Proposal: The Arbitrum Coalition

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.

7 Likes

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.

4 Likes

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.

8 Likes

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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Hey @englandzz, thanks for the support.

  1. The Coalition does not intend to influence or persuade community members to vote in any direction. Our goal is purely to provide objective tools and reports to help delegates and community members make more informed decisions more efficiently. Additionally, given the members of The Coalition may have differing opinions at times we will likely offer a diverse range of opinions and perspectives to the DAO.

  2. The expected cost to the DAO for a year term is $2M paid in ARB based on the 30D VWAP the day prior to onchain proposal.

  3. The Advocate will write, at a minimum, quarterly report on Coalition activities. At any time the DAO will be able to remove any member of The Coalition or replace its Advocate. Blockworks Research will communicate the Coalition’s activities at a minimum of a biweekly cadence.

  4. Toward the end of the 12-month trial period, The Coalition may look to propose a renewal of its services, taking into account crucial lessons we learn throughout the initial period and properly iterating to best suit the needs of the DAO for the following period.

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Please see the “specifications” and “projects” sections in order to better understand some examples of the work that Gauntlet and Blockworks Research will provide and how they differ. Gauntlet specializes in quantitative risk analysis while Blockworks Research focuses on competitive landscape analysis and has the ability to breakdown complex subjects for delegates. Additionally, the Coalition will work as a unified group, giving reason for the single proposal.

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We believe L2BEAT is uniquely qualified for The Advocate role given

  1. They have existing lines of communication with DAO stakeholders. They host the monthly governance call and have been active and quality contributors since day one.
  2. They have a unique ability to analyze the technical components of the L2 and the competitive landscape to make sure The Coalition is working on the most value add initiatives.

Additionally, having a single point of responsibility that The Coalition reports to infers a single point of accountability to the DAO. Having a committee is to the detriment of the DAO given it adds friction and removes the single point of accountability. Though we suggest L2BEAT for this role initially, the DAO has the ability to (and should) replace them at anytime if the community is unhappy with their performance.

All members of the coalition will be abstaining from all votes related to The Coalition, as outlined in the COI policy. Notably, this does not apply to L2BEAT, who is not a member of The Coalition but rather exists to keep The Coalition in check. The DAO always maintains absolute power to remove or replace any member of The Coalition or The Advocate.

2 Likes

This is a great proposal from all the team. Really appreciate the breakdown of projects the coalition will cover and inclusion of a DAO advocate.

I hear some of the concerns around pricing in the comments, but generally believe high quality work can be hard to define and requires top talent. With that mindset and the provided project scopes, the budgets seem reasonable.

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Yep but this is not the way i would expect it to be executed.

I would rather see a group propose a budget for a very specified context (like STIP) and then as a council they would make the decisions in that context, and hold the groups accountable to execute on their promises.

This proposal is very different, we are basically paying your coalition to have an incredible amount of political power in every decision the DAO makes… This is very dangerous and is not a solution I like very much to the problem that I specified. It still expects the whole DAO to make decisions that are often too narrowly scoped, but now we have our trusted coalition to influence our decisions… scary.

The payment is VERY large, larger than what I find reasonable and the benefit to the orgs in this coalition is not just monetary. The political power that comes with this responsibility is immense, and wide reaching.

If Gauntlet was assessing the governance risk of this proposal, the main risk being social capture of the ARB governance by this coalition, how would this proposal fare? If this proposal continues I think there will be a strong need for transparency, conflict of interest disclosures and more oversight than what just L2beat can provide to avoid backroom dealings, descriminatory power plays, etc.

I was basically offered a bribe during STIP (obv i didn’t take it) but I could only imagine the offers this coalition would get given the power they would wield.

I think I will have a hard time thinking this structure can be set up in a benevolent manner as its proposed.

It could be possible if instead of getting so much liquid capital, the reward was mostly ARB vested for 5 years or more, and it could be revokable if very clear rules were violated. Then maybe incentives could be aligned.

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I’m glad I’m not the only person who sees what this is attempting.

