ARBITRUM RESEARCH & DEVELOPMENT COLLECTIVE [V2]
Update log:
- [30/09/2024] Snapshot Date: 10th October 2024
- [10/10/2024] Snapshot Date: 18th October 2024
A brief summary of the changes carried out include:
- Removal of the Operations Lead Position: The responsibilities previously managed by the Operations Lead will now fall under the Supervisory Council’s remit.
- Removal of Hats Protocol: No longer included in the proposed framework.
- Extension Option for the ARDC Term: Introducing the possibility to extend the ARDC’s term by an additional six (6) months, pending approval through a Snapshot proposal. This brings the potential total term to one (1) year.
- Funding Structure Revision: A restructuring of the funding approach to better align with the updated objectives and framework.
Furthermore, a call is to be scheduled for next week to discuss the details and updates for ARDC v2.
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
- This proposal seeks to extend and build upon the Arbitrum Research & Development Collective [V1], which ended up publishing 42 deliverables in the forum relating to the three verticals (Research – Security – Risk).
- Alignment to the ArbitrumDAO Strategic Priorities.
- The ARDC’s mandate will naturally continue aid in ‘Governance Optimization’ through research & development related to the ArbitrumDAO’s several current and future initiatives.
- The ARDC [v2] is being proposed for an initial 6-month term, with the possibility of a 6-month extension pending a future Snapshot vote.
- Establishes a more structured and well-managed framework through the introduction of the Supervisory Council.
- The ARDC’s mandate will aid in future-proofing the ArbitrumDAO by virtue of its cohort of industry-leading research providers.
- This proposal intends to maintain a set of legally enforceable checks & balances to regulate the internal operations of the Arbitrum Research & Development Collective.
- Utilisation of a Protocol-Owned Execution strategy on Aera to convert the program’s ARB into USDC for operational purposes.
ARDC v1 Overview
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 & Ant Federation – DAO Advocate(s)
- Blockworks Research – Research Member
- Delphi Digital – Research Member
- Chaos Labs – Risk Member
- OpenZeppelin – Security Member
Below a summary of the key deliverables and achievements of the ARDC have been provided:
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[Blockworks Research] STIP Analysis Case Study: GMX
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[Blockworks Research] STIP Analysis Case Study: JOJO
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[Blockworks Research] STIP Analysis: Concerns Regarding Possible Misconduct by Synapse with Respect to the Usage of ARB Incentives Allocated Through the STIP
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[Blockworks Research] STIP Bridge: Support Material for the Community
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[OpenZeppelin] Using Hedgey for Proposal Payment Vesting
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[Delphi Digital] Gaming Catalyst Program: SWOT Analysis
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[Delphi Digital] Gaming Catalyst Program - Compensation Structure Memo
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[Chaos Labs] STIP Risk Analysis — Case Study #1: Vertex Protocol
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[Chaos Labs] STIP Risk Analysis — Case Study #2: Silo Finance
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[Delphi Digital] BOLD Dispute Mechanism Summary & Comparisons
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[OpenZeppelin] Security Council Improvement Proposal
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[Blockworks Research] STIP Retroactive Analysis - Perp DEX Protocols Volume Report
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[Open Zeppelin] BOLD Security Analysis
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[Chaos Labs] STIP Risk Analysis — Case Study #3: Pendle Finance
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[Blockworks Research] STIP Retroactive Analysis – Spot DEX TVL
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[Blockworks Research] STIP Analysis of Operations and Incentive Mechanisms
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[Delphi Digital] Arbitrum DAO Treasury Research
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[OpenZeppelin] ETH Staking Options and Risks for the DAO
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[OpenZeppelin] Event Horizon Franchiser Contract Audit
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[Chaos Labs] STIP Analysis | Insights & Key Findings
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[Chaos Labs] Risk Analysis of Adjusting the Minimum Base Fee on Arbitrum
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[OpenZeppelin] ArbOS 31 “Bianca” Proposal Review
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[Blockworks Research] STIP Retroactive Analysis – Sequencer
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[Delphi Digital] Response to Arbitrum Staking Proposal
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[Blockworks Research] Treasury-Backed Vault Research
