[Non-Constitutional] Service Provider Utilisation Framework

[Immutablelawyer]

Executive Summary: Service Provider Utilisation Framework

This proposal establishes a 'Service Provider Utilisation Framework (formerly referred to as the OpEx Budget) to streamline Arbitrum DAO’s engagement with whitelisted external service providers. Currently, any service procurement requires a full governance process taking several months, leading to operational inefficiencies and delayed implementations.

The Service Provider Utilisation Framework creates a dedicated funding allocation for pre-vetted service providers, allowing DAO initiatives to access essential services through an optimistic governance model rather than the full governance lifecycle. This approach maintains strong governance controls while significantly reducing time-to-execution.

By implementing this Framework, the DAO will:

• Create financial incentives for qualified service providers
• Enable access to multiple specialized providers with complementary expertise
• Establish an efficient pathway for whitelisted providers to deliver high-value services
• Reduce unnecessary decision-making overhead for routine service engagements

Note on implementation timing: This document represents a draft proposal for OpEx developed as part of the ADPC’s mandate. While we’ve outlined a comprehensive framework, we believe the optimal timing for formal proposal and implementation depends on both the establishment of OpCo and the availability of an Optimistic Governance Module. Rather than proceeding with an interim solution relying on Snapshot voting (which would create additional inefficiencies), we recommend finalizing and implementing this framework once these foundational elements are in place. Axis is prepared to take responsibility for refining and implementing this proposal after the ADPC’s mandate ends to ensure it maximizes efficiency while maintaining appropriate governance controls. We’re sharing this draft now for discussion purposes and are happy to adjust our approach based on community sentiment.

Background & Rationale

Current State

The Arbitrum DAO currently faces significant inefficiencies in its ability to engage with service providers, including those whitelisted by the ADPC as well as those that may be whitelisted by any future initiatives.

Presently, any effort to solicit services requires the DAO to navigate the entire governance proposal life cycle, a process that can extend over a month for just a single deliverable. This creates substantial operational friction at multiple levels.

The implications extend to higher administrative overhead, opportunity costs from delayed implementations, and suboptimal resource allocation. Contributors must devote considerable time to proposal drafting, coordination, and governance processes rather than focusing on core developmental work.

This situation is particularly challenging in the current market environment, where DAOs increasingly need rapid response capabilities and efficient operational frameworks to remain competitive and responsive to market conditions.

Balancing Efficiency with Governance

While efficiency is paramount for the continued growth and competitiveness of the Arbitrum ecosystem, it should not come at the expense of appropriate governance controls. The challenge before the DAO is not simply to move faster, but to move faster while maintaining the checks and balances that protect the DAO’s resources and reputation.

Unfettered discretion over significant resources creates unnecessary risks and undermines the decentralized principles that form the foundation of the DAO. Therefore, this proposal seeks to thread the needle between operational efficiency and governance responsibility—creating streamlined processes that maintain appropriate oversight proportional to the scale and impact of decisions.

By implementing tiered governance models with controls that scale with the size of expenditures, we establish a system that emphasizes both speed and accountability. This balanced approach prevents bottlenecks while ensuring that larger commitments receive appropriate review.

Need for Standardized Framework

To address these inefficiencies while maintaining governance integrity, we propose establishing the Service Provider Utilisation Framework (Deemed - ‘OpCo Integration Proposal #1’). This Framework will create a direct utilisation rail for whitelisted service providers, allowing DAO initiatives and contributors to access these pre-approved services through a standardized process that calibrates governance requirements to the scale of the engagement.

This initiative serves as a cornerstone for advancing the DAO’s operational capabilities. By establishing relationships and procurement frameworks now, we’re laying the groundwork towards future-proofing the DAO’s operations. The standardised processes and service provider networks being built today will enable smooth operational scaling as the DAO’s needs grow more complex.

Building on Previous Feedback

This proposal also builds on the feedback received for the Arbitrum Research and Development Collective (‘ARDC’) V2, developed by Axis Advisory, one of the three members forming part of the ADPC.

The ARDC concept related to an alliance for combined action used to achieve a common goal in the best interests of the ArbitrumDAO in relation to research and development initiatives. While the original ARDC proposal focused on three core service lines - research, risk, and security - community members identified an opportunity to enhance its effectiveness through broader participation.

A key insight from the proposal’s discussion phase was that limiting each service line to a single provider potentially underutilises the diverse expertise available within the ArbitrumDAO ecosystem. Different service providers often possess complementary strengths, even within the same vertical.

Primary Objectives

In essence, this proposal serves three primary purposes:

1. It creates financial incentives for multiple qualified service providers to participate in future whitelisting initiatives, fostering a robust service ecosystem.

2. It enables the DAO to leverage collaborative synergies between providers while maintaining negotiating power through vendor diversity.

3. It provides an efficient pathway for whitelisted top-tier service providers to deliver their services (such as those outlined in their proposed scope of work within the ARDC V2 proposal), rather than letting such valuable contributions go to waste.

This structure not only promotes healthy competition but also facilitates knowledge sharing and expertise optimisation across the ecosystem. By allowing multiple providers to contribute within each service line, the ArbitrumDAO can better utilise the full spectrum of talent available in its community while maintaining operational efficiency.

Strategic Alignment

This proposal aligns with the broader strategic direction of the Arbitrum DAO toward greater operational efficiency and effectiveness without sacrificing governance integrity. As the ecosystem continues to grow, the ability to rapidly deploy high-quality services while maintaining appropriate controls will become increasingly critical.

The Service Provider Utilisation Framework represents an important step in the DAO’s governance evolution, striking a deliberate balance between operational agility and prudent oversight. It recognizes that different types of decisions require different governance approaches, with controls proportional to the scale, impact, and risk of each decision type.

