I’m happy to see the honest steps taken here to improve on the valid criticism on AIP 1. Ultimately, the two salient points that lead me to vote For AIP 1.1 are:
The implementation of a smart contract-based linear unlock of the administrative budget. While 4 years is fairly arbitrary and seems to be taken from private token sale norms, I think it will work well here. Also, given the budget breakdown is an upper bound estimate in best faith, I expect leftover tokens to be re-allocated to a future contract for distribution to the foundation and/or another entity to further the Arbitrum mission.
Transparency reports that act as a health check on regular schedule to ensure the administrative budget is being used appropriately. Given the clean and open format of the initial report, I’m confident these future reports will appease the community.
Again, I’ll be voting For. I’ll also be watching to see that excess tokens from the vesting schedule are not allocated discretionarily, but rather to a community-approved contract.
Hey all, we will be doing our community call today at 12PM ET, 16:00 UTC on Google Meetup:
We will be going through the AIPs under discussion right now, we welcome all community members and other delegates to join the discussion and share your views!
I want to thank the Arbitrum team for considering community feedback and updating the AIP to make it more transparent. It’s a positive step forward for the Foundation.
Isn’t it funny that multimillion dollar endeavors are hidden behind aliases?
Who speaks for the Foundation? Who are these full-time employees?
And unless you’re building medical facilities for a new vaccine, I cannot fathom how $9M will be spent in R&D. Certainly very worried that administrative is even higher…
Crypto will never meet investor-grade interest if we keep playing hide -n seek.
Thanks @Arbitrum for putting that together. It seems important to know the share represented by the compensation of 20 FTE for the next twelves months.
I’m voting in favor of this proposal. There has been a good effort on transparency and now there is a much better definition on how the tokens will be used. Finally one of my biggest concerns, how the distribution will be made has been cleared along the roadmap for growing the team
L2BEAT votes FOR AIP-1.1 in the Snapshot temperature check.
We have carefully examined the implications of the proposal and engaged in discussions with the community during the Governance Community Call. Although we have some reservations about this proposal (listed below), we are voting in favor of it because we believe it is a step in the right direction that can be followed by further improvements. Below are our remarks:
Pros:
Creates more certainty around the Foundation’s 750M ARB and proposes to lock funds in the vesting vault for 4 years with continuous vesting schedule
Promises to transfer the ownership of these funds to the DAO (through the ownership of this vesting vault)
Gives some clarity around the operational budget
Promises annual transparency reports and semi-annual progress reporst
Cons:
The smart contract code and configuration are unknown at the time of the proposal, making it, in practice, a vote to grant a mandate to the Foundation to lock those funds rather than an actual vote to execute something on-chain. In this case, we give the team the benefit of the doubt, but in the future, we will not vote in favor of proposals lacking clear technical details or, at the very least, a detailed technical vision presented upfront in the proposal.
The operating budget essentially consists of a four-item plan detailing how to allocate $36 million, without providing any background information or specifics. Although we do not wish to escalate this issue right now, understanding that the team needed to devise a plan quickly and did not want to delve into the details, this approach cannot be followed in the future. Our concerns arise not only from the substantial figures involved but more importantly, from the lack of clarity and, presumably, the absence of a well-defined plan.
The same applies to the transparency report - it is not particularly transparent, as there is an abundance of text describing the situation but not many details or concrete figures. While this can be understood given the circumstances, it cannot be the case in the future.
We acknowledge that the current situation is unique and the Foundation requires formal approval to proceed following the rejection of the AIP-1 proposal. However, we wish to emphasize that in the future, we expect greater clarity and more comprehensive reporting from the Foundation concerning the DAO Treasury usage.
Traver from the Messari Governor team here. Great to see an increase in transparency, which is an improvement over many Foundations in crypto today. As the vote stands currently, it appears AIP 1.1 will pass.
As the Foundation proceeds, we’d like to help expand the critiques of the Foundation into some proactive solutions that can improve the Arbitrum Foundation’s communication with the DAO.
Operation Budget
We agree with @jason3s that the operational costs ($36M over 12 months) require greater transparency which should be a prerequisite for distributing any DAO funds to any associated Foundation. The Arbitrum Foundation’s responsibilities break the mold of many comparable foundations (which usually function as a financial and legal wrapper for the DAO, oversee operations, and distribute funding).
DAO
Foundation
Funding
Ops Funding (Annual)
FTE
Scope
Uniswap
Uniswap Foundation
$74M
$4.67M
14
Distribute Grants and advocate for the protocol.
