I’ll abstain my vote. I’m particularly concerned about the significant budget allocation to gaming, which seems disproportionate compared to DeFi & Fintech. Additionally, the description of the “Others” section leaves room for doubt, needing more clarity.
I support this proposal. Arbitrum is currently facing fierce competition, with many competitors rushing to offer incentives to attract ecosystem projects. For example, Zksync is trying to poach TreasureDAO, the largest and most renowned game and NOT native project on Arbitrum. The challenge is serious, and to remain competitive, it is essential for the Arbitrum Foundation to retain sufficient funds.
Voted For: I still lack more transparency on how these funds are used. Who gets, how much? I understand some of these deals should be private. But it is hard for us to asses if this kind of fund justifies the outcome if we don’t know how the funds are used. On the other side, I trust Arbitrum Foundation that in this time of highly competitive conditions we will use the funds in a positive way that will benefit Arbitrum and Ethereum ecosystem. Also now that Stylus is out we need to get even more aggressive in getting new L3 chains built on top of Arbitrum. I decided to support the proposal either way.
This is the real picture.
Furthermore, when liquidity is factored in, Arbitrum has probably already the biggest budget of these chains. If Starknet was to try to use a meaningful portion of that 20% right now, their token would fall by a lot, destroying their actual budget.
We need Arbitrum to be able to compete with other chains, and as noted by Wintermute competition is heating up, but the competition must not be a race to run our tokens to the ground.
Arbitrum is already one of the most generous chains, we need to keep competing whilst rationalizing our spending.
I am in favor of expanding the budget, but we need more transparency on the spending and also a reorganizing effort of the chaotic spending we are now undertaking.
2 Likes
Voted For this Proposal
Rationale
- The purpose of the funding request is well articulated and reasonable
- The selection criteria, eligibility of grant recipients, and partnership guidelines are comprehensive and prevent the abuse of the grants
- The overall allocation of Arb for partnerships significantly falls short of other competitors, and this would improve our competitiveness.
Questions
- Is there is any quantitative evaluation of the return from previous grants or partnerships, ex: volume from the granted protocols, etc ?
Thanks for your questions.
- Yes, the 250m ARB will be in addition to the 750M ARB allocation which will bring the Foundation to a total 10% of the total token supply (still significantly less than any other competitor).
- As mentioned in the proposal, to date, agreements for our strategic partnerships program typically exceed 2M ARB with an average duration of 2.1 years. We expect that the anticipated timeline will not be less than 2 years.
- We prioritize allocating grants in ARB. However, in some cases such as with TradFi firms, ARB tokens need to be converted to stablecoins, similar to the STEP program. And yes, from our experience, other foundations are indeed offering significantly higher offers for RWAs as well as Web2 products planning to launch a web3 initiative.
- The Arbitrum Foundation relies on vested tokens only at the moment. The Arbitrum Foundation cannot rely on unvested tokens. Any unvested tokens can be clawed back by the DAO at any time and this would put the Foundation in breach of the agreements, as well as potential insolvency. From a finance standpoint, it is possible to implement vesting on top of our existing milestone-based structure. However, this will make Arbitrum Foundation grants extremely unappealing because they will need to achieve the challenging milestones and then wait for the vesting. Whereas our competitors are willing to give money upfront, oftentimes without milestones or vesting.
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Thanks for your questions:
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Please see the Foundation’s Bi-Annual Progress Update here where we have expanded on Foundation’s ecosystem spendings: https://docs.arbitrum.foundation/assets/files/ArbitrumFoundationBiannualReport2024H1-c8e9ab997fe68ad09c0105181f9826d8.pdf. In addition, the proposal outlines all the current signed agreements, as well as the pre-agreement offers that the Foundation extended. Please note that as it is often normal in the blockchain space, long-term plans of 3-5 years might not always be feasible. The Foundation has an annual budget that it is using based on the opportunities that are currently available on the market.
