Final: Arbitrum Stable Treasury Endowment Program

Proposals Finalized AIPs
61

gm! just a couple of questions

What’s the reasoning behind the $100,000, are you assuming at least 100 applications?

And what’s the reasoning for a plus for every selected provider? I see forms of undesirable corruption around this big incentive.

and what’s the reasoning behind this decision and not the DAO electing it?

Do expected obligations of service providers include the commitment to share all the relevant data with the PM?

I am not particularly against this, it seems fair. That said, modifying already approved budgets lightly (150% increase) and merely reporting it in a short post while submitting the proposal to Tally should not become a common practice.

thanks!

1 Like
62

Sorry i should have been more clear in my communication!

$100k is the basic retainer fee, for managing the program over a year. the preallocation phase where they help the committee is $1000 per applicant, the post allocation phase is a separate budget of $100k plus $15k per provider

This is a good catch and something @GFXlabs flagged as an issue with maker, where the program manager didn’t recommend liquidation as it would reduce their take home.

For every service provider added, we add to the monitoring work of the program manager (making sure their accounts are clean, assets are safe,etc). that is why it makes sense to not have a flat fee - but we want guardrails like them getting paid the full amount even if they recommend we withdraw assets from a service provider

The details you mentioned above are exactly the reasons we want the procurement committee to be involved - i believe they will get a better deal for the DAO than an election would.

Happy to change the selection procedure of program manager to a snapshot if that’s useful, but leveraging the procurement committee might be more interesting in getting a sweeter deal

Yes the PM will be the annoying gnat following up with service providers to make sure data is shared, interest earned is going to our treasury, etc

Completely agree! Only reason we even changed budget is for reflecting the increased workload of the committee between the snapshot and tally version, from initially being just a screening committee to one that actually recommends allocations.

Thanks for your comments, really welcome it :pray:

2 Likes
63

Thanks @thedevanshmehta and team for your efforts on this proposal. The UADP will continue to support this initiative going into the onchain phase. We are excited to see the influx of applications that come in from the RFC.

2 Likes
64

Thank you for drafting this. A very poignant proposal and in-depth.

Would it be possible to give some more information about how the ARB will be used. I know it says RWAs. But can some specificity be given as to the general idea of breakdown of how the ARB will be invested. I understand that each individual manager may want a different approach. But, I think for clarity it would be better to have a perceived % breakdown of where it’ll be invested within RWAs.

65

We are incredibly in support of this initiative and the RWA story seems to be re-picking up. We’re interested in expanding this pretty rapidly as the DAO has a significant number of tokens that would earn substantial yields relatively risk free. Especially with interest in other grants going through such as the gaming budget, this is something that we should spend more emphasis on in the upcoming months.

1 Like
66

Thank you for your support we appreciate it! This is a good first step towards diversification while boosting RWA protocols on Arbitrum. In our opinion we should see how it performs for at least a year before investing any more in this program!

Based on the service providers we spoke to, there are 3 broad categories;

  1. Tokenized money market funds, like Franklin Templeton’s ‘Benji’

  2. Tokenized treasury bills like Open Eden which require whitelists

  3. Yield bearing stablecoins like USDM which are permissionless

The committee decides on the allocations to each provider and overall breakdown among the categories, depending on quality of applications received.

Hope that answers your question!

1 Like
67

Thank you for the clarity on this. It’s appreciated!

1 Like
68

Despite me voting “for” in snapshot, I will vote “abstain” in tally.

Reason is simple: we have had changes in costs not properly communicated (this is partially on me to notice) and explained (this is on @thedevanshmehta). I personally take the fault on not noticing this before, it was indeed posted several days ago. That said.

I have expressed already to you my concern here: is not for the amount per se (that now made the council costs jump decently), but the fact that there is a generic “increased workload […] and commisurate pay received by LTIPP council members”.

This doesn’t make sense. I am expecting the work done here, and in the LTIPP committee, to be totally different, both in term of quantity and verticals.