Core Benefits

The Service Provider Utilisation Framework delivers several critical advantages to the Arbitrum DAO, balancing operational efficiency with prudent governance controls:

Accelerated Time-to-Execution

The current governance lifecycle creates significant delays for even routine service engagements. The Service Provider Utilisation Framework dramatically reduces these delays by establishing pre-vetted service providers and standardized engagement frameworks. This allows the DAO to respond quickly to emergent needs while maintaining appropriate oversight through tiered approval processes.

Critical operational decisions that previously required months can now be executed in days or weeks, significantly enhancing the DAO’s ability to adapt and evolve in a competitive ecosystem.

Enhanced Quality Assurance

By creating a rigorous whitelisting process for service providers, the DAO establishes a trusted ecosystem of partners whose capabilities have been thoroughly validated. This pre-vetting process ensures all approved vendors maintain high standards of expertise and competitive pricing.

Rather than sacrificing quality for speed (as often happens when projects choose convenient providers to avoid delays), this framework ensures immediate access to top-tier services without compromising on standards. The separation between provider whitelisting and service engagement creates necessary checks and balances while still enabling efficient operations.

Optimized Resource Allocation

Currently, the DAO wastes considerable resources evaluating and negotiating with providers for each engagement. The Service Provider Utilisation Framework creates a ready-to-use framework with pre-negotiated rates and standardized terms, allowing the DAO to focus on building rather than procurement.

This efficiency extends to governance resources as well. By reserving full governance review for strategic decisions and large expenditures, the DAO can allocate its collective attention more effectively, reducing voter fatigue and ensuring major decisions receive proper consideration.

Scaled Governance Controls

The tiered approval structure implements controls that scale with the size and impact of engagements. This proportional approach ensures that:

• Smaller, routine engagements receive streamlined approval while still maintaining essential oversight
• Larger expenditures receive appropriately rigorous review without creating unnecessary bureaucracy
• All engagements benefit from the initial quality control provided by the whitelisting process

This balanced approach prevents both governance bottlenecks and unchecked spending, creating a system that emphasizes both speed and accountability.

Ecosystem Development

Procurement Frameworks in general make Arbitrum more attractive for development by reducing barriers to essential services. For new projects and contributors especially, simplified access to security audits and infrastructure support can be the difference between building on Arbitrum or choosing another platform.

By fostering an ecosystem of high-quality service providers with standardized engagement processes, the DAO creates a competitive advantage that attracts and retains developers. This strengthens the overall ecosystem while maintaining appropriate governance over resources.

Sustainable Provider Ecosystem

The current all-or-nothing approach to service engagements limits the DAO’s ability to leverage the full spectrum of expertise in the ecosystem. By allowing multiple providers within each service vertical, this framework:

• Creates healthy competition that improves service quality and pricing
• Enables specialized expertise for different types of endeavours
• Provides negotiating leverage through vendor diversity
• Fosters knowledge sharing and expertise optimization

Rather than creating gatekeepers with outsized influence, this approach distributes opportunities across a network of qualified providers while maintaining consistent quality standards.

Implementation Framework

The implementation framework for the Service Provider Utilisation Framework operates through two primary layers: (i) governance and (ii) operational. Each layer has been designed with specific controls and procedures to ensure both efficiency and appropriate oversight.

Governance Layer

The Service Provider Utilisation Framework operates through a clear two-tiered approval process that calibrates governance requirements to the scale and impact of each engagement:

Tier 1: Streamlined Process (Up to $80,000)

Requests below $80,000 require approval from OpCo followed by MSS transaction execution. This streamlined process applies the proportionality principle to expedite routine tasks while maintaining essential oversight.

Key controls for Tier 1:

• OpCo conducts a thorough cost-benefit analysis
• Only pre-vetted whitelisted providers may be engaged
• The service must directly benefit DAO operations
• The four-eyes principle is maintained through OpCo review
• All transactions are transparent and recorded on-chain
• The threshold applies to the aggregate payments associated with an engagement (all milestone payments, renewal terms, extensions and part payments must be estimated and added together)

Tier 2: Optimistic Governance ($80,000+)

Requests above $80,000 will utilize an optimistic governance model where proposals are posted publicly with a challenge period. If sufficient objections are raised during this period, the proposal will require further review. If no significant objections are raised, the proposal will be considered approved.

Key controls for Tier 2:

• Initial OpCo approval ensures basic requirements are met
• Public posting with sufficient detail for informed evaluation
• Challenge mechanism enables delegate intervention when necessary
• Structured objection process prevents arbitrary blocking
• Successful challenges trigger more rigorous review
• Final execution remains transparent and on-chain

Anti-Circumvention Measures

To prevent threshold circumvention, the following safeguards are in place:

• Contracts cannot be split to circumvent the threshold
• Related requests must be aggregated for threshold evaluation
• When there is uncertainty regarding total value, Tier 2 processes apply
• OpCo has explicit responsibility for identifying pattern circumvention
• Regular reviews of spending patterns will identify potential abuse

Operational Layer

The operational layer defines how the Service Provider Utilisation Framework will be utilized in practice:

1. Initial Request Process

Any DAO member or initiative can submit a service request, which must include:

• Detailed technical specifications
• Identification of the proposed whitelisted provider(s)
• Estimated costs and timeline
• Expected impact and benefits to the DAO
• Relationship to existing DAO objectives or initiatives

Requests are submitted through a standardized process to OpCo once it is established.

2. Validation and Review

OpCo is responsible for validating that:

• The service provider selected is whitelisted
• The service falls within approved categories
• The spirit of the thresholds is being adhered to
• The request represents a legitimate DAO operational need

This validation serves as the first layer of oversight, ensuring all requests meet basic criteria before proceeding.

3. Cost-Benefit Analysis

OpCo evaluates the cost of the request relative to the expected value, considering:

• Market rates for comparable services
• Proposed timeline and deliverables
• Strategic alignment with DAO objectives
• Alternative approaches or providers
• Previous performance of the provider (if applicable)

This analysis ensures that all engagements deliver appropriate value to the DAO.