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As per our understanding, AF is the only Foundation with a vesting from its DAO. While we cannot speak for others, the main purpose of this budget is to have the funds available to pursue significant partnership deals, not to spend the entire amount of funds at once. For example, the Optimism <> Coinbase deal was 118m OP tokens (~2.3% of all OP tokens) over 6 years: https://www.theblock.co/post/247532/base-optimism-revenue. That single deal alone is larger than AF’s unlocked budget and we have never been in a situation to consider a partnership of that size. The situation you describe about the Governance Fund is the inverse situation. We are asking for a budget from our DAO, whereas the OP Foundation is proposing a budget to their DAO. That is very different in nature. Please see here Foundation’s Bi-Annual Progress Update where we have expanded on Foundation’s ecosystem spendings: https://docs.arbitrum.foundation/assets/files/ArbitrumFoundationBiannualReport2024H1-c8e9ab997fe68ad09c0105181f9826d8.pdf.
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Under this thread (Arbitrum Foundation Transparency Report 2023 - #4 by Mark1) you will find the Grant Transparency Report that shares more details on how grant decisions are made. In the upcoming transparency report to be published in Q1 2025, Arbitrum Foundation will be having a dedicated section to report how the funds in this proposal are allocated. Please note many grants are with institutions that have strong confidentiality requirements, therefore Arbitrum Foundation would only be able to share high level details of strategic grants. There are significant trade-offs in making the information on expenses and agreement sizes public. In this case, if the Arbitrum Foundation does make it public, it can put us at a disadvantage relative to our competitors, and we could also inadvertently disclose contract terms if it’s obvious who received the grant. Nearly all our competitors have no obligation to make their data publicly available. If our data is public, they can simply look at the data and then use it to over bid us on future partnership deals. Simultaneously, projects that are negotiating a grant will also be able to use this data to come with unrealistic expectations. That asymmetric disadvantage will impact our ability to grow the Arbitrum ecosystem.
The 250 million ARB will be focusing on all verticals. Once GCP is set up, Arbitrum Foundation will consult with GCP in order to make sure that grant amounts are not duplicated.
Under this thread (Arbitrum Foundation Transparency Report 2023 - #4 by Mark1) you may find the Grant Transparency Report that shares more details on how grant decisions are made. In the upcoming transparency report, Arbitrum Foundation will be having a dedicated section to report how the fundings are spent. Please note many grant deals are with institutions that have strong confidentiality requirements, therefore Arbitrum Foundation would only be able to share high level details of strategic grants.
Having public data on expenses is a significant disadvantage in the growth of the Arbitrum ecosystem because our competitors do not have open data on expenses, and if our data is public, they can simply look at the data and then use it to outbid us on future partnership deals. Simultaneously, projects that are negotiating a grant will also be able to use this data to come with unrealistic expectations.
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The 250 million ARB will be focusing on all verticals. Once the separately funded GCP is set up, Arbitrum Foundation will pivot the grant strategy to avoid duplicating gaming efforts. Should the DAO have other vertical-specific initiatives in the next 3-5 years, Arbitrum Foundation will again pivot our grant strategy to avoid duplicate efforts. Meanwhile, the Arbitrum Foundation needs to play the role of incentivizing growth across verticals in our ecosystem.
The crypto space moves fast. It is impossible to predict all new technology and application innovations over the next 3-5 years. Having restrictions on the specific verticals may limit ourselves to keep up with a fast-paced industry. As of today, we are actively working on Defi, RWA, infrastructure, DePin and gaming (before GCP is fully setup) to name a few.
The proposal lists the major verticals in terms of allocation and the categories with minor expenditure have been aggregated in the “Others” section. This represents below 10% of the total spend, e.g. amounts in ARB is just 2%. The categories within others are the ones falling outside the scope of Fintech & Defi, Gaming, Infra Service Providers and NFTs.
