and dashboard. I honestly haven’t seen this type of dashboard in any other ecosystem at least not at this level of detail and heterogeneity. I will state the obvious: neither the foundation, nor ocl, nor anybody else did create this data for us which is key to properly measure our operations and allows external parties to asses how good our stack and ecosystem is
- sos proposal (previously: MVP): while this proposal was “immaterial”, I can’t think about anything else beside the detox discussion spearheaded by l2beat that had as much involvement from delegates
- i could mention a few other stuff: CoC and calendar that allows for smoother operations and some breathing room during december, the stylus program to push for the adoption of the technology (being an insider i can testify that a lot of the passed proposals are key, for OCL, to push the adoption of the tech), the drip program (tbd on that one but we have a different approach and we come from a year with no real practical consensus on how to do incentives).
These are the material results; is a bit subjective and in general hard to understand the immaterial results and second order effect that Entropy manifested in the DAO. Two are worth mentioning:
- we have raised the bar in term of professionalization compared to 1 year ago, and this is highly needed if we want the DAO to be a positive component of the Arbitrum ecosystem
- Entropy has become a de fact public face of the DAO in a moment in which we didn’t had (and still don’t have) one.
The question becomes: were the $2.5M we paid a good price tag for what we obtained in the last 12 months? My answer as of today is a big yes.
I also don’t want to sound like a cheerleader. Everybody has margin of improvement here and Entropy is not an exception. Specifically, it can benefit by a lot of things. One of the pitfall we likely had, and is quite common in crypto, is a team that is not only extremely motivated, but also quite young. This is not necessarily a bad thing, but the lack of experience can sometimes create shortfalls that could have been easily avoided. This was noticeable, for example, in certain occasion, during communications with the rest of the DAO or some protocols.
As of today, not only Entropy operated for 1 year in crypto (which, like dogs’ years, is equivalent to 7 years of professional life somewhere else), but they will now have a series of other counterparties, either new (opco) or new in term of willing to be more active (ocl), that will make their life probably easier due to their scope being now narrower compared to the initial mandate.
Entropy would also benefit by diversifying a bit their team through hiring people that are “closer to the trenches” to put it bluntly, and the list of future hires does indeed indicate that.
Entropy is growing in the DAO alongside all of us, this is clear to me.
\
Since we are here I want to also give my educated opinion on the above post from @Tane, not because his opinion is wrong but because the approach/angle should be a bit different imho.
OpCo is a good testimonial on how Entropy did facilitate other entities to rise in Arbitrum. They literally voted against because they thought: we, alongside foundation and OCL, can do enough here. And their opinion in this sense was overturned by the overall DAO vote despite them being the biggest delegate.
We also have seen at the same time initiatives still coming out in an horizontal landscape, such as ARDC v2 and D.A.O. Grant Program.
On priorities shift: to me is pretty clear the fact that, as a DAO, we adapt over time. This is both in term of what entropy does, what we decide about what entropy should do, and in general any initiative of the DAO. Think about opco, was devised 1+ year ago, and we are currently voting to change scope. This is the natural and dynamic process of a DAO, that while slowly constantly reasses scope and goals based on new information, through votes and collective decision.
I am a bit puzzled by this point honestly. Having a provider working exclusively for us is something positive, not negative. It means that they will focus 100% of their energy toward our goal, and that we can align the outcomes in an easier way (re: 15M arb bonus for example). Should we for example in 8 months just vote and say “no, entropy should not be exclusive anymore”? I don’t think so. If we come to that point, the question is likely “should entropy still operate for the arbitrum dao”.
Unsure what you mean when you say “Arbitrum coordinates” but will just assume you mean the DAO. The DAO so far has not specifically coordinated OCL; on the contrary, OCL has posted to us their work and we have validated it from time to time. Same with the foundation, up to a lesser degree because the dialague is way more open (and both should improve over time).
OpCo will indeed act as coordation; this coordination has partially being executed by all parties involved. I honestly don’t see the point on this.
On the overlap: it has been clear now that we are really segmenting operations over time. Entropy is posting about treasury, incentives, data just to name three. None of these 3 are verticals that, so far, were managed by the foundation or ocl, nor by the dao independently (except, maybe, incentives with LTIPP and STIP/STIP.b, but the overall consensus in the last year has been to move on from that modus operandi).
The cost breakdown (without going into the single salary numbers) has always been outlined afaik in their quarterly reports here: Entropy Advisors Updates - Arbitrum.
The headcount, is literally in the slides presented above, with 7 full time members, one part time, and further hires ahead. Knowing that the budget has been increased by 20% with a 100% increase of people, is easy to have the granular breakdown because it will be very close to what we have today already.
I personally answered in length on the above. But the point is that to build fundamentally strong initiatives we need to start thinking on the long term.
Arbitrum as a DAO has had 2 years now to figure out his identity. We have tested a lot of things in a lot of ways and I am glad we did, it really helped us understand what worked for us. We are now at a point in which we need to double down on
EDIT rereading i realized my point toward Tane is not clear. More than discussing “guardrails, kpis, etc” which are fine but also details in the grand scheme of things, to me we should instead answer the following questions: did entropy do a good job in the past 12 months? Was the job worth the price tag? if the answers to the previous questions are both positive, is the new proposal something that puts them in condition to do a work that is at least of the same quality if not above?
This is not because KPIs are not important. But they can be a way to make us feel like we are doing proper DD, make us feel “good” about our “data driven” decision, while instead we miss the forest for the tree.
We can discuss a lot if the price tag is correct, if the term is correct, if the bonus is correct, what kpi to add. To me this is secondary to the most important questions highlighted above. And as I showed (fwiw, i am just a single cow delegate), the attached numbers feels correct, but that is also a personal take.