[Non-Constitutional] Thank ARB by Plurality Labs - Milestone 2: Scaling Value Creation in the DAO

[DisruptionJoe]

Thank ARB by Plurality Labs - Milestone 2: Scaling Value Creation in the DAO

This proposal is currently on Snapshot. 1/26/24 - 2/2/24

Table of Contents

• Abstract
• Motivation
• Rationale
• Team
• Performance
• Plan
• Timeline
• Deliverables
• Cost
• Final Thoughts

EDIT 1/25/24

• Updated proposal amount
• Added links to review documentation
• Updated timeline
• Added companion post about Milestone 2 workstream structure

Abstract

6 months ago, Arbitrum DAO voted to fund the first of three Milestones to build and deploy a best-in-class grants framework for Arbitrum (AIP-3). We are approaching the end of Milestone 1. (Review Milestone 1 here). This proposal is to fund Milestone 2.

• Milestone 1: Build best-in-class Pluralistic Grants Framework.
• Milestone 2: Scale and refine the framework.
• Milestone 3: Make the framework self-sustaining, autonomous.

In Milestone 1, our primary objective was to establish the rails for a scalable Pluralistic Grants Framework. Now, with Milestone 2, our primary objective is to show that we can scale our framework to support a truly decentralized and sustainable future.

To do this, as planned, we will be increasing the funds we are allocating. In Milestone 1, we made an annualized request of 6.4M ARB. Our recommendation with Milestone 2 is to increase the allocation fund size to $30 million in ARB annualized, which enables us to optimize for scale and value creation.

In this proposal, we will outline the use of funds and the importance of leveraging these funds immediately. Additionally, we have included a soft voting mechanism in Snapshot to ensure that the amount for Milestone 2 is aligned with the needs and desires of ArbitrumDAO.

Motivation

It’s personal

We want to see a world where no matter who you are or where you’re from, you can be compensated fairly for the value you create. We want to see an open contribution economy built on digital public infrastructure. It’s who we are. It’s why we’re here.

We want to help create enormous value for everyone in Arbitrum. We can do that by ensuring that capture-resistant governance scales and drives efficiencies across the DAO. If we succeed in this goal, the whole ecosystem wins - including us.

Our discovery process during Milestone 1 generated the following vision and mission which further excites us about the potential and capability of the Arbitrum community: Fueling financial sovereignty by spearheading the evolution of decentralized technologies and governance.

It’s time

We must, in the words of CoinFlip, address “pressing demands dictated by the rapidly evolving landscape”. A Pluralistic Grants Framework must be in place now. We must not wait, we must not be slow, we must not tread lightly.

We must be willing to take big bets and make big experiments now. Doing so will attract the top talent, it’ll signal to the ecosystem that we are here to create enormous value, and it’ll allow us, together, to continue to lead this market.

It’s about aligning incentives

We believe DAOs can better align incentives than our centralized counterparts. But to date, DAOs haven’t generally shown strong alignment: top talent is sitting on the sidelines; value opportunities are sitting on the table; and spending is not strategic.

We believe DAOs have not had the tools and capabilities – a Pluralistic Grants Framework – to support strong incentives alignment. Without those capabilities, DAOs tend to centralize to become more efficient or to suboptimally allocate their treasuries.

We believe in a world in which all Arbitrum citizens are rewarded for the value they create – a world based on open contribution rather than gatekeeping; a world where Arbitrum benefits from the value creation of all its citizens.

Rationale

For a distributed, decentralized community to truly scale and sustain, it must embrace a Pluralistic Grants Framework accessible to all community members. One size does not fit all.

We believe, based on enormous experience across ecosystems – and borne out in our work throughout Milestone 1 – that for pluralistic grants to drive optimal impact, they must embody three components:

1. Onchain, capture-resistant governance
2. Scalable, more efficient grants funding
3. Greater value and utility created for the DAO

Onchain Capture Resistant Governance

A requirement for scaling Ethereum is the ability for decentralized contributors to feel secure that the system will not be “captured” by a centralized actor; that it will realize the potential of truly neutral digital public infrastructure by staying credibly neutral.

“Credible neutrality” unlocks enormous value because builders will make more and bigger investments when they know their investments won’t be lost as a result of corruption, bots, or bad actors.

Scalable structures for efficient grants funding

Scaling with speed is a requirement for winning the L2 race. Yet scalability is an enormous problem for all web3 ecosystems. From the culture of airdrop farming to the difficulty of aligning decentralized and autonomous participants, there remain numerous reasons to slow down or centralize – but this is not the goal of Arbitrum.

Arbitrum must credibly scale grants funding to maintain its role as the leading L2. A well-structured Pluralistic Grants Framework can leverage and fund many methodologies for sourcing and funding the best tools and capabilities to the unique needs of scaling decentralized systems.

Greater value and utility created for the DAO

Web3 ecosystems must allocate funds in ways that drive optimal utility, efficiency, and value. Unfortunately, while ecosystems can quickly allocate out tokens, those allocations have often fallen short on delivering the desired value.

Frameworks tend to optimize for fairness over quality. Many choose poor approximations of value like TVL in the first place, thus setting themselves up to pay for acquisition rather than engagement.

A winning framework must understand what communities value, validate their assumptions, elevate high performers, cut low performers, and support broad marketplace adoption. Our Pluralistic Grants Framework – and the technology that supports it – optimizes for the above.