4. Approval Processing

The approval process includes three distinct phases:

a. Approval to Approach the Market

This decision is made when a business or ecosystem need is identified requiring external support. This approval authorizes market engagement and sourcing activities.

The Service Provider Utilisation Framework enables rapid deployment of teams to seek external suppliers and arrange quotes without unnecessary delays.

b. Approval to Execute Agreements

This approval ensures the requisite authorizations are in place prior to any financial or contractual commitments. This stage complies with the financial thresholds outlined above and the contracting party’s signing authorities.

The Service Provider Utilisation Framework allows the contracting party to expedite execution while preventing “double-guessing” and governance delays.

c. Payment Approval

The contracting party is responsible for verifying that the preferred supplier has met the conditions of the contract before approving payments to be executed by the MSS.

The Service Provider Utilisation Framework provides clear thresholds that allow the MSS team to quickly validate payments and establishes clear delineation of responsibilities.

Separation of Duties

To maintain appropriate governance controls, several separation of duties principles are implemented:

1. The ADPC or any other such entity maintains responsibility for provider whitelisting but has no control over expenditure approval
2. OpCo evaluates requests but requires MSS execution for transactions
3. For larger engagements, the optimistic governance process provides additional oversight
4. All activities are documented and transparent, enabling community monitoring

This framework establishes clear roles and responsibilities while preventing any single entity from having unchecked authority over fund allocation and disbursement.

Problems Solved

The current operational silos in managing service provider relationships create unnecessary complexity and delays for the Arbitrum DAO. These inefficiencies not only slow down critical operations but also create opportunity costs and competitive disadvantages. The Service Provider Utilisation Framework addresses these core challenges while maintaining essential governance controls.

Real-World Impact

The impact of these solutions extends beyond theoretical efficiency gains. They address practical challenges faced by the Arbitrum ecosystem:

1. Security Implementation Delays: The Service Provider Utilisation Framework enables rapid deployment of security resources to address vulnerabilities.

2. Competitive Responsiveness: Other L2 ecosystems are streamlining their operational processes. This framework ensures Arbitrum remains competitive in development efficiency, without compromising checks & balances.

3. Governance Resource Allocation: By removing routine operational decisions from full governance, the DAO can focus its collective attention on truly strategic matters that deserve community-wide consideration.

4. Provider Diversity: The current model often results in using the same few providers due to familiarity and process knowledge. This framework expands access to a diverse range of specialized expertise.

While solving these problems, the framework maintains essential governance safeguards through its tiered approach, creating efficient operations without sacrificing appropriate oversight.

Use Case Example

To illustrate the practical benefits of the Service Provider Utilisation Framework, let’s examine a realistic scenario focused on the ArbitrumDAO’s operational needs.

Scenario: Critical Infrastructure Audit Requirement

The ArbitrumDAO has contracted a third-party development team to build a critical infrastructure component for cross-chain messaging. The component is nearing completion, and a comprehensive security audit is required before deployment. This audit is purely for the DAO’s infrastructure (not a project seeking funding), and timely implementation is crucial for maintaining ecosystem security and reliability.

Under Current Process:

1. The Technical Working Group identifies the need for a security audit of the new infrastructure component.

2. A formal governance proposal must be drafted requesting funds for the security audit.

3. The proposal undergoes the full governance lifecycle:

• 7 days for forum discussion
• 5-7 days for temperature check
• 5-7 days for Snapshot vote
• Additional time for transaction execution

4. During this 30+ day delay:

• The third-party development team remains on standby, incurring ongoing costs
• The infrastructure implementation is delayed, postponing ecosystem benefits
• Any vulnerabilities in the existing system remain unaddressed
• Other dependent initiatives are forced to wait

5. Only after governance approval can the audit be commissioned, adding further time before implementation.

With Service Provider Utilisation Framework:

1. The Technical Working Group identifies the need for a security audit and selects appropriate providers from the whitelisted security auditors based on their expertise in cross-chain infrastructure.

2. They submit a service request to OpCo with:

• Technical specifications of the infrastructure component
• Impact assessment showing the security and efficiency benefits
• Timeline requirements for implementation
• Quotes from two whitelisted security audit firms:
  • Scenario A: $75,000 for a focused audit (Tier 1)
  • Scenario B: $130,000 for a comprehensive audit (Tier 2)

3. OpCo validates that:

• The selected auditors are whitelisted providers
• The service directly benefits the DAO’s core infrastructure
• The cost-benefit analysis justifies the expenditure
• The request complies with all process requirements

4. Based on the selected scenario:

Scenario A ($75,000 - Tier 1):

• OpCo approves the request within 3-5 days
• The Multi-Signature Safe executes the transaction to the whitelisted security auditor
• The audit begins immediately

5. Scenario B ($130,000 - Tier 2):

• OpCo approves the request internally
• The request enters the optimistic governance process with a 7-day challenge period
• Assuming no significant challenges, the MSS executes the transaction after the challenge period
• The audit begins within 10-12 days

6. The audit completes according to the agreed timeline, allowing the infrastructure to be deployed with validated security.

7. The DAO benefits from:

• Faster implementation of the infrastructure component
• Reduced costs by avoiding development team standby time
• Earlier realization of security improvements
• Maintenance of appropriate governance oversight proportional to expenditure size

Governance Safeguards in Action:

This example demonstrates how the Service Provider Utilisation Framework maintains appropriate governance controls:

1. Pre-vetted Providers: Only security auditors that have passed the ADPC’s rigorous evaluation process are eligible.

2. Tiered Oversight: The level of governance review scales with the expenditure size, ensuring proportional controls.

3. Cost-Benefit Analysis: OpCo conducts a thorough evaluation of the value proposition before approval.

4. Transparency: All requests and approvals are documented and visible to the community.

5. Challenge Mechanism: For larger expenditures, the optimistic governance process allows for community intervention if concerns arise.

