I would also like to add that it is necessary for the Arbitrum to determine whose tokens it is interested in, and not as is currently proposed. It seems reasonable to me to select from all the protocols that received grants, those whose tokens are of interest to the DAO, otherwise we may get a bad sample, where there will be not the best projects.
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This proposal makes a lot of sense under grant revamping. It does not make any sense under the mandate of treasury diversification.
as treasury diversification it makes zero sense:
-project tokens are more volatile than ARB and much less liquid
-the goal of treasury diverisification should be to diverisy more into less volatile, and highly liquid, not more volatile and more illiquid assets.
-managing a portfolio of majors is already insanely difficult, doing so for a basket of alts under the guise of treasury management makes zero sense. And would consume treasury working group or deal maker time with very little value.
On the other hand for the purposes of revamping grants, especially for more mature projects, this proposal makes mores sense:
-token swaps align incentive more than grants without strings attached.
-token swaps for projects with DAOs would allow arbitrum governane to have some say over project direction, preventing issues like Treasuredao moving to another chain.
-more mature projects need grants less, have DAOs in place to govern, and benefit more from direct partnerships with Arbitrum.
IMO this proposal needs a few major revamps:
Funding and mandate
-funding for all of this should be sourced from funding which would go towards grants, NOT sourcing new funding.
-this proposal should be reworked as Grant efficiency and effectiveness reform, NOT treasury diverisification which it in no way is.
Token management
-Scope of the token management should be minimized. Would suggest something simple as buy and hold, selling if the project exits Arbitrum.
-Token management should focus on governance, rather than traditional portfolio management and trading or even investment.
Scope of project
-This proposal only makes sense for mature projects with solid usage, market cap, liquidity, and actual DAOs with governance. Would suggest having some criteria around these.
-grants for smaller projects without DAOs or not fulfilling those requirements should probably have a mix of grant and token swap funding, or just grants, and are probably not suitable for this proposal.
In summary, we would not be in favor of this proposal in its initial or even revised state as it’s simply not a good treasury diversification proposal.
However if there were significant revisions in the funding source, mandate, scope of token management, and scope of projects, we think this could be a great way to replace grant funding that would have gone to larger cap projects in the Arbitrum ecosystem.
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Thanks for the feedback! We’ve studied BalancerDAO token swaps which you’ve been quite involved with, they are a model case for how token swaps can build strategic relations. Curious to know how arbitrum can model something along similar lines as them & who made the decisions for balancer.
Thanks for this feedback! We should be having a new v3 of the proposal live soon, which among other things would restrict to protocols that received and held over 50% of the and took part in STIP or LTIPP (a list of only 19). Some feedback we’ve got is that there are a lot of ‘garbage’ tokens so we need to be judicious about which ones are worth doing a swap with and giving legitimacy to.
That said, opening the pathway for Arbitrum to engage in token swaps is an important tool in the arsenal of ecosystem support we can deploy and use for luring builders on arbitrum.
ecosystem growth is indeed the primary role, especially as protocols part of the swap would receive a boost in legitimacy.
The diversification bit is a nice to have, basically we need some way of capturing the value of protocols shooting into orbit which we initially supported. Currently, there is no way to do so outside of increased sequencer fee collection, whose margins are already reducing quite dramatically.
This is good feedback. while token management would be minimized, we would still need a manager in charge of the program after the swaps to oversee and decide on how and whether token swaps can be integrated more into our functioning.
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I’m not sure about token swaps. If the chosen protocols start selling their arb after a year, it might not make a huge difference, but if the dao starts selling their tokens, it could really affect those protocols, because it would be easy for people to claim that the DAO is dumping certain tokens. It’s just too easy to create backlash. Considering that most of protocols that could apply or the native arbitrum one, I think the situation will create more damages than benefits.
Thanks for the great input on the pilot draft we submitted 2 weeks ago @lindsey @cp0x @WintermuteGovernance @ggmatch @jameskbh @JoJo @karpatkey and @TodayInDeFi.
Your input helped us understand the right scope for an initial Arbitrum Token Swap pilot.
We’ve incorporated your feedback and collaborated with @GFXlabs and @CastleCapital to submit a rescoped proposal here: [Non-Constitutional] Arbitrum Token Swap Pilot Program
We would love your perspective on the improved scope and hope to have your support in progressing with this pilot!
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