[Request for Comment - Draft Proposal] Building a Pluralist Grants Framework - Milestone 1

Workshop & Async Feedback Opportunities

Thanks to everyone who has given feedback so far, it has been incredibly helpful!

We have taken your feedback and crafted a Version 2 of the Arbitrum Pluralistic Grants Program. Our next step on this cocreation journey is to collect your insight on specific aspects of the V2 proposal to allow us to better assess which elements are working, and which need further revisions. . To enable this we are using a tool called Ethelo to help have quality asynchronous conversations. It will help best structure the conversation and lead to better outcomes where everyone has a voice.

:pray: OUR MOST IMPORTANT ASK:

Review the new proposal at arbitrum.ethelo.net

Must submit your input and comments by 5pm UTC on Monday, 6/19

OTHER GREAT WAYS TO PARTICIPATE

Open Delegates Workshop - Thursday 6/15 at 8pm UTC

In this one-off event we will be splitting our time between Mural and Ethelo to have a clear conversation with delegates about this proposal.

:calendar: Add to Calendar

Bi-Weekly Grants & Governance Workshops - Tuesdays at 2pm UTC

(First one on Tuesday, the 20th)

These bi-weekly facilitated sessions will be made open to all delegates and teams/individuals contributing to the Arbitrum ecosystem. Hosted workshops will use design thinking to better understand the problems we are facing, align our conversations, and find better solutions.

:calendar: Add to calendar

The proposal below has been rewritten based on all the great feedback here and is available for comment here.

AIP - 3 [Non-Constitutional] Fund the Arbitrum Grants Framework Proposal Milestone 1

Proposer: Plurality Labs

Author: Disruption Joe

Reviewers: ccerv1.eth, emu.eth, dennison.eth, nich.eth, zer8🧠.eth, pepperonijoe.eth, shawn164.eth, azeemkhan.eth, jmcook.eth, boilerrat.eth, jord.eth, ui369.eth, spengrah.eth, griff.eth - Sorry to anyone left off the list who has contributed

A 7-minute video explainer

TL;DR

This proposal requests 5 million ARB (0.1% of the total treasury) to fund the first of three milestones aiming to increase development on Arbitrum, establish a capture-resistant grant allocation mechanism, and make governance participation fun and effective.

The budget breakdown is as follows:

  1. 2.5 million ARB (50%): Funding pluralistic grants programs for ecosystem development
  2. 750k ARB (15%): Funding direct grants program to decentralize the grants program
  3. 1 million ARB (20%): Matching Gitcoin funding pools on Arbitrum
  4. 750k ARB (15%): System design, execution, and accountability

Motivation

Finding Escape Velocity

The problem is deep. The DAO could directly vote on Tally for each grant or even for each of the pluralist grants frameworks suggested in this proposal. However, governor DAO contracts are the only fully decentralized mechanism we have for those collective decisions - and DAOs which have done this have typically centralized over time. We are still missing key aspects of grants/contributor pay frameworks vital to keep the system at a level of minimal viable decentralization.

This proposal has some centralized components, such as the direct grants to research and build out those components which will keep the system decentralized. This kind of build requires high context and expertise. It needs to use centralized management to escape falling into the same wasteful patterns we have found ourselves stuck in as an ecosystem. We know there is a better way, but the decentralized decision making in DAOs has not been willing to fund building it.

This proposal uses the best of centralization and decentralization as tools to escape the centralizing patterns which have plagued DAOs.

This is where the pluralist grants models come in. They are the hyper-decentralized part of the proposal. We propose funding multiple pluralist program managers, each with the autonomy and authority to innovate and improve current decentralized mechanisms to find what works best for funding the key things the Arbitrum ecosystem needs. This program will give each enough funds to run a round, iterate, and show improvement in a second round.

The pluralist grants models compete in a way that creates positive sum outcomes for the ecosystem.

Building Legitimacy

Legitimacy is a critical resource. This proposal aims to increase trust in Arbitrum and drive its usage by establishing best-in-class practices for grants governance.

This proposal incorporates learnings from past grant programs, and aims to describe a corruption and collusion resistant grants framework that addresses the need for DAOs and decentralized systems to have robust governance models. It recognizes that before the Arbitrum 9/12 security council (a part of the constitution which controls Arbitrum contract upgrades) can be replaced with a DAO contract, a capture-resistant governance model that can appropriately allocate capital using optimal funding mechanisms must be established.

Building legitimacy through a decentralized and pluralistic grants framework will demonstrate Arbitrum’s commitment to decentralization.

L2 Competition

The Layer 2 (L2) space is highly competitive.

This proposal recognizes the unique opportunity to bootstrap network effects via a compelling grants framework. By offering to match those funding pools on Gitcoin which choose to run their round on Arbitrum, it can attract a significant number of new high-quality users to the Arbitrum ecosystem. Gitcoin’s previous grant rounds have shown that developers are a key indicator of a healthy ecosystem, and by leveraging the Gitcoin protocols, Arbitrum can gain network effects that further establish it as the “go-to” L2 solution.

Additionally, the increasing user interest in L2 solutions due to high gas fees provides an urgent window to earn new users and position Arbitrum as their preferred L2 choice.

