ARBITRUM RESEARCH & DEVELOPMENT COLLECTIVE [V2]
Update log:
- [30/09/2024] Snapshot Date: 10th October 2024
Non-Constitutional
Defining ‘Arbitrum Research & Development Collective’ or ‘ARDC’: An alliance for combined action used to achieve a common goal in the best interests of the ArbitrumDAO in relation to research & development initiatives
TL;DR
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This proposal aims to extend and optimise the Arbitrum Research & Development Collective to aid in turning Arbitrum DAO members’ ideas into reality for a term of 6 months.
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Alignment to the ArbitrumDAO Strategic Priorities:
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The ARDC’s mandate will naturally aid in ‘Governance Optimization’ through research & development related to the ArbitrumDAO’s several current and future initiatives.
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The ARDC’s mandate will aid in future-proofing the ArbitrumDAO by virtue of its cohort of industry-leading research providers.
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This proposal intends to improve on the [V1] Arbitrum Research and Development Collective proposal by ensuring a more cost-effective and well-managed initiative with the introduction of several parameters (Supervisory Council, Operations Lead);
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This proposal intends to maintain a set of legally enforceable checks & balances to regulate the internal operations of the Arbitrum Research & Development Collective;
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Implementing an on-chain implementation of the ARDC to aid in future-proofing w/future potential on-chain implementations and adopt on-chain checks and balances via the Hats Protocol.
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Fund the ARDC for a 6-month term.
Summary
In the first iteration of the ARDC, we experimented with the structure and the remuneration framework. In this regard, we adopted a DAOAdvocate role as inspired by the Arbitrum Coalition (Refer: Proposal: The Arbitrum Coalition). Also, we adopted the same seats as envisaged in Proposal: The Arbitrum Coalition the Arbitrum Coalition proposal ergo, Research, Risk and Security. In the first iteration of the ARDC, we had the pleasure of utilising the following service providers as elected by the ArbitrumDAO:
- L2Beat [DAOAdvocate];
- Blockworks Research;
- Delphi Research;
- Chaos Labs; and
- OpenZeppelin.
Below a summary of the key deliverables and achievements of the ARDC have been provided:
- [Blockworks Research] STIP Analysis Case Study: GMX
- [Blockworks Research] STIP Analysis Case Study: JOJO
- [Blockworks Research] STIP Analysis: Concerns Regarding Possible Misconduct by Synapse with Respect to the Usage of ARB Incentives Allocated Through the STIP
- [Blockworks Research] STIP Bridge: Support Material for the Community
- [OpenZeppelin] Using Hedgey for Proposal Payment Vesting
- [Delphi Digital] Gaming Catalyst Program: SWOT Analysis
- [Delphi Digital] Gaming Catalyst Program - Compensation Structure Memo
- [Chaos Labs] STIP Risk Analysis — Case Study #1: Vertex Protocol
- [Chaos Labs] STIP Risk Analysis — Case Study #2: Silo Finance
- [Delphi Digital] BOLD Dispute Mechanism Summary & Comparisons
- [OpenZeppelin] Security Council Improvement Proposal
- [Blockworks Research] STIP Retroactive Analysis - Perp DEX Protocols Volume Report
- [Open Zeppelin] BOLD Security Analysis
- [Chaos Labs] STIP Risk Analysis — Case Study #3: Pendle Finance
- [Blockworks Research] STIP Retroactive Analysis – Spot DEX TVL
- [Blockworks Research] STIP Analysis of Operations and Incentive Mechanisms
- [Delphi Digital] Arbitrum DAO Treasury Research
- [OpenZeppelin] ETH Staking Options and Risks for the DAO
- [OpenZeppelin] Event Horizon Franchiser Contract Audit
- [Chaos Labs] STIP Analysis | Insights & Key Findings
- [Chaos Labs] Risk Analysis of Adjusting the Minimum Base Fee on Arbitrum
- [OpenZeppelin] ArbOS 31 “Bianca” Proposal Review
- [Blockworks Research] STIP Retroactive Analysis – Sequencer
- [Delphi Digital] Response to Arbitrum Staking Proposal
