[Request for Support] Creation of An Arbitrum DAO Budget

[Entropy]

We propose an ARDC-led creation of a comprehensive budget for the Arbitrum DAO, recognizing its long-term vision of Arbitrum enduring not just for decades, but for centuries. The DAO’s treasury management should reflect this commitment to both sustainability and growth. While we can likely all agree taking big swings is a good idea at this point in the rollup race, we should do so without spending frivolously and taking on too much risk.

Given the DAO’s significant financial resources, a few of the topics we think the DAO should seek guidance on:

• How much can the DAO allocate annually to ensure treasury longevity?
• Should the DAO focus on establishing recurring revenue streams or other types of spends?
• How can Arbitrum optimize the existing ETH in the treasury to generate returns?
• Which revenue streams should be prioritized for use, and which should be preserved for future growth? Should Arbitrum DAO be spending the ARB in the treasury, or prioritize spending sequencer revenue and soon the other revenue streams? What is the best way to think about Timeboost/MEV extraction in this context?
• More questions of this nature that will help Arbitrum DAO allocate appropriately to both growth and maintenance.

Our goal is to position the DAO for robust financial health, believing it is possible for the DAO to have hundreds of millions in annual revenue within three years. We seek the expertise of the Arbitrum Research and Development Collective to create a strategic, sustainable budget that aligns with the DAO’s long-term vision. We believe a collaboration between the risk and research arms could make sense in this endeavor. It could potentially make sense to pull r3gen and/or steakhouse in to help with this if we can find a quick way to budget them to do so.

We are hopeful for your support and collaboration in this vital initiative.

[Frisson]

I think establishing a socially agreed-upon budget for the Arbitrum DAO is essential. I think it would be a valuable tool to help delegates push back against good, but not great proposals. As a delegate, it’s easy to simply vote YES on anything that is generally a good idea without a framework for thinking through the tradeoffs between proposals. A budget would empower delegates to say “this is a good idea but we can’t do it right now because we already funded/plan to fund these other good ideas”.

I think fiscal responsibility is aligned with Arbitrum’s community value of sustainability:

• Sustainable: Arbitrum should be built and operated with an eye to the medium to long term. Decisions about technology, economics, and resource allocation should not value short-term optimization over the longer-term health and thriving of the Arbitrum protocol, technology and community.

[steakhouse]

We at Steakhouse Financial are strongly in support of the proposed ARDC-led initiative to create a comprehensive budget for the Arbitrum DAO. We firmly believe that this effort is not only timely given the influx of major initiatives the DAO is considering investing in, but also crucial for ensuring the long-term sustainability and growth of the DAO.

Fundamentally, we believe the first step the DAO should take in tandem with developing a financial plan, is the creation of long term strategic objectives. Typically, many organizations set five-year strategic and financial objectives, but given the pace of innovation in our industry, we would recommend the DAO consider a shorter time horizon, such as two to three years.

Strategic objectives should be limited to only a few at most, to maximize the community’s focus on the highest impact objectives and ensure the community is not spreading themselves too thin from both a financial and human capital perspective. Each strategic objective would also include strategic initiatives that articulate how we can collectively achieve these objectives.

Some examples of strategic objectives, purely for illustrative purposes are:

1. Expand Ecosystem and Developer Engagement
   a. Objective: Foster a vibrant and active developer community to build diverse applications on Arbitrum.

2. Increase User Adoption and Accessibility
   a. Objective: Drive mass adoption by making Arbitrum the most user-friendly and widely accessible blockchain.

3. Optimize Economic Sustainability
   a. Objective: Create sustainable economic models to ensure the long-term viability of Arbitrum

Once the DAO aligns on strategic objectives, they must be broken down into shorter time horizons, identify ownership, and develop priorities and targets for how we can collectively assess our performance and make improvements.

Circling back to the financial perspective, we believe the DAO needs to significantly improve financial transparency and visibility. There have been some excellent reports written by r3gen and Karpatkey for example, that have summarized Arbitrum’s financial position quite well, and we believe these efforts should be built upon and taken a step further.

One way we can do this is through monthly recurring reporting, to provide an overview of the DAO’s financial performance and spend against targets the DAO sets. Monthly reports would then be reviewed on community calls in order to provide the community with opportunities to dig into and understand the DAO’s financial position better. This would be one small component of transforming Arbitrum DAO into a data driven organization.

Without any clear strategic objectives and budget, the DAO is effectively flying blind, largely evaluating proposals in isolation rather than in aggregate in support of the longer term vision of Arbitrum DAO.

Sustainably growing an organization is all about capital allocation and return on invested capital, and Arbitrum DAO should strive to allocate resources to the highest returning initiatives that will drive the most impact for growing the protocol. To do this effectively, the community needs to understand how much capital is available to be deployed, over what time horizon, and what the DAO will receive in returns on the capital, financial or otherwise.

To summarize, Steakhouse is very supportive of this initiative and eager to contribute if provided the opportunity.

[cp0x]

Good initiative.

To be honest, a lot of people are already working in this direction, trying different approaches to understand how to make money and how best to diversify the fund, in particular:

• M&A for Arbitrum DAO
• Allow deployments of new Orbit chains on any blockchain
• Arbitrum Treasury Token Swap Program
• Arbitrum Stable Treasury Endowment Program

In addition, we must take into account that the main share of the treasury is ARB.
And for it, Arbitrum does not yet have any utility other than voting.
In order for the token not to lose its financial basis, it needs utility, otherwise all long-term plans will lead to nothing.

[Sinkas]

Just wanted to let everyone know that we’ve taken note of the request and will be discussing it during our next ARDC sync on Monday 20th of May to decide if and how we’re going to proceed.