Title – Proposal: Direct ALL Unused Validator Revenue to a Permanent Ecosystem Fund
Abstract - In the spirit of competition and to celebrate the continued success of Arbitrum, there needs to be a formal move to direct revenue to support the growth of Arbitrum. The most linear way to fund this given Arbitrum’s L2 nature is to formally support it’s builders through the creation of a perpetually financed AES or Arbitrum Ecosystem Superfund.
Motivation & Rationale - This week, many of us were surprised by moves that competitors have made to try and bolster builders, lure liquidity, and create waves in the space. While time will tell whether this will actually get people to move over, there is a clear line in the sand that has been drawn by Metis and I presume that Avalanche Foundation, OP Foundation and others will follow suit in one way or the other. Arbitrum can make a bigger splash with the sheer amount of dollars earned from its validator if they were directed at projects on Arbitrum.
Purposefully in this proposal I am omitting how these funds will get spent, what the qualifiers are and timelines for this because its design is to signal to markets that Arbitrum will remain the biggest L2. This opportunity should be announced if passed by Arbitrum itself letting investors and the world alike know that it stands with its builders for the long term.
The success of Arb scales with its builders and this proposal underlines that fact.
Specifications - I am omitting this section because the only key factor will be ensuring that the DAO has enough funding to run itself, therefore barring financials on spending, the number which enters the AES will be the balance after costs are covered.
Steps to Implement - Again - cost will be determined by net monthly validator income balances being deposited into the AES and the proper AES committee or voting standards being set up in a separate proposal.
Timeline - This should be implemented beginning in 2024 and backdated to Jan 1 upon approval.
I like the sound of this.
I think it’s a healthy flywheel. Promote builders → spur innovation → bring users to Arbitrum → more revenue for the DAO
Thanks Strife - the goal would be to plant a flag in the ground and say we stand with our builders in the long term and that the growth of Arb scales with it’s partners.
I’m less concerned about the secondary effects (how it gets distributed and criteria) because those can be negotiated in the future. Right now building the pool makes the most sense and marketing it to exciting protocols who are building on the best chain.
Agree that at least planting a stake in the ground with regard to allocating revenue, some of which should be used to fund growth, makes sense.
I think the idea is good because, if we look at the market from the standpoint of all competitors, we can have a double approach:
- a tech approach
- a growth approach.
I am not concerned for the former, I truly believe in what Arbitrum is achieving through its tech stack.
On the growth approach, while some stuff might seems superficial or even trivial, it is always good to consider how market can follow and build up narratives after key facts are deployed. Specifically, having a constant generation of capital through the sequencer being available to the ecosystem, would be a very powerful narrative, and can also generate utility and growth.
Would love for bigger delegates and other stakeholders to comment on this.
Cool idea, looking forward to reading along as it’s developed.
Do we have any numbers we can add to give a sense of scale?
What did Metis do that you’re referring to as “a line in the sand”? links?
However, I would like to make our own adjustments.
Since validators perform an important function and bear their own risks and costs for servers and the operation of the node, we (cp0x) have a proposal - to take only part of the income.
Look into the future, if you personally become a validator - will you want to give all your profits to the Ecosystem Fund?
What share of profits should be given away is a debatable issue.
The goal is to take net profit and pass it back to builders. That means any costs that are negotiated in being a validator are extracted before being sent to the fund. If a protocol decides to also become a validator and are performing both services well, they would still need to qualify for rewards on their own merit.
Metis put a large % of their profits into an eco fund. As Metis is their token, this means potentially a lot of value. They made headlines based on percentage, we can do it via sheer number. As for numbers, its important for us to first understand the net which im not sure is public.
How to determine the costs of a validator?
Everyone has their own calculations…
Probably, it is necessary to determine in advance the percentage of payments to the fund
Probably, yes. I think the current proposal is more on the concept itself. If then the decision is to direct 100% of net, 50% of total or 15% of whatever, is up to discussion, but only after agreeing on the general idea.