- [Blockworks Research] Treasury-Backed Vault Research
- [Open Zeppelin] Arbitrum Governor V2 Review
- [Open Zeppelin] Arbitrum Governor Upgrade Rollout & Timeline
- [Chaos Labs] Treasury Backed Vaults Risk Analysis
- [Open Zeppelin] Security Analysis of Arbitrum Staking Proposal
- [Delphi Digital] Follow Up - DAO Incomes Sources and the Path to Staking
- [Chaos Labs] Risk Analysis of Adjusting the minimum base fee on Arbitrum
- [Blockworks Research] Incentives Research Summary
Since the rollout of the ARDC in April, several in-depth studies have been carried out. A particular focus was attributed to the STIP program in individual protocols like GMX, JOJO, Vertex, Silo Finance and Pendle Finance. This included retroactive analyses on the impact of the STIP on trading volumes in perp DEX protocols, spot DEX and yield aggregator TVL, and sequencer revenue. These analyses provided valuable insights into the broader market impacts of the STIP incentives and their effectiveness in driving desired outcomes.
Significant concerns regarding Synapse’s handling of ARB incentives, leading to the withdrawal of Synapse’s application from the STIP Bridge. This incident highlights the importance of ongoing monitoring and transparency in the allocation and usage of incentives.
Moreover, multiple proposals and security mechanisms were reviewed, including the BOLD proposal, Security Council improvements, Event Horizon contracts as well as an analysis of the Gaming Catalyst Program.
Thus, this proposal seeks to build upon the [V1] Arbitrum Research and Development Collective by introducing a more cost-effective and well-managed structure. Key enhancements include the establishment of a Supervisory Council for strategic oversight, the appointment of an Operations Lead to ensure smooth daily operations.
In the ARDC [V2], service providers will be required to outline the scope of work for the first two months of their tenure, including specific deliverables and timelines, which will be incorporated into the election template to be released separately. Supervisory Council will oversee the remaining workload on a case-by-case basis and, once determined that it is in line with the DAO’s interests, will relay this to the Operations Lead to manage the deliverable. Over time, this structure will evolve towards the utilisation of an optimistic governance module, where the community will have the power to veto deliverables to be worked on by the ARDC.
Unlike standard token-based governance, which requires a majority of affirmative votes for a proposal to pass, Optimistic Governance allows proposals to pass automatically unless a predefined threshold of objection votes is met. This approach is designed to streamline the decision-making process, especially for non-contentious proposals, by minimizing bureaucratic procedures and promoting a more efficient governance structure. This mechanism will be implemented once the Optimstic Governance Module is deployed by Tally for the DAO’s use.
Prior to delving into the crux of things, let’s first delve into two pivotal elements of the ARDC [V2]; the Supervisory Council and the Operations Lead.
Supervisory Council
SUPERVISORY COUNCIL ROLE IN THE ARDC: DETAILED RESPONSIBILITIES AND IMPORTANCE
The DAOAdvocate’s role was intended as a single designated entity responsible for guiding the ARDC’s efforts and acting as a mediator between the DAO and the ARDC. This is fundamentally about representing the DAO’s best interests, rather than the operational management of the coalition’s activities.
These operational tasks, carried out effectively by L2Beat included the establishing of communication channels and coordination among members, creating and maintaining a Notion page to document meeting minutes and track tasks through a kanban board, compliance and onboarding processes like KYC/KYB as well as regular updates and the maintenance of open communication channels among several others.
As a result, in the revised structure of the ARDC, we propose introducing two distinct roles: the (i) Supervisory Council and the (ii) Operations Lead. This ensures that strategic oversight is separated from operational management, allowing each role to focus on its core functions without overlap.
