# \[Non-Constitutional\] Treasury Management v1.2
**URL:** https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967
**Category:** Finalized AIPs
**Created:** [September 30, 2024, 12:42am UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967 "2024-09-30T00:42:46Z")
**Posts on this page:** 20
**Page:** 4
### Author:  [@Entropy](https://forum.arbitrum.foundation/u/Entropy)
#### Post date: [November 19, 2024, 1:41pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/62 "2024-11-19T13:41:18Z")
Entropy has confirmed with 2 separate references that previously worked at Paxos that Austin Campbell’s description provided herein is truthful/accurate.
We saw some concerns from the community regarding Austin’s credentials that were raised by GFX, and although Austin responded himself, we felt it was necessary to confirm ourselves. We feel extremely confident that Austin will excel in this position on behalf of the DAO.
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### Author:  [@TempeTechie](https://forum.arbitrum.foundation/u/TempeTechie)
#### Post date: [November 19, 2024, 5:23pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/63 "2024-11-19T17:23:59Z")
Updating my thoughts based on the feedback by Sam Martin (@swmartin) on today’s Governance call.
As per Sam, Entropy will not define in the Tally proposal how exactly ARB will be liquidated for stablecoins. Instead, this will be a task for the TMC committee after (if) the Tally vote passes.
The good thing is that TMC will put their plan of ARB liquidation on the Snapshot vote, so if DAO members don’t agree with it, ARB will not get liquidated in that way.
To me, this is sufficient enough, so I plan to vote FOR the proposal on Tally.
cc @Tekr0x.eth and others who had concerns over this point.
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### Author:  [@Entropy](https://forum.arbitrum.foundation/u/Entropy)
#### Post date: [November 19, 2024, 10:29pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/65 "2024-11-19T22:29:51Z")
Hello all - thank you to everyone who has provided thoughtful feedback on this proposal. We wanted to address some ongoing concerns on the forum with the Snapshot set to conclude on Thursday, November 19th.
> [@EzR3aL](#):
>
> With the new version of 1.2 I do feel way more comfortable. I still do think that the open call is a good chance to ask questions and get opinions from others that may have not commented yet.
> When will the call be scheduled cause you want to move to Snapshot already today?
The open goverance call will be scheduled prior to moving to Tally, but only if the Snapshot vote passes. Expect this call to be scheduled for next week (Between November 25-29).
> [@kuiclub](#):
>
> The proposal is not clear enough about the use of funds and the supervision of committee members, and the details of regular reports, which need to be further clarified. the salaries of TMC and GMC compared with the salaries of other members of the DAO may lead to internal conflicts and disputes, and the content of the proposal design is too important. It should be revised with more communication and feedback. Safeguard the interests of the community.
Neither group members (TMC or GMC) will be paid unless they achieve their predefined milestones laid out in the proposal. If the TMC or GMC fail to meet the DAO’s standards, no money will be paid to committee members and funds can be returned to the DAO - thereby concluding a failed experiment at no cost. **It is important to note that the committees themselves are completely powerless.** The TMC and GMC both require DAO approval on recomendations via snapshot, and they never custody the funds themselves (that is the Arbitrum Foundation’s job). Therefore, the community is, as always, in full control.
> [@pedrob](#):
>
> On the other hand, I would like to see some strategies outlined regarding what the DAO does or does not want to execute with the ETH before the proposal is approved. According to the DAOs Constitution:
>
> "_Arbitrum is part of the Ethereum ecosystem, and the Arbitrum community is part of the Ethereum community. Although the ArbitrumDAO makes its own decisions and pursues its own goals, it is deeply aligned with Ethereum and sees itself as an active and constructive participant in the Ethereum community."_
>
> I believe this alignment should be considered when selecting the strategy.
As a reminder, the DAO is required to approve the TMC and GMC’s recommendation and no funds can be moved without meeting this prerequisite. The DAO will maintain full control over what is allocated (or if any funds are allocated at all)
> [@danielM](#):
>
> I do not support this proposal because it introduces unnecessary complexity with two separate committees and overlapping responsibilities, which could lead to inefficiency and confusion. I am also agree with @kuiclub, that before allocating this significant funds:
> [@404DAO](#):
>
> **Excessive Council Structure** : The inclusion of two separate councils is unnecessary and creates operational inefficiencies. Although this structure was informed by feedback during the working group calls, we strongly recommend consolidating into a single council. This council should oversee all assets (ARB, ETH, and USD) and establish a standardized Request for Proposal (RFP) process along with a unified reporting framework. The proposed bifurcation into ARB/USD and ETH subcommittees is redundant, as qualified council members should be capable of managing all asset classes without requiring additional segmentation.