Rationale

The proposal has been created with the following design principles in mind:

  1. Commitment to decentralization. Arbitrum’s commitment to decentralization is reinforced through the proposal’s emphasis on a pluralistic grants framework. This framework empowers grant program managers with autonomy while ensuring positive-sum outcomes for the ecosystem. The current governance system often relies on a single point of failure, such as a council, which is prone to self-dealing, collusion or apathy. By introducing political decentralization in fund allocation, this proposal in combination with Milestones 2 & 3, eliminates such vulnerabilities and establishes a more resilient governance model.
  2. Fair allocations. Traditional token-based governance systems fall prey to plutocratic outcomes, governance by the wealthy, due to 1 token = 1 vote. However, Gitcoin’s Allo protocol provides an opportunity to use quadratic funding and quadratic voting to achieve more democratic outcomes and can be paired with the latest sybil defense mechanisms to prevent attacks. Furthermore, by embracing a politically decentralized and pluralist approach (governance by the many), this proposal seeks to eliminate corruptible and colluding points of failure and create a more robust and fair grant allocation mechanism.
  3. Sound metrics. The proposal also highlights the importance of measuring projects’ (grantees) active participation in the ecosystem including independent verification of project value creation - demonstrating the ecosystem spending is getting the highest possible value for the investment. The number of people using ARB for governance will be a key metric, as well as additional metrics related to developer activity, contributions to ecosystem growth, grantee NPS, monthly active governance participation, and lowering administrative costs (decreasing bureaucracy).
  4. Iterative Governance. We know there is a plurality of web3 coordination mechanisms available. What is missing is a systemic learning system that can compare mechanism execution and effectiveness across platforms so that web3 can zero in on the most effective, and the Arbitrum network can ensure we are using the most effective available to fund the type of actions we need to grow. Establishing a cadence & cycle for governance experimentation will make this possible.
  5. Pluralism. We hope to support other grant proposals that run side by side with this one. The framework here will allow for controlled experimentation and immediate effects, however, it should not be seen as the top of the grants hierarchy in the Arbitrum ecosystem. If successful, other grant programs will self-select to participate in the framework because of the benefits it provides. Even programs that choose not to participate, but find the support of voters, will have modular components of this framework available to help them succeed.

By embracing a pluralistic grants framework and addressing the need for decentralization, active participation, and cost efficiency, this proposal aims to create a robust ecosystem that fosters trust, attracts quality users, and establishes Arbitrum as a leading L2 solution.

Milestone 1: Breakdown of Budget and Activities

The proposal outlines the allocation of 5 million ARB for the following activities:

A. Funding Pluralistic Grants Programs (2 million ARB)

Immediate funding of Arbitrum Ecosystem Development

A primary goal of Milestone 1 is to immediately kickoff funding Arbitrum ecosystem development. There will likely be 4-6 pluralist grants models which are chosen to run during 2023. Sourcing and selection of these ideas will use novel combinations of bottoms-up & top-down mechanisms facilitated by Plurality Labs. For example, we already ran a contest using JokeDAO to source some fantastic ideas.

The programs will focus on specific needs within the ecosystem and their potential impact. These needs will be identified via DAO native workshop methods being used to build community alignment and consensus on a vision and trajectory for the DAO.

During this first Milestone, it would be most accurate to think of Plurality Labs role as “facilitator” over “manager”. It may be best to judiciously select one or two of the grants frameworks to start right away while using more decentralized mechanisms for the other model selections.

We’ve agreed to collaborate with Saurabh at Questbook to have this model be one of the first pluralist grants programs funded.

Here are a few examples of what might elevate to become a funded program:

  • A JokeRace to source nominations of the best ideas to work on for understanding MEV on Arbitrum, then 3 direct grants issued to the best.
  • A Retroactive public goods funding (RPGF) round to signal to the ecosystem that work done on Arbitrum is just as likely to be rewarded as work on OP.
  • Every week, one grant is given to an innovative developer posting what application they will build using ranked choice voting
  • Streams to developers who continuously check in and share their recent builds and don’t get booted from other devs - a la Protocol Guild / Build Guild
  • A conviction voting model to allow contrarian ideas to surface and find support
  • Expertise councils are created to select the best ideas to fund from ideas surfaced via crowdsourcing.

There are an infinite number of ways these can be structured. The ones that are selected will combine a specific ecosystem need with funding mechanism(s) which are best suited to the goal.

On Centralization vs. Decentralization

An important part of this proposal is the understanding that Plurality Labs will exercise some centralized decision-making, especially during Milestone 1, to facilitate the needs of the ecosystem while at the same time learning and preparing to decentralize these decisions. The bottom line is that we will need to quickly deliver and begin ecosystem funding, but the ethos will remain decentralization as our long-term goal.

After 2023, the selection process for grants programs will progressively decentralize. This is important because many DAO grants programs have been subject to a centralizing force. Either the council or committee thinks the grantees are good or the projects are out of luck. This leads to self-dealing and corrupting centralization over time. Pluralism allows multiple independent agents to compete at the regulatory level in a way that creates positive sum outcomes for the ecosystem.

We believe this plan for progressive decentralization with accountability milestones will deliver sustainable decentralization faster than any other method.

Lastly, Plurality Labs will NEVER hold the funds intended for the pluralist programs. These will be held by the Grants Safety Multisig. Even the program managers never hold funds. The process for releasing them would look like this:

  1. Plurality Labs surfaces great program ideas from the community
  2. Plurality Labs sources a program manager who can execute on an idea
  3. The program manager writes up a program plan
  4. Plurality Labs coaches the program manager and assists their program design
  5. Plurality Labs publicly informs the Grants Safety Multisig of program selection
  6. Grants Safety Multisig confirms that it is “safe to try” and not corrupt
  7. After a funding round, the program manager requests the release funds from Grants Safety Multisig directly to a disperse contract paying out grantees

B. Funding Direct Grants Program (1.25 million ARB)

Centralized process to ensure the system doesn’t centralize over time

Plurality Labs will need to fund the higher-level goal of getting the system built in a way that maintains decentralization over time.