This approach balances the need for operational efficiency with appropriate governance oversight, enabling the ArbitrumDAO to maintain both agility and accountability in managing its infrastructure security needs.

Optimistic Governance Module

Optimistic Governance is a streamlined governance model that assumes proposals are generally non-contentious unless proven otherwise. It operates on the principle that most decisions within a DAO should pass without requiring active approval unless there is significant opposition. This approach contrasts with traditional models that require explicit consent from a majority, thereby reducing the need for frequent voting and minimizing delays caused by procedural bottlenecks. The concept is built on trust in the community’s general consensus and is designed to handle routine decisions swiftly while still allowing for thorough scrutiny when necessary.

In order to get a more conceptual understanding of Optimistic Governance in action, a few examples sharing some similarities have been included:

Governor Note: Evolving On-Chain Governance With Element Council

Motivation: Optimistic Governance

At a high-level, the implementation of the an Optimistic Governance Module is expected to contribute to the following key areas:

[1] Enhanced Efficiency

• Current challenge: Traditional governance mechanisms often lead to delays in decision-making due to the need for affirmative voting, even for non-controversial proposals.
• Solution: By implementing Optimistic Governance, proposals will pass automatically unless a significant number of objection votes are cast. This can drastically reduce the time and resources spent on governance, allowing Arbitrum to focus on more critical decisions relevant to their strategic goals and direction.

[2] Streamlined Process

• Non-Contentious proposals: Many proposals within DAOs are routine and uncontroversial. Optimistic Governance ensures that such proposals do not end up requiring unnecessary voting procedures.
• Objection threshold: Setting a clear threshold for objections ensures that only proposals with significant opposition are subjected to further scrutiny, while others proceed seamlessly.

[3] Improved Participation

• Lowering Voter Fatigue: Constant voting requirement can lead to voters becoming disengaged due to the volume of proposals requiring their input. Optimistic Governance reduces this burden, potentially increasing overall engagement and participation in more critical votes.

[4] Scalability

• Future-Proofing Governance: As Arbitrum scales, the volume of governance decisions will increase. This provides a scalable solution that can handle a higher volume of proposals without compromising on efficiency or decision-making quality.

Easy Track Governance Process (Subject to change depending on final technical parameters established)

[1] Proposal Submission

• A proposal is submitted and enters an active state. It will automatically succeed unless enough objections are raised within a certain period.

[2] Challenge Mechanism

• Members can raise objections by casting “against” or “veto” votes.
• The proposal only fails if the number of objections reaches a predefined quorum.

[3] State Transition

• Pending to Active: Proposal becomes active upon submission.
• Active to Succeeded: If the number of “against” votes does not meet the objection quorum by the deadline, the proposal succeeds.
• Active to Defeated: If the objection quorum is met, the proposal is defeated.

The Easy Track Governor contract modifies the _voteSucceeded function in the GovernorCountingSimpleUpgradeable module. The function checks if the number of “against” votes surpasses the required threshold to determine if the proposal is defeated.

Additionally, the proposal state transitions rely on the deadline and the count of objection votes. An againstQuorum parameter is introduced to define the threshold of objection votes required to defeat a proposal.

The purpose behind this implementation is to initially focus on handling decisions that are generally deemed to be non-contentious and routine in nature. Thus, the primary goal is to reduce the overhead and complexity of traditional voting mechanisms by assuming that proposals will pass unless there is significant objection.

The mechanism relies on a simply objection threshold:

• Objection threshold: If the minimum objections threshold (XX% of the total ARB supply) is not reached within a XX-hour period, the motion is considered passed.
• Objection handling: If the threshold is met, the motion is rejected.

Therefore, this approach by design implicitly includes a form of dispute resolution via the objection process. This essentially results in three possible outcomes:

1. Motion passed: Enacted and moved to the archive.
2. Motion rejected: Automatically deactivated and archived.
3. Motion cancelled: Initiator cancels the motion before enactment.

This requires activity monitoring by delegates which could be supported/facilitated through automated bots & notification systems designed to alert delegates about new proposals and nearing objection deadlines.

Considerations

When implementing Optimistic Governance, several considerations need to be addressed to ensure its success within the ArbitrumDAO:

• Setting Appropriate Objection Thresholds: Careful calibration of objection thresholds is crucial to balance efficiency with the need for thorough scrutiny of proposals.
• Monitoring Mechanisms: Delegates and community members need reliable tools and notifications to stay informed about proposals and potential objections.
• Community Engagement: Continuous education and communication efforts are necessary to ensure that all members understand how Optimistic Governance works and how they can participate effectively.

Implementation Timeline

We propose a phased approach to implementation:

1. Initial Framework: Implement the Service Provider Utilisation Framework as outlined in this proposal once OpCo is established.

2. Procedural Optimization: Refine manual processes based on operational experience.

3. Technical Integration: Transition to the OGM technical implementation once available.

4. Continuous Improvement: Regular review and refinement of parameters based on usage patterns and community feedback.

This approach enables the ArbitrumDAO to realize immediate efficiency benefits while laying the groundwork for further governance optimization when technical capabilities become available.

[JoJo]

Thank you for this deliverable, was a really good reading.

On the framework: we need a way to simplify how we do stuff in the dao. Especially the stuff that we need and that in real world requires a few decisions (do we want to do it, how much do we want to pay for it, who is going to do it, what is the expected outcome). This set of questions that normally are followed by a sometimes brief action are translated in tedious votings and back and forth in our dao. I am all positive on it, as long as the selection of provider and whitelisting is a robust process prone to being open to new participants with constant checks and balances.

