Thank you, @Entropy, for this insightful proposal! I’ve voted “FOR” because I strongly believe such mechanisms are essential for maintaining accountability in a large DAO like Arbitrum, which distributes many grants and incentives.
As I mentioned recently in the Forum, Kleros—a decentralized dispute resolution protocol—has just launched its V2 Beta on Arbitrum. I think Arbitrum DAO could also consider using this court system as an initial screening phase to determine if there’s a rational basis for alleging misuse of funds. Introducing a neutral third-party perspective could help mitigate any risk of conflicts of interest.
However, recognizing the need for specialized knowledge, we could explore setting up a gated NFT version of this court system where only long-term delegates can serve as jurors in such cases.
I’d be happy to delve into more details with you about this. It would be great to see the DAO leveraging protocols built on Arbitrum Chain for these kind of usecases !
I’m voting FOR this proposal. As mentioned earlier, this proposal is a great step forward for accountability in the DAO. With so many funds allocated, it’s important to have a system in place to ensure they’re used properly and to build trust within the community.
I voted FOR this proposal at the temp check stage. I think this program has the potential to serve as an effective deterrent to misuse of funds going forward. I appreciate Entropy stepping up to lead this initiative.
If an anonymous researcher does not want to dox themselves/ get rewarded for forensic accounting/ fraud research, would they be punished for publishing their findings on the forum?
Vote in favor on Snapshot.
Although some questions from my initial comment were not fully addressed, I believe this will help enhance security within the ecosystem, ultimately ensuring that the DAO’s funds remain safe and the program remains sustainable. In the future, I would like to see bi-monthly reports on the progress of this proposal. Additionally, if any suspicious activity is detected, it would be ideal to notify the delegates and stakeholders promptly.
We think the introduction of a “Watchdog” program is a commendable initiative and severely increased accountability within the DAO. Some thoughts:
Definition of Misuse: It’s crucial to provide explicit examples across various scenarios, such as grants, incentive programs, and service providers.
Severity Classification: The proposal introduces a Low, Medium, and High severity scale for fund misuse, ideally we establish more criteria and examples for each category.
Review Process and Conflict of Interest (COI): The proposal mentions that reviewers must abstain from cases where a COI is identified. It’s important to detail the process for selecting unbiased external reviewers in such instances.
Anonymity and Protection for Whistleblowers: Ensuring the anonymity and protection of individuals reporting misuse is paramount. The program should focus a lot on robust measures to safeguard whistleblowers from potential retaliation.
Budget Allocation and Sustainability: The proposed allocation of 500,000 ARB for the program makes sense and we think it’s within reason.
The following reflects the views of the Lampros DAO governance team, composed of Chain_L (@Blueweb), @Euphoria, and Hirangi Pandya (@Nyx), based on our combined research, analysis, and ideation.
We are voting FOR the proposal in the Snapshot voting.
We support this proposal because it creates a way to make sure DAO funds are being used properly by everyone who receives them.
This program will help community members play an active role in keeping the DAO funds safe. Also, the updated proposal defines clear severity levels for funds misuse and provides strong incentives for whistleblowers through both base rewards and a percentage of recovered funds.
The program will help prevent the misuse of funds since anyone thinking of misusing funds will know the community is watching. We like that the program covers all projects that receive DAO funding, which means nothing is left unchecked. Having three reviewers look at each report is great for evaluating problems.
This program is an important step in protecting our DAO’s resources while getting the community more involved in keeping things safe. We believe this mix of community watching and organized review will make Arbitrum stronger and safer.
gm, strong proposal that addresses a critical gap in governance.
Why I support it:
Creates the right incentives to protect DAO funds without relying on pure goodwill
Smart structure with clear severity levels and corresponding rewards
Base rewards + % of recovered funds is a balanced approach
Suggestion: I would recommend explicitly stating that reporting the same issue by multiple watchers would reward only the first valid submission.
Overall this brings much needed accountability without creating unnecessary friction. The 6-month review also ensures we can adjust based on learnings.
This is an important initiative to support a good execution on the upcoming programs. I also like the fact it introduces more checks and balances that we need within Arbitrum
We’re voting FOR with concerns about the KYC requirement.
The combination of anonymous reporting and guaranteed rewards creates strong incentives to uncover misuse, while the severity tiers maintain flexibility. The 6-month trial allows us to test and adjust.
Critical concern: KYC requirements will deter top blockchain investigators from participating, especially given Arbitrum Foundation’s previous KYC data breach. The most effective sleuths value privacy and anonymity. We should explore a non-KYC track similar to Immunefi’s model - perhaps with lower reward caps but preserving investigator privacy.
The enforcement framework needs more teeth. While the proposal outlines general approaches (legal, technical, social), it lacks concrete recovery mechanisms. Let’s clarify these before implementation.
We think creating a bounty program is the best way to tackle fund misuse in the DAO. It’s a practical approach that empowers the DAO to help keep things accountable. We appreciate Entropy to step up to take the initiative.
