Hi, thank you very much for the proposal. I completely agree that auditing is a pivotal task, and I am in favor of the DAO funding/subsidizing protocol audits.
However, I have reservations regarding the funding mechanism proposed through this AIP.
Primarily, I don’t see the necessity to allocate 2M in funding to a single auditor who will subsequently determine which protocols should receive the subsidy or funding. This introduces two significant issues:
- It presents a concentration risk associated with decision-making concerning the allocation of funds.
- It inadvertently establishes an auditing monopoly. The benefiting provider might lack the incentive to maintain a high standard of service, knowing that lot of protocols will necessitate their services. Furthermore, with an extensive subsidy at their disposal, they will gain a competitive advantage over other providers. Lastly, this could further lead to the potential exploitation through exaggerated service fees.
In distributing funds aimed to benefit the end user, a more direct approach would be preferable—subsidizing the end user directly (in this case, the protocols aiming to deploy on Arbitrum), as opposed to the service provider. By adopting this approach, we can retain all the benefits articulated in this proposal, with which I firmly agree, while also mitigating risks related to centralization.
How can this approach be implemented? The DAO could opt for approving a 2M budget dedicated to subsidizing audits, subsequently allowing each protocol to apply for the subsidy they deem necessary for deployment on Arbitrum. Complementing this, a list of recommended—or potentially mandatory—auditors could be voted to. This ensures that, when evaluating each subsidy application, the audit is guaranteed to be conducted by a reputable and proficient auditor (such as Cyfrin).
Thus, when a protocol applies for an audit subsidy, it would be obligatory to detail the chosen auditor, the associated audit costs, and the subsidy amount being requested. If approved, the funding then is released to the auditor. This method ensures the prudent allocation of funds, safeguarding against the aforementioned potential adversities
*I am a member of SEED Latam, but this opinion is my own personal view and does not reflect that of the Arbitrum’s delegation.