This was a key takeaway from the initial open governance calls. Please refer to the following open call recordings below. TL;DR - folks did not want to sell much ARB, and also did not want to pay management/performance fees on the DAO’s ETH given the ability to stake it for a very safe return. The skillsets required to allocate the ETH for ecosystem growth is more BD in nature (GMC), whereas the TMC track required more experience in traditional finance/portfolio construction, familiarity with onchain strategies, risk-adjusted performance reviews, etc. Additionally, as mentioned already, if either the TMC or GMC does not produce work up to the DAO’s expectations, they will not be paid anything.
> [@Entropy](#):
>
> - September 12, 2024: Prelim. Treasury Working Group Call #1 (recording [here](https://forum.arbitrum.foundation/t/treasury-management-working-group-call/26723/6))
> - September 25, 2024: Prelim. Treasury Working Group Call #2 (recording [here](https://forum.arbitrum.foundation/t/treasury-management-working-group-call/26723/7))
> [@404DAO](#):
>
> **Council Selection Process** : We do not support the inclusion of a preselected council and believe that the DAO should have the opportunity to elect its representatives. We propose that a standard election is held to fill two council seats, which would then form a three-member committee alongside Entropy. To account for the increased workload, we also suggest a 50% pay increase for council members.
This is certainly possible, but Entropy does not possess the in-house skillset to run treasury management operations required for the TMC track. This would put a ton of responsibility on one or two members and could lead to subpar results. One of the primary critiques of this proposal prior to the changes made on October 30 was that the pay for TMC and GMC members was too low, so we adjusted it higher. With that being said, we are very open to incorporating feedback that has community-wide consensus before heading to Tally.
> [@PGov](#):
>
> It would also be interesting in determining what stablecoins and what the selection criteria for stablecoins (e.g., risk levels, protocol choices) are. Maybe including a whitelist of stablecoins or criteria for selecting them would add clarity and mitigate risks associated with stablecoin volatility or depegging.
This will be the job of the TMC and must be approved by the DAO on Snapshot prior to any committee member recieving any payment.
> [@PGov](#):
>
> Additionally, while payments for TMC and GMC members are milestone-based, the $300K USDC cost could be considered high for a pilot initiative. Also, the GMC’s potential reliance on NDAs may conflict with DAO principles of transparency. This comment and concern is also valid, we are not a fan of this tone and it’s not productive during this time.
While the cost is high, one of the primary critiques of this proposals first iteration was the payment terms for TMC and GMC members. Therefore, we increased the payment according to community feedback. For what it’s worth, the yield on the underlying should be higher than this proposal’s cost.
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### Author:  [@Euphoria](https://forum.arbitrum.foundation/u/Euphoria)
#### Post date: [November 20, 2024, 6:11am UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/66 "2024-11-20T06:11:28Z")
The following reflects the views of the Lampros DAO (formerly ‘Lampros Labs DAO’) governance team, composed of Chain\_L (@Blueweb), @Euphoria, and Hirangi Pandya (@Nyx), based on our combined research, analysis, and ideation.
We are voting FOR this proposal on Snapshot voting.
Entropy Advisors have delivered another excellent proposal - thank you for your efforts!
We agree with GFXLabs’ concern about bundling multiple items in one proposal. The due diligence done by GFXLabs is what every organization should do when recruiting someone. As a DAO, this is an area we need to improve, so we appreciate GFXLabs’ diligence.
The last bi-weekly call helped us understand Sam’s explanation of Austin’s approach. The fact that payments will be milestone-based gives us confidence. This structure ensures progress, so we decided to vote FOR the proposal to get things moving in the right direction.
We support the idea of linking payments for TMC and GMC members to task completion rather than monthly payments. This approach improves accountability and sets a clear framework for what is completed and paid for. We believe this structure should apply to most proposals.
Since STEP has a similar goal of generating yield for the DAO through RWAs, how will TMC avoid overlapping with STEP? Can TMC use its allocated funds for RWA investments to generate yield?
> [@Euphoria](#):
>
> Additionally, could you clarify what is meant by “high guarantees” in the context of ETH-backed strategies? We are particularly interested in understanding how the DAO will assess and minimize risks while ensuring the safe return of ETH. What mechanisms or safeguards will be in place to protect the DAO’s funds and ensure these strategies remain low-risk?