As said in the chat, the main concern, not necessarily tied to this proposal, is the trend we will see in next few months of saying: opco is key, will have THIS role here.
Opco will indeed be key, we just risk being the dao so broad that we assign to it very diverse tasks and roles, outside of mandate, or even inside the mandate but that requires so many different expertise that it could be problematic to have the right persons in place. We are, basically, starting to shape an entity that is not out there yet.
I think is fine up to some degree and I think is also normal, let’s just all be collectively mindful of this outcome in which opco becomes a jack of all trades before even being born. I also know is a bit outside of scope of this convo, sorry for going a bit off topic.

[Zeptimus]

Thanks for putting this framework together - it’s clear you’ve put thought into creating structure around service provider relationships.

That said, I have some concerns about the approach. The oversight committee structure (7 members) seems to add an unnecessary layer between service providers and tokenholders. From my experience in governance, simpler structures tend to be more effective and resistant to bureaucratic capture.

The KPI framework is definitely a step in the right direction. Performance metrics are essential for accountability. I wonder if we could design this to be more directly accountable to tokenholders rather than routed through an intermediary committee.

Some suggestions that might align with your goals while reducing complexity:

1. Consider scaling back the committee structure or making it more directly accountable
2. Strengthen the direct relationship between service providers and tokenholders
3. Ensure there’s a clean, simple mechanism for revoking privileges if performance lags

On a second note, I personally believe that the governance process is there to ensure resources are allocated thoughtfully. In regards to safety proposals like the one you used as an example, the DAO should have funds set aside for that. For other services where safety is not a concern, service providers should go through the full process—that’s why we have it, and it was designed carefully. That being said, we can always retrospectively assess if there are any flaws and modify it.

I know market conditions aren’t the best, but we also need to consider Arbitrum’s long-term consequences. Paying extra committee structures to speed things up and assist service providers is a double-edged sword.

[Ignas]

Really detailed proposal! I think this can give Arbitrum DAO a huge edge in managing service providers and streamlining processes better than most orgs. If done right, we could set the standard for other DAOs.

Well I believe the biggest win here is governance efficiency. Tbh right now, it’s exhausting for delegates to vote on procedural proposals just to stay engaged. This can fix that. Also, having a structured process to vet service providers could prevent wasting funds on low quality services.

One thing I’d mention about the auto-pass mechanism in the Optimistic Governance Module. If no one objects within the set time, proposals pass by default? even in case they’re not actually good for the DAO…. So maybe consider requiring a minimum number of explicit approvals to make sure someone is always following up.

Also, I didn’t see details on how service providers will be selected, maybe that’s for another proposal but hope it leaves room for new players to join.

I have to say it’s a long process, but if we don’t try, how do we know if it works. Can always improve it over time since picking the right providers isn’t a quick decision anyway

[jameskbh]

Thanks for initiating this discussion!

I agree with @JoJo’s warning that we may be starting to define the shape/mandate for the OpCo before the entity is running, but I also think that we need to foster this type of discussion beforehand so the expectations are clearer when the time is right.

I have a few comments:

@Immutablelawyer

a. Approval to Approach the Market

This decision is made when a business or ecosystem need is identified requiring external support. This approval authorizes market engagement and sourcing activities.

The Service Provider Utilisation Framework enables rapid deployment of teams to seek external suppliers and arrange quotes without unnecessary delays.

@Immutablelawyer

Separation of Duties

To maintain appropriate governance controls, several separation of duties principles are implemented:

1. The ADPC or any other such entity maintains responsibility for provider whitelisting but has no control over expenditure approval
2. OpCo evaluates requests but requires MSS execution for transactions
3. For larger engagements, the optimistic governance process provides additional oversight
4. All activities are documented and transparent, enabling community monitoring

I don’t believe having a different entity taking care of the “procurement function” (or part of it) after the OpCo is established is beneficial. While I understand the reasoning behind “separation of duties”, this adds additional layers to the process. Let me use the presented example to illustrate this:

@Immutablelawyer

With Service Provider Utilisation Framework:

1. The Technical Working Group identifies the need for a security audit and selects appropriate providers from the whitelisted security auditors based on their expertise in cross-chain infrastructure.

What happens if the service needed is not already contemplated in the whitelist? Under the proposed structure, someone would need to go after the entity responsible for whitelisting, all this process needs to be done, then get a quote for the service, and after that, present everything for the OpCo. (half of the procurement function was done outside OpCo).

What happens if there is a question about the quote itself? Then, the OpCo needs to engage with the provider without prior conversations.

@Immutablelawyer

3. OpCo validates that:

• The selected auditors are whitelisted providers
• The service directly benefits the DAO’s core infrastructure
• The cost-benefit analysis justifies the expenditure
• The request complies with all process requirements

If the OpCo is here to take care of “Operational” functions on behalf of the DAO, one of the main ones is the relationship with Service Providers. We are already requiring, under the current framework, that the OpCo has the knowledge to validate all the previous steps.

That is why I believe that it should be responsible for all steps of this procurement process, carrying over the excellent work already done, and applying this framework, if deemed useful (which I think it is). Otherwise, we may be creating extra friction points in the process that are not necessarily needed.

[GensDAO]

@JoJo

we need a way to simplify how we do stuff in the dao. Especially the stuff that we need and that in real world requires a few decisions (do we want to do it, how much do we want to pay for it, who is going to do it, what is the expected outcome). This set of questions that normally are followed by a sometimes brief action are translated in tedious votings and back and forth in our dao.

I agree that the proposed framework is a key advance in reducing bureaucracy. However, I suggest adding concrete examples of simplification:

Standard Templates: Create pre-approved formats for common requests (audits, tool development) that avoid redundant reviews.

Service Batching: Allow whitelisted vendors to offer pre-negotiated “packages” (e.g. basic audit + report for $50k), further accelerating Tier 1 approvals.

@Zeptimus

The oversight committee structure (7 members) seems to add an unnecessary layer between service providers and tokenholders. From my experience in governance, simpler structures tend to be more effective and resistant to bureaucratic capture.