In many DAOs, the need to do everything decentralized trumps the initial need to design good frameworks and systems. Instead of consciously using centralization as a tool to avoid pitfalls, decentralization is fully adhered to as a principle which unfortunately keeps leading us to the same centralizing results. This part of the proposal is required to break free from this pattern.

Many don’t remember, but the original governor DAO contract was built in a centralized way. So were many of the upgrades since including Uniswap’s addition of the merkle claims and Gitcoin’s required delegation, not to mention all of Governor Bravo and Open Zeppelin’s work.

This direct grants program will ensure that needed components for our ecosystem are built.

This part of the proposal is the most centralized part of the process. Building the onchain systems to decentralize the allocation decisions while also increasing voter turnout will require high context and centralized planning. To maintain legitimacy, Plurality Labs is committing to transparency and checks & balances.

For example, an RFP process will ensure that anyone in the ecosystem can submit a proposal to execute work. Grants Safety Multisig will ensure that when a lowest bid isn’t taken, it is justified by team experience or other legitimate reasons.

Projects funded will likely include research and development of the following:

  • Staking for governance (quadratic weighted staking)
  • Continuous voting (conviction voting or other)
  • Flexible voting integration (maintain governance while LPing)
  • Community review and flagging modules
  • Pluralistic impact review modules
  • Onchain appeal mechanism
  • Realtime fraud detection & supporting research & development

C. Matching Gitcoin Funding Pools (1 million ARB)

Timing is Right to Gain Market Share

Gitcoin just ran a beta round on their new Allo protocol. As a permissionless protocol, anyone can run a grants round using the voter registry, grantee registry, and funding pool registry. The protocol is working great but the community almost revolted last month because the gas fees were too high!

More immediate impact may come from this than any ecosystem development funding can provide in the short term. These rounds will run on an L2 - the question is which one will it be?

Prioritization and Alignment of Arbitrum Deployment

This portion of the proposal is also intended to immediately convince the Gitcoin product team to prioritize making their Allo protocol available on Arbitrum. Then, by matching any funding pool which chooses to run on Arbitrum, we immediately bring a large number of users.

It is important to highlight this is not a payment to Gitcoin, but a payment to users funding grants through an Arbiturm round on Gitcoin. Gitcoin core rounds include support for Open Source Software, Ethereum Infrastructure, & Zero Knowledge. This aligns with the stated Arbitrum goal of supporting the Ethereum ecosystem while also attracting users which might otherwise choose another L2.

Open Data & DevRel Support

Additionally, being able to execute pluralistic programs on their Allo protocol allows us an open data substrate which will enable us to compare programs and projects across the pluralist framework. It also allows program managers to use quadratic funding and quadratic voting (if they choose) which require Sybil defense.

Lastly, this comes with the support of the Gitcoin DevRel team to help source builders, host hackathons, and turn the partnership into an event which the ecosystem knows about. Gitcoin wants people building modules on top of the Allo protocol. We need custom modules that will codify the governance rules designed by our pluralist grants programs.

D. System Design, Execution, and Accountability (750k ARB)

In the short term, it will take significant project management work to stand-up a new grants ecosystem. In the medium-term, the goal is for a project manager to work themselves out of a job. There are few people who can point to having done this already in the DAO space.

This is the role for Plurality Labs, Disruption Joe’s new company focused on creating credibly neutral and effective grants programs. Plurality Labs is born out of the Fraud Detection & Defense (FDD) workstream at Gitcoin, which successfully worked itself out of a job and conducted a graceful wind down of the workstream when the Allo protocol was launched.

Team

Plurality Labs Team

Disruption Joe

Ran grants operations for Gitcoin Grants rounds 8-10 growing gross marketplace value from $2 - $10 million. First Gitcoin employee to leave the company and work full-time for the DAO. Started the Fraud Detection & Defense (FDD) workstream. FDD is responsible for stopping over $3 million in fraud while Gitcoin Grants delivered over $50 million in funding.

More reading about the work done in the FDD Review. Joe will be supporting overall project management and grants framework design.

Pepperoni Jo3 (on behalf of r3gen.finance)

Founder of r3gen, a web3 financial service provider currently working with clients including Squid, Coordinape, Inverse Finance and Treasure DAO. Previously PwC consulting alumni specializing in Org Design, Operational Excellence and Change. Joined web3 full time at Index Coop where he served on the Leadership Council as Head of People and Community.

More information on the r3gen services and team can be found here. Pepperoni Joe and the broader r3gen team will be delivering financial reporting and accounting for the grants program and supporting internal operations and workshop facilitation. The r3gen team will also use their experience with legal structuring and complex entity management to oversee the legal and tax considerations for the Grants Program as well as setting and maintaining the KYC process.

Mary Quandt

People-first strategic design-thinking and organizational development leader. Partners with global business leaders to accelerate business strategies and execute people- and organization-focused solutions. Leadership approach combines possibility and participation while keeping firm foot in practical implementation. Thrives on building, leading and growing inclusive cross-functional teams to challenge the status quo. Experience includes IndexCoop, US Election Assistance Commission, Johnson & Johnson, Human Performance Institute, GE, Amazon, Martha Stewart and Charles Schwab to name a few.

