GCP EOY Update and Transparency Report

DAO Programs & Initiatives Gaming Catalyst Program (GCP)
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The Gaming Catalyst Program (GCP) has focused on building up the foundational structure of the program, with significant progress made across key areas such as Council creation, initial hiring, thesis development, operational setup, and deal flow management.

These accomplishments, supported by deep collaboration with the Arbitrum Foundation (AF), Offchain Labs, industry advisors, and key delegates, have laid a strong foundation for the program’s long-term success.

We are excited to share this update and look forward to kicking off 2025.

Transparency Report Link

Thesis

Our thesis was informed by a focused sprint utilizing a combination of design thinking methodologies, industry research, and collaborative sessions with key stakeholders in the Arbitrum gaming ecosystem.

At the core of our thesis are several pillars that we believe will help inform our investments while encouraging trends that will propel web3 gaming forward. These pillars help us to visualize the ideal profile for founders (hybrid teams with not just traditional gaming backgrounds but senior team members with web3 chops), encourage bets against growth in distribution channels, balance big bets on breakthrough tech and games while also encouraging experimentation, and reflect a preference for teams that are part of Arbitrum’s ecosystem.

In addition, our thesis incorporates thinking on portfolio genre diversity, as well as thinking on balancing our investments across content and infrastructure. We’ve also set a flexible framework for supporting developers at various stages of a project’s lifecycle - balancing fund structure between early-stage investments and follow-up rounds where products are live in the market.

Acknowledging that the wider consumer market that yet to adopt web3 gaming en masse, we also believe that diversity is a strength rather than a weakness when it comes to overall portfolio management - the ‘breakthrough’ moments for the industry are likely going to come from the concerted efforts of builders learning from one another and collaborating as opposed to a singular breakthrough moment. As the market matures, the focus will most likely shift, so ongoing thesis analysis and updating as the market evolves is expected.

Our analysis of historical portfolio returns suggests a strategy assuming the “S curve of adoption” and a prediction that longtail participation from gamers will occur in web3. Seeing the recent wave of innovators and gaming veterans exploring web3 is a fantastic signal, but realistically, quality game IP takes time to create. We have created a short-term strategy focused more on current themes and patterns in web3 gaming, as well as a longer-term view on more traditional pathways to profitability predicated on capturing a larger portion of the overall gaming TAM.

While the details around our thesis shared here and in the transparency report are a brief summary, our internal documents hold sensitive key details including portfolio construction strategy, return management, geographical focuses, vertical research, and other details that will equip the program with a strong north star to operate against.

Team Compensation Structure and Review

Acting on feedback from the interim transparency council, key delegates, prospective team members, and other stakeholders, the Council (in collaboration with the working group) have reviewed several different compensation structures including specifically how to structure incentivization.

With recommendations from a professional compensation analyst firm, the GCP Council and team have been reviewing several models, including ARB based bonuses for ecosystem alignment and models similar to those employed in venture capital, corporate venture and foundations to best align team interests with the success of the organization. We believe that the optimal model for the GCP Foundation will allocate against an incentive-based structure that allows for both performance and milestone based bonuses.

Any performance bonuses related to investments will be capped to a maximum allocatable percentage competitive with industry benchmarks and to cover the entire life cycle of GCP including management and disposition. This ensures that GCP council has mechanisms where appropriate to secure competitive investment talent, and is not at a disadvantage when hiring or retaining the team.

The creation of any long-term incentive structures should also lower fixed opex costs which would otherwise be borne in the form of increased salary requirements for key team members.

Council Pay Review

The GCP team has received feedback from various delegates and stakeholders on the current council compensation structure, and will be standing up a proposal to increase council pay. This proposal will also ensure that oversight and advisory members are compensated appropriately against industry standards and for their deep expertise and commitment.

We are continuing to review compensation data from similar DAO programs and from industry standards, and any changes will be put forth to the DAO for approval.

