Reflections After a Year Away: Four Opportunities for Arbitrum’s Continued Excellence

General
1

Reflections After a Year Away: Four Opportunities for Excellence in 2026

Hi everyone,

After roughly a year away from active participation, it was energizing to reconnect with many of you at the Buenos Aires off-site. The conversations there reaffirmed what made Arbitrum special in the first place: intellectual honesty, curiosity, and a shared sense that we’re collectively building something that hasn’t been built before. Thank you again to those who welcomed me back into the dialogue.

I wanted to share four observations. These build on some of the recent forum discussions around the Delegate Incentive Program, DRIP, OPCO, and the evolving structure of the DAO.

1. Delegate Incentives Should Move Away From Activity Metrics to Stakeholder Representation

Most recently, the DAO has been debating multiple variations of the Delegate Incentive Program including:

What all these efforts have in common is that they still try to solve a political science and incentive design challenge primarily through rules-based performance scoring. The intent is good, objectivity, fairness, clarity, but activity metrics are subject to Goodhart’s Law.

A more scalable, governance-aligned model is to move toward Stakeholder Representative Delegates.

A proposed structure:

Define a set of legitimate stakeholder groups, then allow each group to elect a single compensated representative:

  • Core contributors & protocol-aligned entities

  • Application builders above a clear threshold (usage, TVL, revenue)

  • Long-tail / emerging builders

  • Liquidity providers & market makers

  • Infrastructure & developer tooling providers

  • User/community representatives

(Exact groups should be debated.)

This reframes compensation from “pay the most active delegates” to “pay the representatives of well-defined constituencies who are accountable to those constituencies.”

Benefits:

  • Eliminates incentive distortion

  • Reflects real-world political theory on representation

  • Reduces spam and admin overhead

  • Increases quality of upstream proposal shaping

  • Clarifies who Arbitrum is listening to, and why

  • Moves from “rules-based scoring” → “role-based accountability”

Arbitrum has a chance to leapfrog other ecosystems by shifting the delegate system from activity to representation.

2. Connect Explore/Exploit/Operate to the DAO’s Flywheel — And Build Programs Around It

The DRIP program has been a strong step forward, as seen in the October 2025 DRIP Update. But Arbitrum now needs to tie these programs into a unified structure that supports the ecosystem’s flywheel.

Right now, each program infers the long-term goals on its own. Instead, the DAO should explicitly define three governance zones—each mapped to how value actually compounds in the Arbitrum ecosystem:

Explore Zone (Experiment → Validate → Graduate)

This is where new hypotheses, early-stage builders, emerging infra, and novel tooling are tested cheaply and quickly.
Goal: Validate what may someday drive the flywheel.

Exploit Zone (Scale → Strengthen → Compound)

When something repeatedly works—distribution channels, high-TVL builders, liquidity strategies—this is where the DAO deploys serious capital.
Goal: Amplify what already accelerates the flywheel.

Operate Zone (Stability → Coordination → Reliability)

This is the “metagovernance” layer: governance ops, oversight, reporting, proposal integrity, financial controls, compliance, system monitoring.
Goal: Ensure the flywheel runs smoothly.

Right now DRIP mostly serves Explore + some Exploit. But Arbitrum needs more purpose-fit programs for each zone, each with distinct KPIs and operating models.

This should become the architectural blueprint for every new initiative. It grounds funding in a clear theory of impact and puts an end to the “every program is its own universe” pattern.

3. Clarifying OPCO’s Role: Governance Operations, Not Program Execution and What the Firestarter Fund Reveals

The Firestarter Fund proposal is important not because of its budget, but because it highlights a structural confusion in the governance stack.

Why Firestarter matters in this discussion

The fund is currently framed like a “petty cash purse.”
But historically, the origin of the RWA wave in Arbitrum came from something very different:
Someone with delegated authority was able to use small-scale funding to explore an opportunity outside the rigid constraints of Questbook programs, validate the problem, scope the solution, and spark a major initiative.

That exploration cost more than the newly proposed $10k cap.

When OPCO frames Firestarter as a tight mini-grant program, it signals that it may be drifting toward running Explore-zone programs - which is not where OPCO should sit.

OPCO should not be running Explore or Exploit programs.

If OPCO runs high-variance initiatives, it loses neutrality and becomes another ecosystem actor introducing entropy and conflict of interest.

The correct role for OPCO is “Governance Operations + Metagovernance Integrator.”

Governance Operations (Operate Zone)

OPCO should:

  • run the governance cadence and rituals
  • ensure proposals meet standards
  • track fulfillment and call out gaps
  • coordinate delegate communication across stakeholder groups
  • ensure succession and continuity when contributors step back
  • maintain the meta-infrastructure that keeps the ecosystem aligned

This is the “operate” layer of the system.

Metagovernance Integration (Across All Zones)

OPCO should ensure that:

  • Explore and Exploit programs are coordinated
  • aligned entities communicate clearly and regularly
  • representative delegates are engaged meaningfully
  • long-term impact goals and short-term outcome goals remain aligned
  • program operators have what they need — but aren’t stepped on
  • the DAO experiences a coherent “governance rhythm”

The key measurement for OPCO isn’t “how much did they fund?” It’s:

Are they increasing meaningful participation, clarity, continuity, and coordination across the network?

If Firestarter is reframed properly as a kindling mechanism for early-stage problem discovery, it could align with Explore. But only if OPCO remains a facilitator, not the operator.

OPCO must be clearly defined as:
Operate + Integrate. Not Explore. Not Exploit.

4. Arbitrum Is Losing the DAO Narrative Game While It Increases Political Decentralization AND Organization. Why?

There is a narrative floating around that the DAO is “centralizing.” That’s the wrong lens.