Mary will be supporting with design frameworks and expert facilitation

Shawn Grubb

As former CIO, CEO, and non-profit chairman of the board, Shawn spent his corporate career preparing for DAO governance. Introduced to the blockchain in 2015 he went full-time degen in 2019 but moved to DAOs in 2021 when he joined Index Coop leading the governance communications and people operations. In August 2022, he joined Gitcoin where he currently leads governance

Shawn will be supporting governance design & communications.

Auxiliary Teams & Advisors

We have not yet collected official statements and bios from this group. Expect to see them added during the “request for comment” time this proposal is up. Here are a few that have helped to shape this proposal and we expect to be participating in some way.

  • Questbook - Already active with Compound, Polygon, and others, their Delegated Domain Authority model is a great mechanism to use for one of our pluralist models.
  • DAO Masons - Winners of the JokeDAO contest. The grants ships application is highly aligned with the decentralized allocation mechanism component of the proposal and their team has gone above and beyond to assist in getting this proposal ready
  • Pairwise - This Tinder-esque voting application aims to make voting in governance more fun. They placed second in our JokeDAO contest
  • Lawrence Mosley, PhD - Has provided Data Science & Analytics across the Ethereum ecosystem since 2018. A member of Aave Grants DAO, he has the experience to lend to our team with deep onchain data knowledge to back it up.
  • Tally - The Tally team has Arbitrum’s best interest in mind and have seen many DAO grants programs good and bad. Check out this Grants Handbook post from Dennison.
  • Hypercerts - Carl Cervone from hypercerts added a late entry to the JokeDAO contest which focuses on Impact Evaluations.
  • Gitcoin - Gitcoin has agreed to prioritize the deployment of their Allo protocol onto Arbitrum along with DevRel support such as hackathons to build modules on top of the protocol.

Grants Safety Multisig

The Grants Safety Multisig will custody all of the funds outside of the program manager fees. This adds additional security and a layer of checks and balances to protect from self-dealing corruption. If this proposal gets traction, we will outline a mechanism to select Grants Safety Multisig members prior to posting a temp check on Snapshot.

Grants Program Management Fee

An IRL example of a well-run organization that has had 142 years to optimize operations is at ~10%. To be considered “highly efficient” charitywatch.org, 75% of the budget should be spent on programs. The comparisons are not exact, but it does illustrate that 15% is not unreasonable. This proposal also includes lowering this cost to 10% across the milestones as a core metric of success.

There aren’t a lot of pluralist program managers out there to compare to, but for reference, Gitcoin runs a pluralist grants program and recently submitted a $1.23 million 6-month budget for their Public Goods Funding workstream which facilitates a pluralist program but isn’t working itself out of a job and doesn’t have product management and vision workshops to execute.

This also includes compensation for the Pluralist Program Managers who will be paid 10% of the funds they administer while Plurality Labs keeps 5% for higher level administrative efforts. This means the DAO is not “double charged” a management fee.

Looking Ahead: Beyond Milestone 1

If Milestone 1 goes smoothly in 2023, then proposals for Milestone 2 (and eventually 3) will be submitted to complete the transition to a decentralized, pluralist grants program by the end of 2024.

Milestone 2 would focus on program adjustments, alignment with mission and values, and sustainability research.

Milestone 3 would focus on decentralized allocation of funds and proposing a continuous and sustainable ecosystem funding system.

Projected Timeline

Milestone 1 activities will be completed by December 31, 2023.

  • Source, select, and implement 5 pluralist grants programs to immediately begin funding Arbitrum ecosystem development
  • Research and development started to enable testing of a built decentralized allocation mechanism during Milestone 2
  • Incentivization of thousands of Gitcoin users to choose Arbitrum rather than another L2 solution

Milestones 2 and 3 are projected for completion by June 30 and December 31, 2024, respectively.

Note: Milestones 2 and 3 will require separate proposals for funding.

Voting Options

  1. Yes, fund Milestone 1 (5 million ARB)
  2. No, do not fund Milestone 1, and I’ll tell you why in the comments
  3. Abstain

For more details and specific terms, please refer to the original proposal.

Proposer Statement

I realize this is a high-trust role that we are asking for Plurality Labs. I honestly believe we can help get governor DAOs past what makes the centralizing patterns seem inevitable. This proposal is about Arbitrum leading by example. It is already a leader in technical decentralization and excellence. Let’s match that in our DAO governance.

During my time at Gitcoin, we stopped $3 million in fraud over 6 seasons (and deterred unknown amounts). We always put the community first when thinking about legitimacy, fairness, and credible neutrality. We developed decentralized review mechanisms and created fair appeals processes. We operated a machine learning operations pipeline and then reintroduced explainability to the black box in the interest of legitimacy. In the end, we gracefully wound down the FDD workstream as the beta rounds launched because the service we provided is now a private service available to program managers which can use the open source tools we built.

I started a meetup in 2017 which grew to almost 4,000 members. When it first started, I’d give talks on Bitcoin, Ethereum, & Crypto. My second talk I added to the mix was on DAOs. It was about how smart contracts would allow us to create corruption and collusion resistant organizations. These organizations would be governed by open and permissionless protocols. They would come together with agility and force that would allow humanity to tackle its biggest challenges. More importantly, they would dissolve and cease to exist when they had served their purpose.

I’m sharing these parts of my history so you understand the person behind the proposal. So you can make a judgment of alignment with my values as well as the specifics of the proposal.

