We are in support of this proposal moving forward and will vote as such, the Foundation is a very credible entity and is best for facilitating partnerships for the Arbitrum community rather than sorting it out through the DAO/delegate constituency. The foundation has worked hard for its partnerships over the past year with Paxos, Robinhood, and Azuki, just to name a few. We agree that funding the Foundation should not come in the form of a loan, as the Foundation is a service provider for the DAO, and thus the DAO is effectively paying for its service (partnerships, grant opportunities, marketing, etc).
It is important to understand that there is a tradeoff between transparency and competitive privacy here. While we understand other delegate concerns around transparency with such a large amount of funds, the Foundation would be destroying its competitive advantage by telegraphing its partnerships and deals. If possible, we would like a retroactive list of partnerships (so long as it is agreed to by both parties) moving forward.
The Foundation is already subject to ArbitrumDAO oversight, as outlined in AIP 1.1 and we do not believe that extreme monitoring will enhance the synergy, but rather it will make the Foundation subject to additional heavy oversight that our competitors do not have. Additional oversight over the Foundation which already has a strong track record (see previous transparency reports) would only impact the Foundation’s ability to pursue major strategic partners that are already unfamiliar with DAOs and that need incredibly fast turnaround in a competitive environment. Please note that highly strategic deals are only shared with select members of the Foundation and Foundation’s Board of Directors only. Additionally, the Board of Directors of the Arbitrum Foundation is already closely overseeing and approving all deals, in line with their fiduciary responsibilities. The Foundation will highlight the use of the additional 250M ARB through a separate section of each annual transparency report and bi-annual progress report.
Grant agreements will have expiration dates. Generally, if a project fails to achieve all milestones at the expiration date then the unachieved milestone will be forfeited and funds will be released.
Accelerating the vest or unlocking a fixed portion will not help since the Foundation’s vesting also includes things like operational expenses, marketing, events, technical contracts to support the ecosystem, etc. Additionally even if we were to receive our full vest today, we would be unlikely to use the additional funds on grants since we have to have capital for our budget in years 3 and 4. It’s not a question of timing of when the Foundation receives the funds, we simply don’t think our current vest is large enough to be competitive. The aim of this proposal is to increase the Foundation’s budget overall specifically to focus on strategic partnerships. Today, we have accessed ~25% of our budget (1.8% of the total supply). The overall allocation to the Foundation is significantly less than all our competitors who have immediate access to at least 10% of their network’s total supply (competitors total allocation is usually +20% of total supply). This has impacted our ability to compete in bids for strategic partnerships as we simply lack the firepower compared to our immediate competitors. We believe it is imperative to increase the overall budget of the Arbitrum Foundation and allow the funds to be used specifically for strategic partnerships.
The proposal was agreed:
Overall, this proposal seeks to accelerate the growth and competitiveness of the Arbitrum ecosystem by increasing the funding available to the Foundation for strategic partnerships. In this way, the Foundation hopes to better support innovation, attract more high-value partners, and ensure that Arbitrum remains at the forefront of the rapid evolution of blockchain technology and applications.
But there are also some concerns that bother me personally as a regular retail investor:
Transparency and Oversight: Transparency and oversight are key to any funding distribution proposal. The community and DAO members have emphasised the need for clear oversight mechanisms to ensure that funds are used transparently and effectively. The suggestion of a council or oversight committee mentioned in the proposal was supported as it would help to increase trust and accountability, but are there other bodies that this oversight committee could form a reverse oversight.
Community participation and decision-making: Arbitrum’s proposal and discussion process demonstrated the dynamic nature of the DAO governance model. The participation of community members not only in voting, but also in open discussions on the platform is critical to the health of the DAO. The recommendation is to continue encouraging and expanding community participation to ensure a more democratic decision-making process, and what are the future plans in this area
Risk management: the fund management and risk control measures mentioned in the proposal, such as the establishment of the Strategic Fund Management Group, show the importance attached to financial soundness. It is recommended that measures in this area continue to be strengthened, but is there a risk of failure plan in place to ensure that the financial health of the Foundation and the ecosystem is not significantly impacted in the event of market volatility or project failure.
