Proposal: The Arbitrum Coalition

[Bob-Rossi]

I will be voting against. I’ll echo others, in that my against vote isn’t a reflection of my opinion on the actual members of the coalition, but the proposal itself. The budget is a concern, but my my main issue is conflict of interest.

We are asking a group that has a large amount of voting power + security council influence to also have a major input in the proposal process across all projects. I think the only way a proposal like this would be palatable would be a stronger separation of these powers, or they are tied to more specific proposals (i.e., they run the STIP project, or get paid to review items already passed). I know Blockworks has indicated they do not have a goal of influencing or persuading the community, but I don’t see how this can be reasonably done outside of trust.

I’ll add, I’m not opposed to the general idea of having some type of committee that handles these items.

[montyly]

We (ToB) recognize the concerns about the proposed financial commitment and want to provide some context regarding the value inherent in our team’s offering.

Although the proposed investment may initially appear significant, it represents a cost-effective option when viewed within the broader market context. Importantly, our pricing is discounted from our standard rates. Furthermore, our long-standing partnership with Offchain Labs has provided us with unique insights into their tech stack, positioning us as the optimal choice for reviewing proposals and offering insightful recommendations. This proposal is not simply about “hiring one engineer for X months”; it is about gaining access to a team of industry leading engineers with unique expertise, knowledge, and experience.

Upskilling the community is at the core of our mission. The cost of our proposal reflects not just the work to be done but also the creation and distribution of tools and educational resources. These are designed to empower the community with knowledge and skills that foster innovation and self-reliance. By investing in these resources, we are reducing the need for future external assistance, ultimately saving costs for the community in the long term. Over the years, we have demonstrated the impact of our long term community projects, like with our open-source tools Slither or Echidna, that have been widely adopted and praised for their initial and continuing impact on the industry.

We believe our proposal represents a strategic investment into not just the immediate project needs but also the broader ecosystem. By choosing the coalition, you are not only funding a project but also investing in a partnership dedicated to delivering long-term value and continuous improvement to the DAO.

[CastleCapital]

Firstly, thank you for your proposal and keen interest in the Arbitrum ecosystem.

Proposal Outline and Importance

• The proposal is focused on setting up a coalition directed by Blockworks Research to advance research and development initiatives for the DAO, featuring:
  • Trail of Bits, which conducts crucial on-chain upgrade reviews to assure compliance and security, particularly against governance attacks like those involving Tornado Cash. When not reviewing, they’re tasked with creating tools and educational resources to aid future reviews, including Slither detectors and comprehensive tutorials.
  • Gauntlet will offer quantitative analytics, essential for the DAO to make data-backed decisions for sustainable growth, system health, and economic efficiency. Their track record with projects like the Aave Killswitch and Uniswap incentive design underlines their expertise.
  • Blockworks Research aims to deliver analytical research to facilitate informed decision-making for delegates and assist in managing and designing DAO mechanisms.
• The proposal’s criticality is evident in its potential to significantly enhance the DAO’s decision-making security and growth capabilities.
• It’s well-aligned with Arbitrum’s goals, promising to contribute substantially to the platform’s security and scalability.

Team Effectiveness

• Blockworks has demonstrated a strong track record in Arbitrum’s governance, spearheading and passing important proposals, but the concentration of their delegated ARB raises transparency concerns. We also harbor concerns about their grassroots connections to Arbitrum and its communities and market participants.
• Gauntlet’s inactive governance participation, due to delegate address mismanagement, casts doubt on their practical engagement despite their DAO stake.
• Conflicts of interest are apparent with Blockworks seeking to set itself as the inaugural service provider under a framework that could benefit its position and influence within the ecosystem, potentially at odds with the decentralized ethos of Arbitrum.
• The incorporation of Trail of Bits and Gauntlet’s services is predicted to be highly beneficial to the ecosystem.

Concerns

• The proposal risks entrenching a centralized selection of service providers, which may be challenging to reverse and could erode the foundation of decentralization and neutrality that Arbitrum is built upon.
• The multifaceted nature of the proposal risks overshadowing its merits, suggesting a need to segregate the service provider framework for focused evaluation and implementation.
• Research support for Delegates should be broadened to include analysts rooted in the Arbitrum community who can provide nuanced insights from a place of deep ecosystem familiarity.