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Our agreements are multi year in nature, and as mentioned in our proposal we will hold the ARB and only allocate as needed. Under this thread (Arbitrum Foundation Transparency Report 2023 - #4 by Mark1) you may find the Grant Transparency Report that shares more details on how grant decisions are made. In the upcoming transparency report, Arbitrum Foundation will be having a dedicated section to report how the fundings are spent. Please note many grant deals are with institutions that have strong confidentiality requirements, therefore Arbitrum Foundation would only be able to share high level details of strategic grants.
Love to see this proposal up ! I voted FOR, with the following rationale;
- Unlike other DAOs, in Arbitrum the community gives power to the foundation. In Optimism, the foundation selectively gives power to the community
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For marketing, a community run DAO does way better. For targeted BD, we need a central entity
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So in my mind, is 250 million ARB for BD a good spend?
The answer is undoubtedly yes, getting coinbase or sony on arbitrum is strategic, important and we have no way of currently doing that as a DAO putting us at a disadvantage to our main competitor optimism
That being said, I have one question and one concern.
I second this sentiment, since I do not know the timeframe over which these funds will be deployed over.
Will it be 3-5 years? I don’t want a situation where the foundation is asking us to replenish their BD budget a year from now.
I understand some of these deals can be sensitive and require high levels of confidentiality. That being said, i expect a sunset clause for confidentiality to be baked into ALL agreements, so that if and when you need to return for another tranche of funding, all the data is available to us for review.
5 Likes
Multiyear is a very flexible concept, right now i see that you’re reporting that the average duration is 2.1 years which is right above the bare minimum for it to be called “multiyear”.
Moreover, we all know that once the spending has been authorized, it will be extremely hard to be controlled, hence the need for a much more rational and detailed spending.
I am not convinced that there is any need in the current conditions for such a big budget addition to be authorized.
The reasons cited are essentially 3:
- Tight budget compared to competition, but actually in terms of realizable budget Arbitrum probably has the biggest.
- Vesting: this is an issue i can understand, i would point out that if the budget allocated is sufficient, we should work on solving the vesting issue rather than allocating more funds.
I would be more in favor of an immediate unvesting of all the funds dedicated to ecosystem growth.
We are always in time to committ more at a later stage, we should not do so when there are still available yet vesting funds. - Capital lockup: this seems like a sussidiary issue that arises from the two described above.
i don’t see how we would get coinbase or sony, given that both of them have their own L2.
this or some variation of this sounds like a good idea
Overall, I support the proposal as it will enhance the competitiveness of the Arbitrum ecosystem and foster strategic partnerships. Still, I believe there are two aspects that could be improved in the implement process:
- Further Details on Fund Utilization: While the proposal outlines several potential areas for fund usage (e.g., expanding the Orbit Chain ecosystem, securing RWA opportunities, etc.), providing more detailed information on the prioritization of these projects, expected returns, and specific allocation ratios would help DAO members better understand and evaluate the feasibility and necessity of the proposal.
- Community Engagement and Feedback Mechanism: The proposal mentions some challenges in directly interacting with the DAO but does not specify how it will improve communication with DAO members in the future. It is recommended to establish a more transparent and interactive feedback mechanism so that DAO members can stay informed about the progress of strategic partnerships and provide suggestions.
Support this proposal, which is very complete and clearly states that it informs the Arbitrum ecosystem to establish key strategic partnerships for its continued growth and development. The increased budget of 250 million arb increases more opportunities for collaboration and commits to detailing the use of the funds and safeguarding the management and accountability of the DAO’s funds.
Also make a comment. If this proposal passes, does it follow up with a separate column on the official website subpage for follow-up, publicity, etc.
I am voting “for” on this proposal.
As stated above, I think the idea of the foundation having a fund to foster growth for specific deals, is what is needed, especially for orbit expantion.
I partially second the voices of folks calling for more transparency; I also understand that not all details should be disclosed and, in some cases, some details can’t be disclosed due to either specific agreements or just business logic.