Principles Used to Support Our Outcomes

• Create hierarchies of desired outcomes rather than hierarchies of people & institutions
• Engage the community with aligned priorities to make positive-sum contributions
• Flip from rewarding work, to rewarding value creation validated by peers
• Continue to strive for transparency maximization and codified on-chain governance
• Provide clear contribution pathways & support for builders to find success
• Citizens must be able to grow context and embrace their civic duty
• Legitimacy requires multiple layers of bot and bad actor protection - at scale
• Community-led evaluation removes corruptible single points of failure & cronyism
• Complexity requires continuous sensing and responding to inform adaptive solutions
• Impact is relative to the intended outcomes and cannot be measured in a vacuum
• Data-driven growth depends on clear understanding of engagement & retention

Performance: Milestone 1

In Milestone 1, Thank ARB built the rails for and rolled out the three components of our Pluralistic Grants Frameworks.

• Sense: We began a continuous “complexity aware” sensing process by polling over 17,000 Arbitrum users, validating those needs in further questioning and workshops, and emerging four strategies for funding aligned with the needs of the DAO.

• Respond: We quickly allocated 3 million ARB to 12 grant programs which funded almost 200 grantees aligned with the needs of the DAO. These brought top talent into the ecosystem like Open Block Labs STIP data monitoring which will continue to drive value. This one grant alone is likely to save the DAO millions.

• Evolve: We’ve used the Thrive Protocol and Karma to power community-led review of every grant the DAO has funded. We’ve gathered additional data through various feedback modalities and one-on-one conversations. All of this is already informing and improving our work in preparation for Milestone 2.

For an in-depth analysis of our Milestone 1 allocations, experiments, and key learnings, please review this forum post.

While the value of the work we did in Milestone I will continue to emerge over the course of the coming months and years, these are the some of the big wins we are particularly proud of:

• Facilitated the first STIP workshop after the Camelot proposal failed, recruited Tnorm to facilitate the working group, then funded the Open Block Labs data monitoring
• Data infrastructure with Open Source Observer to inform future grant program incentives
• Extensive work with the Arbitrum Foundation to establish DAO compliance procedures
• Firestarter grant given to start the treasury & sustainability working group
• Review of EVERY grant the DAO has funded direct, through us, Questbook, and STIPs
• Built a grant routing system and open database with grant program data
• Sidechain grant by Arbitrum Foundation leading to Arbitrum use at Winter JazzFest NYC
• Financial reporting for the entire DAO by R3gen Finance

Milestone 2 Plan: Scale & refine the framework

The Plurality Labs initial proposal to Delegates:

• Milestone 1: Build best-in-class Pluralist Grants Framework.
• Milestone 2: Scale and refine the framework.
• Milestone 3: Make the framework self-sustaining, autonomous.

Plurality Labs has built out the start of a best-in-class pluralist grants framework for the Arbitrum ecosystem - and, based on feedback and learning, here is how we are preparing for scale:

SENSE: Improve Communications to Mobilize the DAO

Problem

It is hard to maintain context and awareness of DAO contributions. To be a good DAO citizen people must know:

• Where to onboard
• What to know to maintain context
• What are the DAO’s biggest needs
• What opportunities exist to create value
• How to contribute value and get paid fairly

Solution

Provide aggregated communications on ThankARB.com segmented to personas. Build on Milestone 1 efforts:

• Create segmented user personas (Delegate, Builder, Grantee, etc.)
• Aggregate communications based on personas
• Improve a weekly communication cadence
• Prove performance by measuring Weekly Active Contributors (WAC)
• Incentivize value creation using tARB (reputation) & ARB (governance rewards)

Impact

Improving communication to mobilize the DAO will have a profound impact on our ability to find top talent and generate innovation.

• Citizens know how to fulfill their “civic duties” in 15-30 minutes per week
• More people will be driven to test protocols by viewing contribution listings
• More social engagement as we coordinate the ecosystem to boost messaging
• More projects will choose Arbitrum because they understand our needs

RESPOND: Coordinate Allocation Systems to Attract Top Talent

Problem

Passing an AIP in our DAO is hard. It requires a builder to be a diplomat, a salesperson, and to not being paid for months. Top builders can better fund themselves elsewhere. Building pathways and structures for participation will minimize starting friction. To do this we need:

• A process for hiring
• A legal structure for efficient KYC/KYB
• A legal structure for hiring DAO employees
• A governance structure for driving alignment & prioritizing how we spend

Solution

Design and test accountability structures. Put the successful ones onchain and under direct control of DAO voters. Fund efforts to:

• Provide a portal to find out how to contribute to the DAO
• Design participation pathways for contributors
• Design legal, technical & governance frameworks that incentivize long term thinking
• Research and design systems to harden capture resistance and limit circles of influence
• Validate structures and frameworks via the community and delegates
• Ensure the composability of DAO grant and procurement structures
• Build onchain checks and balances across the framework

Impact

Workstreams will support continuous impact. Providing pathways will attract top-tier talent to Arbitrum

• Citizens can continuously review a list of work that matches their skills
• Frameworks that encourage capture-resistance will attract builders needing neutrality
• Transfer of mechanisms onchain and out of Plurality Labs’ control will build confidence
• Composability will allow us to compare results of multiple frameworks

EVOLVE: Collaborate to Reward Winners and Cut Underperformers

Problem

DAOs struggle to maintain a collective memory which allows successful builders more opportunity and cuts out underperformers. We are currently lacking:

• Winning permissionless contributions can grow into larger responsibilities
• Community-led transactional processing (applications, criteria, impact evaluations, etc.)
• Role/skills based segmentation and reputation
• An open data store housing the collective memory of past grant information

Solution

Build user profiles via survey techniques, data analysis, and testing to enable the DAO to identify expertise, double down on winners, and cut off poor performers. Plurality Labs will deliver:

• User profiles built over time using implicit and explicit information
• Community led review experiments alongside control groups
• Identification of engaged DAO members willing to provide adequate effort
• A culture of continuous evaluation & iteration

Impact

Community-led review will allow us to fairly automate grant pre-processing, criteria selection, eligibility reviews, dispute resolution and appeals, post-grant evaluation of builder success and funding decision success:

• People will be incentivized to use ARB to participate in reviews so they can earn
• Corruption in DAO governance can be addressed by decentralized reviews
• Profiles can allow experts / good actors to quickly earn their value
• The ecosystem can continuously build itself to better leverage and integrate data

Timeline

This will be posted on Snapshot on 1/25/24. If approved, it will move to Tally on 2/1.