Balancer
Balancer Foundation
$500K
$500K
4
Manage service providers and financial maintenance costs.
Starknet
Starknet Foundation
50% Tokens
N/A
N/A
Maintaining StarkNet as a public good, continued network development, and developers’ support.
Optimism
Optimism Foundation
30% Tokens
N/A
N/A
Legal wrapper and early-governance steward, allocator of treasury assets to fund public goods.
The Arbitrum Foundation’s scope expands to include responsibilities for operating Arbitrum’s rollups, including “operations, blockchain operation, infrastructure, service contracts, and ongoing improvements to the Arbitrum ecosystem.” Further, the initial budget includes $9M for research alone. Understanding the scope of work (SoW) for the Foundation’s technical development and operations assignments would be valuable, considering this is generally outside a typical Foundation’s purview. In most cases, R&D is done by a separate labs team (Optimism Labs, Uniswap Labs, etc.) or otherwise supplemented by grants. If both Offchain Labs and the Arbitrum Foundation conduct R&D, clarifying each research team’s specific overlap and objectives would align the DAO with the ask and even help justify the budget.
The DAO would benefit from the opinion of others with more DAO budgeting experience (re: @gfxlabs) on evaluating this framework, given the Foundation’s scope. However, we note the vote of confidence from delegates such as @karelvuong and @krst.
Ecosystem Growth Initiatives
The ecosystem growth initiative also needs to be more specific. To be clear, we’re not against the delegated distribution of grants funding to the Foundation, and delegated grants programs will presumably be a more effective strategy than token-voting due to voter fatigue, varying stakeholder interests, and near-term biases. That being said, it must be paired with:
A clear indication of the method the Foundation will use for grant decisions;
The process for grant selection;
The KPIs and goals grantees will be held too;
Infrastructure to track the accountability of grantees;
The amount and schedule of fund distribution (rather than just a mention of the fact that these will exist).
The KPIs referenced in the bylaws should be expanded dramatically. See Optimism’s recently revamped efforts here for their incentive program (launched after backlash following the misallocation of funds and the misuse of allocated funds).
Grants can be an especially pernicious avenue for favoritism, corruption, and misallocation. The DAO should solicit greater transparency around Foundation distributions and set high standards for measuring the ROI and impact of distributed grants.
Transparency Reports
Transparency Reports should include estimating the roles/titles the Foundation aims to employ along with their associated personnel costs, articulating the amount of funding dedicated to R&D initiatives and their objectives, and a more granular budget breakdown for marketing campaigns and events budgets. In addition, the Foundation should be able to share fixed overhead costs for technical and non-technical operations. The transparency reports should resemble more numbers and less text, akin to a spending audit with specific line items and initiatives (beyond a single $9M chunk of funding). While real-time reporting may be too heavy a lift, I don’t see any reason not to publish on a quarterly basis (at a minimum).
Further, these details inform how the DAO can approach its role in operating around the Foundation’s initiatives. As proposals explore new funding avenues for the DAO, the clearer the Foundation can articulate its scope, the more helpful the DAO can be in achieving our collective goals
Lastly, we’d expect the DAO to pursue a further proposal to define future transparency and reporting standards for the Foundation to abide by. We’re happy to collaborate with the Foundation and the DAO to set an agreeable and professional standard.
On Thursday 13 we had our 2nd governance call at SEEDLatam in collaboration with L2 en Español where we discussed with our community the ongoing proposals:
True to our ethos, we went through each proposal and explained them in detail to our community. Then the debate was opened for community members to express their opinions on each proposal. Finally, each proposal was voted on individually by community members present in our discord.
As always, any member of this DAO who wants to participate in our governance calls and is open to discussing Arbitrum-related issues is more than welcome.
AIP-1.1 addresses and resolves most of the requests we made previously. However, despite our favorable vote, we want to express the opinion of our community on each point.
About Smart Contract Lockup
We believe it is a wise decision to lock funds in a smart contract. It also restores DAO control over funds by allowing adjustments to future funding and/or modifying the unlock schedule.
About Operating Budget
The community was satisfied with the presentation and description of the operating budget. However, they expressed a desire for future budgets to be more detailed in terms of expenses and aligned with the goals of the Arbitrum Foundation and ArbitrumDAO.
About Ecosystem Growth Initiatives
In this point, we had requested more details in the previous proposal. We believe the focus and objectives for growth initiatives are better clarified. Although the application and approval process still needs detailing, SEEDLatam and L2 en Español are available to collaborate in the development of these processes, considering the experience of some of our members in such initiatives.