I am not even saying that the amount is wrong, too high, or too low, just, the fact that here we have watched to another program and said “oh, look, that’s the number in there, it should be the number in here” makes me think that there is no real perception of the work that will be actually done in here.

Since the overall costs jumped from 200k arb to 300k arb (and I think a portion of this jump is tied to legal expenses? Not sure), I don’t feel comfortable in voting for here.

Again: the problem is not the number. The problem is that measuring workload, and so compensation, by just eyeballing what others doing, means to me that there is not enough focus on what you want to do. And this is a shame because I know how much you all worked to prepare something that, while imperfect, is a start for something that can benefit our dao.

69

Thanks Jojo for flagging this issue! Appreciate the feedback and happy to go back to the drawing board if other delegates also feel strongly enough about the implementation budget that the present version does not pass the ongoing tally vote.

For a program that is worth $35 million, I do think voting abstain due to an increase of 100k ARB in implementation budget is short sighted. The increase comes from the stipend to committee members increasing from 80k ARB to 150k ARB; the remaining 30k ARB is from receiving an accurate quotation on the costs for a program manager to oversee this program.

In my opinion the increased pay is justified since the major delegates are the ones who reached out to us requesting an increased workload for the committee. From just screening applicants for determining eligibility, they wanted the committee to serve as a judge undertaking the politically charged task of picking winners. This is a pretty big increase in workload and I did not feel comfortable with giving them the same pay.

Regarding the LTIPP comparison, both are programs of a similar size. Leaving aside the effort involved for a moment, if we do not pay appropriately there is incentive for judges to make money in other ways which we certainly do not want. In my opinion, paying committee members 150k ARB to decide how $35 million ARB is distributed is entirely justified.

I’ll also add a final note on our supremely qualified committee, which is likely working at or below cost for this proposal even with the minor increase. We have highly competent legal risk assessment with @northlakeslegal , and as we know legal advice in this space does not come easily; technical proficiency in assessing smart contract risk with @Nethermind , a highly credible actor. And subject matter experts in @GFXlabs , @karpatkey and @steakhouse , which have multiple other clients that are paying them far more money.

1 Like
70

Maybe my answer above was not clear enough.

It’s not a problem of 100k arb more, or less. The change was not properly communicated and that is a minor issue. But that is not the problem.

The problem is that we have a situation in which it was pointed out that

  1. LTIPP council members are paid 25k each
  2. Both LTIPP program and the STEP program are around 35M each
  3. as a consequence, STEP council members should be paid 25k each.

Again: point 3) doesn’t make sense.

And to reiterate: i am not sure if 25k for council members in the STEP is just too high or too low. I don’t know the specifics, because you didn’t provide them, or better, you provided a ballpark reference in snapshot and previous discussion that now changed just because another proposal with a similar size has a 25k payout.

You are right in saying that this is a minor, and that is why i voted abstain and not against.

But i have to be honest: if in the program there is an oversight on evaluating the cost of labor internally, to properly relate it to the value provide, the hours spent and the verticals and knowledge needed, I feel like is legit on my side to ask myself, can this program allocate 35M on behalf of the dao in the best way?
And maybe I am just too pessimistic here, and sorry if I sound too negative, I might just be overblowing the whole thing here. It just seems a really superficial oversight in a program like this one.

EDIT just to be clear: not casting any doubt here on the council. Some of them I know and I work with, some of them not, I am confident they are all 100% qualified for this job. My concern is about throwing a number without proper thinking (or, in my view, mostly wrong thinking) on the cost matter.

1 Like
71

Thanks for providing the extra information! A quick clarification and then a drill down into the root of our differing positions

This concern is thankfully not a valid one as the committee was not involved in any of the changes made to the proposal. I am the lead drafter of the proposal (excluding the RFP) and the one responsible for setting compensation amounts, selection mechanism and other details.

Since I am a facilitating, nonvoting member of the committee (except in case of ties), I do not have any say in the allocations made under this program. so even if these changes cause you to lose confidence in me, that has no bearing on the ability of the committee to allocate for the DAO.