PL-ARB Grants Safety Multisig

Funding sent to multi sig: arb1:0xC158b555F0B1ddd7F4D4f97Fd2a9acd144f8e0D4

Deliverables

Q1 & Q2 Prepare for Takeoff & Launch the DAO Structures

• SENSE - Communication
  • Baseline Weekly Active Contributors (WAC) by persona segment
  • Launch Thank ARB platform improvements for personas
  • Monthly progress reports
• RESPOND - Coordination
  • Conduct board election for the PL-ARB Grants Safety multisig oversight
  • Conduct process for the DAO to hire top talent committee
  • Design contributor pathways & begin building on-chain architecture
  • Launch the first DAO workstream(s) using on-chain architecture & accountability
  • Launch at least 3 “big bets” (details below in Overall Cost section)
• EVOLVE - Collaboration
  • Build dynamic councils using Hats Protocol, DAO personas, and tARB
  • Community-led selection, review & evaluations of every grant
  • Grant Impact Index (GII) created to illustrate grant efficiency
  • Test community-led Thank ARB contribution valuation (tARB)

Q3 & Q4- Stabilize Grants Orbit and Land the Starship

• SENSE - Communication
  • Conduct ongoing surveys of satisfaction with workstreams & Plurality Labs
  • Transfer ownership of Thank ARB WAC to workstream
  • Transfer ownership of Monthly PL & DAO Reports to the DAO
  • Plan for end of year delegate and contributor awards IRL event
  • 2024 PL Wrap Up Report
• RESPOND - Coordination
  • Conduct workstream reviews & create impact report
  • All workstreams are fully staffed
  • Transfer open grant milestone payouts to the DAO
  • Transfer dispute and appeal governance to the DAO
  • Host end of year delegate and contributor awards IRL event
• EVOLVE - Collaboration
  • Use community-led review capability to automate milestone payouts & processing
  • Community-led eligibility evaluation system available to all grant programs
  • Walk-away-readiness-report: Prep for Plurality Labs to walk away in Milestone 3

Overall Cost

After many discussions with delegates and the results of the forum poll on this post, we have decided to go with one straight forward offer on Snapshot. This amount takes the price volatility of ARB into consideration as well.

Allocation Fund Size = $30 million in ARB using the 30 day moving average price of ARB on the day it is posted to Tally.

Plurality Labs Fee = $3.75 million

• $1 million paid in ARB upfront using the 30 day moving average price
• $1.75 million ARB (using the 30 day ma) paid in a linear distribution over 8 months
• $1 million ARB (using the 30 day ma) locked in a Hedgey Token Lockup contract - locked for 1 year

This makes $2.75 million subject to clawback by DAO vote.

Funding thoughts:

• Funds are 100% performance-based; the DAO can clawback remaining funds anytime
• Community funds held in a community multisig - not by Plurality Labs or ThriveCoin
• A lower allocation fund size means less predictability for onboarding top talent
• We are well-positioned to create enormous value, utility, and efficiency for the DAO
• Our first proposal suggested we would scale from 3 to 30 to 100 million ARB over 3 Milestones.

During Milestone 2 we intend to split our service fee between the dedicated Plurality Labs team and the ThriveCoin team to reflect the services provided. We intend to continuously upgrade the Thank ARB application in line with the needs of the DAO…

2024 Fund Allocation

Sample allocation schedule for 2024 below:

[20% of Fund Allocation] Strategy Layer

• Up to 6 million ARB for priority & specialized workstreams
  • Full-time dedicated to Arbitrum
  • Maintain context over time
  • Fixed in size, don’t bloat, and roles accountable onchain
  • Prioritize outcomes to be funded to the decentralized action layer
  • Priority Streams - DevRel, Growth, Tech, Incentives, Governance
• Functional Streams - Marketing, Data, Operations, etc.

[40% of Fund Allocation] Decentralized Action Layer

• Up to 12 million ARB to be allocated by workstreams
  • Funds narrow-scoped and time-bound campaigns
  • Funds: Working groups, Firestarters, Campaigns, Grant Programs, RFPs
  • Allocated using direct DAO voting in experimental meta-allocation models
  • Requires multiple iterative rounds to balance the system
  • Workstreams compete to allocate larger amounts of the total budget