Recommendations

• Deconstruct the proposal into distinct sections to address each element’s merits and facilitate a clear understanding of the individual contributions and implications.
• Revise the proposal to prioritize the development of a comprehensive and decentralized service provider framework, removing biases and conflicts of interest.
• A mechanism to align top-tier privately-funded service providers’ long-term interests with the DAO’s objectives, such as ARB token lock-in periods, should be explored.
• The research team should be expanded to encompass a wider array of researchers, including those with hands-on experience in the Arbitrum ecosystem, to offer diverse and representative insights.

Final Judgment

• The proposal cannot be endorsed in its current state due to the issues surrounding framework development, the need for clearer segmentation of its components, and the general closed nature of the Research group.
• We will advocate for the proposal if it is deconstructed with:
  • A transparent, fair service provider framework for onboarding SPs, the formation of which is led by the DAO
  • Incorporation of a Research Council that reflects the diversity and expertise within the Arbitrum community, not only the interests of well-funded centralized private organizations.

We hope that our feedback is received as a constructive contribution, aiding the further enhancement and success of the Arbitrum ecosystem.

[coinflip]

Voting Against the Proposal

I have reservations regarding this proposal and may continue to provide additional feedback over time.

There’s no denying the reputation and commitment of the three service providers, and I genuinely hope they will continue to serve and support the DAO. TOB has been closely associated with Arbitrum for years as the primary auditor under Offchain Labs. Gauntlet has contributed significantly to the foundation, particularly in relation to the ongoing USDC migration. Additionally, Blockworks has been an active voice in governance, notably leading the effort to block AIP 1.

However, I have substantial concerns that, whether intentional or not, this proposal could result in a concerning concentration of power within the DAO, particularly with certain aspects of Blockworks’ role in managing vendor onboarding. The way it is structured could result in significant conflicts of interest, and effective gatekeeping for other vendors to potentially replace or supplant any of the Coalition members as a principal provider for the DAO.

To be clear I think these were not maliciously done but the practical effect of an eagerness to contribute in many ways, the proposal might have unintentionally created these risks associated with centralization and gatekeeping. A more prudent approach would have targeted scopes to minimize this risk and instead have the DAO focus on the framework aspects of how the DAO onboards and manages vendors and not these coalition members themselves proposing to do that as well.

I hope that either the Coalition will consider revising the proposal or, preferably, that these vendors will actively engage in an open framework if one is proposed since the DAO seems clearly destined for a multi-vendor model.

Suggestions for Improvement:

• Establish a committee of elected advocates from the DAO to provide checks and balances.
• Appoint a separate procurement manager who is not eligible for other positions within this framework, reducing the gatekeeper influence.
• Ideally, encourage the inclusion of multiple vendors in each category, either from the coalition at the outset (with limited period appointments) or directly through democratic elections.

Appreciate the effort that has gone into this proposal. Whether it succeeds or fails, I hope it can be viewed as a victory because it helped to highlight the DAO’s acute focus on the importance of onboarding world-class service providers to support its ambitious vision.

With this urgency in mind, I hope to soon have a proposal up to have the DAO prefund a multisig so that if and when we have a committee, coalition, consortium, combine or caucus to support onboarding vendors we don’t have to wait a long period to get them mobilized and funded.

[chaoslabs]

The idea of dedicated DAO resources has merit. However, we share the concerns raised about the current proposal.

The financial commitment the coalition is asking from the DAO is substantial. Such a proposal should have a better-defined mandate, granular scoping, and clear success KPIs. Furthermore, systems of checks and balances are essential to ensure that this isn’t a pathway towards gatekeeping and entrenchment. These elements are crucial for transparency, accountability, and, ultimately, for the confidence of the DAO.

Several teams have reached out directly, asking if we’d be willing to be involved. Chaos Labs is happy and well-positioned to contribute significantly. Our active role on the Security Council and our direct engagement with leading Arbitrum protocols, such as GMX, underscore our deep involvement and commitment to the ecosystem. However, we believe the proposal in its current format is set up for failure from a service provider perspective. Massive contracts with hand-wavy goals and unclear value propositions are the type of engagements that create backlash, misalignment, and, ultimately, disappointment. All service providers should be long-term focused, and this doesn’t seem like a good first step in that direction.

A structured RFP process would bring clarity and definition to the proposal, allowing additional service providers to present comprehensive and competitive offerings. The DAO stands to gain immensely from a transparent and competitive RFP process, especially at the price points presented.

Looking forward to further discussions and refining this proposal into a solid plan of action that aligns with the DAO’s objectives and resources.

