Entropy Advisors Transparency Report: Q1

DAO Programs & Initiatives Entropy Advisors Updates
1

As part of Entropy’s 1-year exclusive partnership with Arbitrum DAO, we have committed to publishing quarterly transparency reports. These reports cover our activities and achievements over a 3-month period, as well as provide a brief financial update.

Please find the first quarterly report below:

7 Likes
2

Thank you for the report, is quite interesting to have all the initiatives lined up in a single deck.

Few things:

  • is EXTREMELY interesting to know about the stuff you worked upon but didn’t ship because of various reasons. Understanding that not all details can be disclosed, and knowing that underpromise and overdeliver is always the best tactique, maybe disclosing a bit during the calls about these initiatives and what you are currently working could be helpful not only for the dao to konw what you are doing but also to potentially find external contributions, at least up to some degree
  • while for Q2 your focus is mostly on financial management and operationalization of the DAO, my honest take is that we should also move toward growth strategies more. This can mean several things, from incentive programs (and we have several parties in ARDC that wants to propose something) to other initiatives. To me, the key initiative of growth would be by starting to have active support to native arbitrum protocols, even financially / through investment vehicles. If this could be done through OpCo, or if we need another vehicle, I don’t necessarily care, I care about more going toward a coinbase-base-aerodrome type of approach that we should try to pursue in our DAO as well, knowing that we can’t go from 0 to hero in a single day, but also knowing that timing is key. So, while you need to of course stick to your roadmap and your proposal, please give some thoughts to the fact that some goals might be worth adapting, prioritizing or deprioritizing due the environment and timing being the right ones. I really think that right now, in the DAO, Entropy is uniquely positioned to make this happen. And this, if it has to happen, has to happen in the next 6 months.
    TLDR: operations, yes, financials, yes, think about growth pls if possible starting from how to support native arbitrum protocols
  • one underrated thing in the report are delegate day events and the results. Just a single day of everyone in the same room can make up for months of work, as suggested in other places expanding this concept could potentially help a lot the internal coordination of our DAO, and the coordination of our DAO with OCL and AF
  • if I have to move one critique, which is not a big one tbh, is that entropy could improve in using the carrot vs the stick. In some situations, it feels like you have enough reputation behind you to push harder, or in a less gentle way, toward the agenda you think is for the best. At the same time, some other situations could benefit from a more “political” approach. But again this is a minor because 1) feels like most situations were always well handled 2) is really hard, almost imposible, in a dao to put everyone always on the same page. And also building experience over time helps a lot as well in this sense.

All in all, I can say that I am really glad that you guys are around here in Arbitrum. One thing that doesn’t transpire from the deck is how the constant presence of Entropy has helped guiding the conversation from a more generalized point of view in the DAO. For whoever has been around here for a while, knowing how much noise we can collectively make, this is a big value added in my opinion.
Looking forward to see what you will do in Q2 :smile:

2 Likes
3

Thank you, Entropy, for the invaluable work you are doing to bring greater structure and operational efficiency to the Arbitrum DAO. Your dedication to advancing high-impact initiatives like OpCo and Treasury Management v1.2 is instrumental in shaping the DAO’s evolution. These efforts not only foster transparency and strategic alignment but also set a strong foundation for sustainable growth and collaboration within the community.

Your leadership and innovation are bringing concrete improvements to Arbitrum, and we are excited to see the continued positive impact of your work.

1 Like
4

Great work on the report and beyond! You’re doing an excellent job advancing the DAO and driving meaningful progress. I particularly appreciate the OpCo initiative—it’s impressive how you managed to aggregate the perspectives and feedback of so many stakeholders and turn that into a valuable, actionable plan.

Excited to see what you’ll deliver in the next quarter.

1 Like
5

yeah, the slide about the initiatives that fell through is very cool for us delegates to understand better what else you guys do. i wish that for some of those things you guys could have involved the rest of the delegates to help a little bit more, specifically on the bi-weekly calls.

IMG_8375
IMG_83751284×519 133 KB

and I’m really curious about this situation because I’ve always suspected that the Expansion Program could hinder growth and I’m not sure from the phrasing in here if this was the reason why this “deal” fell through or not.