[40% of Fund Allocation] Plurality Labs Facilitated

• Up to 3 million ARB for Thank ARB ‘Contribution Path’ rewards
  • Newly set up by persona (delegates, citizens, developers, creatives, etc.)
  • Growing citizen context by making it easy to stay informed and engaged
  • Reminders and reputation rewards for value creating actions by Arbinauts
  • Learn about other ways to add value in the Arbitrum ecosystem
  • Engage contributors to decentralize community-led assessments and evaluations
• Up to 3 million ARB for experimental grant programs allocated by Plurality Labs
  • Double down on programs that worked well in milestone 1
  • Tools to move Plurality Labs decision making to be onchain & transparent
  • Automations to lower costs and improve DAO user experience
  • Gitcoin rounds to involve the community and continue sourcing new grants
  • Taking shots on new and innovative ideas to test for future scaling
• Up to 6 million ARB for funding programs to immediately boost action in the ecosystem
  • These programs would be selected using our professional discretion
  • A few potential programs we would select [could include:] OR [with the help of a board of [key people] to be established for Milestone 2:]
    • Arbitrum Accelerator Framework w/ first accelerator programs funded
    • Onchain tooling improvements with Arbitrum native builders as guides
    • Potential to expand Gitcoin partnership to host all rounds on Arbitrum
    • Customized Arbitrum RetroPGF designed for Arbitrum ecosystem
    • Data driven allocation strategy using Open Source Observer
    • Github dependency funding using Drips

Team

Plurality Labs

The dedicated team which worked full time on Arbitrum during Milestone 1. We have earned trust in the Arbitrum community, and have an immense amount of experience at the forefront of grants & governance frameworks.

We are working ourselves out of a job through success in our building of a best-in-class pluralist grants framework which provides capture-resistance, scalability, and enormous value creation.

The Plurality Labs team currently has 4 FTE and is looking to hire 3-4 FTE immediately and another 3-4 FTE throughout the year.

Current:

• Disruption Joe - Relations / Strategy
• Shawn Grubb - Compliance / Governance
• Mary Quandt - Behavior Change Specialist
• Feems - Grant Framework Specialist

To Hire:

• Communications
• Project Manager
• Facilitator
• Program Design Specialist
• Grantee Accountability Specialist

ThriveCoin

ThriveCoin and the Thrive Protocol provides the underlying architecture supporting scale and decentralization for our Pluralistic Grants Framework. Without them, we could not have reached the number of followers on Thank ARB on Twitter, mobilized the community to participate in surveys & evaluations, or provided an increase in donation amounts during Gitcoin rounds, among other things.

As a subsidiary of ThriveCoin, Plurality Labs has used ThriveCoin’s tech and capabilities, and 16 team members, throughout Milestone 1. The ThriveCoin team will continue to be an enormous asset to us as we drive to scale. We hope the community appreciates the immense amount of additional resources allocated without any additional cost throughout Milestone 1.

Currently servicing Arbitrum:

• Deployment Lead
• Deployment Specialist
• Product Designer
• UI Designer
• 2x Blockchain Developer
• 2x Backend Developer
• 2x Front-End Developer
• Integrations support specialist

To Hire:

• UX Designer
• User Researcher / Persona Strategist
• Data Analyst

Original Poll - Leaving for review

Option 2 below is what we stated we would do in the proposal for Milestone 1. Compare it to this request for the Uniswap grants program allocating $46.2 million USD.

Which option from the table above would best position Arbitrum DAO for success?

• Option 1
• Option 2
• Option 3
• Option 4
• Do not fund

Final thoughts

Now is the time. Arbitrum is poised to win. We cannot afford to be slowed down when we are ahead. We are committed to increasing Arbitrum’s lead while building interoperable systems which the DAO can take over before the end of our Milestone 3.

We are in a technological race to provide truly neutral digital public infrastructure. Let’s keep our foot on the gas. We want to prove that DAOs will be the future and that DAOs will be the killer app that onboards the next 3 billion crypto users.

On behalf of the whole Plurality Labs and Thrive teams, we are excited to continue building the Pluralistic Grants Framework that this ecosystem has embraced. It is something we own as a community. Together, we are spearheading the evolution of decentralized technologies & governance.

We are Fueling Financial Sovereignty.

[KarlaGod]

Really warming to see these laudable goals to increase Impact in the Arbitrum ecosystem.

I can see that the aim is for quality of contributors and impact measured over quantity.

I’d like to help Plurality Labs and the Arbitrum community in achieving these goals.

I’m a business developer, product manager and a DevRel personnel, I’m also the Lead Partner at B<>rder/ess, a tech Not-For-Profit.

You can reach me here👇🏽

borderlesshub@cryptosmartnow.io

[cp0x]

Thanks to you and your team for hard work.
I think option 2 would be the best solution.
However, I would like to ask you about your commission for the work:

1. Last time you asked for 336k ARB for 1 stage.
2. This time you want to get 3.3 million ARB for stage 2.

Can you explain such a significant change, taking into account the fact that you want to increase your team by 4 people at the moment, and in the end there will probably be 8 people.
The fact that more funds will be allocated for grants does not mean that there will be more grants themselves, it will simply be possible to allocate a larger amount for each grant.

[ZER8]

@cp0x

Can you explain such a significant change, taking into account the fact that you want to increase your team by 4 people at the moment, and in the end there will probably be 8 people.
The fact that more funds will be allocated for grants does not mean that there will be more grants themselves, it will simply be possible to allocate a larger amount for each grant.

Hey hey, there will indeed be more grant funding opportunities which imply more grants and grant programs will be created.

I will give only a small example, one of the former programs “The Arbitrum Citizens Retro round” had 100k ARB in funding and 25 recepients and was lazer focused on those that stepped up for Arbitrum DAO, if a similar program starts out via Milestone 2 and has 5x 10x the funding its scope can be broader which means it can accept 5x 10x even 20x grantees…and this is just one small grant program out of a plurality of grant programs, but the example sticks for all of them as well.

[lindsey]

Great to see the next phase of this rolling out.