[krst]

The below response reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.

TL;DR: We are stepping down from the pre-appointed role of the Advocate, and we’ll be abstaining from the vote but we still support the overall idea as we’ve seen first hand that there’s an actual need for what it tries to accomplish in the ecosystem.

A little history

First, we’d like to clarify that while our name is directly mentioned in the proposal as a pre-appointed DAO Advocate, we are not part of the coalition and did not co-author this proposal. However, we have been involved in consulting the proposal, providing our thoughts and feedback, and we support the spirit of the proposal.

As delegates, and especially with the amount of voting power we have, we feel an immense responsibility for the management of both the treasury as well as the protocol itself. Given that, we believed that having the ability to assess different proposals with feedback from people more knowledgeable in specific domains to be beneficial not just for us, but also for other delegates who face time, resources, or knowledge constraints on certain issues.

Currently delegates are willingly committing time and resources to process all the proposals that hit the forum, do the thorough research and analysis, engage in the discussions with proposers and provide constructive feedback, all as a voluntary work driven by an internal sense of responsibility for the protocol. It becomes more and more evident that this is not sustainable long-term.

The best example was STIP voting where we had to evaluate and vote for almost 100 proposals in just a week. If a single delegate spent just 30 minutes on each proposal (and just reading with understanding through most of them took more than 15 minutes) they would need a total of almost 50 hours during that week to just go through all the proposals. This does not allow for in-depth research, back and forth, or constructive feedback. And no delegate is a domain expert in each project category that we’ve seen in the STIP program, it would be great to be able to get some advice from others in the ecosystem that have more experience and knowledge in particular topics.

Of course STIP is an extreme example, but the example that illustrates that meaningful engagement in DAO management requires both time and resources. Many delegates were also actively engaged in the discussions preceding STIP, including workshops. We are already facing the issues of some ideas not even making it past the forum due to lack of interest and inability of the proposers to get the attention of the delegates, or the inability of the delegates to properly asses and evaluate the proposals.

Reasoning behind our support for the coalition

There were several ideas being discussed on how to address this problem, including delegate compensation (so delegates can devote the necessary time for the engagement in DAO governance), a delegate budget so each delegate could pay for consultation/research services, and, of course, the idea of the coalition, where three well-known entities prepare a proposal to the DAO for providing their services on a recurring basis so they can assist delegates with forming an opinion on different proposals by presenting them with unbiased facts. We feel that all these ideas are worth exploring.

When we first heard about the idea of the coalition, we too were sceptical, and shared similar concerns with the ones raised by other delegates in the responses of the proposal, as well as during the call that was held on Monday last week. In particular, we recognise the risk that the coalition will effectively have additional powers, especially it will be able to filter which proposals are even considered for voting, as those that aren’t covered may not receive the necessary attention from delegates. On the other hand, there is a risk that the coalition will waste man-hours on meaningless proposals, and that projects will abuse this mechanism to post proposals to the forum just to get coverage from the entities that make up the coalition.

In response to those concerns Matt from Blockworks suggested the idea of a DAO Advocate - someone that will be keeping the Coalition accountable and will ensure that the Coalition does not have censorship powers. In our view this role is kind of a “DAO proxy” (which we derive from “product owner proxy” role in product management) between the DAO and the Coalition, that facilitates the communication, oversees the smooth execution of services, prevents any of the two sides from getting clogged due to lack of decision-making, and ensures that resources don’t go to waste for meaningless activities.

This mechanism is obviously not perfect, as it still places a lot of responsibility and power in the hands of a few entities. However, this risk is quite transparent and easy to challenge, as both the Coalition and the DAO Advocate are still responsible to the DAO, and the DAO has all the means to easily stop them (by cutting off funding) if they are not effectively helping the delegates or replace them. And if we assume that the DAO Advocate is honestly serving the DAO and representing the DAO’s best interests, then this oversight is not just assumed, it is ingrained in this structure.

We were then asked to participate in the proposal as the pre-appointed advocate for the setup. Initially we had our reservations as we thought this role should rather be electable, but Matt presented reasonable argument that in order to make the coalition effective from day one it would be better to have this role filled by someone who feels the need for the coalition to exists and understands its’ goals.

Moving forward

Overall, we believe this initiative to be a net benefit for the DAO and something much needed. Furthermore we trust in the good intentions of the entities behind the coalition and we believe that this proposal would be a good experiment.

