The Watchdog: Arbitrum DAO's Grant Misuse Bounty Program

[pedrob]

Thank you very much for the proposal. I believe it makes sense to have a watchdog program.

My first question is: why did you choose this system instead of empowering a person or group of people to take on this role of overseeing the allocation of funds? Could this role be merged with the reporting role proposed by @AlexLumley ? Even though the DAO rejected the design and budget, I believe there is interest in having such a role, and it could fulfill both functions. I think that would make the most sense. Or why did you consider them as two distinct roles?

If this proposal moves forward, it will be essential to have a clear definition of what constitutes “verifiable reports of misappropriation” or “valid reports of misappropriation.” These are two different terms used in the document to refer to reports that qualify for rewards. I think it’s important to unify the criteria and be very clear about the circumstances under which a report is eligible for a bounty.

@Entropy

rewarding those who successfully identify fund misuse

Additionally, a definition of “fund misuse” also needs to be included. For example, if funds that were not used and were supposed to be returned remain in a multisig, would that qualify as misuse?

@Entropy

Just the existence of a transparent and well-publicized bounty program will likely deter some malicious actors from misusing DAO funds in the first place.

The same principle would apply if the person in charge of the GRC also served as the watchdog.

@Entropy

with a temporary solution utilizing a small committee of reviewers with a long-term plan for the program to eventually fall under OpCo, if and when it is stood up.

Why did you envision this as a small committee? I believe it would be better to centralize the initial review of reports, perhaps within the Foundation or you guys from Entropy. I also don’t see the inclusion of the ARDC research member as necessary in the initial stage, given that a single member should suffice to verify the information.

To minimize program costs, you could instead form a sort of “committee” or team between you and the Foundation. In cases where there is disagreement between the two, only then should ARDC support be sought.

I do agree with other comments that if this person or committee determines that a report is “valid” or “verifiable” (based on pre-established criteria), the DAO should subsequently confirm that assessment. This would ensure transparency in the process and allow the DAO to identify providers who are not meeting expectations or misusing funds.

@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

• If the report leads to the successful recapture of funds, 5% of the recovered funds will be awarded to the watcher.

1. The 5% share is capped at $100K. This reward is in addition to the reward above.

The payment system is not clear. Does this mean that whoever qualifies for the reward will receive a fixed payment of 5K, 20K, or 50K plus the 5%?

So it would be that in the case of a valid report, 5K, 20K, or 50K is paid from those 500K, depending on the importance of the report. And only if the funds are recovered would the 5% be paid, correct?

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.

Thank you very much for the proposal!