Proposal [Non-Constitutional] Arbitrum Treasury Token Swap Program

[thedevanshmehta]

Thanks all for the feedback!

@DisruptionJoe

I think this is safe to try.

We did indeed try to design the proposal with what we call 'safety hatches" where the DAO can change its mind at various points. So even if the snapshot is approved and elections are held, they can still reject the Tally proposal; even if the Tally is approved, they can reject all the deals put forth by the dealmakers.

In our opinion, minimizing trust assumptions and not asking for large amounts to be transferred out to an offchain entity is super important as we are all strangers on the internet trying to work together.

@cp0x

Does the agreement with the projects imply that they also hold ARB tokens in their Treasuries?

Yes the ARB would be held by projects and subject to holding periods or lock up conditions negotiated by the dealmakers

@cp0x

I like the idea of ​​being able to participate in the management of projects on Arbitrum, but since these tokens will be in the Treasury, who will have the right to vote? How will this procedure be arranged? Or are these votes delegated to someone?

This is a great question on metagovernance and we don’t currently have a fixed way of enabling it. A simple way to do it would be that once token swaps are complete, elections are held to receive the delegation from our treasury and represent Arbitrum’s best interests in the project. A more complex way would be dividing the voting power among ARB voters so when they delegate, they also get voting rights in the projects we have done a token swap with.

We have only fully thought through the details until December, when the token swaps would be executed. Thanks for prompting us to think on the details of what comes after! I hope to see you apply for being a dealmaker if the proposal goes through

@CptRandlelwa

It will be particularly important to ensure dealmakers are not conflicted by their financial interests or connections / network. Apps should be able to apply for this programme rather than being contacted for BD by dealmakers themselves to ensure impartiality.

Conflicts of interest are always hard as the best dealmakers are also in high demand across the ecosystem. We need to ensure they sit out any deals where they have an interest, similar to how we saw council members in LTIPP declare any CoI.

@CptRandlelwa

We’ve seen pushback against requests for large grants and agree that they have largely been perceived as ‘free money’. This solution intertwines apps more closely with Arbitrum and creates an in-built alignment on both the app and the chain growing and succeeding.

Appreciate the positive feedback! It is indeed more of an alignment play than a treasury diversification one, a way to ensure apps and the infra layer can share in each others success and remain intertwined. It’s also a self-regulating mechanism for grantmaking since projects wouldn’t ask for large amounts from ARB DAO if that means giving up over 50-80% of their community treasury

@JoJo

we basically create a really complex treasury to maintain. you have now 5, 10, whatever amount of coins in your belly that are not arb. What do you do with this? Do you sell them? If so, when?

I would advise not looking at the proposal too narrowly from a diversification viewpoint only. If a token swap with ENS or Celo gets them to choose an orbit chain over the competitors, that’s a much bigger win than the alt tokens we’d get in our treasury. Same for builders or mature apps getting support from us, think of it as a grant replacement program than solely diversification, the final stage of ecosystem support that might begin with a questbook grant and graduate to a token swap.

@JoJo

If I recall, the group was created to diversify some of the treasury into stables and yield bearing stables

This was not the purpose of our group. Our purpose is:

@thedevanshmehta

• Price Impact of large liquidations from grants and incentive programs
• Treasury management and diversification
• Sequencer fee utilization
• Converting Grants into Investments

The present proposal falls well within the mandate above.

@JoJo

Managing a treasury with riskier asset, and risk on asset, is a very different job, that not only explicits itself in different tasks (ie: if you get a stable now, you just need to monitor that stable doesn’t collapse; if you get a coin now, you have to put it at use and likely also sell it down the road), but also requires a different expertise.

We are working with @sid_areta for a treasury manager procurement framework, where it can be added to their responsibilities. In any case, the token swaps would only be executed in 9 months, which is a long time and lots would change by then.

The present proposal is rather low-risk, only 210k ARB to elect dealmakers who scout out opportunities in the ecosystem. If we don’t like what they come up with, we can reject the deals and that’s the only cost incurred; if we do like them, we’ve unlocked a token swap capability for attracting projects to come on arbitrum. It’s a win win either way.