This proposal comes with a few key commitments from me, Disruption Joe, and the team I’m bringing together to facilitate the process.

  • We will deliver the decentralized allocation solution by the end of Milestone 3
  • We will be transparent and publicly showcase our progress throughout
  • We will strive for credible neutrality
  • When making centralized decisions, we will be clear about the nature of the decision and why it was made
  • We will be respectful, trusting and empathetic

It is worth highlighting that this proposal does not stop the ecosystem from giving out any other grants directly from the treasury using the current governance process. This proposal is expediting funding while figuring out how to handle the grants governance in a way that continually increases the impact of funds given out. This will allow the community to assess results using open data, and increase voter participation as a part of the mechanism design. Most importantly, it breaks a pattern we have seen time and again - the slow steady centralization of most DAOs.

Thank you for your time and support of the Arbitrum ecosystem. This proposal will help define what Arbitrum DAO is and will become. We’d value your support as we start to walk that journey together.

Request for Comment

Please co-create this proposal with us. Comment with any concerns or suggestions. The request for comment period will allow a week for feedback, then we will post the final amended proposal. After the proposal is up for 7 days in its final form, we will then post it to Snapshot for a temp check.

This proposal started as a thought exercise which then led to a contest to source ideas from the community. It has been co-created in collaboration with the winning submissions, multiple large delegates, DAO & grants experts, and even other grant proposals. Now, we hope we have provided a quality document that the full Arbitrum community can support.

Please start your response with one of the following:

  • I fully support this proposal
  • I support this proposal, but have some concerns
  • I don’t support the proposal yet, but it could get there
  • I don’t support the proposal and likely won’t
24 Likes

Hey Joe,

This is a great post, and ill tackle each section throughout, but first, the numbers do not seem to match up.

Is it 2M or 2.5M for funding pluralistic grants program & 750k or 1.25M for funding direct grants program?

So if their proposal was to move forward and successfully pass before yours, would that reduce your budget by 1M? Or is there an agreement between both parties, that this proposal would pass first and 1M from the budget would be dedicated to QB?

In regards to section B, on research and development, do you have any teams in mind already that could support this research?

Would Plurality Labs provide reasoning for once which frameworks are selected? And can we expect a review/report for each plurality framework that is utilized? This would act as a great learning experience to see how these frameworks play out so we can identify some pros and cons of each.

This is a very strong team who are experienced in the space, and I believe this would be a great project to fund, but it needs a bit more fleshing out in the costs. Why 750K? How can we expect this to be distributed? What is everyone’s time commitment to plurality labs? (not the most important metric, since quality>quantity) but it provides an idea.

To clarify, I believe in paying for top talent, but we should have a good understanding of fund distribution.

Finally, how long can we expect milestone 1 to last?

4 Likes

Excited to see this proposal and happy to continue supporting working on the wording and design.

Something that I think we would want to see included in the proposal is DAO Oversight of the Multisig itself. This is something we (Tally.xyz) have experience helping with and is easy to do.

Essentially, without getting to into the weeds, we add the DAO as a privileged Signer to the Multisig which would allow the DAO to maintain control over the funds and multisig, even while Plurality labs and teams were in operation. This is a key safeguard that helps to address community concerns about how funds are spent/allocation and oversight. The tool to do this is the Gnosis Zodiac Governor extension, it is well supported, easy to use, and can be added directly to the Arbitrum DAO Page.

6 Likes

Thanks for your clear questions. I

Last minute adjustments! I’m not sure yet. For the final draft, we will need these to be precise. I’m leaning towards 2.25 for pluralist grants programs and 1 million for direct grants to decentralize. How do you feel about the balance of these numbers?

Our current understanding is that their proposal is now a part of this one. When this proposal passes, 1 million ARB will be available for their allocations.

I’ve seen great work from Token Engineering, Blockscience, RN DAO, Open Data Community, and a few other orgs. The RFP process will allow for other teams to bid for work as well.

Yes. There will absolutely be intelligent design in setting up the pluralist models. You could imagine the Questbook delegated domain authority being able to quickly begin funding key areas of need. Then we might have a quadratic funding & voting model which sources from the community, then lets the community double down on the best discoveries. I could see funding the impact evaluation model entered to the contest by Carl from Hypercerts so we can learn and evaluate across programs. Perhaps one is the beginning of a retroactive program to ensure that anyone thinking of building on OP because they might get retroactive rewards instead knows that building on Arbitrum is just as likely to reward them.

We would want to discover more and find the best potential programs which balance out in a uniquely complimentary way. We want Led Zeppelin, not the Ramones. All unique, but come together beautifully.

The 750k includes the pluralist program managers so there isn’t any “double charging”. They receiving 250k for 10% fee to administer 2.5 million ARB. This means Plurality Labs receives 500k. We currently have a team of 4 ready to start on day 1. I’m expecting we will need to hire more and contract some work. Let’s say our payroll to staff and contractors is 200k per quarter. This would leave Plurality Labs with a profit of 100k for 6 months of cutting-edge work which is based on putting ourselves out of a job.

What happens if the prices goes down? What happens if we need to hire more?

Second, I don’t think the DAO should get into micro-managing salaries of independent and autonomous service providers. This proposal is not intended to start a heirarchy of contributors and set rules on compensation. It is results based because we want to see milestone 2 & 3 happen. The Red Cross has been around for 142 years and has a 10% admin cost to distributing funds. They are known as one of the best, but they aren’[t building new web 3 systems and working themselves out of a job if successful.