The Supervisory Council is a supervisory body to be elected by the DAO to ensure representation and alignment with the DAO’s strategic interests. As opposed to the first iteration of the ARDC, where the DAO Advocate managed the day-to-day operations of the ARDC, the Supervisory Council’s role is focused on oversight, without direct involvement in the ARDC’s daily operations.
The Supervisory Council will involve the election of three (3) individuals who will be elected by the DAO. These elected individuals will serve on the Supervisory Council for a term of six (6) months. Each member will receive a monthly compensation of 3,000 ARB for the duration of their term. The total cost for compensating the entire council over the six-month period will be 54,000 ARB.
OVERSIGHT AND MONITORING:
- Regularly review and assess the progress of ARDC projects to ensure they align with the DAO’s strategic goals.
- Monitor financial expenditures at a high level to ensure resources are used effectively and align with the DAO’s principles.
- Evaluate the overall direction of ARDC initiatives, intervening only when there are significant deviations from the DAO’s objectives.
Importance: The Supervisory Council’s oversight ensures that the ARDC’s strategic initiatives stay on track, minimising the risk of misalignment or misprioritization with the DAO’s medium and long-term goals.
REPRESENTATION OF DAO INTERESTS:
- Advocate for the DAO’s strategic interests in all ARDC decision-making processes, ensuring that the collective’s work reflects the community’s values and goals.
- Facilitate direct communication between the DAO and the ARDC at a strategic level, ensuring that the community’s voice is integrated into high-level deliberations.
- Organise and lead community consultations to gather input on major ARDC initiatives, ensuring broad engagement with delegates and informed decision-making.
Importance: By serving as a representative body that stays attuned to the evolving interests of the DAO, the council ensures that the ARDC’s initiatives resonate with the community, thereby enhancing the legitimacy of its decisions.
CONFLICT RESOLUTION AND MEDIATION
- Mediate conflicts that have strategic implications for the ARDC or that arise between the ARDC and the DAO, ensuring resolutions uphold the DAO’s values and objectives.
- Provide a neutral platform for resolving disputes that may impact the ARDC’s alignment with DAO goals, without involving itself in operational conflicts.
Importance: Effective conflict resolution by the Supervisory Council supports the continuity of the ARDC’s strategic focus, ensuring that internal disputes do not derail progress on critical initiatives.
If a simple majority (2/3) of the Supervisory Council deem a member of the ARDC to have acted negligently, in bad faith, or contrary to the mandate/purposes of the ARDC as ratified by the ArbitrumDAO, the Supervisory Council will be obliged to submit a proposal via Snapshot to terminate such a member of the ARDC together with the necessary details that justify such termination.
Following this, the Supervisory Council will have an ancillary obligation to submit a call for applications for the vacant ARDC seat. The decision as to who ought to take up the vacant seat will be determined by the ArbitrumDAO via the election mechanism stipulated in this Forum Post (for intra-ARDC elections, the same RFP-Based + Application election model will be utilised).
Operations Lead
OPERATIONS LEAD ROLE IN THE ARDC: DETAILED RESPONSIBILITIES AND IMPORTANCE
The Operations Lead will be responsible for the day-to-day management and coordination of ARDC activities. This role is distinct from the Supervisory Council’s strategic oversight, and focuses instead on the execution of projects, operational efficiency, and the management of resources. This role is crucial for maintaining coordination, ensuring the timely delivery of projects, managing resources effectively, and upholding transparency, core elements necessary for fulfilling the ARDC’s mandate to the ArbitrumDAO. By translating the strategic direction set forth into actionable plans, the Operations Lead ensures the ARDC’s smooth and consistent functioning on a daily basis.
COORDINATION AND COMMUNICATION:
- Act as the central point of contact between ARDC members, the Supervisory Council, the ArbitrumDAO, and external partners for operational matters.