Perhaps the right approach should be determined and agreed upon by the whole DAO before voting on a specific proposal and introducing specific partners, and if that’s the right way to go, we’ll happily participate in ideating and structuring of such a proposal.

However, as our pre-appointment as DAO Advocate has been (understandably) controversial and our role not well understood, we have decided to step down from the pre-appointed Advocate position and we’ll suggest that this position be opened up for election. We believe that if the DAO Advocate were elected by the DAO, he or she would have a much stronger mandate to represent the DAO as a Coalition overseer. If this role is opened up for election, we don’t rule out the possibility of running in those elections.

Even though we will no longer be directly involved in this proposal we have decided that we’ll be abstaining from voting to avoid any controversy or any potential conflicts of interests down the line.

[BlockworksResearch]

While we are disappointed to see L2BEAT step down from the role of The Advocate, we acknowledge that this decision aligns with the feedback we received from the DAO. Initially, we had a strong belief that L2BEAT was the ideal candidate for this role, and we still hold that view. However, it has become evident that many voices within the DAO community are calling for a more open and democratic process for selecting its Advocate.

In response to this feedback, we find it important to heed these suggestions. To facilitate a more inclusive selection process, we plan to implement the following steps if The Coalition proposal is approved through Snapshot:

1. Creation of a dedicated forum post: We will create a forum post that provides information about the role of The Advocate and includes a nomination template. This will allow individuals or organizations interested in the role to nominate themselves.

2. Nomination period: There will be a one-week period during which nominations can be submitted. We encourage L2BEAT to participate in this process, along with other potential candidates.

3. Snapshot vote: Following the seven days of open nominations, we will conduct a seven day Snapshot vote. This vote will determine who will ultimately assume the position of The Advocate.

Once the Advocate has been elected through this democratic process, The Coalition will move forward with onchain voting. This approach aims to ensure that the DAO’s voice is represented in the selection of The Advocate, fostering a more inclusive and community-driven decision-making process.

[cattin]

The @SEEDLatam delegation has decided to vote AGAINST this proposal at the Temperature Check.

Rationale

We believe the proposal accurately identifies the needs of an emerging DAO that requires driving third-party proposals and providing assistance to delegates to make informed decisions.

The post begins by stating that the Arbitrum forum includes many worthwhile suggestions, but often lacks the research, coordination, design, and risk assessment necessary to move forward in an optimal manner.

Now, the question is, should it be the DAO’s responsibility to fund the research, coordination, or design of third-party proposals seeking Arbitrum funding? Shouldn’t it be its own responsibility to submit optimal proposals for approval? Who has an interest in having these proposals approved?

One could argue that the DAO does have an interest in financially supporting teams to deploy on its network, as this will create incentives for users to join the network, generating positive network effects that ultimately benefit the DAO and the value of the ARB token.

So what is the best way to achieve this?

First step: Establish a clear process or framework for projects to present their proposals. Even though there currently exists a template, we think it’s still to simple and might benefit from having some more details. Therefore, the first step should be to agree on a template or framework for those projects submitting proposals. This should include, at least:

• Project Identification.
• Team Overview (including previous successful works).
• Milestones & Deliverables.
• Supplementary Research.
• Required Funding.
• Commitment to transparency and accountability.
• Disclosure of any conflict of interests.
• Support Needed: Highlight any specific areas where the project requires pre-approval support or resources from The DAO.

Why? We agree that there may be cases where projects or just good ideas, as the Arbitrum Coalition proposal states, may not have the capacity to conduct the research, coordination, design, and risk assessment to move forward optimally on their own. And we are fine with projects asking for it.

How to financially support projects? This can be achieved in various ways:

• Hire a governance facilitator to help them understand the processes and assist projects in preparing proposals.
• Have the DAO contract a service provider to thoroughly study the proposals, recommend what is deemed advisable, and help the delegates decide.
• Provide resources to the delegates so they can form their own teams and have the operational capacity to analyze the proposals. In this case, financially supporting only a certain percentage of the delegates will incentivize them to do their research and make more well-founded decisions. In this scenario, the ARB holders ultimately decide which delegates perform this task most efficiently, and, in theory, those will be the ones to receive a larger percentage of delegated ARB.

Hiring a Facilitator

We talked about this role some time ago but the DAO did not have the maturity and activity that it has today. This role encompasses what has been proposed here for The Advocate and makes it much more comprehensive, being key in assisting any participant in the governance of Arbitrum.