Transparency Reports
Our community was more than satisfied with this transparency report, which provides a description of The Arbitrum Foundation directors and details the initial costs of establishing The Arbitrum Foundation and ArbitrumDAO. However, the relationship with OffChain Labs and the selection criteria for the Nova Network Data Availability Committee remains a bit obscure.
Conclusion
Although some points still need clarification, AIP-1.1 mostly resolves all previously expressed doubts, and this is not an impediment to voting in favor. Our community believes it is time for Arbitrum to take the next step, and for them, the official launch of the Foundation is essential.
Staying tuned for the exciting progress of AIP-1.1 implementation and witness how our vibrant community’s valuable feedback continues to influence the future direction of the Arbitrum Foundation and DAO governance
I have voted “For” on AIP-1.1. There are some items I disagree with (more detail below), however my vote is one that is more based on wanting to look past the initial issues on AIP 1 and to just look at the substance. Based purely on said substance, I believe this is largely a good proposal and is relatively in-line with funding decisions of other DAOs within this space. My disagreements are relatively minor to the scope of the AIP, so voting against with the ask to keep revisiting until he AIP is perfect will just result in unnecessary delays. It really is a situation of “Don’t let Perfect be the enemy of Good”, for better or worse.
I believe there has been good steps taken towards transparency, however I believe there should have been more provided and would be hesitant to vote for something this vague in the future. Here are some suggestions for the future, ideally to be expanded upon in further communications:
The operating budget is a nice breakdown, but it is very high-level and lacks detail on where the USD is coming from (assuming ARB sales, but lacks direction on how that will be executed). I’d like to see more expanded on here.
It is a difficult, near impossible, thing to do considering price swings… but with the price of ARB fluctuating between $1 to over $1.50 recently there is a pretty large gap in the amount of capital provided and the operating budget. Obviously Ecosystem Growth Initiatives will fill a lot of that in, but even at $1 ARB you are looking at $139 Million a year being allocated with no real plans. This will only become more noticeable if the price appreciates. I’m not asking anyone to predict the future, but there should be some more detail on what the plan is in the event of that allocated amount far exceeding expectations. If it is simply more money for public goods - great! Or maybe part of that is ear-marked for operations 5+ years out…? Whatever it ends up being, it should be a little more clear (and as noted above, notes on how the USD will be acquired would help here).
Transparency reports flat out need to be quarterly. Yearly is far too long. Semi-annual I could make a case for, but the initial issues with AIP-1 the leeway for that is no longer there in my opinion. I’ll also add that if the transparency reports will mimic the style of the first one, they will need more detail in them.
this will be one of the steps to take the project further , and develop more sustainably , with a large community like today for the project , which is a large number of users supporting the project . Great LFG
We appreciate the reception to the community’s feedback and the effort put into this proposal. The proposed structure around token lockup and transparency aligns with similar constructs that have worked elsewhere. Furthermore, we approve of the proposed operating budget, as the transparency report will allow the DAO to hold the Foundation accountable for expenditures.
We also agree that the Foundation plays a key role with regards to sourcing, negotiating, and onboarding certain vendor relationships. To further reduce ambiguity around this point, we would welcome a decision framework to make it clear to the community when either the Foundation or the DAO should be responsible here. Lastly, as the Foundation will be made up of people close to the Arbitrum ecosystem, we support the proposed plan for ecosystem growth initiatives.
Overall, we are pleased to see the changes implemented in AIP-1.1 and are excited for things to move forward.
I am happy to see that every care is being taken to ensure the security, stability and growth of this project. However I do share @krst concerns about the lack of specific details on how this proposal is going to be carried out. It is because of his pros and cons analysis of this proposal that I feel confident to vote yes on it.
I hope that the team will address the concerns that @krst and @Bob-Rossi have raised about this proposal and that we will start seeing much more detailed proposals being put up for a vote in the future. I also agree that transparency reports need to be posted quarterly. This way everyone is kept in the know about what the team is doing and can make proposals that they believe will resolve any issues that they see.
If this project is going to survive this volatile market we need to know what challenges the team are facing as soon as possible so that as a group we can propose and vote on the best solutions to overcome them.
Mate you can’t just divide the entire General and Admin budget by headcount, it includes way more than just salaries - they even say it includes insurance, legal and other operating costs right in the post.
By your logic, every employee at Wendys must be making like $200k
With the Snapshot temperature check passing a little over a week ago, I was wondering if/when this proposal would move on to tally. Both AIP 1.1 and 1.2 seem to have passed with overwhelmingly positive results, so I think we’re ready for the real onchain vote with no more major revisions!
