Proposal - Updates to the DIP, The Complete 1.7 Version

[SEEDGov]

Hey everyone!

First and foremost, we want to thank the delegates for their valuable feedback, both here in the thread and during yesterday’s Community Call.

Summary of Changes - July 24th

To provide clarity and reassurance to all delegates and stakeholders, we confirm that the following changes have been made:

• The proposal will not be submitted for a vote today. We will allow at least one more week to continue collecting feedback from the community.
• There will be no retroactive changes for July. However, we want to be clear that if the proposal is approved during the first half of August, the changes will apply to that month, as delegates will have already been informed of the potential updates in advance.
• We are still open to making changes throughout the week, so we will be waiting for more feedback from the delegates.

Maxlomu

@maxlomu

In anticipation of v2, I am looking forward to a mindset change from “delegates discuss in the forum and vote” to “delegates are contributors”.

I suggest (on the lines of what I wrote in the past):

— Min flat compensation for voting on snapshot and tally: the number of votes required will be much lower going forward.
— Structure and entry points for delegates to contribute, even if not full time / involved in the AAEs. There’s demand for activities like project support, mentorship, events, and new initiatives: delegates should be encouraged to plug into these. I’ve spoken to projects actively looking for this kind of help, and the DAO could fill that gap.

— Reward exclusivity. It still puzzles me how we treat the same people who work only for Arbitrum and people who also work for Optimism, zksync ecc.. Their opinion cannot be unbiased and fully committed to the success of Arbitrum.

— Mix USDC and ARB payment. We must share in the success and downsides of our own economy

Thanks for the thoughtful feedback—we’ll certainly take it into account as we look toward v2.0.

Regarding your first two points, we’re fully aligned. This is exactly why we believe the upcoming Contributors Program will be a key entry point for new contributors to Arbitrum DAO.

On the topic of exclusivity, we understand your concerns. It’s a sensitive matter that will likely need broader discussion during the design phase of v2.0.

Finally, on compensation: we agree that it would be interesting to explore a structure that guarantees a fixed USD-equivalent base (regardless of the asset used for payment) along with fixed amounts in ARB. We’re aligned with this direction.

Jean (Mux)

@Jean_MUX

Thanks for putting up the well-thought proposal! As a builder & delegate, we embrace the idea of differentiating delegate and contributor, and support the structure change that attracts both of them to contribute.

We are on board with the direction of decreasing incentives since the activities required are less generally and the introduction of committee. But usually a more mild trending down might find its way easier so that some delegates can adapt accordingly. If 40% percent is a bit aggressive, 20% might be a good start.

Thank you for the support! At this stage, we believe the 40% reduction is backed by strong data and reflects the DAO’s evolving context—but we’re still actively seeking more feedback from other delegates on this point.

Curia

Thanks so much for the thoughtful and in-depth feedback — we’ll go point by point:

@Curia

First, regarding the introduction of Tier X, we understand and appreciate the intent to improve quorum by encouraging more participation from high-VP delegates. That said, we are not entirely confident that rewarding voting alone, without any expectation for broader engagement, will lead to long-term value creation for the DAO. There is a possibility that some delegates may simply vote in order to receive compensation, while others who regularly contribute to discussions, attend governance calls, and help shape proposals are held to higher expectations. This could discourage smaller but highly engaged delegates who have consistently added value. We are also curious whether there has been any outreach or analysis to better understand why many high-VP delegates have chosen not to participate to date. If these delegates have not clearly expressed interest in joining under easier terms, it may be worth exploring other ways to encourage meaningful engagement or to incentivize further delegation to already active contributors.

Regarding Tier X, the proposal states:

@SEEDGov

However, this does not mean their additional contributions — such as forum feedback — will be ignored.
This means that an eligible delegate would secure Tier X by simply voting, but could still move up to higher tiers by actively contributing with feedback or earning Bonus Points through other initiatives.

In other words, delegates eligible for Tier X still have incentives to go beyond just voting, as they can level up to higher tiers through meaningful contributions.

One of the main goals of this new tier is inclusion — to recognize big delegates who have consistently voted but haven’t received any acknowledgment due to their limited bandwidth to contribute beyond voting.

On the concern about discouraging smaller delegates: we respectfully disagree. The program already expects smaller delegates to contribute beyond voting to receive incentives, given that the voting power they bring to the DAO does not carry the same weight as, say, a 5M ARB delegate. We believe this distinction is reasonable.

@Curia

Second, regarding the proposed reduction in delegate compensation, we see the logic in aligning rewards with a lighter overall workload. At the same time, we believe it is worth considering whether this same principle could be extended to other roles in the program. As proposal volume, dispute rates, and subjective evaluations decrease, it seems that the responsibilities of the Program Manager may have also been reduced. If efficiency and fairness are important goals of this update, it may be valuable to revisit whether current administrative compensation still reflects the level of ongoing effort. More broadly, we would also note that the drop in proposal activity is not solely the result of streamlined processes. It also reflects a need for greater support of the delegates who continue to take initiative and contribute to proposal development. Ensuring that these contributors remain incentivized feels especially important for the health and sustainability of the DAO.