Arbitrum DAO lacks a BD team, so it makes sense for the Foundation and its great team to be well-funded to continue fulfilling that role.
My only comment is that, since the funds are coming from the DAO this time, I expect a more in-depth and detailed report on how the funds are being used for these strategic partnerships, not just high-level takes like in section 1 of the biannual report.
Finally, I’d like to continue advocating for more support for the DAO in terms of marketing and communication regarding its initiatives. We will likely see new incentive programs in 2025, as well as the recently approved Stylus initiative. These initiatives require strong marketing campaigns, and while the DAO can fund campaigns with advertising agencies, the main communication channels for Arbitrum (namely Twitter and Discord) are controlled by the Foundation. It would be great to achieve greater synergy in this regard.
After reviewing this proposal and considering feedback from other delegates, we have decided to support it. We recognize that without approving this allocation, the Arbitrum ecosystem could miss out on significant strategic opportunities essential for its growth and competitiveness. However, we acknowledge that 250 million ARB is a substantial amount, so we want to ensure that these funds will be used in the most efficient and effective way possible. We would appreciate seeing detailed plans and regular reports to monitor the utilization of these funds. With this in mind, we believe this proposal will enable the Foundation to secure high-impact partnerships and initiatives that might otherwise be unattainable, ultimately benefiting the entire Arbitrum community.
Plutus is in favour of this proposal but we also want to call out for alternative methods as there are two separatable categories of funding that have unique requirements.
For example:
If we’re talking about single large partnership deals similar to the example above, they could be opportunities large enough to warrant their own earmarked allocations through their own channel. A larger usable allocation like the 250M as a batch or through separate proposals both have their benefits.
But if we look at the smaller 2-10M allocations they probably are not as time critical and work well with a vesting budget like the existing 750M.
Therefore, we propose that the Foundation would consider having separate budgets for running smaller partnerships over time with vesting tokens and larger clips to be allocated either case-by-case or from a larger batch specifically for the projects that require a larger lock-up for pre-agreement offers and signed agreements.
The former, i.e. smaller clips, probably can run smoothly with the current vesting and the latter can either be earmarked from a batch like the 250M proposed. To further refine this hypothetical mechanism, we could have a fill-in request by the AF after a pre-agreement moves to a signed one. E.g., Project A is creating a RWA focused Orbit chain and looks to conquer markets. They require a 100M allocation to which the tokens are reserved from the 250M available in a pre-agreement offer by the AF.
Once signed, there could be an additional request from the foundation to unlock tokens for the signed agreement for 50-100M freeing up that amount to be used for the next partnership offer.
This would in essence act like a cash buffer for the foundation while providing the DAO with the opportunity to unlock more funds for the Foundation to keep exploring offers.
Having large amounts of tokens waiting for potentially closing agreements will slow down the foundation’s exploration but also unlocking large batches for the foundation is understandably risky from the DAO’s perspective. This type of buffering mechanism could help alleviate both sides.
The following reflects the views of the Lampros Labs DAO governance team, composed of @Blueweb, @Euphoria, and Hirangi Pandya (@Nyx), based on our combined research, analysis, and ideation.
We are voting FOR this proposal.
We agree that the best gateway to the DAO is through the Foundation, as highlighted in the following statement from the proposal:
With the transparency the Foundation has provided to the DAO over the past year, we are confident the funds will help the Arbitrum ecosystem grow in the Layer 2 landscape. L2 on Ethereum shall look to grow the entire pie, but who gets what portion of the pie will be decided by the teams working behind each rollup. These funds will definitely provide the required boost in capturing a larger share of the pie.
We would like to recommend Transparency Reports for strategic partnerships over $2 million to give the community better clarity.