Thanks for engaging. Your experience with Compound & OP could really help us. If you’re interested in being considered for the Grants Safety Multisig, please dm.

3 Likes

Obviously, as one of the reviewers who did what little parts I could in helping Joe put this together I’m a big supporter of it.

First off, Joe is amazing and I would back anything he thinks is worth working on. On top of that I’m a big fan of Plurality Labs.

The way this structured is great. The framework and milestones also make sense to me.

Obviously, from the perspective of being a Gitcoin contributor I’m very excited by the notion of working more closely with Arbitrum as well.

Unrelated, big congrats for ArbitrumDAO for getting things going!

Looking forward to see where this goes.

4 Likes

Some really great ideas here backed by an OG team. I can see this going exciting places!

Here are some thoughts to help with deliberation:

What is the rationale for rolling 1,2,3 & 4 into one proposal rather than separate ones?

For example, I can conceivably want to fund the direct grants program but not the matching Gitcoin pool or vice versa. Why not let the community vote separately on the budget items?

Do we know what impact if any OTC sales of 5 million ARB or 0.1% of the treasury can have on the overall price & valuation of the remaining ARB in the treasury? If it causes downward pressure on the price it would then constitute more than 0.1% of the treasury, so not sure I agree with the framing here.

Has there been any consensus on what this limit is? I would think that this exercise should take place prior to a vote on this proposal or any other that comes up, so we have clarity on how much of this years funding is to this proposal versus the amount still left for the community to independently allocate.

I wouldn’t want voters to become apathetic as there are few funds left for proposals organically coming together on this forum!

2 Likes

I’m leaning towards allocating more towards funding pluralistic grants programs, so 2.25M sounds good to me. QB will be taking 900k-1M ARB (depending on the price) so that leaves around 1.25M for 4 other programs, avg at 312k ARB, which is a fair amount to evaluate the effectiveness of these models.

Thanks for clarifying the QB section, that makes a lot of sense to avoid double dipping.

Great way to put it. I see each pluralistic grants program playing its own unique role, but complementing another still, so that they avoid overlapping another.

Following on from that, 500k seems like a bargain for this type of expertise and work for 6 months. As you mentioned, I also expect more hires to facilitate this work, so 500k looks good to me.

I agree with the issue of micro-managing salaries, it can create a lot more disruption than needed, but it’s just finding the grey area where we can understand a bit more of what is happening behind the scenes without the DAO controlling every detail. The information you provided in this comment, helps with that and makes me more confident in the expense distribution.

Happy to get involved, I’ll drop you a message.

4 Likes

Very inspirational to see the Plurality of approaches in determining how to learn our way forward. This proposal has led me to see Arbitrum as more than yet another L2.

My particular perspective as someone who works day to day in protecting or attempting to protect grants rounds via the ODC is that whether we understand the various approaches to allocating resources that this proposal and the subsequent experiments it suggests will undertake - attackers definitely will.

I mention this not as a source of fear and uncertainty - rather to highlight that the background of DisruptionJoe in building the FDD team at Gitcoin is crucial here. I would suggest that we all consider that each of these mechanisms should be evaluated in large part whether they can persist by being resilient in the face of a likely onslaught of attacks. And these resilience criteria must be front and center - although sometimes unpleasant to discuss - because experience shows that small changes in a design of a grant program can have a significant impact on the cost of forgery or attack.

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Because there are dependencies between the aspects of the proposals. For example:

  • The impact evaluation cannot be done (easily) without a decentralized substrate. Therefore, Gitcoin deploying next round on Arbitrum means they get this component ready for us.
  • Some of the pluralistic models require some building. They may depend on some funding from the direct grants from Plurality Labs to get fully set up for experimentation
  • The direct grants needs to build the open evaluation protocol to be available for the community to evaluate apples to apples. This depends on the Gitcoin prioritization.

There are others as well. We considered splitting it, but decided it should be one because of these dependencies. If we split it, then it would be hard to start on any one because of the missing components provided by another.

Yes, you are correct that it isn’t a perfect framing. There will be some downside pressure, though it wouldn’t happen all at once. I’d also consider that there could be upside pressure from buyers who see the potential of the Arbitrum DAO investing it’s treasury in strategic long-term ecosystem development.

In my view, the best we can do is give a snapshot of what is currently happening and inform of other possibilities. That is all this is intended to communicate. However, we did do some polling. Our Polis asked if people agree or disagree with the DAO spending more or less than 10% of the treasury per year. The results were split. This is intentionally much lower than that and is frankly on the lower end of the amount needed to execute this plan in it’s entirety.

There was the polling done that I mention above. Part of this proposal’s solution is that we find DAO native ways to source this info about how much the DAO is comfortable with on a regular basis. It also has increasing voter participation as a key metric. When we ask for Milestone 2, the community can decide if we are successful in achieving this goal.

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Thanks for saying this. It is a key aspect of the proposal. Arbitrum ALREADY IS the “go to” L2. It ALREADY IS the leader in decentralization for an L2. This proposal aims to make it a leader in decentralized and pluralist grants funding and a leader in DAO governance innovation overall.

This is absolutely true. Plurality Labs will be ensuring that the pluralist grants programs are informed about known attack vectors and mitigation solutions. We will take on responsibility to help them to succeed.

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As discussed on the Twitter Space today (recording), we love this idea and will 100% incorporate it into the final draft of the proposal.