Phase one has already had great outcomes like Open Block Labs and R3Gen which both add a ton of value to the broader DAO, plus funding of the smaller grants programs seems to be cutting a lot of red tape and bringing in great programs and contributors. Doing everything you have been doing at a larger scale will be exciting to see.

Having followed along since phase 1 started, I’m a huge fan of the work you all are doing and support this for the DAO.

[DisruptionJoe]

Hey everyone, I’m Joe and I’m leading the Plurality Labs team. I started the conversation around building a grants framework with this post discussing the pitfall DAOs have faced so far.

If you have questions or want to discuss a component of this proposal, please reply here or feel free to reach out. I will try to consolidate all my answers in this comment.

Question - Why is the Service Fee what it is?

@cp0x

However, I would like to ask you about your commission for the work:

1. Last time you asked for 336k ARB for 1 stage.
2. This time you want to get 3.3 million ARB for stage 2.

Thank you for your question!

Answer to why the service fee is what it is

Fairness

The best organizations in the world for allocating funding do so for 10-12% administrative cost. The BEST. These are organizations like the Red Cross which has 100 years of learning. Their staff is administrative, not innovative.

Our first milestone fee annualized is 672k ARB. There were multiple roles we needed but couldn’t afford to hire. The team I poached is passionate, but they had to take cuts from previous roles. We did this in part because we realized we would need to show our value for the DAO to pay what we are worth. We took the bet on ourselves and on Arbitrum delegates to allow us to show our value and right size after milestone 1.

Another consideration is thinking about our intention to execute and leave the DAO. There is no exit built in. We need to find a balance between what a fair payment is and what our margin is. Take a look at any other DAO with a grants program this size and you will see we are WELL below the standard.

The Value We Save & Create

Take the work we have done around STIP which will impact LTIPP and the ongoing program.

• We offered a firestarter to Tnorm to drive the process of getting STIP formed and approved. This made sure the program could happen.
• We funded Open Block Labs for data monitoring services. This provides the data for us to learn for future programs (and potentially shut off misbehavior).
• We funded Open Source Observer to provide data for optimization using github and onchain forensics
• We funded Helika Gaming to index & analyze onchain behaviors and use gaming derived analytic models to identify and define engagement or “stickiness”
• We funded Karma & Thank ARB to incentivize community-led reviews to continually assess the impact of every grant funded

We will likely see over $100 million in incentives given in 2024. If you think our work will have saved even 5% in efficiency through these grants, then our fee has paid for itself.

This is ONLY ONE example of many ways we have and will have created value for Arbitrum.

Volitility Almost Crushed our First Milestone

Our 336k ARB for the first milestone went down from 1.16 to around $0.80 for half of our milestone time. Had we not been delayed by compliance issues, we would have paid out when the price was down. Had that happened, our team would have been out of funds to pay a team of four at the end of December.

What happens if you don’t spend all the funds?

This is an important point, this vote doesn’t send the allocation fund to Plurality Labs team! All the funds are sent to the PL-ARB Grants Safety Multisig which is run by a majority of delegates. Our fee is then sent to our multisig from there. If there is leftover, we will simply roll it forward. There is no way for us to keep it. A good thing about the funds still being controlled by the DAO is that we don’t need to nitpick at how much is being rolled forward because it is all the DAOs funds.

In terms of the fee, we could right size it with the next budget. Say we allocated 80% of the total, we could calculate 20% of our fee and take it out of our third milestone fee. I totally understand that there is a slight incentive for our team to want to allocate everything, even if we do it poorly. That is a legitimate risk, but I’m committing to not doing that.

Our team’s interest in solving this problem without an exit package is that we know solving the problems and bringing success to Arbitrum will open a wide tapestry of lucrative offers in the future. We don’t get that if we aren’t genuine in how we handle disputes and conflict that naturally arises. Hopefully you can understand our position and see how our best interest is aligned with Arbitrum.

Why 30 million ARB?

We stated the goal of massively scaling what the DAO can safely allocate in our first milestone proposal. In an early comment about that statement, we clarified it meant going from 3 million ARB in Milestone 1 to 30 million in Milestone 2 to 100 million in Milestone 3. While these numbers were just randomly pulled out of thin air, there is some logic to it.

Other ecosystems are spending hundreds of millions attracting builders. How much did Optimism drop yesterday? That was the second one this year, correct? How about Polygon’s 200 million? Avalanche? Near? Solana? I think you get the point.

How are we going to keep up???

Also consider that Optimism’s foundation has like 35% of the token supply. Our foundation has 7.5% (and they got dragged for taking that much!) We then collectively forced them to put their funds into a vesting schedule! (I was in support of this at the time, but now I realize it was a mistake.)

We don’t have anyone capable of making big bets for our ecosystem. Let’s free up some funds for Plurality Labs to try and make some big bets as approved by the oversight delegates! We are very willing to work on what checks and balances are in place to ensure quality. (That is literally the job we are being hired to do.)

So will Plurality Labs just pick all the people to hire for workstreams?

NO! We will first design a structure which can be implemented onchain using hats protocol. A process will accompany this structure which may include a council of elected delegates as “approver” role to our “driver” function. Basically, someone has to do the work of creating job descriptions, listing them, tracking applicants, etc. The delegates don’t want to do this. We may find 2-3 different ways to select candidates and compare results. We love to experiment!

Here is an example of how we might shift responsibilities from Plurality Labs to the DAO over time.

Next Question Here!

[0x_Buidler]

This is truly impressive! I really like the emphasis on minimizing friction in DAO operations and set it up for future.

[Limbathegreat]

Impressed to see the so much work proposed, done and achieved by the DAO and the team.