Additionally, we support the suggestion from @thedevanshmehta and @JoJo about creating an oversight council to act as an ombudsman for further accountability.
Does the foundation intend to pay back this 250m ARB after their own budget is vested?
I couldn’t understand anything that indicates willingness no pay back, So if the answer is no, you have my BIG NO for this proposal.
If it’s intended to be paid back with commitment, it can be a good approach to stay competitive. We should also take into consideration the amount of historical expenditure on grants and community initiative among the mentioned projects. I don’t think we have spent little as a DAO. Our emissions are relatively high.
Anyways, I might support or not support depending on if the money will be paid back to the DAO in the future (from the Arbitrum Foundation’s allocation)
I will vote for it but still have concerns about how funds will be allocated and how incentives are being aligned to deploy more funds faster rather than more effectively. Additionally, how is this being researched and measured to see if it’s truly creating a net benefit for the chain?
I was on a call today, but 30 minutes was not enough to get all the answers, so I’m asking here:
I looked at the report for 2023, in which the Foundation spent only 2 million ARB on grants with total commitments of 6.7 million ARB. These amounts do not in any way indicate a need for 250 million ARB at the moment. From the table of the proposal itself, I see that the signed agreements amount to about $ 21 million, which is significantly less than the required amount of 250 million ARB. Future expenses, where $ 108 million are indicated, are still under consideration and it is not a fact that they will be concluded.
And besides this, I understand that some kind of partnership agreements are apparently needed, but what exactly do they give to the Arbitrum?
What benefit do spending hundreds of millions of dollars bring, given the lack of profit from these agreements?
I would like the Foundation to have a long-term plan. As far as I heard at the call, there is no understanding of where we are going in the next 5 years, there is only an understanding that the Foundation will spend 250 million on grants and partnerships. At the same time, the Foundation does not have the task of turning these funds into profit, everything will be spent irrevocably. Based on this information, the question arises: what will the Foundation do in 5-6 years, when all 750 million ARBs run out? What are the plans, is there an understanding?
I do not even want to think about the fact that Arbitrum will exist only for such a short period, I hope that Arbitrum will live for decades and longer.
Why is information about the amounts of grants hidden from us, although at the same time we have the LTIPP and STIP programs, where everything is open and transparent.
Why not give the distribution of grants to DAO, why do we need two different programs?
As a large delegate who prefers to stay out of the political fray (especially because I am active in other DAOs), I’m compelled to address this issue under an anonymous account.
The proposal to allocate non-constitutional funds to bolster the Foundation’s strategic partnerships budget raises serious concerns, primarily due to the ongoing lack of transparency around how the Foundation manages and allocates these funds.
Up until now, there has been virtually no detailed disclosure regarding how these funds are being spent or what mechanisms exist to ensure they are allocated responsibly. We are being asked to trust the Foundation blindly with significant amounts of capital, but where is the accountability?
For all we know, and while this may seem extreme, this money could be funneled into private wallets with zero oversight, and we would have no way of verifying that this isn’t the case. The mere fact that this is even a hypothetical possibility highlights a severe breakdown in transparency.
As stakeholders, we have the right to demand clearer reports, stringent oversight, and a full breakdown of expenditures before any further funds are approved. Until these standards are met, it would be irresponsible to allocate additional funds.
I urge fellow delegates to hold off on supporting further allocations to the Foundation’s budget until we see concrete steps toward full transparency and accountability mechanisms in place.
We cannot afford to let significant resources be managed behind a curtain of secrecy.
This allocation addresses our competitive gap in pursuing strategic partnerships. It enables the Foundation to act swiftly on high-impact opportunities, particularly for Orbit expansion.
The Foundation’s track record is solid, and their commitment to enhanced reporting is reassuring. An oversight council could further balance confidentiality with accountability.
This approach empowers strategic growth while maintaining appropriate DAO involvement - a pragmatic solution for Arbitrum’s evolving ecosystem.