To clarify:

• The subjective evaluation process has not been reduced, but rather strengthened. The Program Manager is now expected to engage with key DAO stakeholders to assess the value of participants’ contributions in a more robust and consensus-driven manner.

• The time currently spent resolving disputes will be reallocated to new responsibilities — particularly, proactive business development to onboard inactive delegates with significant voting power. This goes beyond DMs and includes conducting calls, offering mentorship, and building tailored onboarding paths.

• We do not believe our responsibilities have decreased — quite the opposite. We’re also committing to a sensitive and high-stakes role: enforcing the Terms and Conditions and mediating conflicts between DIP participants and contributors. This responsibility has reputational implications for SEEDGov and is aligned with the Code of Conduct that is currently up for vote:

  @Entropy

  Enforcement & Appeal Process

  All contributors are expected to abide by the Code of Conduct. Enforcement will take place through any program that financially compensates performing governance activities, such as rewards for voting/forum activity, or participation in DAO-approved programs where contributors are directly elected to facilitate the programs.

  The program manager, council, or comparable facilitator in charge of the program is the one responsible for determining violations of the Code of Conduct and reserves the right to take what it deems as appropriate action, which may include but is not limited to, issuing a warning, suspension, or removal from the program. Any community member can raise a concern to the party responsible for managing the program with respect to a contributor failing to uphold the Code of Conduct. While the responsible party is required to acknowledge receipt of the concern and investigate the matter, the final determination and resulting course of action, which may include dismissing the concern, will depend on the underlying program’s structure.

  If there are contradictions between the Code of Conduct and the specific program that is compensating a contributor, then the policies of the program shall take precedence. It is assumed that a program will define its own appeal process, but if it does not, then the conflict resolution section (next) will be the default appeal approach.

@Curia

Lastly, we wanted to briefly share a thought on the removal of dispute rights for subjective scoring. We understand the desire to reduce friction and simplify operations. However, a complete removal of this process might limit transparency and participant confidence. If the number of disputes in recent months was unusually high, it could suggest a need for clearer standards or improved communication. Perhaps there is room for a more balanced solution that keeps dispute rights available in a limited or well-defined way, while still reducing the burden on the program administrator.

On this point, we’d like to highlight this section of the proposal:

@SEEDGov

Finally, considering the previous point, we believe that by achieving a more robust and consensus-based assessment, there will no longer be grounds to dispute the subjective aspects of the program. If a contribution is not considered valuable by the Program Manager, nor by the person who initiated the discussion or proposal, and no other relevant stakeholder (e.g., AAEs or contributors with ≥500,000 ARB delegated) highlights the contribution — whether publicly or privately — then it can reasonably be argued that there is insufficient basis to consider the contribution valuable and therefore eligible for rewards under the terms of the program.

We believe that with the proposed upgrades — especially involving third-party feedback — the assessment process will become significantly more robust. While subjectivity won’t disappear entirely, the absence of recognition from any relevant stakeholder (including the Program Manager, AAEs, proposers, and high-VP contributors) indicates that a contribution likely lacks sufficient merit to qualify for rewards. In such cases, disputes would become redundant.

cp0x

Thank you for the detailed and thoughtful feedback. As we did with Curia, we’ll go point by point:

@cp0x

Lack of time for community discussion
The community has had very little time to review this proposal — only a few days for one of the most comprehensive and complex programs. This creates the impression that either it was rushed or that delegate feedback is not a priority.
This does not promote healthy dialogue, I do not see much need for urgent adoption of new changes.
Suggestion: Please consider postponing the vote by at least two weeks to allow for meaningful discussion

We completely agree with this point and confirm that the proposal will not be put up for a vote today. We’ll provide at least one more week to gather additional feedback from the community.

Our intention was never to rush the process or ignore delegate input. Rather, we aimed to keep the process as fluid as possible so that changes could be implemented promptly — something we believe would ultimately benefit the DAO.

@cp0x

Retroactive rule-making is unacceptable
Establishing rules retroactively is a bad precedent. In every legal system, laws apply only from the moment they are adopted — not retroactively. Applying changes in this way undermines basic governance principles. It would be logical if everyone knew about the upcoming changes a couple of months in advance, but the proposal appeared literally just now.
New rules cannot be applied to a month that is already in progress and the participants did not agree to such rules at that time.
Suggestion: This clause should be removed, as it contradicts fundamental norms of fair process.

We’ve heard similar concerns from other delegates and stakeholders. To clarify, there will be no retroactive application of changes for July. However, if this proposal is passed in early August, then it will be effective for that month, since the delegates will have been aware of the proposed changes in advance.

