The @SEEDLatam delegation has decided to vote AGAINST this proposal at the Temperature Check.
We believe the proposal accurately identifies the needs of an emerging DAO that requires driving third-party proposals and providing assistance to delegates to make informed decisions.
The post begins by stating that the Arbitrum forum includes many worthwhile suggestions, but often lacks the research, coordination, design, and risk assessment necessary to move forward in an optimal manner.
Now, the question is, should it be the DAO’s responsibility to fund the research, coordination, or design of third-party proposals seeking Arbitrum funding? Shouldn’t it be its own responsibility to submit optimal proposals for approval? Who has an interest in having these proposals approved?
One could argue that the DAO does have an interest in financially supporting teams to deploy on its network, as this will create incentives for users to join the network, generating positive network effects that ultimately benefit the DAO and the value of the ARB token.
So what is the best way to achieve this?
First step: Establish a clear process or framework for projects to present their proposals. Even though there currently exists a template, we think it’s still to simple and might benefit from having some more details. Therefore, the first step should be to agree on a template or framework for those projects submitting proposals. This should include, at least:
- Project Identification.
- Team Overview (including previous successful works).
- Milestones & Deliverables.
- Supplementary Research.
- Required Funding.
- Commitment to transparency and accountability.
- Disclosure of any conflict of interests.
- Support Needed: Highlight any specific areas where the project requires pre-approval support or resources from The DAO.
Why? We agree that there may be cases where projects or just good ideas, as the Arbitrum Coalition proposal states, may not have the capacity to conduct the research, coordination, design, and risk assessment to move forward optimally on their own. And we are fine with projects asking for it.
How to financially support projects? This can be achieved in various ways:
- Hire a governance facilitator to help them understand the processes and assist projects in preparing proposals.
- Have the DAO contract a service provider to thoroughly study the proposals, recommend what is deemed advisable, and help the delegates decide.
- Provide resources to the delegates so they can form their own teams and have the operational capacity to analyze the proposals. In this case, financially supporting only a certain percentage of the delegates will incentivize them to do their research and make more well-founded decisions. In this scenario, the ARB holders ultimately decide which delegates perform this task most efficiently, and, in theory, those will be the ones to receive a larger percentage of delegated ARB.
Hiring a Facilitator
We talked about this role some time ago but the DAO did not have the maturity and activity that it has today. This role encompasses what has been proposed here for The Advocate and makes it much more comprehensive, being key in assisting any participant in the governance of Arbitrum.
Hiring a Service Provider
The Arbitrum Coalition would act as a service provider. How can we ensure that this provider is neutral, does not favor particular projects, and does not conflict with the interests of the DAO?
One option is to bar this position to delegates or large ARB holders.
But this unfairly disadvantages the proponents, who have the reputation and track record to provide high-quality and efficient services to the DAO. Therefore, in line with what @dk3 said, we need to build trustless systems that don’t allow collusion or censorship. (we share the concerns described by him in his post)
What can be done? Utilize existing systems: Use the temperature check as a filter to decide which projects will receive the resources for the research, design, and risk assessment service provider to move forward optimally.
As it happens now, proposals that are approved via temperature checks are not necessarily complete or defined. Sometimes the approval comes from delegates supporting an idea or project, but with the condition that the proposal is strengthened.
This same system can be used for the DAO to express the intention that the project should receive assistance from the service provider. By this, before the on-chain vote delegates will have the necessary tools (research, risk assessment, etc.) to decide whether to approve that proposal or not.
Whom to hire as a service provider? As @pedrob argues in the Security Enhancement Fund proposal, the DAO could opt for approving a budget dedicated to subsidizing research and risk assessment, subsequently allowing each protocol to apply for the subsidy they deem necessary for deployment on Arbitrum. Complementing this, a list of recommended—or potentially mandatory—service providers could be voted on. This ensures that, when evaluating each application, the research and risk assessment are guaranteed to be conducted by a reputable and proficient service provider (such as Blockworks, Gauntlet, & Trail of Bits).
Providing resources to the delegates
Lastly, as we mentioned before, offering financial compensation will incentivize delegates to conduct their research and make decisions with a stronger foundation.
DAOs like MakerDAO incentivize their delegates with substantial resources, and their responsibilities extend beyond merely voting and communicating their vote—they also carry out sensitive tasks such as auditing spells and other activities related to governance security.
The expected tasks for the delegates could be specified, and a work regulation outlined that the facilitator will verify before executing payments.
Which do we believe is the best approach?
In our view, a resilient and decentralized system should feature a combination of the three strategies. A facilitator is contracted to support in the initial stage, the possibility of requesting funds prior to the final approval of the proposal, and providing delegates with greater resources so they can study the proposals in depth and with quality time.
We would like to thank Blockworks Research, Gauntlet, and Trail of Bits for the detailed proposal and, most importantly, for bringing this discussion to the table. We agree that the DAO should allocate resources to ensure that the proposals are well-supported and assist delegates in making informed decisions. In this case, we don’t agree with the proposed mechanism.
In this regard, we will support future proposals that include a detailed framework for how various service providers can present themselves to offer their services, rather than a specific allocation proposal for a single provider. There should also be specific milestones outlining the objectives to be pursued and KPIs that allow for the measurement of the results achieved.
Also, we agree with L2BEAT that the current delegate situation is not long-term sustainable.
We believe that a proposal of this nature, which aims to alleviate the workload of delegates and support them in their decision-making processes, should aim for a multi-faceted system. Resources should be allocated to a mixed solution where not just one concentrated point is incentivized, thereby mitigating all the risks and concerns detailed in this forum thread. To this end, we think it prudent to revisit the discussion about hiring a facilitator, the incentives for delegates, and ultimately, the framework for the contracting of service providers.