- Organise regular meetings, ensuring all stakeholders are informed of ongoing projects, deadlines, and any issues.
- Facilitate effective communication to avoid bottlenecks and ensure smooth execution of ARDC initiatives.
Importance: Efficient coordination is crucial for synchronizing the efforts of various ARDC tasks, ensuring that each component works harmoniously towards the collective goals. It helps prevent miscommunication and delays, which are critical for the ARDC’s continued progression.
PROJECT MANAGEMENT:
- Oversee the lifecycle of initiatives, from inception to completion, ensuring they align with the ARDC’s objectives.
- Create and maintain project plans, timelines, and milestones, adjusting as necessary to meet goals.
- Monitor the progress of all ongoing initiatives and intervene when necessary to keep them on track.
Importance: Effective project management ensures that the ARDC can deliver on its mandate to the ArbitrumDAO, thereby maintaining trust and credibility. This role is essential for the timely and efficient execution of the ARDC’s key deliverables.
DOCUMENTATION AND REPORTING:
- Maintain accurate records of meetings, decisions, and project outcomes, ensuring transparency and accountability vis avis the ArbitrumDAO and the Supervisory Council.
- Prepare and distribute monthly reports detailing the ARDC’s activities, progress, and any issues encountered.
- Manage the publication of these reports and meeting minutes on Notion, ensuring easy access for all DAO members.
Importance: Proper documentation and reporting provide transparency, allowing the DAO and the broader community to track ARDC’s progress and hold it accountable. This transparency is vital for building trust and ensuring that ARDC’s activities align with the broader goals of the ArbitrumDAO.
RESOURCE ALLOCATION:
- Manage the allocation of financial, human, and technical resources across ARDC projects.
- Ensure that resources are utilized efficiently and in line with the priorities set by the Supervisory Council and the DAO.
- Monitor budget usage and adjust allocations as needed to maximize impact and minimize waste.
Importance: Efficient resource allocation is critical to maximizing the ARDC’s impact. It ensures that the collective can achieve its objectives without overspending or underutilizing the assets at its disposal, thus optimizing the return on investment for the DAO.
OPERATIONAL PARAMETERS TO BE IMPLEMENTED INCLUDE BUT ARE NOT LIMITED TO:
- Meeting minutes will be taken for every meeting and published on a public Notion site for review by the ArbitrumDAO;
- Monthly report detailing the performance of the ARDC;
- Bi-weekly calls with the community in relation to the ARDC;
- A public dashboard to be utilized by ARDC members to submit updates on specific tasks and sub-tasks thus, keeping the ArbitrumDAO in the loop.
Risk, Security, Research
The Risk Member [Strictly Research & Analysis]
The ideal Risk Member should possess strong quantitative skills to evaluate and manage risks across DeFi protocols, with sufficient expertise in modeling, simulations, and economic risk analysis. On an as-requested basis, they will assess protocol design, tokenomics, and governance mechanisms to ensure economic efficiency, incentivize usage, and safeguard systemic health. The role involves conducting thorough risk-focused research and applying modeling techniques to identify and mitigate potential threats. Additionally, the Risk Member will provide strategic guidance and data-driven insights to optimize risk management practices, supporting continuous monitoring, reporting, and informed decision-making to promote trust and sustainability in within the ArbitrumDAO.
The Security Member [Strictly Research & Analysis]
The Security member should ideally possess skills in specific static analysis bug detection targeting code updates and developing fuzzing capabilities to validate upgrade states. They should be proficient in visualizing the state of governance contracts, ensuring correct encoding of values, and providing educational materials and guidelines for reviewing upgrade procedures. Additionally, they should have expertise in identifying design flaws, and ensuring security and correctness properties in on-chain upgrade proposals. This role is crucial for preventing governance attacks and may involve building tools and educational materials to support proposal reviews.