Treasury Management

The GCP Foundation has been collaborating extensively with the Arbitrum Foundation and professional vendors to create a robust, secure treasury management system. Our current solution is in the final stages of analysis and review, and includes in-depth details and processes around the following:

  • Transfer Process from AF Multi-Sig to GCP
  • Distribution of Grants / Investments
  • Multi-Sig Setup
  • Vendor Privileges
  • ARB to USDC Conversion Procedures
  • Return Management
  • Risk Distribution
  • Clawback Procedures
  • Signer Best Practices
  • Platform(s) Setup

As part of the treasury management process discussed with the Arbitrum Foundation, both parties have recommended a setup that involves the GCP Foundation receiving ARB tokens instead of USDC / USD as proposed within the original Tally process.

This will not only reduce operational burden on our critical partner (AF), but allow the GCP Foundation the flexibility to handle Arbitrum token conversions while using a similar process as the AF currently uses currently. The GCP Team will also continue to work with DAO delegates and stakeholders to explore solutions and platforms to facilitate any treasury management components.

GCP Site and Builders Interest Form

We are also excited to launch our first GCP website, serving as an initial digital footprint which includes an intake form for game builders to express interest in the GCP.

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Designed in collaboration with Territory Studio, this site marks a first step toward establishing a cohesive brand identity for the GCP.

The launch of our site has helped contribute significantly to the 60+ projects currently being reviewed.

Transparency Report Cadence

After discussion with key delegates at Devcon, we believe that synchronizing the timing of transparency reports to match the cadence of Arbitrum Foundation reports on a bi-annual basis will provide a more meaningful signal to the Arbitrum DAO while also reducing operational costs and manpower.

With investment and grant cycles often taking months to fully pass due diligence and deployment, we believe that a quarterly schedule would likely be too incremental, whereas a 6-month cadence will show more meaningful progress.

As per feedback from delegates, we are reviewing supplemental communication methods to keep the community informed, including:

  • Monthly newsletters
  • Monthly forum updates
  • Quarterly ‘State of Gaming’ or community-oriented gaming events with GCP updates included
  • Live GCP presentations at major conferences (EthCC, Devcon, etc)

As the GCP team grows and capacity expands, additional update channels will be added to best equip the Arbitrum DAO with information and data not only about the GCP but about the state of the web3 gaming industry.

We are open to other suggestions on communication avenues and appreciate any feedback in regards to transparency and collaboration.

You can view our first transparency report here.

Program Kickoff Date

The Gaming Catalyst Program entity, structure, and staffing is ready to go live with partnerships and deals as of Jan 1, 2025 - and after discussions with the Arbitrum Foundation, key delegates, Council Members, and other stakeholders, we believe that the start date matching the start of the program’s capability to serve the Arbitrum ecosystem aligns with the goals of the DAO and proposal.

With the program’s entity and first staff members hired, the mandate to start investing and providing grants to ecosystem friendly, innovative gaming projects can start, and we are excited to finally get off the floor. Budgets provided in the initial Tally proposal have been reviewed and as of our recent analysis, will not need adjustment for the length of a three year program.

Team Growth

The GCP will prioritize our short-term hiring roadmap to prioritize immediate talent / functions to sustain progress. Simultaneously, we will be actively recruiting for strategic and investment oriented roles that require longer timelines (i.e. rounding out the leadership team, scaling our venture function, and other critical roles to unlock the next phase of growth). Q1 and Q2 will be a critical hiring period for GCP to ensure we establish momentum leading into 2025.

Tentative Priority Roles in Q1/Q2 2025:

  • Investing oriented roles (i.e. Investor, Analysts, etc)
  • Venture Leadership role (i.e. Venture Partner / GM, etc)
  • Grants Manager
  • Head of Finance
  • Various operational roles (i.e. Operations Manager, Grant Operations, etc)

Specific job descriptions are under Council Review and will be available to share with potential candidates.

Looking to 2025

Conference Presence: The GCP team will be attending GDC and ETH Denver in the coming months to connect with visionary founders and showcase our initiatives. We’ll share more on our conference strategy in Q1.

