From a strict risk-management perspective, we support the allocations chosen by the GMC. We believe forcing a set percentage for Arbitrum-native protocols introduces unnecessary risk, complexity, and subjectivity, all of which are harmful to performance. The allocation decisions make sense if you gauge the perspective of the risk manager. Most of the Arbitrum protocols involved in this post use strategies that pay out in tokens that do not have the best liquidity performance or are possibly hard on the overhead management.
As previously stated, these are tried and true protocols, backbones of DeFi, and from a risk-management position, this holds true on the liquidity side. From the DAO’s perspective, low risk should mean strong audits, high reputation, high liquidity, small allocative share of protocol TVL and pool liquidity, and minimal overhead. These are clear, objective, and salient metrics. Clouding this with a definition of alignment would be poor for the DAO.
Earmarking any percentage of funds specifically for Arbitrum-native protocols seems to add some layer of subjectivity here, when the objectives are clearly defined. To reiterate, Arbitrum alignment is ill-defined. It is easily imagined a coming future where interoperability solutions are in place (see the Open Intents Framework or Chain Clusters) and this definition becomes far murkier. This is not to say Arbitrum alignment does not matter, rather, that it may not have a place in this program right now.
For the ARB-native protocols there’s a matter of risk posed by allocating 5,000 ETH (of course this is adjustable) to protocols where that tranche is anywhere between 14% to over 100% of the protocols TVL. This does not even dive into how the pool split would occur between the Arbitrum Allocated ETH and the prospective protocols.
We don’t think that the GMC should be used as a show of dominance in face of the recent critiques of Arbitrum. Arbitrum has been in poor discussion because of the performance of the token, flippant spending, and so on and so forth. Frankly, this situation could easily be spun in the opposite direction: “Arbitrum DAO could have invested its GMC funds into stable yield but chose to allocate to more risk-on protocols just because they were ARB aligned…” Indeed, using DAO funds for alignment signaling should not be considered. Framing this as “the DAO is here to support you Arbitrum builder” is also tricky. We often talk about attracting users, but attracting protocols is important as well, but this means protocols at any stage.
Fluid is a great opportunity, so much so, that other DAOs have started purchasing Fluid tokens. It is possible that these programs may need not only to weigh the cost of Arbitrum alignment but also the cost of new protocol acquisition. Fluid is a standout protocol that has had a monster run over the past months. Supporting builders means supporting builders with battle-tested products, regardless of the place in the startup lifecycle. Unless there is some specific risk or value extraction from these protocols we’re being inconsistent with the GMC goals to reject them.
From the Blockworks point of view, the selection of protocols makes sense. In reference to the Northstar(s) for this program, all protocols listed achieve low-risk yield and aid in ecosystem growth. The providers have also designed programs in cooperation with one another specifically for the growth of Arbitrum and their protocols.
Finally, we cannot fully assess the quality of every proposal ourselves, given that some remain private (for example, GMX, Pendle, Eigen). With regard to concerns about conflicts of interest, it appears some of the claims in this thread may be less central to the core issue. It is clear delegates are dissatisfied with the allocation, but attributing conspiracies to committee members or focusing heavily on centralization anxieties, risks detracting from more substantive discussion.