The Research Member [Strictly Research & Analysis]
The Research member should ideally possess a range of skills, including the ability to conduct objective analysis and contribute to the design of various mechanisms such as sequencers, fraud proofs, and data availability solutions, with a strong emphasis on objective data-driven research. They should also be proficient in creating processes that incentivize active delegate participation, such as developing delegate incentives frameworks and hosting regular collaborative calls. Additionally, they should be skilled in content creation to promote the Arbitrum ecosystem’s growth.
Moreover, the candidate should have a knack for producing impartial, data-driven research to aid delegates in making informed decisions and improving proposal quality. Excellent communication skills and the ability to manage interactions with DAO stakeholders and service providers are essential, along with the capacity to document ARDC activities and recommend solutions for any issues that arise, maintaining a governance process for continuity.
Election Process
The ARDC election process is scheduled to begin 3 business days from the ratification of the on-chain proposal. A high-level overview of this process can be found in the diagram below.
All ARDC members are expected to serve their term unless terminated by the ArbitrumDAO through Snapshot as stipulated in the Agreement regulating the ARDC [Further details below re. the Agreement & Defining provisions].
There will be five separate elections held:
- Risk-Oriented Member;
- Security-Oriented Member;
- Research-Oriented Member;
- Operations Lead; and
- Supervisory Council.
The following timeline governs an election process that starts at time T [‘T’ means the date that the on-chain vote passes +3 days]:
GOVERNING RULES
While a joint application for each seat is permissible, an applicant may not apply as part of a joint application with other applicants & then proceed to apply as a Supervisory Council member or for another seat.
ELECTION STRUCTURE
1. Application Submission (T+14 business days):
Anyone may submit an application on a dedicated page on the ArbitrumDAO Forums in conformity with the application template;
2. Proposal Review Period (7 business day period following end of Application Submission Period):
This period will be utilised for delegates to be able to review each proposal as submitted by applicants.
3. Amendment Period (3 business day period following the end of the Proposal Review period whereby applicants may amend their application):
Applicants may amend their applications in light of community feedback during this time period.
4. Member election (7 business day period following end of Amendment Period):
A Snapshot with weighted voting will be put up per vertical including the list of all eligible candidates:
- Snapshot for Risk-Oriented Member election;
- Snapshot for Security-Oriented Member election;
- Snapshot for Research-Oriented Member election;
- Snapshot for Operations Lead election; and
- Snapshot for Supervisory Council.
The ArbitrumDAO may approve and implement a Non-Constitutional AIP to change the rules governing future ARDC elections, but the AIP process may not be used to intervene in an ongoing election.
Furthermore, a separate document containing the election templates for the Operations Lead, Council and respective seats, designed to guide prospective applicants through the application process for their respective roles within the ARDC [V2], will be published.
Hats Protocol
The ARDC is manifested onchain using Hats Protocol. Each role is defined as a Hat, a tokenized role that encodes all of the properties outlined in earlier sections of this proposal:
- The role’s name and description
- The role’s responsibilities
- Authorities that come with the role (including onchain authorities like multisig signing permissions as well as token-gated authorities like access to communications channels or workspaces)
- Selection criteria & mechanisms (including elections)
- Accountability mechanisms (such as how the role is revoked and execution of penalties for breach of agreement)
The ARDC Onchain Structure
The following image depicts a testnet version of the ARDC structure expressed as Hats (known as a “Hats tree”). You can interact with it on the Hats app. The super admin role (known as the “top hat”) is held by ArbitrumDAO itself, with the ARDC as a substructure (“branch”).
