Answering to the open question, I think this approach is very responsible and a good way forward. Being the scope of OpCo supporting the DAO through operations and organisation, I think going for the safer, financially sustainable approach is the right decision.
To echo JoJo, my only concern is on feasibility. If it hasn’t been done already, I would suggest to “simulate” the steps needed to make this happen.
Initially, I want to say that this is a very well thought out proposal, but everything regarding the costs is too much, and the staff is unreasonably inflated.
The authors of the proposal clearly live somewhere in the US, where such salaries are probably common, but in most countries even $100,000 per year is an unimaginable salary. Due to the fact that DAO is not limited to the US, I suggest not to burden DAO with such high costs, because I am sure that even for $30,000 per year there will be many willing to work at OpCo. And is the salary of the bosses at $900,000 per year normal? These costs can be reduced by at least three.
Why do we need bonuses in the millions of dollars? Moreover, there are no KPIs. Who will determine whether the employees are working well enough?
How many employees are needed is a moot point. I see that the organization’s tasks can be accomplished with a significantly smaller number of employees. 4 is quite enough.
The motivation says that there are some initiatives that OpCo can solve with legal assistance. But judging by the adopted initiatives, they are all in the blockchain zone, except for RWA, which are solved through intermediaries, but they will not be supported by OpCo, as written in the initiative.
So what initiatives require a lawyer? I do not see any need for one.
For example, Lido creates an external company in the Caymans with operating expenses of 250,000 per year. At the same time, Lido’s DVF is 40 billion dollars. Why are the costs in Arbitrum ten times higher?
Threatens to exclude delegates from management
The long-term vision is as follows - implementation of DAO activities, i.e. all initiators of proposals will not be involved in operational activities. However, as far as I can see, almost every initiator gets a role in their proposal and gets some bonuses for it, and your vision will deprive initiators of bonuses, which may lead to the fact that initiatives will simply stop, since they do not give anything for them, and they take a lot of time.
All this leads us to a system where all initiatives will come from Entropy, and execution from OpCo (which is also an initiative of Entropy). Thus, delegates lose the roles of initiators and managers - this does not look much like decentralization, where the initiative and its execution are controlled by Entropy.
Why exactly 5 people are required in the OAT, if this is an oversight function? After all, all decisions are made either by OpCo with the permission of the DAO through voting.
I want to try and give an answer because, even if i didn’t draft the proposal, I did spend a lot lot lot time to read it. And maybe my answer can help @Entropy have a perspective on how others are currently perceiving how this can go. So, feel free to correct me if this is not the right reading, in the and i am always only a cow.
I won’t necessarily go into numbers, if the brackets are right or wrong, but would like to add a perspective here.
If you want to specifically attract good personell, having salary based on geography is often time detrimental: will introduce internal differences for people having same tasks and scope. Means tha,t if you tune it down to salaries that are, in this case, not usa based, you will necessarily exclude this people.
Let me also extend this way of thinking to other initiatives we have in the dao
In a post covid world, and in a crypto world, in which we all work outside timezones, outside barriers, and with (hopefully) a deliverable-set mindset and not an employee one, this way of thinking is not the way to setup for success.
I don’t think setting up a company with 4 employee, again, is for the best. As every company, the amount of work will grow over time, and so the need of personnel. Likely, there will be a natural growth based on this. But I really can’t imagine opco working with just 4 people.
in here we have 3M for up to 20. I also imagine this is for a 2 year mandate, so basically 1.5M for 20 people. Is not a huge amount considering the scope, and considering that people in opco won’t be able to partake in any other job or role either here in arbitrum or outside of it.
You are referring to this initiative i guess. This is extremely scoped: is an entity that will have the task to enter in legal agreements with lido’s partners. OpCo is, as the name suggests, something larger and more “operational” in scope. Again I am not discussing here specific numbers, I am just referecing what you posted. Is also worth mentioning that this lido example was previously linked by @Immutablelawyer above as an example of a different execution way, in which you have smaller subentities with extremely precise tasks. For this reason I don’t honestly see your example applying here.
from what I read, the DAO can either specifically task the opco to execute on an “idea”, or have the delegates/contributors create an initiative and, eventually, have the opco interact with this initiative by for example hiring that very contributor or others. I don’t see the path you are saying in which the combo of entropy + opco will be a capture all. That said, yes we are introducing centralization in arbitrum with this company, and yes likely, if the opco is succesfull, we will have more initiative being created by the opco itself. Will that mean that the dao has no say on this, or that the dao has no power on creation of new initiative? I don’t think so. I just think we will raise the bar in quality terms. This, to me, is a very good outcome.
