Proposal: The Arbitrum Coalition

Blockworks Research will handle project management which includes regular communication with the DAO. We will be hyper communicative in this initiative with updates in the forum biweekly and whenever necessary. Though “Priority 1” projects are our main mandate, our work efforts / roadmap will be at DAO discretion through The Advocate once funded.

Please see the Coalition Member Termination section for details on cutting off payment to any member or the entire coalition. One quarter payment up front is standard for new service provider initiation. As detailed in the “conflict of interest” section, all coalition members will recuse themselves from voting “if a proposal directly related to the Coalition is submitted.” (vote abstain)

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Consistent communication between BWR and the DAO gives transparency on The Coalition’s ongoing initiatives. Should the DAO have reservations regarding the value of these initiatives or suspect a bias in the guidance of L2BEAT, the DAO retains the ability to replace its Advocate at any given moment. Moreover, it is worth emphasizing that the Arbitrum community will have unrestricted access to both The Advocate and Coalition constituents, giving an opportunity to influence our collective undertakings.

The composition of The Coalition is malleable and the community wields absolute authority over both its DAO Advocate and the members of The Coalition.

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We appreciate the feedback and support! We believe the conflict of interest policy that states we will abstain on all votes related to The Coalition should address your concern regarding the ARB delegation received by BWR and Gauntlet.

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Thanks for the support! Although not traditional quantitative KPIs, we believe our outline of “projects” creates a framework for evaluation of work that we can point to toward the end of our funding period.

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Throughout the short history of the Arbitrum DAO, all participants have experienced first-hand the hurdles that can present themselves in a governance process where there’s multiple parties involved. Ranging from lack of time, resources, or participation from delegates, the overarching theme is a lack of objective, neutral information that participants could utilize to act as a basis for decision-making.

Blockworks, Gauntlet, and Trail of Bits are all industry-leading entities in their respective verticals and thus well-positioned to take on and execute the responsibilities outlined in the proposal.

Objectivity and neutrality are essential to ensure that the objectives and desired outcomes outlined in the proposal are met, and we think that is well thought through in the ‘Conflict of Interest Policy’. Concerning this, the DAO can choose to halt payments in case of signs of underperformance.

Overall, the proposal is well thought out, and it would benefit the operations of the Arbitrum DAO and its participants for a reasonable cost. PlutusDAO fully supports this proposal.

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We at Layer3 are impressed with the scope and strategic direction of the proposal. Blockworks, Trail of Bits, and Gauntlet stand out as industry-leading teams and complement each other perfectly within this context. Echoing Nathan’s sentiments, our only feedback is to outline more specific, actionable KPIs.

Otherwise, we wholeheartedly endorse the initiative and applaud the Coalition for their meticulous approach in crafting the proposal.

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We are very mush in need of a proposal like this… but I’m not sure if I like the cost/value ratio.

Is this one part time (60%) engineer for a year for 800k? (about $1.3M annual salary?)

Is this one VERY part time (30%) quant for a year for $327k (about $1M annual salary?)

Is this one full time person for $780k a year?

I must be reading it wrong.

Please clarify.

In the mean time, seeing what I see, as much as we need the help, we can find better offers.

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Additionally, the DAO will have our entire team at its disposal which spans in expertise with a wide array of skills that include technical research in many crypto native niches, onchain analytics, and more. We expect the actual workload to achieve our projects and scope of work to be far higher, but have outlined a minimum amount of hours to cap a max spend by the DAO.

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Hi Griff! You have made a great point about voter apathy, popularity contests, and gov capture previously and we appreciate your support in the need for The Coalition. In the comment you said “Distributing this much money deserves a dedicated group of thoughtful decision makers, who’s top priority is distributing the funds.” and we absolutely agree! The stakes are high and opportunity cost of doing nothing is real. The goal of The Coalition is to bring together experience from outside and within the Arbitrum ecosystem to facilitate growth and decentralization. Its primary mandate is to reduce the bandwidth requirement of a delegate with tools and detailed research so that they can make more sophisticated decisions. Additionally, we will be able to aid in decision making that allows for more efficient proposal + execution processes. For example, we would have advocated (and created) a custom voting solution in place of 105 votes for the STIP process.

Similarly, one method of thinking about potential compensation for The Coalition is the man-hours saved across governance participating stakeholders and additional value add in terms of efficient directing of resources within the ecosystem. Using the Arbitrum STIP example, had The Coalition existed during the time, we could have created a custom comprehensive framework for delegates, evaluated all the Arbitrum STIP proposals as a baseline starting point for delegates, and combined that into a more user friendly voting solution. If for example, it would have taken all delegates 50 hours each to evaluate proposals, talk to applicants, give feedback, and vote on proposals, it could have saved 46 (no of delegates with more than 1M ARB) x 50 hours = 2,300 manhours across all delegates. In addition, perhaps the end state of the Arbitrum STIP votes would have benefited the overall ecosystem more due to a more effective distribution.