As you can see in the image above, the testnet tree demonstrates how the properties of each role are manifested onchain. Some key features include:
- As the parent (“admin”) of the Operations Lead role, the Supervisory Council can select who has the role and configure any desired accountability mechanisms
- The Supervisory Council role is held by a multisig
- The Council Member role is held by each of the to-be-elected council members. They are granted membership in the council (including signing permission on the Supervisory Council multisig) by way of having (“wearing”) the Council Member hat
- To receive the Council Member role, members must be elected by the DAO, pass KYC, and sign an Agreement. All of this is encoded directly into the Council Member role as selection criteria
- The Foundation holds the Arbitrum Foundation role
- As the counterparty to the Agreement, the Arbitrum Foundation is authorized by the accountability mechanism encoded into the Council Member hat to revoke the role if any members breach the agreement, thereby terminating the member. It also has the authority to terminate a member if the ArbitrumDAO signal votes to do so.
- The holders of the Service Provider role are selected by ArbitrumDAO by passing a proposal to add a given server provider to Service Provider hat’s allowlist eligibility module. Selected service providers can then claim the hat to assertively complete the process.
- The Supervisory Council role is authorized to revoke the Service Provider hat pursuant to its conflict resolution responsibilities.
ADDITIONAL BENEFITS
In addition to encoding the full design of the ARDC onchain in a robust, capture-resistant format, defining the ARDC with Hats Protocol has several other benefits:
- Transparency and legibility: The onchain hats serve as a source of truth for ARDC’s structure, its roles, and the people and organizations that hold them fully open to all members of the Arbitrum community and discoverable/viewable from a variety of front ends (including the Hats app).
- Interoperability with legal: The programmable interfaces exposed by the onchain hats provide the Arbitrum Foundation with concrete mechanisms for carrying out their legal responsibilities with regards to the ARDC.
- For example, offering elected council members a way to sign the Agreement onchain, as well as the ability to enforce the agreement onchain (eg by revoking an offending member’s hat). The onchain signature can optionally serve as a confirmation of the actual agreement signed offchain (eg via Docusign) or stand on its own.
- Lays the groundwork for additional initiatives: It is easy to imagine new initiatives within ArbitrumDAO that are enabled by the existence onchain role-based structure. Some may even interact with or be controlled by the ARDC.
CONDUCTING ONCHAIN ELECTIONS
ArbitrumDAO is tasked with electing several of the roles in the ARDC: the Supervisory Council, the Operations Lead, and the Service Providers. The hats corresponding to each role facilitate these elections. Here is how those elections will be conducted.
SUPERVISORY COUNCIL ELECTION
- ARB holders vote in Snapshot as described elsewhere in this proposal.
- Arbitrum Foundation will conduct KYC/KYB with each of the winners. Once complete, the Foundation will add the winners to a term-limits-enabled allowlist attached to the Council Member hat.
- Finally, the winners will sign the Agreement onchain and simultaneously claim the Council Member hat.
OPERATIONS LEAD ELECTION
- ARB holders vote in Snapshot as described elsewhere in this proposal.
- The Supervisory Council mints the Operations Lead hat to the winning candidate.
SERVICE PROVIDER ELECTION
- ARB holders vote in Snapshot as described elsewhere in this proposal
- The Supervisor Council mints the Service Provider hat to the winning candidate(s).
IMPLEMENTATION SUPPORT
While this proposal contains the full design of the ARDC hats tree, there may still be some changes that emerge over the course of the ARDC’s initial operations. This proposal therefore includes scope for 6 months of support by Haberdasher Labs (HL), a contributor to the Hats Protocol ecosystem.
Checks & Balances
The ARDC will be regulated via an Agreement entered into by all elected ARDC Members with the Arbitrum Foundation serving as a counterparty to the Agreement.
The Agreement will be made public & include, but will not be limited to the following provisions:
Appointment & Termination: ARDC Members will be appointed via the forecited election process in accordance with ArbitrumDAO Consent by the Arbitrum Community.
- Arbitrum Community will be defined as follows:
“Arbitrum Community” means those persons who have the right to propose and vote on proposals ergo, the token holders of the ARB token with the following contract address [0x912CE59144191C1204E64559FE8253a0e49E6548] from time to time visible at [$1.73 | Arbitrum (ARB) Token Tracker | Arbiscan 3].
