We support the overall direction of the initiative and greatly appreciate the effort, as well as the articulate and well-thought-out proposal by @Entropy. We recognize the value of an OpCo or its equivalent, as highlighted by @WintermuteGovernance. Our experience with dYdX governance reinforces our belief that such structures are critical and practical solutions for maturing DAOs with a broad base of stakeholders and delegates, like Arbitrum.
However, we also have concerns regarding the size and budget of The OAT. While the OAT has hiring as its important task in the beginning, its key mandate should focus on observing and overseeing OpCo’s activities. In this context, having five members seems excessive. Additionally, bonus compensation should be outcome-based rather than granted simply for remaining in their positions.
Creating this DAO-adjacent entity does pose a couple of questions, especially along the lines of centralization. However, we believe the potential is worth the risk so we were supportive of the initiative.
This proposal passed the Snapshot voting stage last week, with ~81% of the total ~162M cast votes being FOR. That said, considering the proposal’s potential major impact on the ecosystem, we believe there are still too many unaddressed concerns from delegates for us to move forward with the process.
As such, we are modifying the order of the next steps (reflected in the newest version of the proposal under the Timeline section) as follows:
Host a community call following the end of the DAO’s Holiday Break to answer any open questions and enable us to implement the final round of edits while accounting for everyone’s opinions
Following the final round of edits, the proposal will move to the onchain voting phase
Only once the proposal has passed Tally will the application period for the OAT be initiated
Voted FOR, since I am supportive of this idea. Having an formal entity and people directly working on it will make processes go faster and in turn enable faster innovation, which is needed to attract even more talent and remove organizational silos (one of the biggest pain points here right now, imo). I do believe the budget overall is very large, and there are multiple ways to optimize it, but having spending cap control and an independent committee helped address this concern. Excited for this phase in the DAO.
Here is the SimScore AI executive summary. The summary is based on the top 20 SimScore replies weighted by similarity.
Executive Summary: Evaluating the OpCo Proposal for the Arbitrum DAO
The OpCo proposal has elicited a broad spectrum of feedback, reflecting diverse perspectives on its potential impact on the Arbitrum DAO. The following summary is weighted by similarity scores, highlighting the most resonant opinions:
Key Supporting Themes
Strategic Alignment and Operational Efficiency
The highest-weighted feedback (54.3%) supports the notion that the DAO should focus on setting its vision, leaving execution to the OpCo, thus enhancing efficiency while maintaining clear accountability.
Many contributors (50.4%) see the proposal as a pathway to institutionalizing the DAO, providing a structured framework to coordinate initiatives, and enabling better alignment across the ecosystem.
Enhanced Execution Capabilities
Several respondents (47.3%, 42.1%) believe that OpCo offers the resources and expertise needed to simplify decision-making, optimize governance, and drive long-term growth. It is positioned as a critical enabler for executing DAO proposals more effectively.
Safeguards and Flexibility
Many stakeholders (45.2%, 43.2%) value the built-in mechanisms allowing the DAO to adjust or terminate OpCo’s operations, ensuring alignment with the DAO’s goals while mitigating risks of overreach.
The Oversight and Transparency Committee (OAT) is frequently mentioned (44.3%) as a key safeguard for ensuring accountability.
Centralization Concerns
Risks to Decentralized Ethos
A significant portion of respondents (45.8%, 42.9%) express concerns about potential centralization, which may conflict with the DAO’s values. These concerns are coupled with apprehensions about the proposed 22M ARB budget and the 30-month timeline.
Checks and Balances
Some contributors (37.3%) acknowledge these risks but believe the proposed safeguards, such as trial periods and governance oversight, are sufficient to mitigate them.
Divergent Opinions
Alternative Approaches
Opposing voices (36.3%, 41.5%) advocate for a more lean, passive, and cost-effective entity, suggesting shorter pilot phases to assess OpCo’s value before committing to a larger budget.
Budgetary Concerns
Cost-efficiency is a recurring theme, with suggestions to balance decentralization and operational needs without excessive expenditure.
Actionable Insights
Refining Scope and Objectives
Several voices (42.5%, 39.4%) highlight the need to define specific tasks and objectives for OpCo during its initial phases, particularly in areas like managing intellectual property and legal liabilities.