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Mostly aspects of the proposal we have already pointed out but to reiterate:

  1. The Coalition does not intend to influence or persuade community members to vote in any direction. Our goal is purely to provide objective tools and reports to help delegates and community members make more informed decisions more efficiently. As an example, for Arbitrum STIP, we would have created a decision matrix within a pre-built spreadsheet distributed to all delegates, so that delegates themselves could rank and evaluate different STIP proposals within a digestible matrix and arrive at their own conclusion. Once again, we will not be forcing/persuading delegates to vote a certain way, and we will not be making decisions on behalf of the community when it comes to such votes. We will solely be providing tools so that community members may make more effective decisions individually and independently of The Coalition. We cannot overstate the fact that community members will retain independent voting power in all governance matters, and it is not the case that The Coalition will be the final decision maker in any future proposal on behalf of the community. To be thorough, here is another example. For the current proposal to Activate ARB staking, if deemed important enough by the advocate, The Coalition would have stepped up to provide comprehensive research on the potential impacts of token inflation, how much of a supply sink ARB staking could potentially be, how this would be implemented, whether it could carry over to potential future profit distribution channels, and more. From there, we would merely be providing this as objective information to all community members, so that they themselves may make a more informed decision when it comes to voting. Additionally, given the members of The Coalition may have differing opinions at times we will likely offer a diverse range of opinions and perspectives to the DAO.

  2. Blockworks Research understands the gravity of the responsibility we are taking on, but also knows there is uncertainty around the time commitments associated with this work. In our proposal to the DAO, we specifically proposed a not-to-exceed price to eliminate the possibility of overspend on the DAO, with Blockworks Research taking on the risk of having to dedicate any additional resources in order to fulfill our mandate without receiving additional compensation. We believe this is a fair trade-off for both parties and shows Blockworks Research’s commitment to Arbitrum’s success. In addition, we believe that the benefits to the ecosystem in terms of better governance processes, more informed votes, and a better distribution of resources as a result of that, fully justifies the cost of The Coalition.

Additionally, all members of The Coalition are companies with long-standing reputations in crypto and have trust in the industry. Blockworks, for example, is a media company and thus maintaining trust is the main pillar to our business. While we are dedicated to servicing Arbitrum, we are not a new entity spun up purely to service the DAO. As a long-standing (6 years) crypto media company, we are no strangers to maintaining ethical operations a business. Since inception, we have held ourselves to high standards, as outlined in our Trust and Ethics page which we follow religiously, and we will continue to maintain ourselves to such standards through The Coalition.

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Have you considered creating an isolated proposal for “comprehensive research” and outlining the expenses and key performance indicators (KPIs) involved for each needed work, instead of allocating a large budget for the entire year without a clear indication of demand enough for such services? In my opinion, this approach would be more efficient and enhance the competitive landscape among service providers.

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Hi everyone, it’s Paul from OpenBlock Labs. Thank you to the teams behind this thoughtful proposal. It is great to see talented contributors harness their expertise to assist the Arbitrum DAO in realizing its vision.

At OpenBlock Labs, we are currently engaged in providing grant efficacy analysis for the Arbitrum STIP, utilizing a team of analysts and quantitative researchers to delve into topics that are related to those in this proposal. We will be developing a robust data intelligence layer across 30 Arbitrum projects, which we expect will serve as an essential baseline for future growth initiatives.

It’s worth noting that the compensation we agreed upon for our services is significantly lower than what is currently being proposed here. This discrepancy in cost can be attributed to the RFP process we participated in, which encouraged providers like us to submit detailed proposals, outlining clear milestones, deliverables, and competitive pricing. It would be inconsistent for an organization to purchase services at a specific rate for one initiative, and pay several times more for similar work in another initiative.

With the intention of progressing this forward, OpenBlock Labs would like to participate and contribute analysts and quantitative researchers for the sake of additional accountability at a significantly reduced rate. We trust that the coalition remains open to evaluating new working groups, particularly when it presents a more cost-effective option for the DAO. We also encourage other providers to submit proposals that improve the fairness and sustainability of this endeavor.

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