The members of The Coalition have full time employees with benefits, and weeks will be allocated across the best suited team. For example, within Gauntlet, it may be the Applied Research team which is currently leading various incentive proposals for Uniswap or Market Risk team doing the USDC migration on Arbitrum. We do not bring single members but rather professional organizations with diverse expertise. With BWR, our onchain analytics team, governance team, grant/incentive frameworks team, or other domain experts may be utilized to the adapting need of the project.

Additionally, as stated before, BWR takes on the risk of any additional workload beyond the minimum hours in order to achieve the scope of our work.

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The team definitely looks solid on this one.

I have a few questions:

  • Is it possible to have a quantifiable set of deliverables against the outlined costs as opposed to retainer type expenses?
  • Can we get some clarity on who owns the intellectual property for the tools, reports, and other outputs generated by the Coalition?
  • How will the Coalition handle a situation where a conflict of interest is discovered after decisions have been made?

General Feedback:

  • It might be beneficial to have an independent review or audit of potential conflicts of interest and a more structured process for identifying and managing conflicts.
  • The mechanisms for oversight, accountability, and potential replacement of the Advocate should be clearly defined to prevent any misuse of position or misalignment with the DAO’s interests.
  • It’s mentioned that the list of engagements is subject to change based on the DAO’s shifting priorities. A structured process for reviewing and adjusting the engagements in response to changing needs and priorities might be necessary to ensure the coalition remains focused and effective.
  • It would be great to see mechanisms for regular performance evaluation and feedback collection from the DAO
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Great innitiative!
During the process of STIP, we definitely witnessed the room to improve regarding supports to delegates, well-informed dashboards/statistic etc. The coalition is right to the point of solving the current problems.

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Hey @jengajojo, appreciate the feedback and thoughtful questions!

  • We agree with the sentiment and are personally big fans of KPIs. However we do worry about setting KPIs too early without a strategic vision (see Hasu’s GOOSE as an example) that they align to. If the DAO later decides on a vision that renders our KPIs useless, we run the risk of producing wasted work which would be a disservice to the DAO. Additionally, we would like to be able to account for the changing needs of the DAO throughout the year. Subsequent to the funding of The Coalition, it may make sense for the DAO to align on a set of SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) deliverables to ensure all members are held accountable against the spend allotted.
  • The IP question is a good flag. BWR, Gauntlet and TOB each have distinct approaches to Intellectual Property that reflect our product suite. We are working on a cohesive solution that will work for the Coalition and the DAO to be outlined early next week.
  • The handling of COI that is discovered after a decision has been made will likely have different paths to resolution depending on the exact situation. With that being said, the DAO Advocate’s role will be to notify the DAO of the COI with options on how to remediate the situation. Remediations may include removal of member(s) and termination of funding, but will be dependent on severity.

As stated in the proposal under the Conflict of Interest Policy, all coalition members, including the DAO advocate, will make transparent all conflicts of interest in a database that will be accessible for all DAO members.

We like the idea of an independent reviewer who could create these processes and the necessary documentation. The DAO would have to source and identify this entity post-confirmation of the Coalition (if we chose the reviewer it wouldn’t be a completely independent entity). We would suggest this entity have a broad scope applicable to all councils and service providers subservient to the DAO.

The DAO Advocate is in a powerful position. Ultimately, the DAO retains the ability to replace its Advocate via a governance proposal if it believes its interests are not being served. All Coalition members shall vote Abstain if a proposal directly related to the Coalition is submitted.

Additionally, the DAO Advocate shall present a report to the DAO on a quarterly basis that outlines how the Coalition members are progressing towards the priorities set forth by the DAO. These reports are the means by which the DAO holds the Advocate accountable. If the reports are unsatisfactory, or if the DAO believes its priorities are not being effectively communicated to the members by the Advocate, then the DAO can put up a vote for removal.

We believe these quarterly reports, in addition to the regular cadence messaging with the delegates (hosted by Blockworks Research), are the best times for the DAO to discuss changes in priorities. Additionally, the Arbitrum community will have unrestricted access to both The Advocate and Coalition constituents. If changes need to be made, then the DAO advocate will notify the community via a forum post of the proposed changes and gauge community sentiment to ensure alignment.