As mentioned earlier, clear measures to secure DAO funds are crucial. Will the service provider generating yield have risk coverage through insurance providers with players like [Nexus Mutual | The crypto insurance](https://nexusmutual.io/)? Alternatively, will the DAO get to review the proposal each time a milestone is completed by TMC and GMC?
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### Author:  [@0xAlex](https://forum.arbitrum.foundation/u/0xAlex)
#### Post date: [November 20, 2024, 11:21am UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/67 "2024-11-20T11:21:21Z")
I am voting FOR this proposal as it is crucial for any project to do proper Treasury Management. As I mentioned in my initial comment, I do think having an entity (OpCo or maybe the DAO) that has the macro vision of Stable and ETH investments could be beneficial.
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### Author:  [@0x\_ultra](https://forum.arbitrum.foundation/u/0x_ultra)
#### Post date: [November 20, 2024, 11:45am UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/68 "2024-11-20T11:45:18Z")
I’m voting in favor on Snapshot. I don’t think that this proposal is perfect, but it represents a good starting point. Having dedicated people overseeing this aspect is crucial, and while the approach can be refined over time, it’s essential to begin now to make us more competitive.
Also, I think that a first 6-month term for both councils is a good timeframe for experimentation that allows flexibility. I believe that progress should be closely and frequently monitored, and reports should be reviewed regularly to decide whether to renew the initiative.
Regarding the suggestion for two committees, I believe having too many people involved could complicate decision-making—more is not always better. But having clear milestones will surely help maintain focus and accountability.
We can still work on it and make it better, but it’s a good start.
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### Author:  [@thedevanshmehta](https://forum.arbitrum.foundation/u/thedevanshmehta)
#### Post date: [November 20, 2024, 5:58pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/69 "2024-11-20T17:58:45Z")
> [@Entropy](#):
>
> Entropy has confirmed with 2 separate references that previously worked at Paxos that Austin Campbell’s description provided herein is truthful/accurate.
I appreciate the follow up! Changing to a FOR since the due diligence checks out 🫡
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### Author:  [@juanbug](https://forum.arbitrum.foundation/u/juanbug)
#### Post date: [November 20, 2024, 6:40pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/70 "2024-11-20T18:40:14Z")
On behalf of the UADP, firstly, thanks to Entropy and all of the effort here into structuring and iterating on this proposal. Treasury management is a critical function for the DAO’s long-term health, and addressing idle assets alongside operational needs is a step in the right direction.
Overall, some areas that could benefit from further clarification or refinement:
- Focus on ETH and ARB Utilization: Leveraging idle ETH and addressing ARB volatility concerns demonstrates alignment with immediate DAO priorities. Should be emphasis into creation and refined more?
- Transparency Through Reports: Quarterly reporting requirements provide visibility into the committees’ actions and foster accountability.
- Clarification Needed: Could the proposal provide more specific guardrails for converting ARB to stablecoins? For instance, will there be a cap on daily or weekly sales to avoid market disruption Could a combination of OTC deals, TWAP mechanisms be used?
A lot of the concerns seem to be around committees and maybe inefficients with coordination. We emphasize some of these concerns but above all, just think that the pre-selection of committee members has raised concerns regarding DAO participation and member accountability. Not sure best step forward here but maybe some visibility on this would be good.
Budget wise, could the committees provide interim budget recommendations while OpCo formalizes a comprehensive budget?
Overall proposal is an important step forward for the DAO and something we certainly need. Refining the operational framework and addressing key concerns around transparency in selection processes, and risk management is our only concerns.
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### Author:  [@Bob-Rossi](https://forum.arbitrum.foundation/u/Bob-Rossi)
#### Post date: [November 21, 2024, 4:50am UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/71 "2024-11-21T04:50:51Z")
I will be voting “For” on snapshot as ultimately I think we really need to get some type of treasury management process in place. While I have some operational disagreements, I think at it’s core the proposal makes sense.
Before the Tally vote, I would like to see this question addressed however. Maybe I’m on an island with this… but I’m not really sure how the DAO voting on ETH investments is going to work if the Growth group is short-term focused
> However, I think I’m still in the ‘agree to disagree’ camp here, but maybe more explanation would help. Is the expectation of Growth group a more long-term approach or short-term one? If the plan is to drop the ETH somewhere and let it sit for a year then I think this isn’t as big of a deal… but if the DAO is going to have to have constant snapshot votes because we’re putting 1000 ETH in protocol abc this month and then half the ETH is sold off to go into protocol xyz the next month and then 100 ETH a week is going into protocol 3… and so on… I think you run into those risks I noted before.