- ArbitrumDAO Consent will be defined as follows:
““ArbitrumDAO Consent” means a vote of the ArbitrumDAO Community in favour of a proposal satisfying the minimum requirements set forth at The Amended Constitution of the Arbitrum DAO | Arbitrum DAO - Governance docs 4 (as such minimum requirements set forth therein on the date hereof may be revised from time to time with ArbitrumDAO Consent) taken by any of the following means:
- *Snapshot 1 (or any successor thereto); or*
- another mechanism, whether on or off a blockchain, that ensures only and all people voting hold or have been delegated blockchain-based tokens known as ARB."
CONFLICT OF INTEREST PROVISION:
ARDC Members will be bound to act in absolute good faith, with utmost honesty, refraining from deriving unauthorized profits from their position & disclosing conflicts of interest. ARDC members should always disclose any potential or actual conflicts of interest to the Supervisory Council who will then proceed to mitigate the respective ARDC Member’s involvement in the task in relation to which such ARDC Member is conflicted.
To sum up, all ARDC Members must declare the nature and extent of any interest, direct or indirect, which the ARDC Member is aware that she, he or it has in a proposed task at hand.
MANDATE & PURPOSE OF THE ARDC:
The ARDC members are pivotal in executing the purposes of the ARDC, ensuring that the activities thereof align with the ARDC’s objectives and the stipulations of ratified proposal. Here, it is also the role of the Supervisory Council, to see that this is actually being done and that activities within the ARDC will actually further or are in conformity with the purposes outlined in the ratified proposal.
RECORD-KEEPING AND REPORTING:
Comprehensive and precise record-keeping is imperative. The Operations Lead will be required to maintain detailed accounts and documentation of the ARDC’s internal operational workflow together with meeting minutes taken by the Operations Lead. Furthermore, periodic reporting is essential so as to keep the ArbitrumDAO updated re. Task-specific progress & internal ARDC Administration (such as which ARDC Member is working on which task & deadlines for the expected publication of tasks that fall in line with the purposes of the ARDC).
DUTY OF IMPARTIALITY:
ARDC Members (including the Operations Lead) will have an obligation to act in an impartial manner in relation to their tasks & workflow, ensuring that the ARDC is not compromised by personal interests or external influences.
OBLIGATION OF RECUSAL:
ARDC Members with a conflict of interest involving a project being reviewed by the ARDC should recuse themselves from participating in the evaluation and should vote Abstain if a proposal directly related to the ARDC is submitted. Additionally, ARDC members will abstain from commenting or voting on proposals made by any company that can be deemed a direct competitor.
PROHIBITION OF SELF-DEALING:
Participants should refrain from voting on sending funds to themselves or organizations where any portion of those funds is expected to flow to them, their other projects, or anyone they have a close personal or economic relationship.
ETHICAL TRADING:
Members are required to follow ethical trading standards in regard to ARB and any other relevant digital assets.
Term & Cost
The duration of the ARDC’s mandate will be 182 days [6 months] and commence 30 days (not business days) after the on-chain proposal is approved and executed. This aids in giving the elected members and personnel enough time to complete KYC/KYB with the Arbitrum Foundation and sign off on the grant agreement.
The ARDC may seek to identify and complete other initiatives for the ArbitrumDAO & the wider Arbitrum Ecosystem, depending on the changing needs of such ecosystem, at the discretion of the Supervisory Council following consultation with the ArbitrumDAO via the necessary communication channels.
Costs:
25,000 ARB to @Immutablelawyer as retroactive payment for the drafting of this proposal, as well as the managing of the election process itself and ensuring execution of all steps pre-commencement of the term. The 25,000 ARB will be delegated to the Immutablelawyer Tally profile for a minimum period of 90 days following receipt of funds.
45,000 ARB to Haberdesher Labs (Hats) for full design of the ARDC hats tree, and ongoing support, and implementation in relation to the ARDC Hats Tree.