Brand and Marketing Efforts: Keep an eye out for our upcoming PR showcasing the program’s activities, our first cohort of investments and partnerships, along with the launch of a full-featured website complete with a grants portal.

Builder Pipeline:
As of December 29th, 2024, we have 64 projects in the pipeline and a highly active funnel of interest from game builders through our new website and submission form. We are actively expediting the due diligence process for builders who align with the thesis outlined above.

A more in-depth execution timeline is described in the transparency report, and will continue to evolve as the team grows, our first cohort of strategic partnerships come to fruition, and feedback from the community is received.

The GCP Foundation is thrilled to share more about our progress as the program officially launches in the new year. Together, we are confident that the future of gaming will find a home on Arbitrum.

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This is good, in my opinion. However, I have some reservations about the team growth strategy, but I am optimistic, and I look forward to seeing how the hiring for roles goes. Cheers to a new year, everyone.

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Thank you for this update. Several fairly routine items we didn’t see covered in the post or report:

It sounds like a Cayman foundation company was ultimately selected? If so, please share what interested persons are defined in the constitution/articles that have a right to information on the entity. This should include some way for the DAO or its non-GCP-affiliated representatives to pursue legal enforcement of directors’ duties if needed. Sometimes this is vested in a separate entity that takes directions via DAO resolutions.

Where does the equity ownership of the foundation company sit? Foundation companies have ownership by default. If it was orphaned, please provide the details on all associated entities used to accomplish this (a graphic is usually quite helpful).

Can you please provide the articles of incorporation and bylaws? Unless there is a specific reason to exclude them, please be sure to include all top-level agreements like deed polls, amendments, trust declarations, corporate service provider agreements (some may require payment terms to be redacted).

A maintained list of any corporate trustees, directors, enforcers, or other corporate roles would also be great. Also, please provide the name of the legal entity that was formed.

Perhaps just create a locked thread that keeps links to historical and current information around this so it’s easily searchable and all in one place on the forum in a central document hub.

Can you share what this percentage is? Or is that still being determined?

Can you share what this will be? And will it be requesting new funding or coming from the existing $25m operating budget for GCP?

Reminder that anything deviating from the Tally proposal requires approval. If you anticipate a lot of revisions, consider a vote to delegate this power to a smaller group of delegates (not working for GCP).

Presumably no, if both AF and the GCP foundations are in Cayman jurisdiction, but can you confirm there are no expected tax burdens related to the transfer of the funds from AF to GCP foundation?

See our comment above that anything deviating from the Tally proposal requires approval.

Regarding the transparency report, it would be great if in the future it included financial statements for the GCP foundation. Given the size of the funds, it would also be great if you could commit to an annual audit (can’t remember if this was already required, but don’t think it was).

We understand these are early days, but transparency reports need to be more thorough in the future. It is not transparent, for example, for the DAO to not even know the name and legal jurisdiction of the GCP entity. This is, of course, an oversight, but reflects a low level of professionalism that needs to be upgraded given the massive amount of funding allocated to the GCP. Feel free to reach out if we can be helpful when you draft the next quarterly transparency report.

Edited to add: Is this msig with 40m ARB under AF control or GCP foundation control? All of the signers are fresh EOAs, so can you provide a little context over the custodial arrangement?

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Awesome job @rickjohanson , @Djinn , @coinflip and team.

I know it takes a bunch of work to develop a transparency report. I’m also excited to how these continue to develop and get better and in the future. =)

The thing I’m most excited about is:

That is a ton of team that are likely to get the support they need to develop great games on Arbitrum! =)

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Hello Dan and Rick, and thanks for this report.

I think is overall balanced: it’s showing what we have come up to so far in the last 6 months of working.
Being in the interim council, and having always had a interested eye in this initiative, I know by first hand that there was a general friction and delay to setup the foundation of the program: not at fault of anybody, just, was the first time that in Arbitrum, and likely in crypto, we did setup something this big. It took time. And I am personally ok with that, and glad that we are moving forward toward a more operationalized phase of GCP.