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I believe this is a great proposal with the potential to bring substantial benefits to the Arbitrum DAO. However, I do have some concerns about certain aspects of the proposal. These concerns include the potential centralization of power, the significant cost involved, questions about accountability, the lack of a clear long-term vision, and the level of community involvement. Addressing these concerns is essential to ensuring that the proposal aligns with the best interests of the DAO and its community.
So my questions are:
Questions:

  • Centralization of Power: How will the proposal address concerns about the potential centralization of power within the coalition and its influence on DAO decisions?
  • Significant Cost: Can there be a more detailed breakdown of the expected costs and how you align with the DAO’s budget and financial sustainability?
  • Accountability of the Advocate and Coalition Members: What specific mechanisms will ensure transparency and accountability for the Advocate and coalition members?
  • Long-Term Vision for the Coalition: Could the proposal provide more information about the long-term vision for the coalition beyond the initial 12 months and how it will continue to serve the DAO’s interests?
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It is difficult for me to distinguish the contributions of these entities. It would be helpful to have a more detailed description of the range and scope of all research types, which could help to identify the overlap between the two parties.

Although Gauntlet’s contribution is visible to the space, I am afraid that Blockworks Research’s impact doesn’t justify their proposed budget compared to others.
I prefer creating separate proposals with expenses and KPIs for each contribution such as research or audit in specific categories.

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Additionally, it’s crucial to establish clear and robust minimum Key Performance Indicators (KPIs) for this proposal to ensure accountability and measure the effectiveness of the coalition’s activities. This includes defining specific, quantifiable metrics that demonstrate the value each coalition member brings to the DAO, such as the number of proposals reviewed, the quality of code reviews, the impact on proposal decision-making, and the success of risk management strategies.

Regarding concerns about potential monopolies in this space, it’s essential to maintain a balance between efficiency and competition. If the coalition underperforms or if other entities express interest in providing similar support to the DAO, there should be mechanisms in place to address this.

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I am a huge fan of this proposal.

To be frank, there’s a lot of big brain shit that happens on Arbitrum that takes a lot of effort from delegates to understand. The coalition can lend a much needed helping hand in that department.

It is my view that the teams that the make up the coalition are some of the highest quality teams in the space with diverse expertise and deep subject matter expertise.

Having such a coalition is a massive win for the Arbitrum DAO and ecosystem.

Arbi Ants in control.

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Today, the Coalition parties and a few Delegates had a call to address this proposal openly. Generalized notes from this session can be found here

Agreements:

  • Economic, Research & Security Services on retainer are needed in principle.
  • Not all Delegates can make informed decisions based on proposals alone; more nuanced expertise is and will be needed for third-party evaluation of new proposals.
  • We believe L2BEAT, Blockworks, Gauntlet, & Trail of Bits to have upstanding character and would operate in good faith, however, there are components of this proposal that entrench single points of failure and unilateral control.
  • There is no method for course correction outside “raise another proposal”
  • Service Provider onboarding is a task that will be assigned to Blockworks to create a framework to streamline the onboarding process, Blockworks will not be the KYB party, and Blockworks will have a neutral stance allowing any party to apply, and once complete for their products/services to be listed as available to the DAO.

Concerns:

  • Concentration of Voting Power amongst the Parties
    • L2BEAT: 18.87M
    • Gauntlet: 8M + 4.66M
    • Blockworks: 7.95M
    • Trail of Bits: Unknown
    • TOTAL: 39.48 MILLION ARBITRUM DELEGATION
  • Security Council Influence - 3/12
    • 25% of all Security Council Members
  • Concerns around gatekeeping what should be a “focus

Having the same parties review and provide opinions on proposals, cover those proposals publicly via Media Networks, vote on proposals, review the security concerns of a proposal, and then execute the Arbitrum network upgrades is fundamentally lacking separation of powers.

Below are my personal opinions, which I have shared already:

  1. I would like a council to act as advocate, controlling how the coalition’s efforts are focused. I have no concern with L2BEATs historic integrity, however, as a project building on Arbitrum, L2Beat is not, and the changes of Arbitrum do not affect them the same; their point of view may be quite limited compared to project developers. Given my concerns above, you can see how the advocate role can control all parts of Arbitrum Governance by directing what is worthy of “focus” and what is not.

  2. I would like to see the parties considered in this proposal abstain from voting on this proposal in both the temperature check and on-chain vote.

  3. Without proper separation of powers, the risk of collusion and censorship is too great for me to ignore. Again, I have no concern with the integrity of the parties, but the whole reason we build in this space is to build trustless systems. If the proposal is not willing to change the advocate role, then I would like to see how they plan to address conflicts of interest and separation of powers before going to Temperature Check.

  4. Pricing: I understand the costs associated with a program like this, but I would like all parties to provide a document for Rates and Standard Costs for transparency and future negotiations if the proposal is passed. I’m sure all the projects have documents like this for traditional retainer-based agreements.