We have several gaps here due to the status of Foundation, as the most important stakeholder in our ecosystem. And I don’t think anybody wants to challenge this status, nor thinks it doesn’t hold true. But potentially, this is not for example a way to disclose some information to the dao (re: foundation grant program, while we can see the end protocol getting the grant, I don’t think there is a public list of the amount or scope for each grant request, just to give an example).
So, while the above could be a bit off topic here, would be a solution similar to the one adopted for the GCP be useful?
In there we have a council, under NDA, that can have full knowledge on the operation behind, and can alert the DAO in case something is wrong, and potentially claw back funds (paging @Djinn for confirmation here). I don’t think we should gun necessarily for this specific type of dynamic, nor I do think the DAO should claw back funds from the foundation. But a certain degree of oversight/collaboration, even if under NDA, could be useful, and in general could be a good tool to leverage the operation of DAO and foundation. This council can indeed steer the convo of dao’s initiative toward specific ones that would benefit on going deal of the foundation, and the council could be part of the transparency semestral report (or, add an indepedent section all together).
I am spitballing ideas here, and I am open to a feedback that is: all of this is just nonsense, is non applicable, doesn’t solve problems, does only introduce friction.
But since the foundation is coming to the dao, and since we should enhance the synergy between the dao and the foundation in general because we all have the same goal, this initiative could be a start.
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Overall, we are leaning to be in favor of this as it helps the foundation remain competitive in securing strategic partnerships. The ecosystem has grown significantly, and its current budget it seems, put it at a disadvantage. Increasing the budget by 250 million ARB would allow the Foundation to engage in larger, long-term commitments with partners, which is essential for the continued expansion through initiatives like Orbit chain. These partnerships should increase activity and have new markets and use cases.
Some questions we had were:
- How will the Foundation prioritize partnerships? Given the large amount requested, we’d be curious on how the Foundation plans to assess the most impactful partnerships.
- How will the Foundation mitigate risks associated with projects with failed milestones? If milestones are not met, funds could be tied up indefinitely. What contingencies are in place for failed or delayed projects? When is the lockup considered written off?
- What other alternatives were considered? For example, would accelerating the vesting schedule be a more efficient solution than requesting a lump sum increase?
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Love the idea of an elected oversight council from the DAO privy to the details under NDA & monitoring the 250 million arb fund usage
If nothing else, it gives us an ombudsman who we can trust to be more unbiased in giving a general assessment of what’s going well & badly.
Before moving to tally, i would like a response from the foundation on a DAO oversight council privy to deals under NDA & a sunset clause for NDAs so all agreements can eventually be disclosed
2 Likes
i just throw the idea but is a half ass idea, because as long as everything is fine everything is good. But if something happens in which the council doesn’t agree, what is the right course of action? Don’t think neither clawback nor going public is the right thing to do in this case.
So, my idea was just from what we did in the past in a similar situation (NDA) but with a different potential outcome.
Again, might just be an extremely wrong idea tbh, and I would not personally push for it unless someone else would provide a way to complete it, or make it better, because otherwise would just be a bad mechanism not able to provide any solution.
1 Like
Voted FOR.
I think the solution created for the GCP can be explored but should be outside of this proposal.
Overall, the Foundation and DAO should be strongly aligned, but there should be care in evaluating all the DAO requirements, operational needs of the Foundation, and other considerations before moving forward on proposing new structures for the Foundation org.
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I’m voting in favor. I believe that in this period where Arbitrum is facing intense competition, it’s essential to keep up and push for an expansion of strategic partnership, which is the case with this proposal. While I recognize this need, I also believe that transparency should be at the core. As @Arbitrum mentioned above, disclosing details is sometimes either impossible due to confidentiality agreements or can lead to disadvantages in competitiveness, but I still think that some type of solution can be find to assure transparency and to see where this +250M ARB go. For example, what @JoJo mentioned is an interesting way of monitoring funds that I think it would be worth considering.
That said, I believe that in these situations there’s also a component of trust, and I support what Arbitrum Foundation is doing. I’m voting in favor, but I’d like to discuss some ways to provide oversight and transparency before going on tally.