Funding & Voting
Option A: Funded with 830,000 USDC + + Council & OL
- Security: 330,000 USDC (Applicable Cap)
- Research: 330,000 USDC (Applicable Cap)
- Risk: 170,000 USDC (Applicable Cap)
- Council: 54,000 ARB
- Operations Lead: 60,000ARB
Option B: Funded with 1.05 Million USDC + + Council & OL
- Security: 400,000 USDC (Applicable Cap)
- Research: 400,000 USDC (Applicable Cap)
- Risk: 205,000 USDC (Applicable Cap)
- Council: 54,000 ARB
- Operations Lead: 60,000ARB
Option C: Funded with 1.25 Million USDC + Council & OL
- Security: 500,000 USDC (Applicable Cap)
- Research: 500,000 USDC (Applicable Cap)
- Risk: 250,000 USDC (Applicable Cap)
- Council: 54,000 ARB
- Operations Lead: 60,000ARB
Option D: Abstain
Option E: Do not fund the ARDC
[Excess ARB which will not be utilised as a result of the elected members and their corresponding fees will be returned to the ArbitrumDAO Treasury]
Fund Conversion (Aera)
Arb Conversion Strategy
The ARDC will utilize a Protocol-Owned Execution strategy on Aera to convert the program’s ARB into USDC for operational purposes. The Protocol-Owned Execution strategy utilizes off-chain logic to monitor onchain liquidity and model the price impact of trading. The ARDC will use an Aera Vault, with Gauntlet as the guardian, to execute the conversion. Trade execution is scheduled and sized according to impact modeling and executed on Odos, or Bebop.
Protocol-Owned Execution
The Protocol-Owned Execution strategy uses off-chain logic to monitor onchain liquidity, model price impact, and plan the execution of active and passive trading.
For ARB on the Arbitrum Chain, Gauntlet will swap out tokens using either Odos (DEX aggregator) or BeBop (self-execution solver).
Passive execution uses concentrated ARB positions in an ARB/USDC pool (Odos supports projects such as Camelot, Uniswap V3, and more). The amount converted through this position is periodically claimed, and a new ARB position is set in the pool. These can be thought of as limit orders.
Active and passive execution are used in tandem to maximize liquidity sourcing. Price impact modeling and gas cost determine the intraday trading schedule and size. Historical data is used to determine initial parameters. We continuously monitor slippage, intraday price impact, and medium-term price impact and adjust execution parameters if necessary.
Intraday price impact is measured as the likelihood of observable price divergence in the hour after trading. The medium-term impact is measured as the effect of trade size on the divergence relative to a peer benchmark.
The example chart shows rolling slippage for one of Aera’s Trade Execution Customers.
The example chart shows the likelihood of intraday impact for one of Aera’s Trade Execution Customers.
ARDC Vault Parameters
- Chain: Arbitrum
- Vault Owner: MSS (Address to be created post-snapshot)
- Guardian: Gauntlet
- Tokens: ARB, USDC
- Protocols: Odos, Bebop
- Strategy: Swap ARB for USDC; minimizing market impact
- Fee: 0%
About Aera
Aera is an on-chain solution to optimize DAO funds autonomously. It addresses the common pain point of inactive treasury management, which often hinders a DAO’s ability to maintain its runway, cover liabilities, and benefit from market growth. Unlike traditional institutions that rely on agile managers for fund allocation, DAOs face unique challenges, including governance and incentive alignment with external managers.
To address these, Aera offers a unified solution for efficiently and transparently managing on-chain treasuries, grants, and incentive funds through customizable vaults. Aera vaults can hold stablecoins, native tokens, and other cryptocurrencies, with their objective functions tailored to each DAO’s needs. Guardians leverage off-chain logic to automate rebalancing decisions, ensuring the vaults meet their objectives across various market scenarios and time horizons.
You can read more about Aera here.