It’s refreshing to see OpenBlock Labs willing to contribute at a reduced rate for the benefit of the community and get at firesale discount Coallition proposal at very cheap floor offer.
4 Likes
Brian here from RabbitHole.
While these service providers are great individually, I believe this proposal could be improved.
One of the lessons the crypto community has learned from the experiences of DAOs like Aave and Nouns is that when we lock in service providers for too long, we might inadvertently curb the spirit of accountability and hinder the innovation that’s vital for long term growth.
In my view, there are alternative approaches this proposal can take:
-
Encourage service providers to make their own individual proposals to propose their specialized services aimed at concrete objectives. This laser focus will make it simpler to weigh the advantages and financial implications for the DAO, and discourages mega proposals like this.
-
Let’s identify service provider roles we need (quantitative analysis, research, auditing) and hold elections for these roles. By holding periodic elections for these roles, we can ensure that there’s a continual infusion of fresh ideas and a competitive drive that keeps service providers motivated to drive the best results for the DAO.
Both strategies align with Arbitrum’s ethos of promoting relentless improvement and move towards decentralization, which I believe will lead to longer-term sustainability for the DAO.
10 Likes
I want to say I trust all the teams involved in this RFP, rockstar teams with more than enough reputation at risk. And I greatly appreciate the effort it takes to engage in these discussions on the forum, it’s a lot of work, and you are doing a fantastic job.
However, I don’t think this structure benefits Arbitrum, I would much rather see you partner with the groups proposing to offer them these services directly, and become integrated into their proposals as needed, as opposed to having a retainer.
Most importantly, the systemic risk that passing proposals like this could have, can’t be overstated. We should avoid hiring service providers with such a wide scope IMO. They will gain undue influence over the DAO, which is against the sprit of DAOs in general.
Service providers should have a much more narrow scope IMO. For instance, if you said you wanted to take on a budget of 100 M and build a STIP follow-up or something similar, with a very clear budget, and timeline for execution, I’m sure it would pass. Narrow scope, clear limits, GREAT. Large scope, vague limits, BAD.
I hope this doesn’t dissuade you from continuing to participate in ARB governance and the ARB ecosystem, instead I hope you can respond like Camelot did when their proposal was denied, which resulted in STIP.
Can’t wait to see what you come up with, there is a lot of opportunity here.
15 Likes
As the first Aave DAO service provider, we have seen the roles expand (treasury, dev), add redundancy (risk mgmt.), and churn. Vendor lock-in is a real and often stated consideration in that forum.
As the oldest DAO service provider of the initial service providers, we are putting our track record and good will on the line. We fully intend to police ToB and BWR (and them us) and facilitate rapid expansion or churn of service providers whenever required.
5 Likes
Your wide-scope intuition is similar to ours when we first entered servicing DAOs. We stated service level agreements (SLAs) for a tight scope (risk parameters only) that targeted KPIs (risk-adjusted yield for depositors, capital efficiency for borrowers, mitigate depositor losses) with a variable fee tied to that success. What we found, not only Aave or Compound, is that priorities change quickly.
Our experience has been that every engagement has top priorities at the beginning that are changed, deprioritized, or scrapped. For just a couple of recent public examples, we didn’t scope Synchronicity Price Adapter “Killswitch” Functionality for LST Emode and LST Oracle risk and Chainlink Synchronicity Price Adapter 2.0 for Aave. Our work with the Uniswap Foundation, is consistently thrashed by Uniswap DAO and Labs priorities. We now capacity plan for Senior/Staff data scientist/ML/Sim engineers to be available to JIT requests. We’ve scoped our engagement here to do the same.
6 Likes
Just wanted to chime in on this important discussion as well on behalf of the UADP, @AbdullahUmar and I. We voted in support of the coalition, and our reasoning is below!
We’ll continue to be keeping track of this proposal for the days to come.
4 Likes
Regarding the concentration of voting power among the parties (and Trail of Bits: Unknown), I realized that we haven’t made it explicit, but Trail of Bits will not hold ARB tokens and therefore will not participate to any on-chain voting.
4 Likes
I largely echo griffs sentiment on this one, the coalition have strong voting power & many delegators.
I see the tasks in this proposal as also helping them be better delegates. I fear this will set off a race to the bottom where every large delegate on arbitrum tries to get paid for their work, which will also get them more delegators through efforts compensated in this grant
I’d suggest keeping $5-10 million as an incentive program open to those that have more than X amount delegated to them along the lines of stip, to prevent Blockworks, Gauntlet and L2Beat getting a lead on the other delegates by having their staff paid out of this budget.
4 Likes
Speaking for Gauntlet, if we didn’t feel that we as a delegate could benefit from deploying more resources, then how could we expect other delegates to benefit?