@cp0x

Excessive increase in the entry threshold
You just said on the call that you see a problem in the fact that there are small delegates and they need to be encouraged, and then you propose a barrier that simply won’t let such delegates into the system.
Raising the minimum delegation to 500,000 ARB (a 10x increase) creates a major barrier for smaller but active delegates. This will likely shrink the number of active participants — which goes against the stated goal of the program.
I understand this might reduce the review load for the program operator, but the objective of the program is not to simplify operations for administrators.
Suggestion: Remove this requirement, especially considering the many other limitations already in place

There may have been a misunderstanding here. On the call, we specified that large delegates — not small ones — should face lower barriers to participate in the program.

The goal of raising the threshold to 500,000 ARB is not to reduce admin workload, but to improve economic efficiency, particularly with regard to incentivizing voting behavior. As outlined in the proposal:

@SEEDGov

Inefficiency in rewarding small delegates’ voting activities: Economic analysis in our last report shows that incentivizing voting participation from delegates with >500K ARB is 47 times more efficient than incentivizing those in the 50K–500K ARB range.

This figure is enlightening regarding how cost-effective it is to incentivize small delegates’ voting activity. While this was a deliberate approach during the early phase of the program—to attract talent and enrich the DAO with greater pluralism and human capital—this “investment” should naturally be scaled down over time as these smaller contributors are successfully onboarded into full-time DAO roles (as occurred with Pedrob and the OAT, for example). It’s important to mention that these onboardings are, of course, based on the merit of the contributor, and not every participant in the program will necessarily end up working full-time for an AAE or any other DAO initiative.

The 500K threshold is directly related to the voting power that a cluster of delegates can contribute. Initially, we considered incentivizing only the Top 50 delegates within Tier X — this cutoff was somewhat arbitrary. However, when we looked at the next 15 delegates (ranked 51–65), we found they collectively hold just over 10M VP. While the “ROI” (in this case, ARB per USD Spent actively voting) of incentivizing voting activity from these 15 delegates is lower than that of the Top 50, 10M VP is a significant figure that shouldn’t be overlooked.
Our goal is to identify and support the cluster of delegates holding the largest amount of VP. Based on current data, there are approximately 65 delegates with 500K VP or more. Below that point, the VP per delegate drops steeply. As such, the “ROI” of incentivizing delegates beyond the Top 65 declines sharply, along with the additional amount of VP being incentivized.

@cp0x

Tier X incentivizes low-effort participation and system abuse
Tier X encourages delegates to accumulate 500,000 ARB and then do nothing beyond voting — yet still receive $1–1.5K. Worse, large delegates can split into multiple 500K wallets to farm rewards, earning far more than an active 2M ARB delegate who contributes meaningfully.
On the call L2beat said that everyone goes through KYC and it is not a problem to gather 4 friends just to get money 4-6k just for 2M quorum.
Ministro said that a situation where a lot of 500k delegates will go through Tier X is unlikely. But above I just described a situation where previously non-participating users will make several 500k delegates.
This Tier does not help in any way with the main purpose of this program.
Suggestion: Remove Tier X — it creates opportunities for abuse and undermines the value of substantive contributions

We respectfully disagree. In fact, removing Tier X would be counterproductive, as it is meant to bring in consistent voters who may not have the bandwidth to contribute more deeply.

We don’t see a high risk of farming:

• KYC is required for getting rewards
• All on-chain activity is traceable (for example, delegations)
• As Program Managers, we can easily detect patterns of behavior suggesting vote farming or wallet splitting
• If abuse occurs, we will take action accordingly

@cp0x

Voting Power Multiplier (0.8) unfairly penalizes smaller delegates
When combined with 30 points of subjective scoring, this multiplier can effectively block smaller delegates from qualifying. Since the subjective scores will not be debated, the operator alone decides whether a small delegate gets paid.
The new rule itself that it will be impossible to debate 30% of the points is simply unfair and only says that the operator is tired of debating, but it has not yet been possible to build a system where this is excluded. If such disputes exist, there is a problem, and you are not planning to eliminate the problem, but simply to force them to remain silent about it.
Suggestion 1: Remove the multiplier entirely. Instead, apply the multiplier to payment amounts, not to eligibility. For example, set a base reward of $Х,ХХХ and scale it with the multiplier — this would be fairer and still acknowledge delegation size without excluding anyone
Suggestion 2: Reduce subjective score influence to Tier 1 only, with a 10-point maximum — higher tiers should rely only on objective criteria

We appreciate your view, but this element is not part of the proposed changes — it was introduced earlier and we believe it continues to function as intended.

The multiplier was designed to reward proportional impact fairly and transparently. As we’ve previously communicated, its purpose is to strike a balance between effort and influence. At this time, we see no compelling reason to change or remove it.