The main issue is that in most activity there has to a compliance and legal evaluation of course of action, both referred to the entity itself, to the specific situation of contributors and to arbitrum. The political landscape should likely become more permissive and clearer, but not all the clouds have been blown away.
Mine is an educated guess here: you want an odd number so if there is an internal vote it doesn’t stall; and likely 3 people are not enough to have broad oversight. This is not only due to the amount of work, but to the fact you want real oversight, and 3 persons means you effectively need to poach, if you want to act in a malicious way, only 2 (well, likely you need to poach all the 3 to be honest). But this is just a guess on my side.
Reiterating here a discussion we had in telegram:
The proposal overal is taking shape nicely but i have two critical concerns that remain.
Suggestions:
We can leverage the OpCo as a legal vehicle to effectuate change. We can alleviate congestion in the DAO and allow focused and fast decision making, but then let’s think a bit more about how we can setup the OpCo as an open platform rather than choker. I’d suggest starting with a research/pilot type of thing during which these concerns are addressed, similar to how AVI and the M&A program operated. Otherwise it looks like we’re voting for an undercover CEO for the DAO and I really struggle to see that working.
I understand your point of view about creating equal competition for everyone.
However, competition is precisely the offer of maximum productivity for minimum resources.
If you imagine that you are the owner of a company that offers vacancies, you would hardly set maximum salaries on the market, it seems to me that Arbitrum should be treated as your own company and save its funds where it is acceptable.
There is clearly a flaw in the proposal. You say one thing, I say another, but there is no objective data by which we can determine the amount of work. Since there is no work, then there should be a minimum of employees. If there is work and there is a lot of it, let’s make an additional budget request with justification. But just spending $ 500,000 a month is too much
It’s not about whether it is a lot or a little. Although I think it is too much for a bonus. There are two questions here:
I agree about the quality of initiatives, they can be better due to the competent selection of employees. However, regarding the quantity - I have big doubts. Initiatives are the prerogative of active enthusiasts, and not employees who will receive a salary in any case, regardless of the initiatives - they are simply not paid for this
Currently, the Arbitrum DAO is not in any jurisdiction. Why does it need to comply with any requirements? Yes, in many countries legislation is created and changed and perhaps this should be monitored, but I do not see the need to hire a lawyer on a permanent basis, he will simply spend the Arbitrum’s funds
I did not see any functions of the OAT that could maliciously spoil something. The main thing they vote for is hiring employees. The budget is formed in this proposal and is voted on by the Arbitrum community. Otherwise, OAT is a bridge between OpCo and Arbitrum
Overall, as I said, the initiative is correct and necessary, but it seems to me that it has a significant drawback in terms of the huge budget.
Just to chime in here, I think the salary ranges in the proposal need to be viewed not as set salaries for the respective positions but as projected budget line items.
The analogy above is not quite correct. Since a business owner is in full control of the budget and can make decisions alone, should he pursue top-tier talent or not?
The proposed budget, particularly for salaries enables the OpCo and the OAT to actually go after the top-tier talent necessary to get the most value for the Arbitrum DAO out of the OpCo.
On a more general note, competitive compensation is necessary to attract top-tier talent. And top-tier talent is instrumental for the success of any organization.
I understand that you want to hire the best, but does their salary match their tasks?
You can hire a super-cool specialist and let him make simple tables, but since the specialist is cool, you need to pay him a lot. This is irrational.
Since I do not see the volume of work of specialists, I do not understand how their salary is chosen.
The OpCo proposal addresses key gaps in DAO strategy execution, but there are areas that require further clarification and improvement - some of our comments and suggestions can be found below:
Entropy, thank you so much for putting this together. It’s a very well thought out initiative and it’s been exciting following the discussions in the comment.