Regarding a delegate race to the bottom, we are curious if you have an example(s) of this occurring. We have not seen this in the numerous DAOs we operate. Our experience and various DAO’s attempts at delegation migration have proven mostly inelastic to redelegation.
Can you say more? We aren’t sure we understand. Gauntlet can not pay employees in ARB or any other token including stablecoins.
4 Likes
err maybe these are some stupid questions at this point but… here it goes:
what is the motivation for making this a coalition?
why didn’t these service providers just applied by themselves, each one in their own niche and expertise?
is it easier to pass a proposal to fund all of them as a group by combining all their reputational power at once?
have they ever worked all together before? can we trust their ability to coordinate effectively themselves?
3 Likes
We would first like to emphasise that we appreciate the individual coalition members’ involvement and contributions to the DeFi ecosystem so far.
However, we believe that this proposal presents major flaws that are not aligned with the DAO:
- the resulting large concentration of voting power
- the current lack of structure and visibility for the DAO to onboard SPs
- the questionable budget without any comparison point
- the possible conflicts of interest (SPs defining frameworks to onboard SPs)
- the extremely large scope of the proposal making it difficult to properly gauge
Following the work and collective DAO action that has taken place for STIP, we strongly believe that a security framework is necessary in order to align the best interest of Arbitrum with the various SPs. A neutral and transparent process is a priority before locking in million-dollar commitments, and we hope that SPs will use this as an opportunity to show their general alignment with Arbitrum.
We will be voting against.
10 Likes
Thats an interesting point, really great to draw upon your experience in governance across chains! Delegation is mostly sticky but with the upcoming ARB unlocks in March, I do see a nonzero amount finding its way to active delegates.
I can’t think of another case where the most powerful delegates have applied to be a service provider, so we are all breaking new ground here 
My larger concern is with the vortex of power / flywheel that is being created through this proposal.
Revenue earned as service provider → Hiring Staff → Greater capacity to undertake delegate duties → More ARB delegated
I understand it may not be a direct payment, but Gauntlet can offset payments to their employees with the revenue being earned via this proposal.
Overall i echo camelot’s point of creating an RFP before issuing million dollar contracts, to create a level playing field & ascertain needs assessment before getting into a financial comittments.
3 Likes
Thanks for your reply!
Yeah service providers are still few and far between. Unfortunately many are pivoting away from DAO work given the difficulty of managing fluid counterparties and stakeholders.
Speaking for Gauntlet, proposing this scope of work was more of a battle internally (Finance, Ops) than the objections we have received in public discourse. The market is turning and we are busier than ever. Our team believes Arbitrum is a strategically important ecosystem that can lift and spearhead all of DeFi, rollups, and crypto into another growth cycle.
2 Likes
After discussing with a few community members, I have changed my mind on this proposal and support it. This is under the new idea that sparked from conversation that this should in fact encourage more SP competition by letting other SPs also put up their own proposals for overlapping services to compete on price/quality.
I see this as blend of what @DisruptionJoe proposed with RFP - Abitrum Short-Term Incentive Program (STIP) Data Monitoring and Reporting (compete on a SP) and the new idea that multiple SPs should be chosen to encourage open competition.
6 Likes
No, just no.
First, can the organizations involved demonstrate their time is worth $650-$1500/ hour? Those are the requested amounts. That seems exorbitant … as in “more than I pay for Harvard lawyers” exorbitant, literally.
Second, if the advocate is supposed to be an independent voice for the DAO, the advocate should be elected separately. There’s not even a veneer of independence if the advocate is proposed in the same breath as the council, never mind being actually nominated by the candidates for the council.
The fact the council candidates thought this was a good idea is disqualifying in my opinion. I’m voting no and urge others to do the same.
4 Likes
Hi all,
We’ve been notified that some delegates are concerned that this proposal, The Arbitrum Coalition, may interfere with the activities of the Arbitrum Foundation.
I want to highlight that, in my perspective, the Arbitrum DAO has two key roles:
- Defender of the Arbitrum Protocol
- Support the Arbitrum Ecosystem
In the pursuit of the above goals, it will be necessary for the Arbitrum DAO to engage service providers, whose expertise can be leveraged to fully achieve a desirable outcome for both roles.
One can argue that a key measure of the Arbitrum DAO’s success is its ability to enable horizontal scaling of capable organizations who can execute initiatives on its behalf. To achieve this, it is crucial for the Arbitrum DAO to establish robust frameworks, streamlined processes, and effective committees that seamlessly facilitate the onboarding experience for service providers or even new startups that emerge from the Arbitrum DAO.
With the above in mind, the Arbitrum Foundation has always taken the stance to complement the efforts of the Arbitrum DAO. We are here to assist when requested by authors of the proposal, and we will work with authors to understand the exact nature of assistance. We view the level of support that we can offer as a balancing act - where we aim to empower (and not direct) community members with the utmost goal of allowing them to run initiatives in an independent and effective manner.