And now we come to the root of our differing positions ! Your approach to compensation is that it should always be based on input costs like labor and time put in. Estimating this accurately is time consuming and an inexact science at best, as you yourself have discovered when LTIPP received twice the number of applications than expected. Plus it makes every proposal into a salary negotiation, which is mentally taxing and results in the ’ @tnorm ’ problem where proposal drafters who don’t like constantly negotiating or estimating their pay moving on to more stable jobs.

Whereas the approach I decided to take is outcome based. Both LTIPP and STEP council members have the responsibility to recommend allocation of similar amounts of money (same end outcome) and so should be compensated equally, even if there is different levels of effort involved. This approach certainly has its flaws but I would argue that it scales better since we can build on precedents from earlier proposals passed by the DAO and reduce the transaction costs in estimating pay.

I don’t think either of these 2 methods is superior as you are trying to make it out to be! There are simply different trade-offs involved.

72

Gonna sit this one out with an abstain.
A) Mostly because of my feelings about RWAs which I have shared before. (I would rather use an existing rail like Maker because my personal economic stance has always been by the time we stand this up rates will be coming down)
B) The reasons for the amendments from snapshot to onchain vote are unclear to me. For example, has the procurement agreed to take on this responsibility? Maybe I missed the thread where responsibilities have been outlined and accepted (even though I disagree that they should be the party to administer this, given they already have a full workload). Anyways will stay on the sidelines for this one.

2 Likes
73

This is reassuring, thanks

“Estimating this accurately” → I never said that. Estimating what the workflow would be, trying to understand the workload in term of hours, trying to understand a buffer, is definitely not an “accurate” estimation. An accurate estimation is using softwares like sap to log in hours, and god forbids if i want that.

Sorry, no. An outcome based approach is an approach in which you have a portion of a fixed salary, plus a variable portion based on amount of inquires, plus something tied to results. The latter part, comp with results, is something we are not ready as a dao. But the former two yes.
Also, outcome based is not “doing X”. Is doing X with quality. Again, we are not yet ready for this.

Sorry, no, again I am not sure how you can come up with this conclusion, that since the amount is similar the allocation should be similar. It’s a totally different job.
And even if we wanted to go down this route, step is a 35M program, LTIP is 45M, why not doing then a linear proportion and use then 19k arb as reference amount? And again, I am not saying 25k in this council is too much or not enough. In here i am just showing the fallacy of your logic.

Every approach has pros and cons, we are not gunning for perfection but

“my” method (which is not mine. Is simply trying to put some logic in what you expect to do) is not superior. Is, simply, more realistic and ground based than saying “the other dude is taking 25k, they manage the same amount of ours, let’s get 25k for us ourself”.

I’m sorry man, but the amount of money involved in this DAO is not trivial. There is a premium here, here = crypto, to do certain jobs compared to most global realities, and this happens because the industry is in rapid growth and there is no playbook. High risk high reward type of thing. And I am not saying we should underspend on people, cause that is the recipe of failure.
But we need to aim to the best transparency possible and the best effort possible on our side, because we have tons of eyes on us, tons of users who have vested interest that us as a community do the best for the ecosystem. We should aim for an high route when possible.

And deciding on compensations like this, like you are slicing a piece of bread, no ser, sorry, to me is not the right way to behave.

I’ll shut it here now because it might just seems a crusade and that’s not where i want to go, best of luck to you, let’s hope that i am just a pessimistic cow and that the dao will look at the proposal in a different way from mine.

4 Likes
74

Thanks Jojo appreciate the back and forth on an important topic like setting the compensation rates in DAO proposals! I do hope that standards emerge in the future by which it becomes easier to work out implementation budgets so that friction is reduced for contributors looking to make proposals. Such discussions certainly help move us to that goal :saluting_face:

We are requesting committee members to try logging their time and provide an estimate of the market costs involved in the performance of their duties in the program, if it passes the tally vote. So we should hopefully get some hard data on actual costs to inform future proposals to some extent.