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@dennison and I put together some documentation that explains the “why” behind using the Zodiac Governor Module, and includes a guide on how to set it up.

Link to documentation: https://docs.tally.xyz/user-guides/using-governor-with-gnosis-safe/zodiac-governor-module-for-subdaos-and-grants-programs

We’re here to help if anyone has questions!

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I’m excited to get a grants program off the ground, and appreciate @DisruptionJoe’s leadership in driving this forward!

With that said, I would like to see more than 50% of the funds in this proposal go towards Arbitrum ecosystem development specifically. I think this number should be closer to 80%.

As it stands, 50% of proposal funds (a total of 2.5 million ARB) goes to operational overhead and/or initiatives that may not directly benefit the Arbitrum DAO. I think this amount is excessive.

Specifically, I’d like to see the following changes:

  • Remove 2 entirely. Let’s start by executing well on distributing the ecosystem funds during milestone one, then we can consider funding a cycle of development about how to improve the grants program during milestone two.
  • Reduce 3 Gitcoin matching round from 1 million ARB to 200k ARB. Let’s start with a smaller amount as a way to start building the partnership with Gitcoin. Let’s see some reporting on how effectively the matching funds were used and validate Gitcoin’s level of interest in a partnership before we drop a milly.
  • Reduce 4 to 500k. I think 500k ARB at anywhere near current market prices is enough to get the first milestone of a pluralistic grants program off the ground. Milestone one is scheduled to conclude at the end of 2023. This proposal likely won’t execute onchain until ~July. 500k ARB should be plenty of funding for 6 months of work from one full-time leader and a small team of part-time contributors/vendors. If the team performs well, I think there will be a strong case for additional investment during milestone two.

Looking forward to continued discussion and eventually a formal proposal for this exciting initiative!

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Thanks for the comprehensive answers, I’m curious to see the final shape of the proposal! I am broadly in alignment and about 80% of the way there.

I am still not sure 10% annual treasury spend adds up, at least without significant asset diversification. For example, Hasu’s analysis found that if Uniswap sold 2% of its tokens, it would crater the price by 80%. I can’t even begin to imagine how 10% annual liquidation each year might tank the ARB price.

If we use the Uniswap numbers as a benchmark, the price impact of passing this proposal as is would be a 4% ARB decrease. Like you mentioned, there would be an upside from the DAO directing significant resources to an ambitious plan like the one you have laid out, backed by a solid team. That’s why I’m broadly in favor of the proposal. To get me fully on board, I would like to see the framing of the cost in the final proposal as X% of annual DAO spend rather than 0.1% of treasury.

Interesting. I think that your especial novel point is " Pluralistic Grants Programs":

  • A JokeRace to source nominations of the best ideas to work on for understanding MEV on Arbitrum, then 3 direct grants issued to the best.
  • A Retroactive public goods funding (RPGF) round to signal to the ecosystem that work done on Arbitrum is just as likely to be rewarded as work on OP.
  • Every week, one grant is given to an innovative developer posting what application they will build using ranked choice voting.
  • Streams to developers who continuously check in and share their recent builds and don’t get booted from other devs - a la Protocol Guild / Build Guild
  • A conviction voting model to allow contrarian ideas to surface and find support.
  • Expertise councils are created to select the best ideas to fund from ideas surfaced via crowdsourcing.

It is great that builders/contributors can receive grants through various ways in which different funders decide. Your idea is including various funding types: prospective funding, retrospective funding, community-leading funding, and committee-leading funding. And then, using existing tools like JokeDAO, Grants Stack, and Nouns Builders is good Especially, an example of this below model may be “Osmotic Governance/Funding” by Jeff from BlockScience.

  • A conviction voting model to allow contrarian ideas to surface and find support.

However, I wonder that a difference among these funding model may be generated, so a difference of influence to grantees also may be done.

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Hey Joe, thank you for writing this up!

We’re excited to see an initiative around this program and some prescient comments from @frisson, @bobbay, and @thedevanshmehta that I’ll try not to repeat below.

Understanding that this is an initial request for comment, the proposal generally seems heavy on signals (“hyper-decentralization,” “accountability,” and “checks and balances”) but vague on process and structure. The video helped, but a clearer articulation of Plurality’s process and vision might help the community review the proposal.

Thoughts on Purpose

We worry the proposal might stray from Arbitrum DAO’s main objectives to grow and steward an L2/L3 network. While innovative governance is commendable, it might be better done in straightforward service of Arbitrum network growth rather than merely for innovation’s sake.

This program risks inadvertently creating bureaucratic layers and diverting DAO funding towards administration. This results in prioritizing new, expensive programs over the quality of new builders on Arbitrum. Further, proper fund allocation should discern whether potentially costly governance experiments (such as continuous voting, on-chain appeals, and quadratic staking) align with the DAO’s requests, needs, and desires.

This echoes sentiments shared by Tally, one of Plurality Labs’ “Auxiliary Teams and Advisors.”

Pluralistic Grants

Multiple grant programs are great, but Plurality Labs’ utility as an administrative layer is unclear. The DAO could fund multiple grants programs w/out Plurality Labs’ oversight; does the community require such costly advisory services?

Further, the DAO should demand programs of the highest quality, Questbook is the most concrete suggestion here and, consequently, has already managed to publish an independent proposal without any admin help or cost to the DAO.

One can also consider the inherent incentive structure a misalignment. To tiredly quote Charlie Munger, “Show me the incentive, and I will show you the outcome.” How does aligning program manager compensation with spending ensure grant quality, the effectiveness of allocated capital, or the accountability of program managers? What will Plurality Labs do to help program managers evaluate their programs and optimize for performance?