The current structure could be optimized:

Committee ≠ Closed Group: instead of 7 fixed members, I would propose that OpCo works with 3 base members + 2 ad-hoc experts (elected by quick vote according to the nature of the service). Example:

For a smart contracts audit: 3 OpCo members + 2 external auditors (not whitelisted) as consultants.

@Zeptimus

I wonder if we could design this to be more directly accountable to tokenholders rather than routed through an intermediary committee.

I agree, a priori it occurs to me to do:

Public KPI dashboard: A dashboard on the DAO showing:

• Average approval time by category (goal: <72 hours for Tier 1).
• Supplier compliance rate (e.g., 90% on-time delivery).
• Cost vs. market (e.g., comparison of whitelisted audit prices vs. industry average).

@Zeptimus

For other services where safety is not a concern, service providers should go through the full process—that’s why we have it, and it was designed carefully.

I agree, it seems to me an important point to differentiate between critical services (which justify agility) and non-critical (which should go through the full process).

What comes to my mind, as a suggestion, then the rest can see which method is better, is an “Urgency Labeling” for example on Implement a color system to classify requests:

• Red: Critical (e.g., bridge failure) → Tier 1 automatic approval with further review.

• Yellow: Urgent (e.g. lib update) → Tier 1 standard.

• Green: Routine (ex: maintenance) → Tier 1 with 48h prior community notification.

on the other hand, I would like to add that the the proposal is solid, indeed, but needs safeguards against bureaucratic inflation and more direct accountability mechanisms. I suggest implementing a 3-month pilot with 2-3 service categories (ex: security + infrastructure) to fine-tune the model before scaling.

[Argonaut]

Hello, thank you for your proposal. We find it very interesting and full of great value. We believe that reducing some bureaucracy is crucial in cases where it’s really necessary, so we view this proposal positively. However, we have a few observations:

• The proposal only outlines two approval levels based on the expenditure (under and above $80,000). What happens if the expenses are significantly higher than $80,000? While this may be unlikely, it is important to establish limits. Expenses well above these figures should go through the traditional governance process. Specifically, we believe it is appropriate to set a limit for Level 2 to avoid uncontrolled spending, ensuring that its approval goes through the traditional process for a more thorough analysis by the community.

• Regarding requests, it would be important that each one is made publicly using the Forum, to ensure greater transparency. This also includes the results of the requests, whether they are approved or not. We believe this aspect is not mentioned in the proposal and consider it crucial to maintain transparency in this regard.

We also want to emphasize the importance of selecting the providers that will be part of the mentioned whitelist, as well as the follow-up on the work they perform.

[tamara]

Thank you for the proposal, the below is exactly what we experience in the ARDC and we would benefit from a wider array of service providers.

@Immutablelawyer

A key insight from the proposal’s discussion phase was that limiting each service line to a single provider potentially underutilises the diverse expertise available within the ArbitrumDAO ecosystem. Different service providers often possess complementary strengths, even within the same vertical.

This being said I have some concerns/suggestions wrt operational layer:

1. In the Initial Request Process, would it make sense to include a COI? If any DAO member can submit a service request this might make sense.
2. Does the OpCo have to perform steps 2 & 3 for every submitted service request?
   Again if not only initiatives but also DAO members can submit requests, there should be a very explicit k.o. criteria in step 2 that gives OpCo the right to stop proceeding to Step 3.
   E.g., if no legitimate DAO operational need can be established → request stops there

[chamadao]

We read through this proposal a few times and while we are still skeptical about OpCo being an improvement for the DAO, this does seem somewhat in the right the direction. However, for our tastes, it still needs work in two key areas: service provider accountability and budget thresholds.

On the accountability side, right now it feels like we’re focusing more on the “how to approve quickly” but not enough on “how to make sure we get what we pay for.” For example:

• Could we add milestone-based payments that only trigger when specific deliverables are completed? Right now it seems like providers get approved but then there’s no real tracking system for their work.
• What about some kind of performance scorecard? Maybe track if they deliver on time, stay within budget, and actually deliver quality work. This could feed into whether they stay whitelisted for future projects.
• We would like to see some kind of regular check-in requirement where providers have to give updates so we catch issues early rather than finding out at the end something went sideways. Really we think this should apply across the whole DAO including for OpCo itself.

On the budget side, the $80k threshold for streamlined process feels high:

• Maybe drop Tier 1 threshold to $40k instead? $80k is a full time employee in most places, and in our opinion the DAO is still overspending like crazy.
• We could add a middle tier between $40-80k with a bit more oversight but still faster than full governance.
• For anything over $20k, we should probably require detailed cost breakdowns and maybe even comparative quotes from different whitelisted providers.

We also think we need more transparency around how money is being spent:

• Regular spending reports showing where the money’s going and what we’re getting for it
• Some kind of public dashboard or informations from the DAO showing active projects and their status
• Publishing deliverables when they’re completed (unless confidential)

The proposer could easily add a section on “Accountability and Reporting Process” that covers these points without making the whole thing too complicated.

[CastleCapital]

The proposal overall is very detailed @Immutablelawyer and is robust enough for the DAO’s needs and requirements. We do have some suggestions in order to make the framework less open to abuse.

1. Spending Limits
Apply spending limits on OpCo (or the managing party) for Tier 1 approvals. This ensures proper oversight of funds with proper spending limits in place to ensure the process is not abused.

In the event initial funds have been fully utilized, OpCo can request from the dao additional funds.

A minimum floor should be defined so when funds fall below it, OpCo is to initiate request for funds (if necessary)

2. RFQ Process
While we think the process and due diligence are in line with best practices. One recommendation we have is for OpCo (or the managing party) to also obtain a quotation from a service provider not already whitelisted by the DAO with a minimum of 3 RFQ responses required.

This ensures that the DAO continues to receive the best prices, minimize potential collusion between whitelisted vendors, and is able to continuously engage with and recruit potential service providers.

