The Watchdog: Arbitrum DAO's Grant Misuse Bounty Program

[SEEDGov]

Hello @Entropy!

It’s great to finally see a proposal like this. We recall that other delegates have mentioned the need for a “watchdog” but we believe this proposal is superior as it “decentralizes” this function instead of assigning all responsibility to a single individual/entity/committee.

@pedrob

What I would add/change is to deduct the upfront payment for the valid report from the 5%.

In this way, the searcher is always guaranteed a minimum payment for their valid submissions, and the maximum payment is 5% of the recovered amount (not 5% + the initial payment). And from that remaining part of 5%, the 500K could be replenished to keep the program sustainable.

We agree with what @pedrob suggests here. It seems reasonable for the base compensation to act as deductible if funds are recovered.

@Entropy

If the review committee deems a report valid at their discretion, they will deem what level of misuse.

1. Low: 5K ARB

2. Medium: 20K ARB

3. High: 50K ARB

• What criteria were used to determine these amounts?
• What happens if someone validly reports the misuse of 4K ARB? We ask this because paying 5K ARB for a valid report might be economically inefficient when the maximum recovery would be 4K ARB.
• This question makes us wonder whether the proposed tiers need to be detailed further. What criteria are used to categorize as Low, Medium, or High? Should we include a minimum threshold for reports to be analyzed?

@Entropy

The DAO will vote via Snapshot on whether or not the violation constitutes a DAO ban.

The requirement for 3% of the circulating supply should be added here to ensure the vote is valid.

On an off-topic note, since there are now multiple situations where 3% of the circulating supply is required as quorum, it would be optimal to add a feature in Snapshot to “activate” this requirement when setting up a vote. This would allow Snapshot to indicate when a vote hasn’t passed due to insufficient quorum and ensure that delegates are aware of the quorum requirement. @raam @cliffton.eth, what do you think about this? Is it feasible?

@Entropy

• Anyone (watchers) can identify potential misuse of funds that originated from the DAO and submit an evidence-based report to a designated section on a to be determined bounty platform. The report remains private during the initial submission phase.

This is crucial. Reports must remain private during the initial phase to prevent a “witch hunt.”

@Entropy

We believe that this mechanism is optimal for the time being, but if/once OpCo is stood up, the program could be moved into its domain. If done so, the reviewer and voting mechanism would likely need to be restructured.

If the program is migrated to the OpCo, the evaluation committee could include: one delegate elected by the DAO, one OAT member, and one ARDC member.

We suggest including an OAT member since only individuals with no other financial ties to the DAO can be part of OAT, making a conflict of interest unlikely. Furthermore, with OpCo established, there wouldn’t be many reasons for the Arbitrum Foundation to remain in the committee, as legal agreements with SPs/Grantees would likely be signed with OpCo instead of the Foundation.

@Entropy

The selected provider and the required budget will be presented to the DAO before the proposal moves to Tally.

So, does this mean Entropy will select a provider from the bids submitted, and then a Snapshot vote requiring 3% quorum of the circulating supply will follow?

If we’ve understood correctly, we believe it would be more optimal for the DAO to vote among the different options rather than ratify a selection made by Entropy.

Lastly, we noticed no mention of how the committee’s activities will be reported. We believe one report per quarter would be sufficient.