I am definitely not a expert as Paper here, so I can’t go in as much detailed question. But it could indeed make sense to share some light regarding the legal entity, or at least information up to the point that any relevant party, capable of navigating the info, can retrieve the rest if needed. Obviously, if there is no reason to not share these. Since this structure will likely be reused in future (opco partially if it’s gonna happen first, avi if it’s gonna happen second, etc), might make sense to allow for third party scrutiny as well for the sake of future initiatives.

Personally interested in this as well. If the goal is to align the GCP council, to other council structure we want to spin up in the DAO like the OAT for the OpCo, I am personally not against, as long as this is justified by duties, tasks and responsabilities.
Also we are going eventually backwards here, so we likely can’t add details or constrains like the ones we want to put in the OAT; but I guess the first mover also comes with the 20/20 hindsight. This to say that comp can be changed, and should if the parties involved feel that there is a monetary misrepretantion of the roles.

Agreeing on this, specifically on changes on the council comp. And I am pretty sure that the GCP members agree on this as well.
Don’t necessarily agree on the vote needed for the financial manageemnt of the assets. If I go to tally this is what I see

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Is unclear, to me, if this refers to

  • only OpEx
  • OpEx + grants/investments

and I am honestly struggling trying to remember the discussion we had during the months. I know that there is an opex that is measured in dollars, not in arb; to me, as long as the conversion for opex doesn’t have any surplus compared to the $25M planned, it should be fine at high level, although I would reccomend using the best practice already used by the Foundation for conversion. Knowing that a treasury manager will be hired, I am confident this will be done.
But this leaves the question open on what is the specifical reference here, re: managing conversion of funds by GCP. Is for example the plan to put out grants denominated in arb or in usd? might be too soon to answer this question, but could be related to the above.
Again, at high level: since we are in a rising market for crypto asset, I think is sensible, for a fund, to have some liberty on the management of liquidity in the treasury; as long as we specifiy the scope (the part about opex + marketing, the part about investment, the part about grants, all of them or just a few) and the modalities (best practice, frequency), and we keep compatible with the quarterly release that was voted, it should be ok, with the caveat of an higher responsability on the treasury manager of course.

I think this is neither an oversight nor a sign of low level professionalism. This the most meaningful update since inception for GCP, we are here to see how the initiative is going, and from a delegates’ perspective knowing if the initiative is going as intended vs the name of the entity is probably what matters. I although agree that this info is needed, and in general that we could consolidate all documents. If possible, would be interesting to have a repository of docs similar to what is offered by the Arbitrum Foundation

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I don’t have too many remarks right now. It has been 6 months since the Tally vote: in crypto years this is a lot, but putting all of this up is neither something easy nor fast to do, and I am pretty sure we will leverage all the knowledge acquired to speedrun future initiatives. On this note, it could be interesting to understand what have been the biggest challenges so far, for the sake of futures orgs we will have in the DAO.
The focus as mentioned should be hiring now, because useless to say, the team that will be hired will be key for the success of this initiative, starting from the lead, but I am stating the obvious here.

On the thesis, there will be time to discuss, but would like to highlight the third pillar of the report, the breakthroughs for distribution. I personally hope that a lot of work will go toward collaborating with mobile infra partner, because we still have a huge gap in crypto through mobile, and gaming could be a trojan horse to cut a piece of the pie from this addressable market.

Glad we are moving forward with the initiative taking a proper shape :smile:

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The main update is that a legal entity was formed, but the name of that entity, the country it exists in, and its ownership/control structure are not mentioned.

You can’t get a lower level of disclosure than that. If that’s not an oversight, then what would be?

As for professionalism, this entity is handling more than $160,000,000. A transparency report like this would result in an immediate audit and probably a personnel change anywhere outside of a DAO. We can give the benefit of the doubt in this case – the GCP contributors don’t have experience reporting to investors – but let’s not lower expectations. This is a serious amount of money and requires serious reporting and execution.