Hiring a Service Provider

The Arbitrum Coalition would act as a service provider. How can we ensure that this provider is neutral, does not favor particular projects, and does not conflict with the interests of the DAO?

One option is to bar this position to delegates or large ARB holders.

But this unfairly disadvantages the proponents, who have the reputation and track record to provide high-quality and efficient services to the DAO. Therefore, in line with what @dk3 said, we need to build trustless systems that don’t allow collusion or censorship. (we share the concerns described by him in his post)

What can be done? Utilize existing systems: Use the temperature check as a filter to decide which projects will receive the resources for the research, design, and risk assessment service provider to move forward optimally.

As it happens now, proposals that are approved via temperature checks are not necessarily complete or defined. Sometimes the approval comes from delegates supporting an idea or project, but with the condition that the proposal is strengthened.

This same system can be used for the DAO to express the intention that the project should receive assistance from the service provider. By this, before the on-chain vote delegates will have the necessary tools (research, risk assessment, etc.) to decide whether to approve that proposal or not.

Whom to hire as a service provider? As @pedrob argues in the Security Enhancement Fund proposal, the DAO could opt for approving a budget dedicated to subsidizing research and risk assessment, subsequently allowing each protocol to apply for the subsidy they deem necessary for deployment on Arbitrum. Complementing this, a list of recommended—or potentially mandatory—service providers could be voted on. This ensures that, when evaluating each application, the research and risk assessment are guaranteed to be conducted by a reputable and proficient service provider (such as Blockworks, Gauntlet, & Trail of Bits).

Providing resources to the delegates

Lastly, as we mentioned before, offering financial compensation will incentivize delegates to conduct their research and make decisions with a stronger foundation.

DAOs like MakerDAO incentivize their delegates with substantial resources, and their responsibilities extend beyond merely voting and communicating their vote—they also carry out sensitive tasks such as auditing spells and other activities related to governance security.

The expected tasks for the delegates could be specified, and a work regulation outlined that the facilitator will verify before executing payments.

Which do we believe is the best approach?

In our view, a resilient and decentralized system should feature a combination of the three strategies. A facilitator is contracted to support in the initial stage, the possibility of requesting funds prior to the final approval of the proposal, and providing delegates with greater resources so they can study the proposals in depth and with quality time.

Conclusion

We would like to thank Blockworks Research, Gauntlet, and Trail of Bits for the detailed proposal and, most importantly, for bringing this discussion to the table. We agree that the DAO should allocate resources to ensure that the proposals are well-supported and assist delegates in making informed decisions. In this case, we don’t agree with the proposed mechanism.

In this regard, we will support future proposals that include a detailed framework for how various service providers can present themselves to offer their services, rather than a specific allocation proposal for a single provider. There should also be specific milestones outlining the objectives to be pursued and KPIs that allow for the measurement of the results achieved.

Also, we agree with L2BEAT that the current delegate situation is not long-term sustainable.

We believe that a proposal of this nature, which aims to alleviate the workload of delegates and support them in their decision-making processes, should aim for a multi-faceted system. Resources should be allocated to a mixed solution where not just one concentrated point is incentivized, thereby mitigating all the risks and concerns detailed in this forum thread. To this end, we think it prudent to revisit the discussion about hiring a facilitator, the incentives for delegates, and ultimately, the framework for the contracting of service providers.

[Michigan_Blockchain]

Michigan Blockchain is voting FOR the proposal to Fund the Arbitrum Coalition on the Snapshot Temperature Check.

The proposal establishes a coalition of three respected entities to provide their services on a recurring basis for the benefit of the Arbitrum DAO. This will serve to assist the large, active body of delegates in making informed decisions by providing unbiased analysis on a diverse set of proposals.

The Arbitrum Coalition is a concept we believe will provide major benefits to the community and enable a more efficient DAO governance process. The members of the coalition have continued to communicate with delegates and address concerns regarding the proposal and its potential shortcomings. We feel the coalition is strongly aligned with the future of the Arbitrum ecosystem and funding the coalition for one year, with the DAO maintaining the ability to change the service providers and reevaluate future frameworks, enables for a transparent and effective trial of a new form of governance structure.

We believe the Coalition provides the Arbitrum DAO with leading service providers in the space and addresses many of the complexities and inefficiencies we have faced to this point as a DAO. We appreciate the teams for their effort and look forward to working with them to ensure that the Coalition delivers substantial benefits to the Arbitrum DAO and the ecosystem as a whole.