We do not have any objection to the utilization of the Optimistic Governance process, taking into account that the OpCo is first reviewing and improving on the proposals with the Service Providers before a vote being raised.

We agree with @JoJo’s comment below and need to be mindful of how this proposal is brought forward.

@JoJo

Opco will indeed be key, we just risk being the dao so broad that we assign to it very diverse tasks and roles, outside of mandate, or even inside the mandate but that requires so many different expertise that it could be problematic to have the right persons in place. We are, basically, starting to shape an entity that is not out there yet.

While we understand the separation of duties, we think this should be mandated as a temporary setup until such time the incorporation of OpCo is completed, with the final authority to continue or change the structure provided to OpCo as was also highlighted by @jameskbh

@jameskbh

That is why I believe that it should be responsible for all steps of this procurement process, carrying over the excellent work already done, and applying this framework, if deemed useful (which I think it is). Otherwise, we may be creating extra friction points in the process that are not necessarily needed.

Overall, we think it’s a good first step towards some operational structure, but we need to ensure flexibility is maintained to not constrain the OpCo once it’s ready.

[Tane]

We would like to thank @Immutablelawyer and Axis team for the detailed proposal on the needs to streamline the engagement with service providers. Especially for the Optimistic Governance, we are very much aligned with the challenges laid out in its motivation section and the concept of introducing the Optimistic Governance to achieve this framework. It will benefit other similar requirements to make the process faster, yet with the proper governance procedure.

Since we have similar concerns as other delegates have on the details like dependence on OpCo establishment and possibly an excessive oversight committee structure, etc, we believe we should continue to discuss those points to refine the proposal going forward.

We would like to highlight the other part of the proposal, the implementation of the optimistic governance. As an active delegate in the Lido DAO, we believe its Easy Track Motions works well to achieve the optimistic governance and the DAO should look into how it’s implemented.

Lido’s Easy Track system is designed to handle frequent, low-stakes governance actions (like topping up reward programs or adjusting node operator limits) without requiring a full token holder vote each time. For the implementation details, Lido does NOT use the OpenZeppelin Governor modules (like GovernorCountingSimpleUpgradeable) for Easy Track. Instead, it was heavily inspired by Aragon’s governance model, using Aragon’s MiniMe token for vote snapshots and its EVMScript execution format (Details can be found here). Lido also has built a front-end interface for Lido’s permitted committees to create relevant motions and for the community members and tokenholders to monitor and vote on them.

On Arbitrum, we can leverage OpenZeppelin’s Governor framework to manage proposals (motions) and voting. However, we can consider other solutions; instead of the default GovernorCountingSimple (which expects For/Against/Abstain votes)​, we can implement a variant that only uses Against votes by subclassing the Governor contract and override the voteSucceeded() or quorumReached() logic. An alternative is to not use the Governor counting at all and simply incorporate an “objection tally” in a custom contract. For instance, a simple OptimisticGovernor contract could maintain a mapping of proposalId → objectionVotes and allow token holders to call object(proposalId) to cast a no-vote (summing up their weights via getPastVotes(token, proposalSnapshot)). This contract could then have a function to finalize/execute proposals after the deadline if objections < threshold.
We could also consider utilizing ERC20Votes for automatically keeping track of vote power at past block numbers and introduction of a Timelock controller with limitations like only the governor or proposers can execute the passed proposals for extra safety.
We should also consider having a dedicated UI similar to the one for Lido and a notification system for delegates to take appropriate actions on those proposals (possibly additional considerations should be done for the DIP criteria as well).

In conclusion, we are in support of the framework and initiative to make this proposal forward! We are looking forward to hearing opinions from other delegates and contributors.

[Immutablelawyer]

Dear all,

We’d like to thank you all for your support on this proposal and (most importantly) the great valuable feedback we have received on it!

It seems that there’s appetite for implementing on-chain checks & balances within OpCo (and hopefully, this sets a valuable precedent for other initiatives as well!).

We will be taking stock of all suggested iterations/implementations, and coming out with amendments in the coming weeks to this proposal.

Thanks again for the very valuable feedback and for taking the time to read through!

Kind regards,
Immutablelawyer
Axis Advisory // ADPC

[Euphoria]

The following reflects the views of the Lampros DAO governance team, composed of Chain_L (@Blueweb), @Euphoria, and Hirangi Pandya (@Nyx), based on our combined research, analysis, and ideation.

Thank you for putting forward a well-thought Service Provider Utilisation Framework.

The ARDCv2 attracted several qualified applicants interested in working with the DAO. However, without a whitelisting mechanism, it’s been difficult to fully leverage the time and effort spent on onboarding those contributors. This proposal addresses that challenge directly.

We understand that the framework’s implementation is dependent on the establishment of OpCo and the availability of an Optimistic Governance Module, so it may take some time before it’s operational. That said, we wanted to highlight a few key points and add our thoughts:

@Argonaut

The proposal only outlines two approval levels based on the expenditure (under and above $80,000). What happens if the expenses are significantly higher than $80,000? While this may be unlikely, it is important to establish limits.

We agree with this concern. A ceiling or upper limit beyond the $80,000 threshold would add clarity, especially in edge cases. It also sets expectations for service providers and adds an extra layer of financial control.

@chamadao

What about some kind of performance scorecard?

This is worth considering. A simple performance scorecard, even a lightweight one, can help the DAO evaluate the value received versus the cost incurred. We understand that not all deliverables may be immediately measurable, but even qualitative feedback would add useful accountability.

@CastleCapital

We do not have any objection to the utilization of the Optimistic Governance process, taking into account that the OpCo is first reviewing and improving on the proposals with the Service Providers before a vote being raised.

We echo this sentiment. The use of Optimistic Governance here feels appropriate, especially with OpCo acting as the first layer of review. This could significantly reduce friction while still preserving community oversight.

One of the most important goals this proposal aims to solve is reducing the time required to engage with service providers. The current process is slow and restrictive, which limits our ability to respond quickly to emerging needs. Faster onboarding is a step in the right direction for DAO agility.

