JoJo Delegate Communication Thread

[JoJo]

March 2025 voting

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Snapshot votings

TMC Recommendation

Vote: Deploy only the stable strategy, Deploy both, Deploy nothing, Only deploy arb strategies, Abstain

@JoJo

Had to cool off for a couple of days before being able to provide a proper feedback.

I am voting as suggested by threesigma in the following way.

@threesigmaxyz

#3 YES, deploy the Stable Strategy /// NO, do not deploy the ARB Strategy

But this vote is not an endorsement of what was done so far, and comes from the believe that we need to increase the speed of execution from 0.1 miles for hours to 0.15 miles per hours.

Let me break down the proposal.

The Good

The stablecoin strategy are likely good. I am ok in dividing in equal parts in all the 3 parts. I am also ok in karp and avantgard charging a management fee: in the shortlist of protocols i see for both univ3 and camelot v3. Makes me think there is a management of liquidity in a v3 range that might change over time, or at least be manually assessed, since there is no mention of a third party ALM. Managing liquidity is not trivial, and stable pools are all beside stable despite the name.
I am expecting this portion of the strategy to be not only succesfull in yield but useful for the check account of the dao and i am also happy to have avantgard and karpatkey to have a more active role operationally wise in our dao, with gauntlet also consolidating it.

The Bad

The fact that we can’t come up with a proper arb strategy is, to be blunt, quite bad. We all know that, as asset, has only value toward governance; is not not spread enough to be an hub of liquidity (and this maybe can change in future), we don’t have staking out yet so is not a collateral good ebough. This is a quite obvious.
But the fact that, as a dao, we can’t find a way to properly utilize arb at minimal risk and minimal yield for us speaks loud about the state of the ecosystem. I will go back to this but it shows that 1) we need to prepare programs that are more tailored to what we can effectively do in our ecosystem 2) we need to improve the state of arb as a token, in term of utility.

The Ugly

I am honestly still puzzled why the vote was not separated between stable and arb strategy: there was more than 1 suggestion, and if someone has a strong feeling against the current arb approach rule wise it would have to potentially stop even the stable part of the program to push, for example, for a change in rules. This choiche was not only imho quite straightforward but also suggested by some delegates.

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Between this proposal, and the GMC, is pretty clear that while both the committees and organizer were well intended, there were issues regarding the risk approach and the availability of options on the table.
We had a very good opportunity to not only create yield for the dao, but also increase the usage of arbitrum native protocols as a signal to external parties that yes, the dao sustains aligned and native protocols. This will be true only in part and applies both here and to the eth side of the treasury.

My STRONG expectation is that, once we move forward with the stable here, and the eth in gmc, we create right away a second proposal in which

• the risk parameters, while tight, should be commisurated to be able to take risk in protocols that allows us as a collective to use intensively the most important arbitrum protocols. Is not about to retrofit / tailor fit, is about being realistic on what we can do today in our chain
• the financial goals should be such that, if we can’t find a “good enough” source of yield for single side arb, we can instead pair arb with other assets, such as eth or stables, to provide for example liquidity in v2/v3 pools or as collateral for perps
• the operations of the committee should be such that, if there is a protocol/vault potentially deemed useful, it can work directly with the protocol operator, to both adjust the application and even tweak if needed some parameters of the vaults in case there is the possibility (which is not there most of the time but asking has 0 cost in life).

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I want to stress one final concept. Is relative easy to quantify financial risk of deploying capital here or there in term of projected yield based on market conditions.
What is not apparent, most of the time, is the risk we incur as a DAO by not supporting the stakeholder protocols of our ecosystem. If, as a dao, we don’t promote their utilization by being the first customer on the line, why should we expect others to come to us in the first place?

Note: i have been quite harsh in the judgment above. This is not against single components of the committee or entropy: we have crafted on paper an idea, and this idea has been carried forward while in part being very risk adverse and in part sticking to what we voted for. Which, on paper, is totally fine, and I am sure the committee had to evaluate ton of applications with some (several? most?) not even written in the proper way risk wise. But we need to start pushing toward the last mile here, be proactive, understand how to go toward the goal we want and do the legwork we maybe didn’t expect we had to do. So my harshness is not about badly judging this initiative or the participatns, is in reality just a way to stimulate everybody to be in war mode.

