Updating the OpCo Foundation’s Operational Capability

Proposals
1

Introduction

The ArbitrumDAO approved the OpCo: A DAO-adjacent Entity for Strategy Execution which allocates 30M ARB towards an operation company whose mandate is to operationalise, assist and oversee proposals approved by the ArbitrumDAO.

The OpCo elections have been completed which appointed Patrick McCorry, A.J. Warner, and Frisson. The three council members have appointed Pedro Breuer as an OAT council member and are in final stage conversations with an identified candidate. All council members, alongside the Arbitrum Foundation, are now working towards operationalizing the OpCo entity and hiring the initial team to lead the organisation.

In the course of our work we reviewed the original OpCo proposal to fully internalize its mandate and operational capability. We discovered a number of restrictions during this process that may hinder the OpCo’s ability to fulfil its mission, attract the best talent who can contribute towards the OpCo’s success, and prevent the OpCo from proactively working on initiatives that can lead to future proposals in the DAO.

We want to take this opportunity to go through each identified restriction, how it may impact the OpCo’s operational capability, and a proposed fix that can resolve the restrictions.

Restrictions Identified & Proposed Solutions

We’ll take this opportunity to go through each restriction alongside the proposed updates for the OpCo. Keep in mind, we will pick the problem statement from the OpCo proposal that most accurately reflects the problem, as sometimes the same restriction is repeated several times in the proposal.

Inability to Interact with Service Providers

  • Problem: It’s important to note that OpCo will not have the authority to enter into contracts with service providers or individual contributors for strategies not approved by the DAO through governance, unless directly related to its operational needs (e.g., hiring an accounting firm).

The OpCo is unable to enter service agreements with service providers or individual contributors unless it is related to its own operational needs.

To illustrate the issue, let’s consider an example where a contributor approaches the OpCo with a proposal for the DAO and the OpCo thinks it may be valuable for the ecosystem. Unfortunately, the OpCo cannot engage with a consulting firm to evaluate the idea. The only option available for OpCo is to encourage the contributor to seek permission (and potential funding from exploratory work) from the DAO.

We believe this situation is counter to the OpCo’s core mandate to support preliminary work on potentially promising proposals before it reaches the DAO. It should have the freedom to engage third parties, when necessary, to work on initiatives that it believes will receive a positive response from the DAO.

We believe it should be fixed with the following:

  • Proposed Fix: OpCo has the authority to enter contracts with service providers or individual contributors for any matter it deems necessary to fulfil its mandate to support the ArbitrumDAO. The OAT will offer its recommendation to help adjudicate agreements.

This proposed fix will enable the OpCo to enter agreements with service providers or individual contributors alongside allowing the OAT to provide oversight on whether the agreement indeed fulfils the mandate of supporting the ArbitrumDAO.

Restrictive Treasury Spend

  • Problem: OpCo’s initial capital allocation is meant to cover the entity’s setup costs and operating expenses, including full-time internal staff salaries, recurring administrative costs, and OpCo’s oversight committee.

The OpCo restricts its budget to only be used for operational costs related to employees, running the organisation, and administrative costs.

We can re-use the previous example to highlight the issue. Let’s assume a contributor approaches the OpCo with a proposal for the DAO. The OpCo cannot offer a grant to the contributor to investigate the idea further, in a similar manner to M&A Pilot or the Arbitrum Venture Initiative Pilot. To obtain any exploratory funding, the OpCo will need to work with the contributor on a proposal for the DAO, as opposed to offering its own funds to support preliminary work.

We believe it should be fixed with the following:

  • Proposed Fix: OpCo’s capital should be reserved to cover the costs of administrative and operational duties as approved by the OAT, but any excess capital that is available can be used on a discretionary basis to fulfil its mandate as a proactive entity in the ArbitrumDAO.

This proposed fix will enable the OpCo to spend funds on a discretionary basis with oversight of the OAT. We believe this is mandatory to ensure the OpCo can be ‘proactive, meaning if the entity has the bandwidth and recognizes an area within its focus categories where developers could be made, it can propose a strategy’ as written in the original proposal.