Also worthy to note is that my startup, Play2Learn Games which indulges in building Blockchain based tabletop games are a beneficiary of the PL Milestone 1 and we have also successfully created special Arbitrum IRL card games which have been distributed to kids, teenagers and community members whom have been seen fit to receive such.

We do hope to extend this and be able to reach out to more individuals and persons as this medium not only educate people about the beauty of Blockchain technology but also educate them about the Arbitrum ecosystem.

See pictures here

See our Twitter page here also which tells the stories
The story on twitter

Another story

[Tekr0x.eth]

As someone who got a grant (Thank ARB on Gitcoin) and is now serving as a contributor (Voting Council at Mini-Grants), I just want to say thanks to Thank ARB programs for getting me more involved in the Arbitrum ecosystem. I’m all in to back any move Joe and Plurality Labs make—they’ve got my trust.

[mmurthy]

I am one of the Arbitrum grantees funded through Plurality Labs. We are building GAP, you can find more info here and here.

I wanted to share my support for PL team. Working with Feems, Shawn and Joe has been really amazing so far. They have helped us with regular product feedback and increasing product adoption (through twitter campaigns, workshops, office hours and more). I have been working with Feems almost on a daily basis as she is helping us get quality data, gathering feedback from users and relaying it to us and iterate. Many grant programs do a good job of allocating capital but PL team has gone beyond that and helping us get traction and make our product a long-term success. If you’ve any specific questions, don’t hesitate to message me.

[cerv1]

We are another recipient of Plurality Labs support (see here) and have only good things to say about working with this team. Standing up a grants program is not easy. It needs to be properly resourced in order to be effective. As we move into the next market cycle, a grants engine isn’t just a “nice to have” it’s a core differentiator.

I hope delegates provide constructive feedback to improve any gaps or concerns they have this proposal. It was impressive to watch how this played out in the forum last year for Milestone 1.

[thedevanshmehta]

I remember voting against the initial proposal that funded Plurality Labs. In a true testament of Joe’s character, he did not take it personally and in fact reached out asking if I wanted to lead the Arbitrum Treasury and Sustainability WG!

I am currently one of the grantees in their firestarter stream and will remain at the treasury WG for milestone 2, so I shall have to abstain in this vote. Nonetheless here are some considerations to make when voting and choosing an amount to sanction for PL

@DisruptionJoe

Scaling with speed is a requirement for winning the L2 race. We must be willing to take big bets and make big experiments now.

The power law hasn’t yet kicked in for L2s. This bull market, one L2 will absorb the market and start enjoying network effects. I honestly hate to say it, but Base + OP is looking like a front-runner.

Which is to say, now is the time to double down on previously funded projects that have shown success, and not pull up the bridge

@DisruptionJoe

• Milestone 1: Build best-in-class Pluralistic Grants Framework.

And that leads to my second point - the fact that PL has achieved success in milestone 1, warranting our trust in their capacility to deliver. Let’s look at some of the plural mechanisms they devised in 6 months;

• Gitcoin rounds for funding projects and rewarding Arbitrum Citizens
• JokeRace for appointing a grants council
• Buidlbox hackathon for teams building on arbitrum
• Personal head-hunting to recruit and retain talent that ArbitrumDAO needs
• thankARB governance month for rewarding participants and contributors taking actions that benefit us

Obviously not all these mechanisms have proven effective; that’s what the far more difficult milestone 2 seeks to achieve, identifying what doesn’t work so we can cut out the flab and scale up on what is delivering value to the DAO.

@DisruptionJoe

• Milestone 2: Scale and refine the framework.

Joe and the PL team show up in these forums + TG groups everyday and have their finger on the pulse of ArbitrumDAO like no other grantee. I feel confident they will do what is best for the DAO, including returning excess funds that cannot be well allocated, rather than exhaust the budget for winning personal reputation points. Their performance in milestone 1 gives confidence in sanctioning a higher amount to them, as they have shown they spend judiciously and not recklessly.

One question I had was on the difference between the strategy layer and the decentralized action layer - is there a hierarchy between them where the strategy folks manage the action team? Would there be porous movement between both groups or is the action team just contractors hired by the strategy team to execute on formulated tasks?

[Bobbay]

Prior to the approval of plurality labs initial proposal, I was unsure of how this would play out, but I’m glad to say that it exceeded my expectations. Their consistent presence and support has been remarkable.They initiated working groups and programs and retained talent that would have otherwise been unpaid and gone elsewhere.

Their performance in milestone 1 instills confidence in approving a higher budget for them, as they have proven to be prudent and responsible in their spending. A lot of experiments were conducted, albeit not all successful, but the aim was to experiment, reflect, and improve.

Regarding the payment, the DAO needs to responsibly compensate its contributors. Fair payment is key to attracting and retaining talent, essential for the sustainability of these programs. As mentioned by Joe and Devansh, now is the time to double down on these experiments as the L2 wars break out. There is a lot more that can be done in the arbitrum ecosystem.

Overall, I support the proposal.

[Sov]

As a representative of Gitcoin I support this proposal.

We have been very happy with the work of Plurality Labs and the impact they have had not only on the Arbitrum Ecosystem but Web3 OSS as a whole.

Great work to the team. We are excited to continue on this journey with you.

[Saurabh]

I had the opportunity to work with Joe initially in the first iteration of the proposal six months back. I would like to echo what Bobby mentioned, even I was a bit unsure about how this would work because something like this had never been implemented by any DAOs. All the DAOs had a standard way of running a grants program, either through a council, committee, or something like DDA. However, Joe did something different, and it worked. I would like to mention some of the key points.