GMC’s Preferred Allocations (7,500 ETH)

Vote: Abstain, due to the fact I helped Camelot in crafting the proposal and worked with the committee to adapt it to the risk profile that was requested
Would still report what I think was the most important feedback on my side here

@JoJo

I am gonna jump the gun to move the convo from the current twitter drama and delegate chat hell into the forum.

I have experienced mixed feeling since the publication of these results. I will start by saying is impossible for me and for anybody else to read all the applications so far posted by the protocols, especially because some are gathed as docs so, likely, any end take I or others will have will be currently mostly

• gut related
• tied to higher level goals.

At first, I was honestly disappointed by the 3 protocols selected. Don’t get me wrong, I was well aware that lido staked eth would have been an important part of this first tranche, as well as aave. We are talking about battletested protocols, backbone of defi. Thinking arbitrum can succed for example without these 2 would be naive at best, malicious at worst.
I won’t comment on fluid that, as a protocol, I don’t know well enough. I will trust the committee in saying it provides risk adjusted yields that are good enough for our DAO.

All this premised, it seems rather strange that there is not a single eth allocated to arbitrum native protocols.
This is bad because we are on an almost 2 months streak in which the highest autorithy of our chains (OCL through Steven/AJ, Foundation through Patrick, DAO through Entropy, and I am surely missing several here so no offense) talk about how the DAO and the ecosystem should change pace, should push for alignment of participants etc. The one time we had the capacity to take actions matching our collective words, we have a very strict choice of protocols, all from ethereum mainnet.

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I am not here to say that these protocols should excluded or others should be plugged in. Nor I am here to say that the committe didn’t do a proper risk adjusted analysis, because I am pretty sure that are well equipped in this sense, likely more than most particpants here. But the decisions here have been extremely short-sighted.

Our DAO is at an inflection point. I personally expect all participants of the DAO, especially the ones in active roles, in knowing how bad the perception of Arbitrum is out there. For this reason, is quite strange that out of 7500 ETH, we couldn’t even allocate 10% spread in other protocols, even to just give outside a signal that “the dao is here to support you, builder that decides to come to arbitrum instead of going to base to enjoy the support of coinbase or to solana to be part of the biggest casino in the world”.

I am going to also try and put myself in the shoes of the committee. The program, as was structured, was mostly a one-way program. Meaning that while there is mentioning of “having a counterparty negotiating”, this is mostly related to numbers. At least, this has been my direct experience having crafted the jones/camelot joint proposal. But, the committee didn’t engage with protocols saying “of X, Y and Z that you proposed, we can do X, we can do 30% of Y and Z doesn’t fall in the risk parameters”. Curious to know if this happened to others.

Let’s also do a practical example.

@Entropy

Again, only strategies that rely on ETH and ETH-pegged asset strategies will be pursued.

This point was in the end unclear in the details. As stated above, only staked lido direct strategies have been pursued with no direct exposure to LRT; likely more than one protocol has submitted strategies involving lido eth, rocketpool eth, renzo eth, etherfi eth etcetera. The committee could have, for example, only onboarded the staked lido part and maybe exclude the others.
Note that I am not suggesting this course of action, but merely stating an example in which there could have been alignment.

Note that taking on actively all proposals, reshaping that on behalf of the DAO, would make this program more akin to what we have had through STIP.b and LTIPP in which advisors indeed had this painful role. We don’t want to go down that route again, but we can find compromise that are driven by the overarching goals of

• reach the financial independence of the DAO
• give a signal to builders that we, indeed, want to support them in several ways
• start to change the perception of the general public of the Arbitrum ecosystem, the DAO, the Foundation, that are all seen in a downward spiral.

An approach like this would have the benefit, for example, to allow utilizing instead of 5000 eth in AAVE, of using 4800 ETH in AAVE and 200 in Dolomite, only in the ETH lending, having what accordingly to defillama is an average yield that is double on only 4% of the initial capital, in a protocol that natively started in Arbitrum, has participated to our incentive programs, and now expanded succesfully in berachain where thanks to the work of the foundation and ecosystem now manages there half a billion in assets. This not a shill for dolo, to which I am not affiliated nor I am an investor, but is a prime example of a protocol that, for the good or the bad, has found better opportunities and more success outside of Arbitrum, and that we should try to retain and keep closer to our ecosystem.