A lot of talking points have already been addressed but I still see some delegates sighting centralization risks. The million-dollar question should be: Does the potential benefit outweigh the risk? In my opinion, I say yes.
In this space, there’s a very thin line between efficiency and centralization. As a community, we have grown to that point where we need to ask ourselves if the potential for more efficiency and a more agile DAO is worth the risk of centralizing power and maybe even overspending. Don’t get me wrong, I am not saying this proposal centralizes power to the OAT but I am just trying to paint a clearer picture on this tangent.
The way I see it, OpCo would be striking the balance between community control and the need to get things done. It answers the question “How do we empower individuals while also creating structures that allow for collective action?”
Interesting times ahead!
The following reflects the views of GMX’s Governance Committee, and is based on the combined research, evaluation, and consensus of various committee members.
The OpCo proposal is a critical step toward operationalizing the Arbitrum DAO and addressing inefficiencies. GMX sees its potential as a value-add for the ecosystem but highlights the importance of maintaining decentralization while enabling effective execution of DAO objectives.
From our perspective, OpCo should prioritize supporting emerging projects, enabling new entrants, and fostering innovation. Direct collaboration on incentive program development could provide significant value, making it essential to define clear pathways for engagement with builders.
Striking the right balance between flexibility and structure is key. OpCo must operate within clear frameworks that empower researchers and service providers to contribute across initiatives while avoiding excessive centralization. Its budget should align with market rates and demonstrate full justification, with performance-based KPIs ensuring accountability and transparency.
While GMX supports the need for operational capacity, success depends on OpCo’s ability to deliver measurable results, empower the ecosystem, and remain aligned with the decentralized ethos of the DAO.
We would like to see updates with clearer explanations of the following before supporting:
And one more question about hiring employees.
If OpCo itself hires employees, and OAT confirms this hiring, then how does the first employee appear?
Who will it be, how to choose him, if the organization does not exist yet?
my understanding is that the ceo, and maybe the cfo or others, will be sourced by entropy. In the end most of the success of this initiative will come through the leaders. I see potentially entropy collaborating with the foundation and others to search in the network the key figure(s) that could lead this initiative.
This btw has been a process similar to the gcp.
As has been pointed out several times, the presented budget is exemplary, meaning that OpCo doesn’t have to hire exactly 12 internal employees at the assumed salaries that are driving the total Internal Employees line item. Since OpCo needs to be able to react to the DAO’s needs, which are volatile from time to time with new requirements occasionally emerging quickly, it’s difficult—if not impossible—to precisely estimate the entity’s exact expenses and required personnel for its first term. A buffer is required in the case the DAO decides to leverage the entity heavily. In other words, with the exception of setup and fixed costs such as the executive-equivalent employees’ salaries and offshore entity personnel, OpCo’s expenses will only scale when i) the DAO decides to utilize the entity more or ii) OpCo is instructed to take on more complex strategies that require employees/SPs with higher salaries.
Moreover, as pointed out by @backbone, competitive salaries will enable OpCo to go after top-tier talent necessary for the entity to maximize the value produced for the DAO. It’s well known that average compensation in crypto is on the higher side compared to other industries, with, e.g., VC-backed projects paying highly competitive salaries. What is more, for OpCo to be able to attract talent, the entity likely has to pay a risk premium. This is due to several factors, but the most notable ones are the fact that the DAO can defund the entity at any time and internal employees will be working in the open. Without an adequate budget, initializing OpCo likely doesn’t make sense due to the entity being subject to adverse selection.
The OAT will also be responsible for ensuring that overhiring doesn’t take place and the agreed-upon salaries and bonus structures are in line with market comparables and the required skills for a specific position, as well as reflect a hired candidate’s experience and competencies. Naturally, if OpCo has the opportunity to choose between hiring two identical candidates but the other one is 3x more expensive, the entity would go for the more cost-effective candidate. Some comments seem to be particularly fixated on the assumed compensation driving the Chief Chaos Coordinator’s salary. Again, this number is based on industry comparables as written in one of our previous thread responses, but this doesn’t mean that the OAT together with the Arbitrum Foundation has to exhaust all of the capital reserved in the model if a suitable candidate can be attracted with a lower salary.
