Gaming Catalyst Program Analysis (ARDC Research Deliverables)

As a part of the Arbitrum Research and Development Committee, Delphi Creative has put together a SWOT analysis for the current Gaming Catalyst Program (GCP) proposal. This memo highlights the various opportunities the GCP brings forth, as well as things that need to be addressed as the mandate for the program is further fleshed out.

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As per the request of the GCP team as well as the DAO Advocate, L2Beat, Delphi Creative has put together a short memo outlining reasonable compensation ranges for roles the GCP is looking to hire for in the near-term.

Thanks for your work in putting this together! Super interesting read and good to know about the various compensation packages, this should become a standard for future proposals since management fees is one of the more contentious issues even if people agree the proposal is good.

I did want to raise some concerns on the benchmarking that has been done. You have taken the VC industry standard (2/20 with some carry), which is perhaps more suitable for the M&A proposal by @Bernard than the GCP.

For example, the GCP has proposed 25 million in compensation of a total 225 million budget. When questioned about the divergence from your analysis, they said carry is not relevant to them as Ronin and Immutable are the competitors to benchmark against, not the VC industry as a whole.

Thanks again for your research! I appreciate the role you have taken on to make compensation in DAO proposals more bureaucratic and less political. Before the vote concludes, it would be nice to have some comment from Delphi on the final implementation budget of the GCP and whether it is in fact reasonable

Hey Devansh, we appreciate the kind words and understand your concerns. Below is our response to the things you’ve pointed out:

  1. We did not consider the standard 20% performance fee in our analysis, and used the 2% manangement fee to establish a “soft ceiling” in light of uncertainty around the exact fee structure and budget for the GCP.

  2. The concluding section of our analysis titled “things to note” did highlight that the data we used to establish this was from 2021-22. While this doesn’t explain a high-degree of divergence, it is something worth noting because venture compensation does not stay static, especially considering the rapid growth of venture capital over the last decade.

  3. Our analysis was meant to provide a ballpark range for compensation in various roles, not a practical ceiling for salaries. Our analysis does not account for legal roles required, outside vendors (legal advisory, fund accounting, entity set up, etc), and expenses incurred in the process of business development.

  4. Our analysis on compensation is also structured as base compensation + fixed incentives. We did not consider carry for this analysis, which means these numbers do not reflect performance-centric incentives which the top candidates would expect.

  5. The figures in the analysis, as previously mentioned, are ballpark ranges. To make category-leading hires in any of these roles would undoubtedly stretch the ceiling of these numbers.

  6. The reality of most of other ecosystem funds – gaming or otherwise – is that turning a profit is not one of their main objectives. Their only real mandate is to grow the ecosystem with capital investment into teams that promise to bring something special to the network. In this way, the GCP is unique in that there is an expectation of profit for the ArbitrumDAO apart from the indirect effects funded teams will have on the network. These ecosystem funds are not usually funded by the DAO directly, and typically do not have the same level of expected transparency (which could result in additional hires and cost).

  7. Benchmarking against Immutable, Ronin, Polygon, Avalanche, and other networks with gaming ecosystem funds is ideal in theory. However, obtaining compensation data with respect to fund operations from these teams has proven to be extremely challenging. Our analysis defaulted to venture funds as they are the closest parallel to the GCP for which there is prior data to draw on.

Hope this context was helpful!