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[Open Zeppelin] Arbitrum Governor V2 Review
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[Open Zeppelin] Arbitrum Governor Upgrade Rollout & Timeline
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[Chaos Labs] Treasury Backed Vaults Risk Analysis
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[Open Zeppelin] Security Analysis of Arbitrum Staking Proposal
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[Delphi Digital] Follow Up - DAO Incomes Sources and the Path to Staking
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[Chaos Labs] Risk Analysis of Adjusting the minimum base fee on Arbitrum
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[Blockworks Research] Incentives Research Summary
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[Blockworks Research] Timeboost Revenue and LP Impact Analysis*
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[Delphi Digital] Transaction Ordering Policies & Value Accrual in L2s: Timeboost, OP PGA, Fastlane & OEV Network
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[Chaos Labs] Timeboost Risk Analysis
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[OpenZeppelin] Timeboost Security Analysis
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[OpenZeppelin] Arbitrum L2 Time Lock Delay Proposal Security Review
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[OpenZeppelin] RARI Multichain Governance Proposal Security Review
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[OpenZeppelin] Arbitrum daoURI Proposal Security Review
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[Blockworks Research] Retroactive LTIPP Analysis**
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[Delphi Digital] Incentives Programs in other protocols**
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[Chaos Labs] Treasury Management Risk Assessment**
*Although Blockworks didn’t pick up this workstream specifically as a member of the ARDC, it has been included in the list since it was relevant to the Timeboost discussion and since it was published in the overall context of the work ARDC was doing on that front.
*These deliverables haven’t been published on the forum yet. Although the ARDC term has concluded, the engagement of the members will be officially regarded as ‘concluded’ upon publishing the final deliverables.
As outlined in the Final Outcome Report prepared by the DAO Advocate, L2Beat, member performance should not be assessed solely by the number of deliverables completed. Each deliverable varies in complexity, making a simple tally an inadequate measure of contribution. For this reason, individual totals for each member were not compiled, as it would not provide an accurate comparison.
Since the ARDC launched in April, several in-depth studies have been undertaken. 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, risk assessments were conducted across multiple initiatives, accompanied by several security evaluations. These included the BOLD proposal, Security Council improvements, Event Horizon contracts as well as an analysis of the Gaming Catalyst Program.
This highlights the importance of post-rollout research as a critical tool for continuous improvement, allowing the DAO to learn from past experiences and refine its strategies. By systematically analyzing outcomes and identifying areas for enhancement, the DAO can build on successes, address challenges, and make increasingly informed decisions.
Summary
This proposal builds upon the foundation established by the Arbitrum Research and Development Collective [V1], introducing a more efficient and structured framework. In ARDC [V2], proposed working members are required to specify their total hourly commitment and hourly rate, which will be detailed in a separate election template.
Additionally, applicants must outline a scope of work for the ArbitrumDAO covering two months of their term (one-third of their total workload), complete with clear deliverables and timelines. The remaining two-thirds of their workload will serve as a flexible budget to address tasks on an “as-needed” basis, allowing providers to demonstrate their understanding of the ArbitrumDAO’s most pressing needs.
The final decision on the work carried out by elected working members will ultimately rest with the Supervisory Council. While the proposed scope serves as an initial framework, the Council will oversee and adjust the workload on a case-by-case basis, prioritizing deliverables within each vertical and addressing any conflicts between pre-determined tasks and requests made by the ArbitrumDAO. This emphasizes the Council’s crucial role in maximizing the effectiveness of ARDC v2, aligning tasks with the DAO’s priorities, and ensuring smooth daily operations.
The goal is for this structure to gradually incorporate an Optimistic Governance Module (OGM), giving the community the power to veto ARDC deliverables. Unlike traditional token-based governance, which requires a majority of affirmative votes for proposals to pass, Optimistic Governance enables proposals to pass automatically unless they meet a predefined threshold of objection votes. This approach minimizes bureaucratic overhead, facilitating more efficient decision-making for non-contentious proposals and fostering a more agile governance framework.