At the end of the day, if the DAO thinks OpCo is overspending or overhiring, which will be visible through the bi-annual oversight and financial reports as well as the OAT’s quarterly updates to the community, it can always give feedback to the OAT, instruct OpCo to stop executing on a certain strategy, or even defund the entity completely. We’d also like to point out that funds requested for this initiative should be considered allocated and only spent (expense) once they are actually paid out from OpCo.
Answered here:
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For OpCo to be able to, e.g., independently operate in a legally compliant manner, enter into contracts with service providers, and advise proposers on legal matters (these are often required on the backend for other verticals than just RWAs), it naturally requires legal capabilities. This question has been answered in more detail here:
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There seems to be a misunderstanding here. As mentioned in the proposal, “… anyone interested in facilitating a DAO initiative could propose themselves (or another party) for that.” and “If approved through governance, the facilitator would then be contracted by OpCo as a service provider for the DAO.” In other words, anyone interested in facilitating a strategy can still put up a proposal to do so and get paid for the work based on how compensation has been defined in the proposal. Moreover, nothing prevents a proposer from including a bonus for the creation process in an OpCo-related proposal.
The proposal also states, “Proposals and their execution can still be DAO-led end-to-end and outside of OpCo if delegates vote in this regard. OpCo is a tool for the DAO to leverage if needed.” What OpCo offers in addition to the current structure is that, if the DAO so chooses, the entity can procure or internalize roles for which there currently aren’t clear contributors within the DAO, and finding such contributors is difficult. We also feel as though one of the main benefits that OpCo would introduce is enabling delegates to focus on actual strategy creation instead of having to spend resources on all minor details related to overseeing execution.
It’s also important to point out that although this proposal has been created by Entropy, we would have no additional control over OpCo compared to any other delegates.
This is not fully in accordance with the proposal. The OAT’s responsibilities include things such as ensuring over-hiring doesn’t take place and is done per strategies approved by the DAO, firing internal staff if required, approving contracts with service providers, greenlighting salaries and larger spending, etc. The OAT also has several additional tasks related to guidance and ensuring information flow, with the responsibilities further described in the proposal under the “OpCo Accountability – The Oversight and Transparency Committee (OAT)” section. It’s also crucial to recognize that OpCo’s budget is not formed in this proposal, rather, this deliverable falls within the Chief of Coins’ duties and will be ratified by the OAT as well as the DAO later.
The number of OAT seats was decided based on several factors, including the required diversity of competencies and capabilities, not allowing votes to be split evenly between against/for, hindering the OAT’s ability to become corrupted, and the expected workload of the committee for OpCo’s first term.
When it comes to a well-functioning organizational structure, this is another great reason why a strong OAT as well as executive-equivalent employees are needed as they will be the main parties responsible for setting up the framework. OpCo has to be mandated to execute strategies within the verticals you mention, meaning that if the entity handles most activities in these areas, it would be a result of the DAO deciding this to be the best approach. Since the DAO can instruct OpCo to enter into a contract with any service provider, we believe that if a strong SP with deep expertise in an area where Arbitrum lacks sufficient capabilities submits a proposal to address a critical issue, they wouldn’t be shut down. Ultimately, the DAO will maintain its authority to decide what individuals, service providers, or other relevant entities are working on by defining/approving specific strategies. Although OpCo will be proactive, mainly when it observes inefficiencies that could be remedied, the DAO will always have the final say when it comes to these decisions. On a side note, we also don’t think reducing redundancies in the ecosystem is a negative thing, on the contrary.
OpCo’s responsibilities can be summarized as facilitating strategies within the ecosystem support and financial management focus areas, as well as any other areas that might be approved by the DAO in the future. Since OpCo additionally needs to be mandated by the DAO to execute a specific strategy and how this takes place (i.e., proposer/proposer-related party, internalize roles, or facilitate a procurement process), the only way OpCo’s efforts generally would begin overlapping with other contributors is if the DAO instructs OpCo to do so, or a stand-alone initiative outside of OpCo is passed that has similar responsibilities as the entity.