1. Transparency - The PL team, the grantees, and working groups have been reporting the progress they have made on the forum.
2. Funding High-Quality Projects - Funding projects like OpenBlocks would be a great example. Core contributors of the Protocol through Arbitrum Citizen rounds.
3. Arbitrum Gov Month - Arbitrum Gov month was huge success and the amount of data collected has been really helpful to understand the goals of DAO.

Just one goal I would like to see this program achieve is if we can get more projects to launch their chain on Orbit.

[Bob-Rossi]

I want to thank Plurality labs for their work so far on this, they have put in a ton of work and it is especially appreciated that they put together the Milestone 1 Review. It is crazy how fast time has flown by - I can’t believe it’s been 6 months!

I did read the Milestone 1 review just now and have to admit I the results have far surpassed what I expected when first voting to approve this. I think it’s fair to say the first milestone was a success and I’d recommend anyone who hasn’t read it to do so. Seeing the success makes me more comfortable supporting as it moves towards Milestone 2.

One message from above / the Milestone 1 review I wanted to touch on is the communication points. I think below from the review hits it on the head.

DAO members need communications to be simplified and aggregated. They don’t know where to go to maintain context, know what they should do, and learn about other ways to be a good Arbitrum citizen.

I have to admit some of these projects I even missed, so I hope Milestone 2 looks to addresses some of that further. I was seeing this too with a few projects that reached out to me on grant applications, and in the DAO’s defense this is to be expected as we find our footing and mature. I’m hoping this project helps to get us to a place years from now where a real good system is in place!

I also would agree that there isn’t really time to delay given current market conditions. Both in the broad uptick in the market and other L2’s continuing to innovate. So I’m glad to see that urgency acknowledged!

Edit: Adding that I have voted “For” this proposal. I believe Plurality Labs has shown success with Milestone 1 and deserves their work to continue to be funded for Milestone 2

[UI369]

<TLDR: Plurality gave our little dev DAO a shot, and now we’re making big things happen for Arbitrum.>

Last year, DAO Masons was a newly formed DAO dev and design team hoping to make a positive impact within the Web3 DAO movement. We were working through the bear market as best we could, trying to make ends meet.

It was Joe’s 500ARB Jokerace contest to design a pluralistic grants program that got us engaged with Arbitrum. We saw that Arbitrum was making a genuine effort to become a community-run DAO with solid governance processes, so we poured ourselves into designing something meaningful for them.

What we came up with is Grant Ships - the ‘evolutionary grants meta-framework.’ We won the contest, got some decent interest and feedback, and 500 ARB (see the original ‘2 minute read’ submission for Grant Ships)

After that, we moved on to other projects with MakerDAO, Builder Nouns and some artist NFT drops, but we kept an eye on Arbitrum after that. What impressed us most was the way the delegate community stepped up to navigate the struggle around AIP-1.

When Plurality received the funding for their milestone 1, we applied to build Grant Ships for real.

We weren’t sure if we’d get it, but we took feedback, made some changes to Grant Ships. Finally we got approved for a grant that would fund us for a few months of building.

Not only that, we get to run a mini-grants program through thisnew system to fund other teams. This was a big win for our little DAO, and the timing was perfect because we were struggling to stay in the web3 game at all.

We’re now getting a lot of positive attention on our model and a lot of helpful feedback on how to make it better. We’re building a product that we hope can help make the web3 grants scene better overall.

Plurality is looking for teams that can build high impact projects, and every time they find and fund one, Arbitrum becomes a little healthier, a little stronger, a little more versatile.

We’re now able to stay involved solving challenging problems for DAOs and we hope to be a beacon for other teams and developers who are looking for an ecosystem to call home. If Milestone 2 gets funded, we can tell our network and there will be more stories like ours. This gives Arbitrum a better shot at meeting its full potential.

To us it’s a no-brainer. Plurality is doing it right, so they have our support.

[DisruptionJoe]

How the DAO Makes Decisions - A companion to the proposal

Decision-Making Modalities

The DAO currently has one decision making modality: delegates must vote for everything big and small. This does not scale and is suboptimal for outcomes. Once the noise surpasses the signal, this becomes a popularity contest. Can I get enough voters’ attention?

Delegates know this, and see the need for different groups to take responsibility for parts of an allocation approval process.

Plurality Labs has been one of those groups. Our ability to experiment in making decisions enables two huge benefits to the DAO:

When there is an urgent need, we are able to fund it right away.

• STIP likely wouldn’t have happened without us having this ability
• The treasury & sustainability research wouldn’t have happened
• The procurement committee wouldn’t have been paid for their work

We are able to harness evolutionary mechanics by trying out different mechanisms

• This happens at multiple decision making levels
• This requires Plurality Labs freedom to make decisions
• The experiments in governance are what will bring capture-resistance

We have been able to fund impactful work with our grant spending because we are able to sense the needs of the DAO and address the biggest issues fast. We do this in parallel to the experimentation and design work needed to deliver over three milestones and exit.

We Support the DAO

We are a framework architect for the pluralist grants programs for the DAO. What does this mean?

What does this mean?

Funders in the Pluralist Grant Framework

You can see the roles as indicated in the picture below representing how the DAO is allocating funds. Each shade of blue represents a different role in the pluralist framework. A black-line border indicates a governance layer.

Plurality Labs is a “Program Provider”

A program provider is responsible for selecting Grant Programs to fund. They help avoid redundancies by connecting the dots between programs and communicating with other service providers. Their success is based on selecting quality programs which in turn select impactful grants to fund. The program provider is indirectly responsible for grant success in so much as they must focus funding to top programs and coach program managers in design and ensuring grantee participation in accountability systems.