At the temp-check, I’m voting in favor of increasing the Foundation’s strategic partnerships budget. Expanding Arbitrum’s reach and fostering meaningful collaborations are key for long-term growth.
Questions asked by @cp0x seem reasonable, it would be positive to see additional feedback before going to an on-chain vote.
We support allocating further funds to boost the foundation’s Strategic Partnerships budget, as we acknowledge the necessity of remaining competitive within the landscape.
However, we are wary of over-leveraging grants as a means to direct capital without any expectations or accountability. Rather than how much money projects have in their vault, the real difference is how these are spent. For this reason, we would like to see these partnerships established against clearly defined KPIs, which could then measure their success and be refined for the future (e.g., identified by the expected return on investment, boosted on-chain metrics, etc.).
Lastly, as @pedrob highlighted, we believe ensuring these strategic initiatives are followed up with the appropriate marketing support to maximize their impact and user awareness is important.
In alternative, we support exploring alternative solutions, such as what @Entropy proposed regarding the foundation vesting, to avoid further dilution.
After consideration, the @SEEDgov delegation has decided to “ABSTAIN” on this proposal at the Snapshot vote.
Rationale
We would like to begin by expressing our appreciation for the Foundation’s work on the grants program. However, upon reviewing this proposal, there are a few aspects that raise concerns for the future:
Lack of a clearer roadmap/timeline: While the general verticals for investment have been outlined, there is a lack of clarity on how the funds will be allocated, the expected duration of the grants, or the criteria for distribution. Additionally, there is uncertainty regarding the long-term plan: once these funds are depleted, will the Foundation return to the DAO for additional funding?
Shift from growth to sustainability: The DAO appears to be transitioning from a full-growth strategy to a more sustainable approach to fund management. This raises questions about the Foundation’s alignment with this new reality, particularly given that 250M ARB represents a significant portion of the treasury. We believe the DAO and the Arbitrum Foundation must work collaboratively, but from our perspective, this has not been happening sufficiently so far.
In light of these concerns, we suggest that ARB disbursements be spread over time and aligned with a detailed roadmap from the Foundation. The MSS could collaborate with the Foundation to implement monthly or quarterly installments, rather than a vesting schedule, ensuring sufficient liquidity for larger deals while minimizing market disruptions from excessive disbursements.
Need for oversight: To ensure that the Foundation’s actions are aligned with the DAO and to avoid redundancy with other DAO-funded programs, we support the creation of an oversight committee, as proposed by other delegates. This committee should have full access to relevant information, including sensitive data that the Foundation has indicated it cannot disclose publicly.
We hope to see some of this feedback reflected in the final proposal on Tally, in which case we will consider voting in favor. We regret that this feedback has come at a later stage, but we believe the pre-snapshot discussion period has been quite short (just one week for a proposal requesting approximately 8% of the treasury). As such, we recommend extending the discussion to allow for more thorough deliberation.
I voted FOR this proposal at the temp check stage for the reasons outlined below. I appreciate the planned additional resources for reporting/transparency and coordination with the GCP outlined by the Foundation in response to my original comment.
I know this is going to be perceived as a very “cut off your nose to spite your face” type of response but taking a step back this is a large ask that 1) as other delegates have mentioned doesn’t seem to have much detail as I would expect for the size of the request 2) doesn’t feel justified given there are already ARB funds earmarked for the foundation and 3) doesn’t have any revenue generation to soften the blow of funding.
I should add, it sounds like the majority of these funds would go towards grant funding. Which when you start factoring in the various grant programs already ran by the DAO we have seen a massive percentage of the DAO budget going to these types of projects.
I’ll caveat at the end here… this isn’t an opinion of outright rejection of the idea and I see a version of this where I vote to pass… I basically just think that at this time given the size of the request and what I noted above this needs more time in the oven.
Edit: Posting here to save space on the forum. For Tally, I will maintain my “Against” vote as concerns I (and others) noted have not been adequately address IMO.