Accountability

The request for $1M of DAO funds for “system design, execution, and accountability” deserves scrutiny. This seems small relative to Arbitrum DAO’s treasury but it is a significant ask given the quoted deliverables for Milestone 1:

The DAO should seriously consider the costs, the deliverables, and the team’s ability to execute any grants program, including this one. Based on the clarifications above, 500K ARB will support a four-person team (at least 50% appear to be external FTEs) to execute three relatively vague tasks in < 6 months of work.

Finally, the proposal references checks and balances but only mentions a multisig; I may be overlooking something. I will note Disruption Joe has a strong reporting record from the FDD committee, and we’d expect similar commitments in reporting and budgeting in the future.

Gitcoin/Allo Section

We’re certainly not against the arguments here, attracting Allo protocol to Arbitrum would be a huge win, but It’d be great to hear from Gitcoin directly on whether an SP layer is required or if a commitment of matched funds in a separate proposal would suffice.

Conclusion

Ultimately, the DAO will decide whether these programs align with Arbitrum DAO’s goals. We hope these comments can help make a more clear and convincing proposal and look forward to seeing future iterations. Currently, it feels vague for the admin budget it requests and emphasizes funding governance projects over actual builders.

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Looking at the points mentioned in the comments, here is a brief summary from my POV, that need to be altered for this proposal to move forward.

Budget

  1. Priority the funding of pluralistic grants program: 2.25-2.5M
  • An additional 10% will be used to fund the admin/ program manager costs. 225k - 250k
  1. Reduce “Funding direct grants program” for milestone one.
  • R&D should be funded in milestone one as it is as essential part of innovation and growth for the long term. This can also help the DAO make a more informed decision for funding milestone two.
  1. Reduce the Gitcoin matching funding pool to a more reasonable amount
  2. Revise the amount required for accountability, with these new changes.

I believe in the vision set out here, but I also understand some of the concerns in handing out a large number of funds, especially in the early days of a DAO. It would be best for both parties to find the middle ground which enables Plurality Labs to execute a high quality of work, but at an amount, which enables them to work for the long term, not the short term.

Purpose of Plurality Labs

Echoing @tnorm comments on purpose, it is a valid thought to take a step back and evaluate whether its worth the DAO funding a pluralistic grants framework, when there are other vendors such as Questbook who are already providing their own service without additional support.

Questbook is a rare case in my opinion, and other programs would require more support, but @DisruptionJoe could you expand on the role plurality labs would help in facilitating these programs?

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We appreciate all the work @DisruptionJoe, and others have put into this proposal. The program design, milestones, and goals are sensible, and the budget is appropriate.

What should the community expect with regard to communications from Pluralist Labs on standing this up and ongoing operations?

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Through this forum and the Twitter spaces we’ve received a lot of great feedback. We are going to bring it together with a new draft which we will post on Monday.

Please continue to share comments between now and then - we will continue to listen and respond in the new draft.

We’ve had a few one on one convos where people expressed this. We definitely need to both make adjustments and better clarify how much is directed to the ecosystem growth.

This proposal is designed to remove the bureaucracy. We know that when a DAO doesn’t do any mindful intervention, they centralize fairly quickly. We can absolutely fund these grants programs directly with no Plurality Labs. However, the pattern that is most likely to play out is this one.

This proposal will immediately begin funding L2/L3 development. It is a key metric for the proposal. That said, I think this is a great callout you are making because this proposal is specifically about solving the problem of centralization over time.

You are correct in pointing out that to support this proposal, one must ALSO support the following in addition to funding ecosystem development.

  • You believe the DAO should be able to maintain decentralization over time
  • You’ve seen and understand the pitfalls of grants programs without oversight
  • You recognize that different funding models work better for different goals

One other consideration, we do think there should be other grants going out to fund the ecosystem outside of this program.

As for the incentive being aligned, this is a good point. We will consider options here.

For the answers to the other questions, we can include some of this information in the next draft. It was in a previous draft and we took it out to make it shorter.

This was not communicated well. We took out a ton of the granular details to shorten the proposal. We had a lot of feedback from reviewers that the proposal was way to long. Hopefully, the next draft communicates this better.

Thank you for your recognition. Some think it should be a multisig which is elected, others think appointment. Do you think voters will participate in a multisig election for a 6 month project? We aren’t sure what’s best and are looking for feedback on this.

We have a direct comment from @azeem with Gitcoin above. He is a workstream lead. Is there someone else you’d like to represent Gitcoin here?

Hopefully we are more aligned than you currently see it. Thanks for some valuable input. There are key items we can communicate better and some that we need to change. It will all be taken into consideration before we post a final draft.

We want to cocreate this with the community. If you are interested in participating in a workshop about this next week, please dm!

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Appreciate the timely response and reception! We look forward to seeing V2 of the proposal and further details about the administrative budget and the strategic alignment of program benefits with those of the Arbitrum network.

For a multisig, a forum temp check of proposed signers and Snapshot ratification feels okay. I don’t know if an election is necessary for V1 but might be required as the program evolves.

The distinct nature of the Gitcoin distribution might justify a separate proposal demonstrating a collaborative strategy. For example, I’d love to hear from @azeem and Gitcoin on insights and lessons learned from similar protocol partnerships for the DAO to consider. This proposal can simultaneously address Plurality Labs’ operational costs for this specific endeavor.

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