The motivation is twofold:
- Enabling and empowering entrepreneurial-minded participants is the most effective strategy to draw them into our initiatives and this will only work if they truly have the freedom to take action.
- It is important to acknowledge that a single entity, such as the Arbitrum Foundation, does not have the capacity to single-handedly execute across all areas.
With regards to proposals like The Arbitrum Coalition.
The Arbitrum Foundation has engaged and entered contractual relationships with service providers to help further develop the Arbitrum ecosystem - but we don’t see ourselves as a sole provider for procuring and onboarding new service providers. We want to encourage the Arbitrum DAO to put processes in place to enable service providers to join our ecosystem with a focus on supporting and enabling the execution of proposals by community members. It may be the case that authors request our assistance as the Arbitrum DAO is still young, but long term, we hope to see an Arbitrum DAO that requires minimal support from the Arbitrum Foundation (as we focus on our mission statements).
Like always, we do not endorse any pending proposal including The Arbitrum Coalition. We are just adding to the discussion to help assure all delegates that initiatives like this proposal do not interfere with our activities, we are always willing to help when needed, and hope to see processes/frameworks eventually emerge that make it seamless to onboard new service providers who can assist the Arbitrum DAO with proposals from the community.
10 Likes
I like the idea of a coalition as it can accelerate the DAO over the next 12 months and help stir delegates in the right direction by providing valuable feedback and analysis. However, I have concerns regarding the centralization of vendors, pricing, and the need for clear Coalition KPIs goals. Concerning centralization, multiple vendors should be considered for each vertical.
For example, Chaos Labs is a leader in the risk space as well and already works with many Arbitrum protocols and applications. Similarly, I do believe we can find another research firm that could provide hourly costs and share the workload together with BWR. This is a big financial commitment for the DAO and can be impactful. A more thorough diligence process will result in better service packaging at a more competitive price point for the Arbitrum community. With multiple vendors competing, we will get more diverse feedback and more than one perspective / opinions on specific deliverables. I’ve reached out to Chaos Labs to provide hourly costs on contributing to Coalition efforts. Last thing our ecosystem needs is to become laughingstock on CT by the way we handle vendors procurement.
In terms of length of commitment I believe we shouldn’t commit to anything longer than 6 months. I understand this proposal was a direct reaction to overwhelming workload that delegates were put through during STIP 1 however I believe in the next 6 months a lot of processes that are being put in place will diminish the need for coalition services over time.
Coaltion Proposal CT reference links:
3 Likes
We recognize the importance and value of having dedicated teams to provide ongoing support in research, coordination, design, and risk assessment! However, we would prefer to receive separate proposals for each team to justify their respective costs and allow for independent voting decisions, similar to the process used for STIP voting.
We acknowledge the teams’ proven track record in the space and their significant contributions to Arbitrum DAO. We are confident that these teams will continue to receive the necessary support while simultaneously addressing community concerns about systemic risk.
3 Likes
After reviewing the Arbitrum Coalition’s proposal and has decided to vote in favor of it, recognizing its ambition to enhance the DAO’s capacity for research, development, and execution. The coalition’s comprehensive skill set, spearheaded by reputable entities in the crypto space, is poised to bring substantial advancements to the DAO’s operations.
However, we do so with an air of caution, as we have some reservations that need to be addressed. Specifically, the analysts’ budget requires more transparency, and we need assurance that the wide scope of the coalition will not conflict with ongoing proposals, such as the one focused on security support. Furthermore, the potential for power capture within the coalition presents a risk that warrants a strategy to provide check and balance for the coalition.
By casting our vote in support, we affirm our positive outlook for the coalition’s potential while emphasizing the necessity for these outstanding concerns to be addressed. We believe that with these adjustments, the Arbitrum Coalition will be in an even stronger position to support the DAO’s vision and contribute to a decentralized and thriving future.
2 Likes
I think there has not been enough of an answer to all of these (right) points laid down by @dk3.
To recap we have a council that:
- can steer the overall direction of proposals in the forum (because, when you dabble into frameworks, you can tailor these very same frameworks)
- has a total of 39M votes
- has several members in the security council.
I don’t know specifically where the line should be drawn about the mix of voting power + critical roles + advocacy roles, but for sure is in my opinion way beyond what we have right here. And I think we should do a further step to specify, in the constitution, that certain roles comes with the caveat of not having as a delegate more than X% voting power and the inability to take other roles that could create a conflict of interest.
I want also to specify the following: I don’t have any specific reserve about the people involved in this coalition. Matter of the fact, I feel like most of them are well suited for the role. But, as a DAO, we need to ensure that even just potential situation of conflicts of interests don’t arise. Because today we have “good guys”. Tomorrow we might not be this lucky.
4 Likes