Trial Periods and Iterative Feedback
Implementing a phased, pilot-based approach could address many concerns by allowing the DAO to assess OpCo’s performance and adaptability before full-scale implementation.
Stakeholder Engagement
Clear communication and collaboration with stakeholders will be critical in addressing concerns, ensuring alignment, and fostering broader support for the initiative.
Conclusion
While the OpCo proposal presents significant opportunities for enhancing the Arbitrum DAO’s governance and execution, it also raises valid concerns about centralization and cost. The prevailing sentiment is cautiously optimistic, with strong support for the proposal’s potential benefits, contingent upon robust safeguards and iterative development. A phased approach, clear accountability mechanisms, and ongoing dialogue will be essential to successfully implement this transformative initiative.
Following last week’s community call and additional conversations with key stakeholders and delegates, we’ve made the following final edits to the proposal on January 22nd:
Increased the ask from 22M ARB to 30M ARB given the decline in ARB’s price since the proposal was previously updated.
26M ARB reserved for liquidation until $12M worth of cash equivalents has been attained (at the price of $0.68 as of January 21st, this would require ~18M ARB).
4M ARB reserved for bonuses.
After subtracting the bonus allocation and the liquidation is complete, any remaining ARB will be immediately transferred back to the DAO treasury.
Updated the timeline based on the most recent developments.
Added the below text to the “OpCo KPIs & 12-Month Deliverables” section to establish tangible, initial focus areas for the entity:
We aim to move this proposal to the onchain voting stage next week, with voting starting on January 30th.
I am still skeptical about this initiative. The idea itself is great, but the proposed implementation is too expensive.
And now you are adding an additional 8 million ARB (due to the fall in cost).
I liked the list of goals, but I urge you to reduce the costs for this task.
I remember how many doubted entering into an agreement with you for a year due to the high cost of your services, but this proposal is 10 times more expensive (and the efficiency of this structure is still difficult to understand, but the costs are too high)
this is pretty normal, most expenses are USD denominated so while they are asking arb they need to be realistic in term of outcome. What is the problem? Any leftover will be sent back to the dao regardless.
This is not a fair comparison, we are talking about a group of dedicated people helping the dao with 2 specific founders versus a company with a different structure, external people and so on. Doesn’t make too much sense as comparison.
Just to clarify, the underlying ask has stayed the same ($12M in cash equivalents and 4M ARB reserved for bonuses). The total ARB-denominated request was changed due to the decrease in ARB’s price (from ~$1 when the proposal was updated in December 2024 for the offchain voting process to ~$0.68 on January 21st, 2025). The total 30M ARB allocation also includes a buffer, meaning that unless the price of ARB continues falling relative to the $0.68 level, a notable portion of the total ask will be immediately returned to the DAO treasury once the bonus allocation has been subtracted and the liquidation of ARB to cash equivalents is complete. The potential for a change in the total earmarked ARB was clearly outlined in the proposal that passed Snapshot:
Moreover, the reserved cash equivalents and ARB-denominated bonuses are based on an exemplary budget. In other words, if the proposal is approved, this capital should be considered allocated, not spent. The entity will naturally incur some setup costs and a certain minimum level of OpEx. Aside from these, expenses only scale if the DAO requests OpCo to internalize more roles to facilitate initiatives. It’s also worth reiterating that the exemplary budget has been constructed with drivers that are on the higher side of the range to account for any unforeseen events or worst-case scenarios that could require notable capital commitments.
Nevertheless, as an example with the following assumptions:
The entity will employ the Chief Chaos Coordinator, Chief of Coins, OAT, and five additional internal employees (internal employees assumed to be hired immediately when OpCo operationalized, with salaries calculated as the average of the drivers shown in the exemplary budget, with full bonuses allocated to the OAT and 58% to internal employees)
General legal fees 2x higher than what the GCP shared in its transparency report (reported GCP general legal fees assumed to have incurred between when the entity was officially formed in September 2024 and YE 2024)
The rest of the assumptions driving the Setup & Other Admin Costs in the exemplary budget held unchanged (with the exception of the Miscellaneous line item, which has been scaled down to account for 7 internal employees instead of 12)
OpCo’s first-term costs would amount to ~$7.5M in USD-denominated expenses and ~2.7M ARB in ARB-denominated expenses (or ~13.8M ARB in total at an ARB price of $0.68).