With that out of the way, we’re confident the GCP contributors understand this and will improve. They will likely provide the requested improved documentation, and we look forward to those documents being compiled and disclosed.

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To me the meaningful updates in this report are more than the fact that the entity has been created: the high level thesis and the framework that will be used to evaluate and vet investments are what I was personally looking forward to read.

But I don’t want to go adversarial here, because we are on the same page: more details on the entity are needed, and for sure will be provided.

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Hey guys, thanks for the update. In addition to the other questions asked I’d also like to know who’s working on this. From the outside, it’s not clear if it’s a team of 2 or 20 that’s already in place. Maybe a “our team” section in the website?

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Hello! Thanks for your detailed report. It is an interesting read and a great summary of what happened so far.

I have a question regarding the Team Growth section. Is it possible to have a breakdown/organizational chart of the current positions and where the priority roles will fall under? It would be nice to have a bit more info beyond “Various operational roles”, for instance, and a projection on how the expenditure will grow over time.

Thanks in advance!

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Would it be possible to understand what is the status of the pipeline of investments?
While the priority is hiring for the next months, is mentioned that there are 66 projects, and I would like to know what is the status of these grants/investments. They will obviously have to go through the compliance and normal process, but maybe you have been speedrunning these and we could be able to see some results relatively soon?

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Hey @Djinn !

Happy New Year to you and the GCP Team <3

First off, we wanted to say that it is clear a lot of effort has gone into getting us to this stage and in the preparation of this report, and it is also good to see that progress is underway in relation to the creation of the Council, initial hiring, thesis development etc. What we like most about the recent work done on the thesis, from the info provided, is (in particular) its multi-faceted approach. Naturally (as we are all aware) incorporating design thinking methodologies and comprehensive stakeholder engagement, establishes a strong foundation for the program’s execution down the line and for the years to come, which is especially relevant for the GCP.

From a ‘fiduciary’ responsibility pov, also kudos on the details provided on the treasury management framework (ref. to the detailed protocols for risk distribution and return management).

The program’s commitment to governance is further exemplified through the engagement of external compensation analysts and the push for performance-based incentive structures aligned with industry standards. That being said, this could have been strengthened even further by including some additional info on how benchmarks were chosen and how performance reviews for incentives will work, albeit we understand that this will probably be clarified further down the line. One final comment on the team front, while the roles outlined make sense, we feel that by this stage the specific role to be undertaken concerning operations should have been specified (rather than just stating various operational roles), as this would have helped gather feedback.

It is also good to see that delegate feedback was taken onboard and addressed through regular communication methods such as the monthly newsletters, forum updates and the quarterly ‘State of Gaming’ updates, among others. As to your point on feedback in relation to transparency and collaboration, we feel that the communication methods outlined meet our expectations for this initiative.

On that note, we agree with @JoJo’s comment suggesting the setting up of a repository of documents akin to that prepared by the AF. In essence, for the GCP as for any other initiative, reducing any friction for delegates to be able to quickly access and assess such information would be a win for everyone. Touching on the points raised by GFXlabs, without repeating them unnecessarily, we feel that additional info relating to the GCP entity, and similar info in that regard should be included in future transparency reports and further strengthen the case for such a repository.

Finally, the launch of the website and the existing pipeline of 64 projects (or 66 as noted in the report) relative to the goal of 400 applicants on Tally shows significant market interest and validation. It is exciting to see this momentum building, and while it’s early days, things are clearly coming together.

Looking forward to seeing how things unfold and happy to share further thoughts as needed!

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Awesome updates @Djinn, @rickjohanson. I think this is a solid start for the GCP. Understanding the thesis which will be the guiding principles by which the funds are allocated is honestly the most important piece of information to me.

Information requests around the entity itself are fair but seem like minutiae to me compared to the “How and Why” behind the GCP.