I look forward to the revision before the temperature check snapshot later this week.

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Was it a public announcement? Was it advertised somewhere?

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I love the clarity and thoughtfulness put into this proposal. Collaboration is key with a mission this huge.

Thanks @cliffton.eth for directing me here and for suggesting I introduce myself. I’m Iggy, the founder of Squad, a curated community for crypto-native engineers. Our members (ex-Ethereum Foundation, Polygon, Starknet, Coinbase, WorldCoin, etc.) have deep experience in the space and team-up together to do cool projects. We’d be happy to support in any way possible, for example with additional engineer hours for proposal reviews and/or dev work.

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Hey everyone,

By way of a minor introduction, my name is Joseph (legal advisor, Enforcer @dYdX Operations SubDAO & a member of the TraderJoe Governance Council).

After joining the Coalition call held yesterday, here are my thoughts on the proposal above (I posted a bit of a tl;dr on my X account @immutablelawyer). By way of a precursor, I am personally in favour of this proposal and the underlying difficulties it aims to achieve - difficulties which plague most (if not all), delegate-based governance frameworks.

  1. The proposal should include a breakdown for costs for all service providers so as to offer insight in relation to how the costs applicable to SPs forming part of this Coalition were calculated (Blockworks Research has already provided theirs, expect other SPs to follow suit);

  2. The proposal lacks enforceable accountability mechanisms & a legal structure underpinning the establishment of such accountability mechanisms. I would personally suggest (not legal advice - not your lawyer), looking into the Guernsey Non-Charitable Special Purpose Trust structure to achieve the issues delineated above. Given that the activities of the Coalition are non-financial in nature (research/information driven in nature), it would eliminate any sort of potential regulatory implications from a VASP perspective. In addition, it would also impose legal obligation on its members (referred to as Trustees), to act in good faith, with utmost diligence, and within the Purposes of the Trust (the Purposes could be structured to mimic the mission statement of the Coalition with the Advocate - being L2Beat, acting as an Enforcer and making sure that the Coalition’s members act in accordance with those purposes). This also gives the Advocate (L2Beat, a legal right to actually stop funding should Coalition members act in breach of the Purposes, in a non-diligent manner, or in bad faith).

  3. The proposal should ideally include criteria re. what forum post would be chosen for a report and what forum post would not. Having the advocate be the link re. choosing w/Community feedback is subjective in nature. In addition, should there be a high volume of proposals with the community being split on which proposal they think ought to get a report, this will cause issues as well. I find that setting expectations is always a beneficial exercise and thus, having a set of objective criteria in place re. how a forum post is put in the ‘report-bucket’ would be ideal (this will also be a benefit to SPs as they can plan ahead better which would naturally result in higher quality report for delegates);

  4. The proposal should have also been structured via a tendering process, with the community being able to vote on the different SPs that would be entrusted with the subject-area that was needed to fill the Coalition’s expertise-bucket. This would have been more democratic in nature and would have included the community in the choice re. which SP they think would have contributed optimally to the respective area. In addition, albeit the proposal stipulating a 1-year term, I would personally suggest having a Coalition election after 6 months so as to not only serve as a performance review of sorts and optimise where needed, but also give space to new SPs to make their case as to why they deserve to be part of the Coalition / what they potentially can do better. Healthy discourse and competition will naturally lead to a better quality output for the DAO - always.

  5. In line with the above, the proposal should include adequate mechanisms for onboarding and offboarding SPs to the coalition. Here, again, the Trust structure would offer much needed clarity due to its ability to integrate snapshot votes in the removal/appointment of members and thus serve as a ‘legal’ integration with Arbitrum’s current governance framework;

  6. On a more positive note, the underlying goals the Coalition aims to achieve are net-positive. This is due to the fact that the Ecosystem needs to be well-informed prior to making decisions re. millions of $ worth of funds. During the STIP voting process, we did see quite a bit of mistakes made when voting (for ex. there was a delegate voting NO with the reason being that he was against bridges, but the project was not a bridge to begin with). Hence, the expertise is needed;

  7. In addition, the concept of having this ‘service’ offered to delegates who might have the voting power, but might not have the time to go through every proposal and give it the time it deserves, will hopefully lead to higher quality participation & voting.

All in all, I am in favour of the idea being circulated here. However, I do hope that a lot of much-needed detail is added re. accountability, COIs (having an actual enforceable policy), oversight, & setting expectations for the community re. reports, deadlines, and workstreams.

I look forward to seeing you guys iterate and optimise the proposal - great work & brilliant idea!

Kind regards,
Joseph I Axis Advisory

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