When it comes to Entropy’s relationship with OpCo, we are cognizant of the fact that the entity would likely assume many of the workflows we are currently facilitating. It’ll again be up to the DAO to decide whether this would be done by OpCo internalizing more roles, hiring us as a service provider, or the entity conducting a procurement process for similar service providers. The point is that when an external, high-quality SP exists within the ecosystem, they can be plugged into OpCo, which would function as a unified point of contact that would create a mesh layer for information, knowledge sharing, and other synergies. In short, the idea is similar to your point of view, but instead of supervising, OpCo’s focus should be on guiding contracted service providers and researchers.
A more concrete example of how this could function is given here:
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As stated in the proposal and further expanded in one of our previous responses:
Exciting to see this hit Snapshot! A lot of this is great, and very comprensive. Overall some thoughts we had for this/emphasis on comments/community’s points:
Main question we have is how does OpCo decide whether to manage a project directly or supervise an existing service provider?
I definitely see the value in OpCo for Arbitrum – it will really help optimize management, finances, and strategy while bringing more professionalism and transparency to the DAO.
That being said, the 30-month timeline feels long for such a proposal, especially with a budget of 22M ARB (even after it was reduced from 35M ARB). That’s a big sum, and if it’s not managed properly, we could see financial inflation 
I’ve voted yes on Snapshot, but I’d love to know how we ensure the 22M ARB is spent effectively and doesn’t have unnecessary costs? Also, what’s the plan to protect the DAO if OpCo doesn’t meet their goals or fails to deliver on commitments?
Already gave plenty of feedbacks, here, here and here, plus some more scattered. And in general, as a judgment on specific topic, have engaged in this interesting convo.
To me situation is relative straight forward:
The points above to me are first, compatible with what most has judged as a too long of a mandate. De facto of the 30 months, we can consider the first 6 months burned between setting up the entity, source the ceo (and possibly the cfo), find the oat, negotiate first 2 salaries, get the operations up and running with a first few sets of people being the operational people alongside the 2 c-suite. Even just writing this down, 6 months could be optimistic considering the summer in between.
That’s why 30 months is the bare minimum here.
On the capital, as stated previously, I prefer the OpCo having more than it needs and eventually give it back then the opposite situation; if I read the prospect above with the people + salaries, the 22M arb is compatible with a full fledged org, with again no obligation to spend it all (and here, spend = overhire = controlled by oats).
I also think that salaries proposed are not that out of the world: remember, anybody in there won’t be able to partake in any other initiative in this dao, or others dao, or protocols. This is quite big: the opportunities in the crypto space are quite abundant, having this exclusivity does bear a premium; and the bonus is necessary to align performances (otherwise you risk people doing the bare minimum, and we don’t even want to have to tackle a situation like this, we want people that grind everyday).
The main risk of this proposal is finding the right CEO, this was discussed already, and will be one of the most important key success factor.
Not only i am voting in favor, I vote in favor with the hope that scope will be expanded by the dao overtime.
Hey all, just read through the OpCo proposal and wanted to share some thoughts.
We or better say Entropy is looking to solve some real pain points we’ve been struggling with - like how slow everything moves and how hard it is to actually execute on initiatives.
The pitch is pretty straightforward: create a legal entity that can hire talent, manage complex projects, and cut through all the governance nonsense that typically kills momentum in DAOs. They’re putting up 22M ARB to get this off the ground, which is no small chunk of change.
DAOs have so much potential, but right now they’re like a bunch of brilliant people stuck in endless meetings or proposals. This could be a game-changer.
Sure, there are risks. Another governance layer could just add more complexity. But I’d rather see someone try something bold than keep doing the same ineffective stuff we currently have.
What im still not sure about (maybe i simply haven’t seen it or i do not understand) is, will OpCo basically be the controlling layer of governance? I have to admit im struggling to understand.
Maybe someone can ELI5 this to me.
Im going to vote YES for snapshot and will re-read again to see if I fully got it.
It sounds good！I support that