That said, this is a solid first report. I believe a focus on distribution and data driven iterative development is the best path forward for all games but web3 games even more so. This gives me confidence Arbitrum will be able to bring great builders to the ecosystem.

Looking forward to following the rest of these updates.

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I appreciate the transparency you’ve demonstrated. Once again, both this attitude and the commitment to increasing the project’s security are commendable.

This level of responsibility strengthens my belief in Arbitrum’s potential to become one of the world’s leading networks.

Regarding the investment thesis, milestone-based and phased validation is essential. Most early-stage markets rely on this approach. However, if you’re dealing with early-stage projects, close monitoring of the teams, scope management, and a solid foundation of partners supporting each phase are critical elements for long-term success.

The challenges we face during each phase of the product adoption S-curve, as mentioned, require strong, hands-on guidance for the teams shaping our ecosystem.

One of the biggest issues in the gaming industry is entrepreneurial mindset. Many who label themselves as CEOs lack this behavior, often bringing habits from their professional backgrounds rather than true business and leadership experience. Experience is valuable, but it must be paired with a solid understanding of business management and perseverance. With resources, progress can be accelerated, but when challenges arise (as they do in every company), projects are often abandoned due to a lack of commitment and resilience.

We greatly appreciate your support and guidance, and we want you to know that you will also have a committed ally in building this ecosystem and achieving lasting, measurable results.

Best regards,
Marco Maia
Osten Games / Data2073

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Thank you very much for the report.

I support the comments and questions raised by @GFXlabs, @JoJo and @jameskbh earlier, so I will not reiterate them to avoid redundancy.

One thing I would like to see in a year-end report is specific KPIs for the upcoming year. I understand that the report mentions work is already underway on this. But it’s important to be clear on KPIs and performance:

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According to the proposal that passed, by now the transparency report should have outlined performance against KPIs.

I understand there were delays in setting up the infrastructure necessary to execute the program and its fine. Now, given that the report states that January 1, 2025, is the official start of the program, and from that date capital will be deployed for investments and grants, I believe it is very important to set delegate expectations with KPIs for 2025, both for the program as a whole and for each specific role. Note that I am requesting KPIs for each specific role because the proposal defines and outlines them.

Again, thank you very much!

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Hey everyone, thank you so much for all the feedback and support. I’ll do my best to reply to the various discussion points. Our team is looking forward to sharing more in the future as we continue to cook up programming for the GCP!

1. Can we get a deeper analysis of the pipeline, including category breakdowns and summaries of deals in each stage?

In the future, we expect to have deeper segmentation of our pipeline, hopefully inclusive of funded projects as well. In the future, we will have other avenues of transparency as well to supplement the transparency reports - exploring ideas including newsletters, continuing forum updates, etc.

2. Can we share the entity structuring and name?

I don’t think this should be an issue but we have reached out to our legal advisors to understand what can be shared.

3. Are grants going to be denominated in ARB or USD?

We expect there to be some flexibility in the structure we offer grants. As of now, we do expect to start with ARB denominated grants.

4. Can we get a document repo of important information about the GCP?

Yes! We will stand something up before the next report and will look to the Arbitrum Foundation repository as a source of inspiration.

5. Can we add a team page on the website?

We expect to add a team page and other additional information to the first iteration of the website in the coming months / quarters (check out https://www.thegamingcatalyst.com). It’s more of a question of bandwidth - but we do have the information on the current team in the transparency report.

6. Will there be a breakdown of the org structure and priority hires? Can there also be a projection of expenditure over time?

Yes, we can explore including a high level org structure and include some projections on hiring spend in the next report. It’s a tiny team right now so we are still working through some of the budgeting so please be patient with us.

7. KPIs for the year - can we see these for 2025?

The KPIs illustrated in the transparency report are representative of what was in Tally. However, the team is working on quarterly / yearly planning and expect to have more robust publicly available KPIs and OKRs. Stay tuned on this one!

I don’t think we will have role based KPIs available publicly - these will be shared with the Council and team as a way of holding folks accountable and performance monitoring.