Compensation for OpCo Employees

  • Problem: 4M ARB allocated to a bonus pool for internal employees and OpCo’s oversight committee (3M reserved for internal employees and 1M reserved for the committee). If bonuses are paid out, they must be denominated in ARB and have a vesting structure attached, with internal employees’ payouts additionally being performance-based.

In many organisations, it is common for employees to have a base salary, token agreement that vests over time as a structure of the initial compensation package, and a bonus structure for good performance. We believe the bonus pool should be available to support token agreements as well as bonuses.

We believe it should be fixed with the following:

  • Proposed Fix: 4M ARB allocated to a compensation pool and bonus pool for internal employees and the OpCo’s oversight committee (3M reserved for internal employees and 1M reserved for the committee). The compensation pool should be paid out in ARB with a vesting schedule, while the bonus pool shall be denominated in ARB, available for employees only and shall be performance-based. The exact split between the compensation pool and bonus pool shall be determined by the OAT Council.

This will offer the optionality to offer future employees a token vesting agreement alongside a bonus structure for performance related compensation.

Restrictions Around Council Elections.

  • Problem: Any individual may apply to the OAT. However, all appointed individuals that have a non-observing seat, as well as any companies with which these appointees maintain a professional or financial relationship, are required to relinquish any and all contributor roles within the Arbitrum DAO that were obtained through an official election or ratification process conducted via Snapshot or Tally. As long as an individual has a non-observing seat on the OAT, they and their affiliates as defined above are prohibited from becoming an internal employee for OpCo, entering into service provider contracts with the entity, and applying to a contributor role related to the Arbitrum DAO that requires an official election or ratification process through Snapshot or Tally. Due to legal constraints, an OAT member and their affiliates as defined above cannot be members of another initiative’s or DAO-adjacent entity’s oversight committee. If an appointed individual or their affiliate as defined above sits on another oversight committee(s), they are required to resign from any such position(s) to be able to join the OAT.

The initial restrictions were crafted to prevent conflicts of interests for OAT council members, but as we have witnessed in the previous election, several promising candidates who generally have the best interests in Arbitrum in mind were unable to apply and join the OAT. For example, tnorm was unable to apply as it would restrict Gauntlet’s ability to enter service level agreements.

We believe it should be fixed with the following:

  • Proposed Fix: An individual will be entitled to run as a candidate for the election. No single organisation should be overly represented in the OAT. There should be no more than 1 candidate associated with a single entity. No candidate with conflicts of interest that would prevent them from acting in the best interests of the ArbitrumDAO which include, but not limited to: affiliates with direct Arbitrum competitors, proven histories of exploiting projects and others. If a candidate is elected on behalf of an organisation, then the OAT membership is tied to them and cannot be rotated to someone else in the organisation. It will be up to the current OAT to enforce the above policy, and if a candidate is excluded from the election, then the rationale must be publicly disclosed to the ArbitrumDAO. If the DAO disagrees, they can initiate a vote with a non-constitutional quorum to overturn the OAT’s decision to exclude a candidate.

The proposed fix is inspired by the eligibility policy that is applied to Arbitrum’s Security Council as outlined in the ArbitrumDAO’s constitution. It relies on the current OAT to enforce the policy, but if the ArbitrumDAO disagrees with the decision, they can overturn with a vote that achieves a non-constitutional quorum.

OAT members are no longer required to relinquish their role as contributors within the ArbitrumDAO and are allowed to be a member of other DAO-adjacent entity oversight committees. The motivation is to ensure talented individuals can continue to support initiatives in the ArbitrumDAO while offering their expertise to help the OAT navigate its own future. Of course, a contributor may voluntarily decide to relinquish some roles depending on time commitments, to ensure they can dedicate themselves to this role.