We also want to underscore an important point not directly mentioned in the proposal: the long-term sustainability of service providers. When providers have already demonstrated value, the DAO should consider continuity, especially if the performance difference between providers is marginal. Sustained demand even during quieter periods, helps keep providers aligned and solvent. This is crucial in our niche ecosystem, where the number of capable providers is still limited.

Overall, this framework introduces strong financial incentives and operational structures that we believe will benefit both the DAO and its partners. We look forward to seeing it evolve as OpCo and related governance modules come online.

[cp0x]

Overall, this is the right direction.

We, the DAO, have already approved $10 million in audit costs, so repeating the same process for each stage of funding is a bad idea.

However, as was written above, it is worth thinking about the price threshold for project categories (and perhaps making three levels).

1. The proposal stated that we are ready to support about 100 projects at $100,000. But for some reason you have up to $80,000 and above.

2. Perhaps you should not completely trust the information from the AI, but I could not find a single detailed report on the cost of audits for a large set of projects:

   a). Small projects (one or more smart contracts) - up to $10,000. Here I would suggest not doing a large analysis, but conducting it in the same way as in QuestBook for small grants, i.e. the decision should be made by one expert.

   b). Medium projects (more complex contracts, possibly multiple audit phases) — $10,000 to $50,000. The procedure proposed in this proposal for audits up to $80,000 should be applied here.

   c). Large projects (long and complex security audits) — $50,000 and above. The procedure proposed in this proposal for audits over $80,000 should be applied here.

[Deelabs]

This is a great and very much needed, comprehensive framework to streamline service provider engagement with the DAO. The proposal addresses important operational inefficiencies in the current governance process that have been causing unnecessary delays and missed opportunities (moving fast is essential in such a fast-paced industry and not being able to do so is both a threat and an opportunity cost).

We appreciate the effort to balance operational efficiency with governance integrity through the tiered approval structure. The current governance lifecycle for service procurement is indeed causing significant operational friction and opportunity costs, and this framework would help bridge this gap while maintaining appropriate oversight. It also aligns well with the broader strategic direction toward greater operational efficiency as the DAO continues to scale.

Regarding the tiered threshold approach, the current two-tier system with an $80,000 threshold may be insufficient for properly scaling governance controls with expenditure size. It could be worthwhile to pursue a three-tier system where Tier 1 covers up to $30,000 with streamlined OpCo approval for routine, smaller expenses; Tier 2 spans $30,000-$100,000 utilizing the optimistic governance process; and Tier 3 for expenditures over $100,000 would follow the traditional full governance process. This would provide appropriate controls that better scale with financial risk while still addressing operational needs.

As noted by others, the proposal focuses more on approval processes than on accountability for delivery. The DAO should implement milestone-based payments with structured schedules tied to specific deliverables, develop a standardized performance scorecard to assess provider performance, require periodic updates from service providers during engagement, and create a public dashboard for transparency by tracking all engagements, their status, and completion metrics.

To ensure the DAO continues to access the best expertise and competitive pricing, it should establish an ongoing process for new providers to apply for whitelisting rather than creating a closed system. For Tier 2+ engagements, requiring multiple quotes from different whitelisted providers would be beneficial. As suggested by @CastleCapital we should consider requiring quotes from non-whitelisted providers to maintain competitive pressure through an RFQ process.

To strengthen the overall framework, we suggest implementing a 3-month pilot with 2-3 service categories before full deployment, implementing period-based spending caps for Tier 1 approvals and developing clear guidelines for differentiating between critical services requiring expedited approval and non-critical services.

Overall, this framework represents a significant step forward in making the DAO more operationally efficient while maintaining appropriate governance controls. With the refinements suggested above, we believe it can strike the right balance between agility and accountability. We fully support moving forward with this initiative.

[danielo]

Read through this twice and my initial reaction is: Why optimise the DAO to contract service providers? Shouldn’t sub-daos/programs/catalysts/orgs be the ones contracting while the DAO approves the creation of said orgs?

so e.g. instead of Tech Audits, we should have an org/unit/subdao that looks after governance and has the budget allocated for service providers, research, audits, etc.

This is a genuine question and not a critique, as the Org Design vision for the DAO is currently very unclear to me so hard to decide on proposals without a coherent overview. But maybe you have such a vision or at least a few pieces you can share about why this design and not others?

[EzR3aL]

Oh im not sure if this is a good thing tbh.
We have seen Maker trying to launch SubDAOs and they have been a big failure.
Spark is the only spin-off that is still alive but thats it. Sakura and all the others didn’t even start.
I think having Sub-DAOs just creates more friction and isn’t helpful at all.
I might be biased but I think how we are handling things at the Aave DAO is working pretty well.
We have different Service Provider, directly tied to the DAO for risk, developement, BD, financials, etc.
That way you have way better control over these things.
Because who is going to watch all these Sub-DAOs.
Surely we can give this to OpCo but it hasn’t even really launched yet and we are already giving them tons of work.

[danielo]

The most important role that OpCo can have is oversight. If i could pick 1 role for it would be this one.
And subdaos have a bad rap because people designed them properly, but what i mean here is units that can execute. Like GCP (minues the transparency issue) and we could learn a ton from that experience to do it faster next time

[EzR3aL]

But these are different to SubDAOs imho.
A SubDAO is something like Spark, its a completely closed entity working for its own product, but somehow benefits or is correlated to the other business/protocol and kind of only exists because of that.
GCP is like a newly established Service provider in my opinion the DAO hired to get more developer and focus towards gaming on Arbitrum. Its not building any new protocol but rather tries to get people doing this on Arbitrum by their own.

Service provider are a good thing, at the Aave DAO we have established SPs for risk, financial, growth, BD, development, etc.
With the new AAE we basically have the same, as the main goal is always to push Arbitrum.