>
> And the more I think about it, from a delegate perspective that seems to open the project up to issues with voter fatigue and conflict of interest concerns.
Edit: To save forum space, I’m editing to indicate I will maintain my “for” vote on tally. I would of liked my question addressed, but it’s realtively minor and ultiamtely I think this proposal is good for the DAO as stated in this and prior posts.
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### Author:  [@paulofonseca](https://forum.arbitrum.foundation/u/paulofonseca)
#### Post date: [November 21, 2024, 8:49am UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/72 "2024-11-21T08:49:13Z")
voting **For** on the current offchain proposal because I feel that this is something the DAO can experiment with at this point.
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### Author:  [@ocandocrypto](https://forum.arbitrum.foundation/u/ocandocrypto)
#### Post date: [November 21, 2024, 3:09pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/73 "2024-11-21T15:09:49Z")
As in @web3citizen representation, voting **FOR** in this proposal and below is our rationale.
> [@Web3 Citizen Delegate Communication Thread](https://forum.arbitrum.foundation/t/web3-citizen-delegate-communication-thread/27518/4):
>
> Snapshot vote: Treasury Management v1.2 We are voting FOR this proposal in the Snapshot stage. Council structure and recommendations While we do understand the hesitation behind creating two entities to forward treasury management, we believe given the broad nature of the stated goals it does make sense to have two teams to provide multiple viewpoints on investment options for the DAO to review and approve. This could also have been achieved with two teams operating under a single committee. W…
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### Author:  [@Tane](https://forum.arbitrum.foundation/u/Tane)
#### Post date: [November 21, 2024, 7:23pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/74 "2024-11-21T19:23:23Z")
We vote **FOR** the proposal on Snapshot.
We believe establishing a proper treasury management function in the DAO is critical as the presented key issues should be addressed sooner rather than later. We also appreciate the updated proposal that have incorporated various feedback from the other delegates including the milestone-based compensation scheme.
Ultimately, the program success depends on upcoming suggestions from the TMC and GMC and we believe the selected members are capable of providing them along the way. We will closely review them and make sure they are managed in an appropriate manner via their regular reporting. In the future, as @gauntlet suggested, the DAO should explore a less manual approach to manage the treasury with minimized operations (and operating members to be elected by the DAO if needed) and we would encourage the to-be-established OpCo to propose a revised plan after the 6-months v1.2 initiative.
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### Author:  [@krst](https://forum.arbitrum.foundation/u/krst)
#### Post date: [November 21, 2024, 8:02pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/75 "2024-11-21T20:02:23Z")
The following reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.
We’re voting FOR the proposal in the temperature check.
Having discussed this proposal extensively with both Entropy Advisors and other Arbitrum delegates, we believe that this is a meaningful and reasonably contained experiment that will provide us with important lessons on how to approach treasury management in the future.
In this case, we like the fact that the board members are pre-appointed as part of the proposal, as ultimate success depends on the competence and effectiveness of these specific teams working for both pathways. We believe that Entropy’s vetting and selection of the right teams increases the chances of success and also ensures clear accountability - as these teams are pre-appointed and have mandate from the DAO, they have been provided with everything we could provide to ensure their success.
We also want to ensure our full support as delegates along the way and hope to have a good, healthy relationship with them during their term. We hope that they will present their progress and be available for questions and feedback from delegates during the monthly GRC calls.
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### Author:  [@BlockworksResearch](https://forum.arbitrum.foundation/u/BlockworksResearch)
#### Post date: [November 21, 2024, 8:46pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/76 "2024-11-21T20:46:46Z")
Blockworks _Advisory_ is voting FOR this proposal on Snapshot.
We’ve seen the discussion and pitfalls of treasury management in the DAO thus far, and are overall happy to see a proposiiton come forward. We also are confident in Entropy’s ability to properly vet and filter for the right candidates. However, we would like to echo the concerns brought by Tane and Gauntlet, in the future it may be a good idea to have some bucket of the treasury minimally managed.
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### Author:  [@snowdot](https://forum.arbitrum.foundation/u/snowdot)
#### Post date: [November 21, 2024, 10:46pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/77 "2024-11-21T22:46:21Z")
Gm, gm ✨
The results are in for the **[Non-Constitutional] Treasury Management v1.2** off-chain proposal.
See how the community voted and more Arbitrum stats:
> **[\[Non-Constitutional\] Treasury Management v1.2](https://dhive.io/proposal/1498)**
>
> Explore \[Non-Constitutional\] Treasury Management v1.2 proposal, results, votes, and analytics
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### Author:  [@WinVerse](https://forum.arbitrum.foundation/u/WinVerse)
#### Post date: [November 25, 2024, 6:15am UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/78 "2024-11-25T06:15:27Z")
DAOplomats voted in favor of this proposal during the temp check.