All the key concerns raised have been addressed clearly, and the trial phase gives room for improvements. This is a solid step toward stronger transparency and trust in the ecosystem.
The following reflects the views of L2BEAT’s governance team, composed of @krst and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.
We’re voting FOR the proposal.
Although we understand the motivation behind the bounty program’s creation and are voting in favor of the proposal, we remain skeptical about its potential effectiveness. We’re afraid that the whole thing will create more problems than solve and that the program’s existence will be used as an excuse for future proposal authors not to consider accountability or oversight mechanisms in their initiatives.
At the same time, as the examples in the proposals show, the DAO needs to have a way to ensure that the money it spends isn’t misused. As things stand right now, there’s no such mechanism in place that’s DAO-wide, and each initiative, in theory, needs to address that part on its own.
With that in mind, we’re willing to give the program a chance and see how things will unfold.
The Watchdog passed on Snapshot with a total of 154.6m combined FOR and ABSTAIN votes. Therefore, the proposal obtained the non-constitutional quorum requirement that Entropy outlined.
Addressing the additional concerns that came up during the voting period:
For clarification, sleuths and community members will be able to submit a report without completing a KYC. However, in order to be eligible for the reward, KYC is required. Unfortunately, due to the Foundation’s compliance policies, there is no way to avoid this measure.
This is a great suggestion, language will be added before the onchain vote to clarify that the first report deemed valid will be the only one rewarded. Consideration will be given on how to best communicate this out to the community as every report may not be made publicly available.
The Watchdog program’s intention is to provide a private & safe avenue for community members to report misuse. It does not explicitly block other means of reporting misuse, such as posting it directly on the forum. However, even if an anonymous researcher does not wish to report the misuse through the Watchdog, Entropy strongly encourages that they at least bring it to the attention of the Arbitrum Foundation before bringing accusations straight to the forum.
The term “whitelisted” was written with the intention that the program could be eventually moved to OpCo, when and if it is stood up, and that at least during this first 6-month trial period, the listed entities (Entropy, Arbitrum Foundation, and ARDC Research Member) would be pre-selected as the reviewers.
Reducing costs and complexity through this kind of set up is an interesting idea. While @JoJo already provided context on why ProtonMail specifically may not be sufficient, Entropy will continue to consider how to keep this program streamlined & cost effective. During the RFP process, if we determine that there is a better solution than building out the original portal we had envisioned, then we will update the DAO and make adjustments to the proposal.
With our team finishing up deliverables for a few other initiatives, delegates can expect an update regarding the RFP process and its next steps early next week.
The following reflects the views of GMX’s Governance Committee, and is based on the combined research, evaluation, consensus, and ideation of various committee members.
Entropy’s proposition of a Watchdog Bounty Program aims to provide stronger oversight in funds utilised across incentive programs, grants, investment vehicles, or service provisioning. This program allows reports from whistleblowers to be made to a Watchdog group if there’s malpractice within the distribution of grants.
We are happy this program has been approved by the community, we wanted to help highlight our decision-making, this program is great for creating accountability within the DAO, with close resemblance to the Dodd-Frank Wall Street Reform and Consumer Protection Act, in which Whistleblowers are able to report on fraudulent activities in the financial services industry. Those Whistleblowers can maintain anonymity and can receive a percentage on the penalties incurred by offending corporations. Similarly, this program allows whistleblowers to report resourceful information on parties who misappropriate funding given by the DAO.
Alongside the misuse definition which clearly defines the impact, we suggest a framework documenting how watchers can provide this information with discretion to protect their identities or recourse on them for disclosures. Unfortunately, the issue of malicious or forged reports, as @JoJo had mentioned is an issue that we have no determination for, but we do believe the committee will act in accordance with proper evaluation and confirm the evidence shared in the report.
Overall we were favourable to this program, it is well-meaning and heads in the right direction, creating a valuable oversight committee for managing Arbitrum DAO grants to prevent bad actors from taking advantage of good initiatives.
The watchdog initiative is great. We believe creating a well-structured bounty program would help curb future grant misuse as it not only helps us track potential fund misappropriation but also encourages projects to be more cautious with grants received.
I support the Watchdog proposal. Working as a PM and developing the GRC I can tell you how much work it takes to observe the misuse of funds at the initiative level, let alone at the sub-initiative level.
I like the concept of decentralizing the watchdog perspective.
I am interested in how this watchdog will get incorporated in to something like a PM or managing and developing the additional initiatives.
I’m also unclear how effective this proposal will be post the incentive program.
Going forward I am more interested in how misuse can turn in to measuring ROI of grants.
I voted FOR in Snapshot.
Really liked this proposal, having an accountability structure like this will immensely help with execution, it’s an attempt to optimize the capital deployment, something I’m all favour for. This makes a lot of sense. I like the reward and payment rewards composition, it incentivizes both the grant recipient to be honest and the watchdog entity to find inconsistencies. I think giving a chance to this proposal might help the dao find a good balance if it works well.