LobbyFi’s rationale on the price and making this proposal available after its activation for on-chain voting
The OpCo employee salaries and OAT compensations are at the upper bound of what is sensible, hence these are not being priced in by LobbyFi.
Although LobbyFi will set the instant buy price based on the 100% of the bonuses that are requested, more specifically at 1% of that sum: 4m ARB * 0,6 (current price of ARB) * 1% ≈ 7.5 ETH.
While the broader community is the greatest beneficiary of the proposal, we see a potential higher interest of the OpCo-affiliated parties (now or in future) in it going though due to a “competitive” package it offers to its contributors. Based on the proposal’s nature we do not expect the community to be interested to participate in the community auction - for this reason, the auction will be deactivated for this proposal. Given the snapshot vote outcome of 130m votes in favor and 26m abstaining, we expect the proposal to easily pass the quorum on-chain with or without LobbyFi’s support. At the same time, we would like to emphasize that LobbyFi will automatically vote against the proposal in case the voting power is not acquired before the end of the voting period, which is programmed in the implementation smart contract for proposals which go live for sale WITHOUT the auction activated.
voting Against the current onchain proposal because as I mentioned previously, this should be tried and experimented with a much smaller budget. For example, we could even keep the same costs but fund just the OAT for now and see how it performs on its first tasks, and then gradually fund more and more scope.
This is a proposal we’re excited to get behind as it proceeds to onchain vote. As members of the ADPC and having led the M&A work for the DAO, we have seen the necessity of establishing an OpCo for the DAO on the ground. We have even recommended either of the creation of an OpCo or some kind of legal entity for the DAO in our past reports (here and here).
We do believe that the OpCo has a chance to enable the DAO to do strategic initiatives it couldn’t do before, e.g., Venture, M&A, while addressing fragmentation in initiative execution and lack of clear ownership for critical programs.
While timelines on this work have not been met so far (the initial target was for the OpCo to be live at DevCon 2024), we do see and appreciate the work that has gone into it. In order to ensure a smooth landing, we feel it is important to establish clear processes from the onset regarding the OpCo formation and to conduct more handholding with key parties involved in the target OpCo. One key area to look at is the relationship between OpCo and existing service providers. We need to move from theory to practice rather sooner than later, i.e., let’s get service providers / contributors / and anyone else in a room to discuss the granularities. Denver might be a good occasion for this. There should be transparent processes around transitioning existing contracts, defining specific criteria for determining what initiatives should be executed through OpCo and working with existing DAO groups to ensure fair competition, efficient procurement and preventing vendor lock-in.
Thanks to @EntropyAdvisors, @dk3, for the longstanding efforts towards this initiative. We will be voting in support during the onchain vote.
I gotta say, I am excited to vote in favour on tally. I don’t usually comment when we go onchain, yes there are changes but here what is worth pointing out are the kpi for the first 12 months: achievable, but ambitious.
OpCo in 12 months should be able to consolidate TM + STEP, should have a framework and structure to onboard SP, should be able to handle (excluding funding) an initiative top down, from drafting to vote to onboarding to kyc/b to disbursement of payments. This is literally the bare minimum. At the same time, it would be quite a step ahead in our DAO if we think how convoluted are our processes now.
And yes, looking at the interim goal we have for the year, continuing the SOS proposal up to the reporting part (this will depend on how technical the tasks are tho, and there could be needed a technical support but we will see), absorbing event budget/watchdog, creating standard reporting for financials. Doable as well.
Likely the most complex task is the branding/marketing with the Foundation, because is probably the most abstract goal of the pack. But is exciting to think about being able, as a DAO, to have an enabler like the opco to do things that so far we have had to task others to do on our behalf.
I voted in favor of OpCo. It is not the perfect solution but currently the DAO is the opposite of a well-oiled machine which is what we need to stay competitive. Other DAOs with full-time employees can execute faster, lose less time (and money) in the process, and rally behind a mission quicker.