It’s important to note that ARDC v2 does not depend on the OGM for implementation; however, once Tally deploys the OGM for the DAO, a proposal will be submitted to integrate it into the ARDC structure.
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 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.
In the revised structure of the ARDC, we propose establishing the Supervisory Council, a body elected by the DAO to ensure alignment with its strategic and operational priorities. The Supervisory Council will be better positioned to capture the full range of perspectives and needs of the DAO community, bringing a variety of skills and viewpoints to strategic discussions.
At the same time, this Council will also be responsible for day-to-day management and coordination. This dual focus ensures that the ARDC’s activities are strategically sound while being operationally effective, closing the gap between high-level guidance and the actual execution of tasks.
This structure will consist of three (3) individuals elected by the DAO for an initial six-month term, with the option to extend for an additional six months. Each member will receive a monthly compensation of 5,000 ARB throughout their tenure. As a result, the total compensation for the council over the initial six-month period will be 90,000 ARB, and, if extended, the total cost for a full year will amount to 180,000 ARB.
At a current price of $0.52/ARB, the initial 6-month term would cost approximately $46,800. For context, the DAOAdvocate role for ARDC v1 was compensated with 50,000 ARB, which, at the current price of $1.70 would have equated to $85,000. This comparison underscores the cost-effectiveness of the ARDC v2.
STRATEGIC OVERSIGHT & RESOURCE MANAGEMENT:
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Conduct regular reviews of ARDC initiatives to ensure they meet the strategic objectives set by the DAO. Intervene as necessary to address significant deviations, providing guidance to bring projects back on course.
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Strategically distribute financial, human, and technical resources across ARDC projects, prioritizing efficient usage that supports the DAO’s goals. Adjust allocations as required to respond to shifting priorities and project demands.
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Monitor overall budget expenditures to verify that funds are being used effectively. Make proactive adjustments to optimize impact, minimize waste, ensuring resources are directed toward high-value initiatives.
Importance: The Supervisory Council’s oversight ensures ARDC initiatives remain aligned with the DAO’s strategic priorities, minimizing risks of misalignment. Through careful resource allocation, the Council maximizes ARDC’s effectiveness, thereby enhancing the ARDC’s overall impact.
REPRESENTATION OF DAO INTERESTS & COORDINATION:
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Act as a central point of contact between ARDC members, the ArbitrumDAO, and external partners for operational matters while advocating for the DAO’s strategic interests in all ARDC decision-making, ensuring that the community’s voice is integrated into high-level deliberations.
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Organize and lead regular meetings and community consultations on major ARDC initiatives, ensuring broad engagement, keeping stakeholders informed of project updates, deadlines, and any emerging issues, and promoting informed decision-making.
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Facilitate effective communication to avoid bottlenecks and ensure smooth execution of ARDC initiatives.
Importance: By staying attuned to the DAO’s evolving interests, the Council ensures ARDC initiatives resonate with the community, enhancing decision-making legitimacy. Effective coordination synchronizes ARDC efforts, preventing miscommunication and delays to keep projects on track.
CONFLICT RESOLUTION AND MEDIATION:
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Mediate conflicts that have strategic implications for the ARDC or that arise between the ARDC and the DAO, ensuring resolutions uphold the DAO’s objectives.
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Provide a neutral platform for resolving disputes that may impact the ARDC’s alignment with DAO goals.
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.
PROJECT MANAGEMENT:
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Maintain accurate records of meetings, decisions, and project outcomes, while developing and updating project plans, timelines, and milestones to ensure transparency and accountability.
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Prepare and publish monthly reports on the ARDC’s activities, progress, and any issues, making these reports and meeting minutes accessible to all DAO members.
Importance: Effective project management, along with thorough documentation and reporting, ensures that the ARDC delivers on its mandate to the ArbitrumDAO. These practices build trust and credibility by enabling the DAO and the community to track progress.
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, including the number of proposals, completed deliverables across each of the three verticals, project updates, and feedback on decisions made by the Supervisory Council;
- 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.