Royal Blue = Grant Program

Grant programs fund the decentralized community to build in alignment with the DAO. They consist of Voters, Pools, & Recipients. Grant programs may consist of multiple funding rounds.

Grant Program managers are responsible for the design and execution of grant programs. They are responsible for the end-to-end program including comms, operations, and project management. They should be able to match allocation strategies to the funding needed in a way that provides the best results. Grant program managers are grantees themselves as they may require some level of compensation which can range depending on the program design.

Dark Blue indicates the number of funding rounds in the program

Rounds are discreet funding events. They have pre-processing, execution, and post-processing work. The initial conditions, especially for fully onchain systems, can be iterated each round.

This doesn’t even look at the grantees!

Within grant programs, there are a few very different categories of grant types. Each has its own set of benefits and risks:

Type of Grant	Benefit to Ecosystem	Benefit to Builder	Risks
User/Liquidity Incentives	- Acquire new users - Large investors bridge	- Acquire new users - Offer better returns	- Users leave when incentives stop - Attracts engagement farmers
Product-market fit bets	- More businesses to bring users	- They receive funds - They belong to the community	- Very low odds - Requires infrastrucutre to support it - Can’t compete with professional orgs
Open source infrastructure development	- Tooling needed to make builders lives easier is funded	- They receive funds - They belong to the community	- Builders don’t have to build things that aren’t part of their core product
Community education & events	- A more informed population - Acquisition & retention	- They receive funds - They belong to the community	- Very hard to be fair and unbiased - Lots of grifters
DAO operations	- People can easily find their way - Onchain systems ensure credible neutrality - Ensures legitimacy - Maintains context - Can sense & respond - Executes ideas that suggesting parties don’t have time to do	- They receive funds - They belong to the community - They have access to leadership - Opens up career opportunities	- Can lead to bureaucracy - Can lead to capture - Naturally tend to bloat - Naturally tend to work in silos

Most of the Arbitrum grant programs have done open source infrastructure. The foundation has so far taken the lead in product-market fit bets and community education and events. Questbook programs have done a bit in these areas as well. Open source infrastructure development can be attributed to all of the grants programs.

Plurality Labs is the only organization funding DAO operations, although it hasn’t been our direct focus.

How Much Should Plurality Labs Fund?

We are committed to building capture-resistance, scalability, AND efficiency. This is the point of hiring our team. Our flexibility will also allow us to wisely experiment with new methods which may optimize funding in the other categories.

The portion we allocate is represented by size in the graphic below on the left. On the right you can see the relative grant size if our proposal was passed.

The light blue area on the left is the only funding which is allocated to:

• Supporting DAO operations
• Innovating to optimize how funds are allocated
• Designing capture-resistance
• Ensuring the DAO can safely scale the amount it allocates
• Building accountability systems

The Purpose of Plurality Labs Experimentation

The Arbitrum DAO governance is the decision-making modality for everything outside of the programs it has funded. When it does approve a grant program directly, it only does so if it knows what the governance mode of the program will be. You see proof of this when the most engaging delegate discussions are about councils and elections. Questbook is a program provider which allocated funds to 4 programs based on conversations with delegates and contributors. All of its four programs use one decision making modality - delegated domain authority.

In Plurality Labs’ first Milestone, we were the only program provider with decision-making to make adjustments and iteratively improve their program’s governance.

The methodology funded 12 programs which managed 27 rounds of fund distribution in less than 6 months. We had over 30 experiments in grant governance design including 6 at the program manager level and 24 at the round level.

For Plurality Labs to be successful in delivering across three milestones, we need to run enough experiments to find optimal solutions. Then we need to build them onchain and run them again to see that they work correctly. We also need to be able to attract top talent by having a runway long enough for them to view Arbitrum as a quality career opportunity.

The allocation fund made available to Plurality Labs goes to the PL-ARB Grants Safety Multisig which is a 4/6 with only two Plurality Labs team members. This is low risk… The DAO can claw this back with a Tally vote at any time. They can even claw back a portion of the PL fee. Because of this, we don’t think most people will object to the amount set to allocate.

How We Decentralize

We learned that we need other program providers to keep us on our toes to maintain context in a given area over time. During our second milestone, we will empower workstreams to allocate 60% of the allocation fund and we will select programs to deliver the other 40%.

This graphic shows the ideal future state for how the Plurality Labs team facilitates the decentralization of Arbitrum DAO. It includes our team roles as framework architect and program provider.

We will take the month of February to publish an in depth report on the state of the grants overall. We will use the time to conduct our PL Community Council elections and begin planning our strategic objectives for 2024.We will begin deploying funds at scale in March 2024

To move fast, we will move some big bets forward by working with the DAO and delegates to craft well-liked programs. At the beginning of 2024, we will spend more time setting up workstreams and facilitating alignment and planning some big bets. By the end of 2024, there will be multiple other program providers known as workstreams with full-time Arbitrum dedicated people and keeping context for us all.

We will establish a container to design and implement capture-resistant governance that we can walk away from and expect it to operate in a Decentralized, Autonomous, and ORGANIZED way.

[feems]

We held a recent twitter spaces focused on Milestone 2 and a look back - https://x.com/arbitrum/status/1748831734802636930?s=20

Joe and Feems also spoke about measuring impact on green pill

Season 3 - Ep. 7 - Plurality Labs w Feems + Disruption Joe

[duokongcrypto]

the aim is for quality of contributors and impact measured over quantity