IMG_8376
IMG_83761284×533 110 KB

also, regarding this case, will someone else that doesn’t have a conflict of interest, other than Entropy, move forward with it?

6

Hello!

Thank you very much for the first report and for detailing all the initiatives you’re working on, whether they’ve reached the forum or not.

My only comment relates to the last page of the document. Since this is a “transparency” report, in my opinion, the breakdown of budget utilization could be a bit more detailed.

Firstly, I would like to see a month-by-month breakdown of the income (in this case, it was consistently $100K per month for having fewer than 7 members) and the percentage of that budget allocated to each of the items outlined in the approved proposal: Salaries; Legal, Insurance, and Accounting; Conference Travel, Offsites, and Small Events; Assorted Software; Office/Miscellaneous. Additionally, within each month, it would be useful to specify the percentage corresponding to Operating Income.

Regarding the first quarter, I have a question: Since you didn’t surpass the 7-member threshold, does this mean that the $300K that wasn’t claimed can no longer be claimed?

Also, since the proposal allows the Operating Income to be used at any time during the agreement, it would be good to mention your plans for utilizing those funds. If no plans exist yet, it would be good to specify what it has been used for in future reports.

Thank you very much for your work!

1 Like
7

Hey @pedrob!

Thanks for taking the time to review our quarterly transparency report and provide feedback.

You are correct that because we did not reach 7 employees, the additional monthly funds that were allotted from the original DAO proposal have now been forgone. We promised the DAO that we would not rush to scale the team just for the sake of the larger monthly payments, but in all honesty, we are certainly getting to the point of reaching full capacity with our current team size and ever-growing workload (GMC, one-off proposal requests, helping OpCo move forward, incentives design, Stylus Sprint program management, Events budget management, etc). We will likely look to add another employee over the coming months so we can accommodate. Per the language of our proposal, these funds will be returned to the DAO at the end of the term (along with any potential bonus not received).

Regarding a more granular breakdown of our costs, we feel as though the given segmentation, as well as the additional explanations, provide the DAO with adequate information on our financial performance. As explained in the transparency report, our expenses have recently risen significantly, and we expect this trend to continue in Q2, fully materializing (i.e., visible) in Q3. As such, we will funnel Q1’s operating income back into the business.

Other details to consider are revealing sensitive information about employees’ salaries. As was explained in our original proposal, we’re already facing competition from well-established research houses, funds, etc., when it comes to talent acquisition. Enabling readers of the report to reverse-engineer individuals’ salaries would be a huge limitation to us. It’s also important to consider that we’re running a business here, and providing granular breakdowns may even put us at a disadvantage when it comes to companies operating in the same vertical as we are (i.e., competitors).

Providing a detailed breakdown could risk hindering the company’s optimal growth, cost-effective operations, and strong culture while making it easier for competitors to poach talent. What we’re willing to disclose, however, is that all of the co-founders are working at salaries notably below market rates/what they were paid in their previous positions.

This is all to say we will not be providing a more detailed financial breakdown.

8

This is great! Congratulations on all your work and I hope you find the needed talent!

Thanks for the answer. There are many points here.

I didn’t ask (or at least, didn’t pretend to) for an exact breakdown of how much is paid to each individual, but rather a percentage of the total funds allocated to salaries overall, without specifying amounts per person. It’s true that having that figure could allow salary estimates, but with the data currently available, similar estimations can already be made, albeit with less precision.

That said, I agree with the arguments being made, but I still believe the DAO should, in some way, be able to oversee how resources are being spent. I would support the idea of providing granular details only privately to delegates, upon request and under an NDA. And if you don’t want to share this information with smaller delegates like me, I’d also agree with limiting access to larger delegates who meet a determined threshold.

This seems particularly relevant to me because, if that’s the case and it isn’t known by the delegates, it’s a situation that won’t be sustainable over time and needs to be corrected.

Having said all that, and unless other delegates agree with my stance, there’s no need to continue this debate. I’ll leave it as an idea for future consideration. Thank you very much for the responses.

2 Likes
9

who are all of the co-founders of Entropy Advisors?