A final outcome report is to be prepared at the end of the initial 6-month term, with an additional report if an extension is approved. This report will summarise deliverables, including any outstanding proposals, rationale for prioritisations, and funds deployed. Additionally, feedback is to be collected from the elected working members on challenges faced, successes achieved, and key lessons learned.
Additionally, 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).
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 four separate elections held:
- Risk-Oriented Member;
- Security-Oriented Member;
- Research-Oriented Member; 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; 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 Supervisory Council and respective seats, designed to guide prospective applicants through the application process for their respective roles within the ARDC [V2], will be published.
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 Supervisory Council will be required to maintain detailed accounts and documentation of the ARDC’s internal operational workflow together with meeting minutes taken by the Supervisory Council. 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 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
The ARDC’s mandate will be structured in two phases:
- Phase 1: Upon the passing of this proposal, the first tranche of funding for 182 days (6 months) will be unlocked. The ARDC’s mandate will commence 30 days (not business days) after the on-chain proposal is approved and executed. This provides sufficient time for the elected members and personnel to complete KYC/KYB with the Arbitrum Foundation and finalize the grant agreement.
- Phase 2 - Extending Decision: At the end of the initial 6-month term, a Snapshot vote will be held, offering the ArbitrumDAO the following options:
- Extend the ARDC with the same working members.
- Extend the ARDC with a re-election of the working members.
- Do not extend the ARDC
If the DAO chooses not to extend the ARDC after the initial term, MSS will return the remaining funds in stablecoins to the Treasury. There will be no subsequent OTC to buy back ARB.
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.
Funding & Voting
In the ARDC v1, the ARDC was funded with 1.76M ARB, which at a price of $1.7/ARB amounted to approximately $3.01M, inclusive of a bugger of around 30%. For the elected members at the time of the proposal this would have amounted to:
- Research – $1.13M USD [Quoted fees by Blockworks Research & Delphi Digital - $960,000]
- Security – $1.13M USD [Quoted fees by OpenZeppelin - $$750,000]
- Risk – $0.57M [Quoted fees by Chaos Labs - $320,000]
- DAO Advocate – $85,000
In ARDC v1 funds were held in a 3/5 multi sig, however, for the ARDC v2, the multi-sig requested to manage the funds is within the Multi-Sig Support Service (MSS) established by Entropy Advisors.
Costs
35,000 ARB to @Immutablelawyer as retroactive payment for the drafting, review and refinement 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 35,000 ARB will be delegated to the Immutablelawyer Tally profile for a minimum period of 90 days following receipt of funds. This increase is reflective of additional reviews, amendments, and hours allocated for refinement by our team.
It is important to note that the applicable cap outlined below represents the maximum allowable amount that may be quoted by prospective applicants in the application phase, ensuring that total spending does not exceed this limit. Thus, this is not a guaranteed amount to be paid, but rather the ceiling that cannot be surpassed.
In response to feedback received, allocations associated with risk have been increased by 20%. Additionally, the figures provided below are based on a full 1-year term. Should a decision be made not to extend ARDC v2, the funded amount would be capped at a maximum of half the amounts shown.
Option A: Funded with 1.73M USDC + Council
- Security: 660,000 USDC (Applicable Cap)
- Research: 660,000 USDC (Applicable Cap)
- Risk: 410,000 USDC (Applicable Cap)
- Supervisory Council: 180,000 ARB
Option B: Funded with 2.09M USDC + Council
- Security: 800,000 USDC (Applicable Cap)
- Research: 800,000 USDC (Applicable Cap)
- Risk: 490,000 USDC (Applicable Cap)
- Supervisory Council: 180,000 ARB
Option C: Funded with 2.60M USDC + Council
- Security: 1,000,000 USDC (Applicable Cap)
- Research: 1,000,000 USDC (Applicable Cap)
- Risk: 600,000 USDC (Applicable Cap)
- Supervisory Council: 180,000 ARB
Option D: Abstain
Option E: Do not fund the ARDC
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.