The creation of the two management tracks, TM and GM, addresses concerns about service provider shortfalls due to dollar-denominated contracts and insufficient ARB holdings to cover agreed-upon rates, and shortfalls in capital deployment respectively.
These two tracks have a lot on their plates, and we would love to see how they handle their respective responsibilities.
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### Author:  [@danielo](https://forum.arbitrum.foundation/u/danielo)
#### Post date: [November 25, 2024, 6:39pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/79 "2024-11-25T18:39:52Z")
We voted FOR this proposal. The system is well setup to give it a go and the benefits are significant
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### Author:  [@Entropy](https://forum.arbitrum.foundation/u/Entropy)
#### Post date: [November 26, 2024, 5:38pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/80 "2024-11-26T17:38:14Z")
Hello Everyone. Thank you again for all of the thoughtful feedback on this proposal, and for casting your votes on Snapshot. This proposal has passed the temperature check, and will move forward to onchain vote next Thursday (12/5).
As promised, there will be a chance for anyone to ask questions to specific GMC/TMC members via an open governance call. This will take place tomorrow (11/27) at 9am ET (2pm GMT). The call is on the DAO’s open governance calendar. Alternatively, please find the call link [here](https://meet.google.com/cxx-nfua-eqs).
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### Author:  [@Entropy](https://forum.arbitrum.foundation/u/Entropy)
#### Post date: [November 27, 2024, 3:16pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/81 "2024-11-27T15:16:55Z")
Please find the recording of this call [here](https://drive.google.com/file/d/1yGiTdpwUvfBSqJHcXZeeeQ0EjGanq0MZ/view?usp=sharing), and feel free to ask any other questions to specific members in the replies.
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### Author:  [@SEEDGov](https://forum.arbitrum.foundation/u/SEEDGov)
#### Post date: [November 29, 2024, 5:16pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-treasury-management-v1-2/26967/82 "2024-11-29T17:16:24Z")
_After consideration, the [@SEEDgov](https://forum.arbitrum.foundation/u/seedgov) delegation has decided to “ **FOR** ” on this proposal at the [Snapshot Vote](https://snapshot.org/#/arbitrumfoundation.eth/proposal/0x6065f661e3f2a5673284d3d5801dfa0126218c1840215426b576effc19fcc107)._
### Rationale
We would like to thank @Entropy for facilitating this proposal. We genuinely believe it is a step in the right direction concerning Treasury Management. The issues of Service Provider Shortfalls and the treasury’s inactive assets are matters that need to be addressed promptly:
- **Regarding Service Provider Shortfalls:** This will avoid going through Tally to cover differences arising from ARB volatility, providing SPs with additional assurance that Arbitrum DAO can meet the agreed compensation. We believe this shouldn’t be taken lightly, as it represents an added level of “legal certainty” for SPs engaging with the DAO (and as with everything, if the risk is lower, pricing improves).
- **Concerning the treasury’s ETH:** The opportunity cost of doing nothing with it is immense. We are eager to see the committee’s recommendations on how to invest the money, emphasizing that the primary guideline should be **“Safety First”**. This would prioritize efficient alternatives with the best possible risk/reward ratio, i.e., those offering higher yields with minimal smart contract risks.
Despite these two solutions, there is still much to be done in establishing an integral plan that encompasses all implemented proposals in this vertical (STEP, AVI, GCP, etc.). We agree that the OpCo could serve as a structure to align these initiatives, ensuring a unified Treasury Management strategy.
#### Regarding the proposed Council structure
- Agree with the separation into two distinct councils because the nature of the tasks differs. (choosing Treasury Managers vs choosing protocols invest ETH)
- We are not fans of the pre-selected committees. While we understand that, given the specific qualifications required of the members, it may seem optimal, we believe the DAO might be missing out on conducting its own RFP (which could open opportunities and optimize costs, despite being slower). This also raises concerns about how the OpCo should establish its negotiation processes in the future. For instance, if a service is required, ideally, the cost should have been consulted/negotiated with three or more SPs or potential committee members. We would like to know if a similar process was conducted at least privately during this pre-selection.
- Before voting on this proposal in Tally, we would like to inquire whether any of the pre-selected members have any potential conflicts of interest that we should be aware of. This is crucial to ensuring adherence to the Code of Conduct, even though it is not a position subject to elections.
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