What’s emerging is a multi-layer governance architecture that creates both order and opportunity.

Layer 1: DAO Delegates → Long-term impact goals

The DAO sets strategy and holds aligned entities accountable for impact-level KPIs.

Layer 2: Arbitrum-Aligned Entities → Translate impact goals into zone-specific outcome goals

These entities should not run programs directly.
Instead, they:

  • distribute resources across Explore / Exploit / Operate
  • choose operators
  • synthesize learning
  • ensure alignment to DAO-level impact goals

This separation is essential for accountability. By running on long-term budgets without consensus dragging every decision to the land of mediocrity, they can showcase excellence - as we have seen in DRIP.

Separating the AAE “operating” and “allocation” budgets could help clarify accountability.

Layer 3: Program Operators & Service Providers → Short-term execution

Programs like DRIP, growth teams, infra teams, liquidity programs, or research teams deliver measurable outcomes.

Why this improves decentralization

Because it creates pathways:

  • individual newcomers → service providing contributors → program operators → aligned entities → strategic stewards
  • more aligned entities = more political decentralization
  • more operators = more opportunity
  • more structure = less chaos, more clarity
  • more clarity = more meaningful participation

Arbitrum is not becoming centralized. It’s becoming viable.

It is embracing the productive tension between order (structure, accountability, alignment) and chaos (experimentation, emergence, discovery). This balanced ecosystem is what allows both innovation and stewardship to coexist.

This is the optimistic story:
Arbitrum is maturing into a governance system where decentralization deepens, opportunity expands, and the flywheel spins faster because the system around it finally has shape.

Closing Thought

Arbitrum is entering a phase where the scale of its resources and ambitions requires more structure. Not overbearing bureaucracy, but empowering pathways.

  • Delegate incentives should evolve into stakeholder representation.
  • Explore / Exploit / Operate zones should be explicitly defined and mapped to the flywheel.
  • OPCO should anchor governance operations and metagovernance integration — not run programs.
  • Aligned entities + operators + pathways will increase political decentralization, improve outcomes, and provide more meaningful participation pathways.

I hope you find value in my insights, and I am happy to discuss further to provide clarity.

— Joe

4 Likes
2

I agree with many of the ideas, but not with the decentralization aspect.

Decentralization and efficiency are always at odds. Therefore, it’s always a balance and a choice – but recently, the choice has always come down to having complete control.

  1. The Arbitration Foundation essentially controls OpCo, all DAO operations. The DAO is there only as an observer – that’s centralization.
  2. Entropy appears as a superdelegate, who, thanks to enormous funding, does a lot of work. Consequently, other delegates can’t adequately compete with Entropy in efficiency—they don’t have even close funding, further reducing the influence of regular delegates, while Entropy’s voting share grows daily.
  3. ATMC also essentially manages Entropy’s strategies – meaning enormous funding – tens of millions of dollars – is not managed by the DAO.
  4. The Arbitration Foundation controls discussions both on the forum and on Twitter. They believe that delegates are Arbitrum ambassadors and therefore receive rewards. But this isn’t true – delegates represent those who delegated their tokens to them. And they will prioritize the interests of these people, as long as it doesn’t interfere with the development of the Arbitrum. And that’s fine, because healthy criticism always helps correct mistakes and change the direction of development to a more appropriate one.
  5. Now, delegate incentives are also being developed by the Foundation. For some reason, the Foundation determines how much the DAO will pay DAO delegates. It’s not always bad, the last proposal was very good, but it’s still centralization.

As a result, finances, operations, proposal development, incentives, and discussions are all centralized. I don’t know of any clearer signs of centralization, but I’m willing to discuss it.

What I’m trying to say is that I’m a proponent of decentralization, but I also understand the desire to control decisions and financial flows. We need some kind of general plan for a year, two, or three, outlining the goal, what the DAO will strive for - how it will function, what governing bodies and decision-making bodies it will have - and then gradually move in that direction. Right now, I don’t see any strategy for that.

3 Likes
3

Thanks for raising this. I think we’re actually aligned on the core issue, but describing it precisely matters here.

To me, the key point is that Arbitrum is already politically decentralized. Delegates are chosen by token holders. Delegations can shift instantly. No single entity has inherent authority. That part of the system is functioning. (Though some would argue that the soft power has created a circle of influence that is almost impossible to break into via merit-based contribution.)

What people are reacting to is something different:
The operational layer looks centralized because the DAO intentionally created well-resourced entities to get things done.
That was a choice made by a politically decentralized system, not a cartel acting on its own.

The real risk isn’t that we’re centralized today. The risk is that without an ongoing plan for capture resistance, these operational structures could drift into becoming gatekeepers over time. They could rightfully be described as gatekeepers today. Not because of bad intent, but because they’re the only ones with the resources to sustain serious execution.

This is why pathways for meaningful participation that allow for merit-based “upward mobility” are a key unlock to value in 2026.

I see these as the key points:

  1. Political decentralization already exists.
    Tokenholders decide who holds influence. If they shift their preferences, the map changes overnight.

  2. Operational centralization exists because viability had to come first.
    A system that can’t execute is a system that can’t (or shouldn’t) decentralize anything further.

  3. The missing piece is a clear plan for long-term capture resistance.
    Not because we’re captured today, but because a politically decentralized system should continuously design against future capture.

  4. The sequence matters:

    • Build something that works.
    • Then fortify the parts that ensure no operator or cluster can become indispensable.
    • And make that intention explicit, so contributors understand the direction of travel.

If the DAO communicates more clearly that viability came first, and that the next phase is strengthening capture resistance through broader participation and competition, most of this concern evaporates.

1 Like