@cp0x

Operational spents are 50% of incentives (27k vs 55k)
You have talked a lot about some efficiency of the program. But I see increasing costs for operational expenses.
You can say that this is a complex system that requires large human resources and you will be right. BUT it was you who built such a system - make it simpler and more transparent
Just imagine the same situation with grants, where the operating costs for a $10 million grant would cost $5 million.
Suggestion: It is necessary to exclude the increase in the cost of operating expenses - you determine them yourself and can regulate them

As we discussed with Curia and on the Community Call, there are a few key points to clarify here:

• We are assuming new responsibilities, including enforcement of the Terms & Conditions and the potential Code of Conduct, as well as business development efforts to onboard inactive high-VP delegates. The last one requires significant time and interaction with contributors and stakeholders.
• Comparing the admin budget only to the incentive distribution seems reductive. The value of the program lies not just in payouts, but in its overall impact — improving quorum, onboarding contributors, and strengthening DAO governance.
• The current clause on reevaluating admin compensation (after reaching 65+ registered delegates) was previously approved. That threshold has been exceeded for some time, but we waited to introduce this update until we had the 1.7 ready.
• Finally, we expect the v2.0 of the program to be simpler, improving operational efficiency. For now, however, SEEDGov continues to evaluate hundreds of comments from over 65 delegates, engage in stakeholder feedback loops, handle disputes, and guide participants. These activities require full awareness of nearly all governance activity within the DAO — not a trivial task.

@cp0x

In addition to the comments on the presented version, I have additional thoughts on improving the program:

1. It would be important to introduce clear KPIs for the program operator’s performance, such as:

• Monthly reports must be submitted on time without exception
• Monthly reward distributions must be executed strictly on schedule
• Anonymous monthly or quarterly evaluations of the operator’s performance should be collected
• The operator should respond to all forum messages from delegates related to the program
• Biannual reports on overall progress and execution should be published

Based on these KPIs, the monthly compensation for the program operator should be determined

At last, linking the operator’s KPI to payments should be excluded so that the operator is not interested in specific reductions for specific delegates in accordance with the KPI

We think we already addressed this in a prior post. A few thoughts:

• We are humans, and exceptions do occur — particularly with regards to the timing of monthly reports. When initially defining timelines in DIP 1.5, we may have been overly optimistic. However, these were always framed as expectations, not hard deadlines.
• Monthly payments do not depend solely on the Program Manager, which makes hard deadlines for distribution unrealistic.
• Biannual reports already exist — the latest was published here.

We do appreciate the suggestion for anonymous evaluations and are open to further exploring this in the v2.0 design phase.

Hawheik

Thank you for the detailed and thoughtful feedback.

@Hawheik

In practice this means that existing sub-500k ARB participants must maintain a nearly perfect record of voting, or be locked out. Go to the hospital for a month? You’re out. Have a family emergency that takes you away for a few inopportune, high-activity weeks? You’re out.

We believe this can be addressed. What do you think about adding: “The Program Manager reserves the right to apply exceptions regarding this rule, as long as it provides a rationale for this decision”?

This way, if there is a force majeure situation (verifiable) that prevents a contributor from maintaining their on-chain voting activity above 75%, a grace period could be granted.

@Hawheik

The second requirement that will cause such an expulsion is any failure, in the DIP Program Manager’s opinion, of a participant to “Adhere to the DIP’s Terms and Conditions and any other Social Agreement”, which I think most of us can agree is a matter of subjective judgement.

Indeed, it is subjective, and that’s why there is the possibility to appeal our decision to the Arbitrum Foundation:

@SEEDGov

In the new iteration, appeals of any type of sanction (whether a penalty, suspension or removal from the program) should be submitted by the affected DIP Participant to the Arbitrum Foundation, which would act as a neutral mediator in the situation and have the authority to ratify, change, or revoke the Program Manager’s decision.

@Hawheik

Instead of this, I think a worthwhile improvement to the DF category is to normalize all Delegate Feedback scores proportionally to the highest-scoring DF for each month, such that the highest score is normalized up to the maximum score (40) and all others are scaled up proportionally. This naturally compares each delegate’s feed to the Best Possible Delegate for that month, instead of an unobtainable Perfect Ideal Dream Delegate.

Regarding the assessment of DF, if we implemented this, we would end up over-compensating every month. Not every month has comments that deserve the maximum score; the level and quality of activity vary, and certainly not every comment adds value.

That said, there have been delegates who received the maximum score, and during those months, it was easier to “normalize” proportionally for the rest using those comments as a benchmark.

Finally, with the new system, if a contribution brought value to the discussion, it is very likely that a relevant stakeholder will highlight it — it will no longer depend solely on our criteria. Therefore, we believe that instead of being more “restrictive,” it could actually be more inclusive, as we are incorporating different perspectives into the assessment.