1 Like
75

Thanks DK for sharing the feedback here!

Even if you are in two minds about RWAs, I trust that you agree giving an incentive for Franklin Templeton, Ondo and other big players in the space to come on Arbitrum is a good thing?

Even if providers are not on Arbitrum, they have to give us a timeline by which they come on our chain. If they do not come within that timeframe, we will be withdrawing our investment from them, so the incentives are clear.

It’s actually based on our brief conversation at EthDenver! Where you shared that you do not want to vote on individual service providers as a delegate but would rather that be done by an expert committee.

The procurement committee will play a role in hiring a program manager. The actual allocations to service providers who receive the 35 million ARB is done by our committee

1 Like
76

I support the STEP proposal as a strategic move to diversify our treasury and grow the RWA ecosystem on Arbitrum. While there are costs involved, I believe the potential benefits outweigh them.

Having a dedicated team to vet opportunities, perform due diligence, and manage the operational side is crucial. Their oversight will provide much-needed transparency into the performance of our RWA investments.

This initiative will boost our ability to fund development long-term. Moreover, by becoming a major player in RWAs, we can attract more projects and liquidity to Arbitrum.

Initially, I had concerns about the timing of swapping ARB for RWA assets, considering the upcoming ARB token unlock and potential short-term price impact, but we need to think long-term. Arbitrum’s success ultimately depends on the health and growth of our ecosystem, and the STEP program is an investment in that future.

I encourage everyone here to support this important step forward for Arbitrum.

1 Like
77

Appreciate the support! This in one line is exactly what we hope to achieve with this proposal.

The selection procedure for program manager of STEP who oversees RWA service providers is undergoing a slight modification. The procurement committee will review the RFP we put out on the forum soliciting applications for the post but they will not be in a position to select them. We were notified of this 2 days ago. As the APDC is still a new body, we are figuring out how they fit into the DAO.

Pedro was prescient in suggesting the program manager role be elected by the DAO in the first place. The amended procedure for selection of a program manager is the following;

  1. Responsibilities and an application form is put up on the forum for interested applicants (responsibilities is already written up on tally, application form TBD)

  2. Each applicant proposes their own fee structure and also what benefits they can provide as a comment in the thread

  3. Snapshot election is held among eligible applicants

2 Likes
78

The Princeton Blockchain Club is voting FOR the STEP proposal on Tally.

It’s a good strategic move to diversify our treasury into less volatile assets (especially at this point in the market cycle), and to support the growing RWA ecosystem on Arbitrum.

We do see the concerns about the compensation + procurement changes from the Snapshot brought up by JoJo, DK, and others. Some of the changes are positive - handing off service provider research to an expert committee reduces delegate overhead by a good bit. Not really a fan of the compensation changes though.

Regardless, we don’t think that’s a big enough issue to warrant voting against/abstain. We should get the ball rolling on treasury diversification pretty soon, so we’re voting in favor.

1 Like
79

Thanks appreciate your vote of support! We won’t let you down

I would add that these 2 changes - in compensation and handing off service provider research to a committee - are interlinked.

We designed the earlier compensation under the assumption that the committee would not need to do research into each service provider but only give a stamp of eligibility. Once this assumption didn’t hold up anymore, we had to also redesign the compensation to be more fair and reflect the extra work involved!

1 Like
80

Blockworks Research will vote to ABSTAIN from the STEP proposal.

We agree that treasury management will be a crucial aspect to develop going forward and see RWAs as a meaningful vertical for Arbitrum to begin focusing on. However, due to the expense structure having been changed since the passing of the Snapshot vote and certain other factors seemingly still being modified, we have decided to abstain on Tally.

While we acknowledge and appreciate the effort put into accounting for the community’s concerns and realize that many aspects related to the proposal will have to be developed as things move forward, we aim to refrain from establishing a precedent wherein votes are cast on onchain proposals that lack finalization concerning the tangible specifics instituted within those proposals.

1 Like