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I totally understand that, whatever the choice the commission would have made, it would have made someone unhappy. But the current choice feels is going against what we have been seen preaching by the ecosystem leaders.

I will wait for the proper explanations from the committee. The goal will be, in the end, to have working capital for the dao in a risk adjusted way: if we find ways to do it while signalling support for a broader cohort of Arbitrum protocols, we will have a net positive outcome outpacing value wise both the work needed for it to come to fruition and any yield difference.

disclosure: cow has wrote the applications for jones and camelot, has partially advised winr, and has helped more protocols than he really wants to admit in the end. While biased, cow likes to think he cares about the ecosystem as a whole regardless single protocol preferences

[CONSTITUTIONAL] Proposal: For Arbitrum DAO to register the Sky Custom Gateway contracts in the Router

Vote: For
Pretty straightfoward vote, is something we did for Rari as well, the fact that OCL is engaged in this
activity helps strengthening the confidence

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Tally votings

Request to Increase the Stylus Sprint Committee’s Budget

Vote: Abstain
As for the snapshot vote, since I am part of the committee, I am abstaining from this vote.

[CONSTITUTIONAL] - Adopt Timeboost + Nova Fee Sweep

Vote: For
This collapsed the 2 previous votes, i am in support of both so just confirming previous snapshots

[NON-CONSTITUTIONAL] Arbitrum Onboarding V2: A Governance Bootcamp

Vote: For

@JoJo

I did vote in favor in snapshot and i am confirming my vote here, but for reasons that are slightly different that I want to explore.

The premise: ongoing changes in Arbitrum sentiment

The landscape of Arbitrum DAO has changed a lot in the last quarter, both due to the new political landscape, the market dynamics and an higher involvement of AF/OCL. This is leading us, chaotically sometimes, toward new sentiment tied to exclusivity of contributors, quality of works, cutting spending that is not deemed necessary. Nothing wrong with any of this.

But, has also created a concerning byproduct in my view: is becoming complex to work and contribute in the DAO.

The problem: keep valuable entities/people engaged in the ecosystem

We can talk a lot about what contributing to this DAO means, we have a degree of flavours that go from being a small delegate in DIP (deemed, by several, as something net negative, bringing noise at a high monetary cost and also indirect reputational damage outside of our sphere) to being a service provider for ARDC, with all that happens in between. The common denominator is: is becoming harder and harder to be part of programs, regardless if you are “aligned”, want to do a good job, want to bring value to both your team and the ecosystem. We have seen this first hand:

• some established service providers, that did a great job in the dao (previous ardc, adpc, grant programs) have turned down a lot their contributions in our dao
• single meaningful member and contributors can’t find a way to properly be here (one can “use” dip, and the importance of arbitrum, up to some degree to justify the amount of time spent here)
• even introducing new people is extremely hard because there is an amount of time spent to pass proposals, with no certainty of the outcome, that drives these new forces away despite a handshake agreement (saw this first hand in the D.A.O. program).

This is, useless to say, my personal opinion. But also the opinion of someone that engaged, directly or indirectly, with most delegates and participated to several programs. You really need a thick skin to work in Arbitrum.

Governance bootcamp as experiment not for junior hiring, but for methodology of junior hiring

So, why all of this introduction? Because while

• is true what krst said (i don’t remember when): we are potentially training people for jobs that we don’t know what they will be
• is true what others said: we don’t have any guarantee that these people will be retained by the DAO, and they might just move in other ecosystem
• is true also what Arbitrum said: costs are high, is not necessary

I think we have to be more proactive and less miopic and think a few quarters ahead.

This, to me, is an experiment to understand if in-house training can partially be a solution to find new workforces. And honestly it could be: when you hire junior people in a company, you hire them based on previous experience and competence, but also you train them to the culture, framework and modus operandi of your company, and you train them to know the intricacy of the people working in there, the overall goals etc.

I think this is a very expensive experiment. But knowing the outcome of this 200k initiative, knowing what things will and won’t work from it, can probably be more valuable than the base cost if the collective goal is to think about our DAO more as a company moving forward. It can help us find our “corporate” identity, and specifically help us try to understand if in this way we can facilitate to have valuable new people in Arbitrum.