Finally, if an OAT member is affiliated with an entity, that entity is no longer prevented from engaging in service provider contracts with the OpCo. Keep in mind, there will be a conflict of interest policy that will require a conflicted OAT member to recuse themselves on all matters related to that entity or any service agreement signed with OpCo.

Declaring Conflict of Interest

  • Problem: Required to maintain a public record of all actual and potential conflicts of interest.

We believe this requirement is overkill as a requirement for the OAT elections. It is important that direct conflicts of interests are disclosed (e.g., working at a competitor), but potential conflicts of interests can become impractical for certain user profiles (e.g., prolific investors) who have valuable networks and skillsets that can be beneficial to the council. It is easier for potential conflicts to be handled within the council as they must be disclosed when necessary and the conflicted OAT member must exclude themselves from the matter.

We believe it should be fixed with the following:

  • Proposed fix: All OAT members are required to publicly disclose actual conflicts of interests (e.g., employed by a competitor) at the time of proposing themselves as a candidate for the OAT election. Potential conflicts of interest should be privately declared, when required and if elected as an OAT member, with the OAT council. If the remaining OAT council believe it is indeed a conflict of interest, then the conflicted OAT member will be excluded from voting.

Our proposed fix aims to strike a balance. Candidates for the OAT election are required to publicly disclose direct conflicts, in a similar manner as Arbitrum’s Security Council elections. If the candidate is elected as an OAT member, then they can disclose potential conflicts of interests with the remaining members of the OAT council. If the OAT council believes it is indeed a conflict of interest, then the conflicted OAT member will be forced to recluse themselves from the matter at hand.

Ecosystem Support or Financial Management only

  • Problem: As initiated, OpCo’s core mandate will be to enable the execution of DAO-defined strategies within the Financial Management and Ecosystem Support categories when requested by delegates.

The original proposal fixed the mandate of OpCo to only focus on ecosystem support or financial management unless there is an additional proposal that expands its scope. We are weary about pigeon-holing the OpCo’s mandate before it is operational as there are many verticals that can arise that the OpCo is best suited to tackle, but it is unable to do so without an explicit vote by the ArbitrumDAO. For example, taking the reins on governance related matters in the ArbitrumDAO seems like a natural fit for OpCo, but at present it is unable to take up that mantle due to this restriction.

Additionally, since the OpCo will offer oversight capabilities for proposals passed by the ArbitrumDAO and executed by others (like AAEs, contributors, etc), it should have the full freedom to take that on without contention on whether it is focused on ecosystem support, financial management or whether the DAO needs to approve a new domain for OpCo. In fact, as written in the proposal, the OpCo should proactively work on identifying opportunities and we believe restricting the OpCo to specific categories can be problematic in this pursuit.

We believe it should be fixed with the following:

  • Proposed Fix: OpCo’s core mandate is to work on, facilitate, and provide operational and oversight support for strategies that have the potential to benefit the ArbitrumDAO.

The proposed fix will allow the OpCo to proactively work on and experiment with new strategies and verticals that it believes the ArbitrumDAO may positively vote on in the future. For example, it can begin work on a proposal focused on improving governance in the DAO or a future grant program for public goods. This can enable the OpCo to operate in a flexible manner with rough consensus amongst delegates and the OAT on initiatives it believes will ultimately benefit the ArbitrumDAO.

Of course, to carry out any large initiative, the OpCo will still need to request funds from the ArbitrumDAO’s treasury, so this flexibility should be viewed as enabling small-scale experiments by the OpCo and proactive work towards acquiring future funding when it is required on domains that it believes is important for the DAO’s success.

Conclusion

The proposed fixes should enable the OpCo to voluntarily enter service agreements with service providers or individual contributors using discretionary funding available to help access additional resources to fulfil its mandate to the DAO. Additionally, it helps fix the compensation structure for OpCo employees to be in line with industry standards and relaxes restrictions for OAT council elections to enable attract more candidates who have the interests of Arbitrun in mind.

We invite the community to discuss the matters on this thread and we will organise two governance calls to discuss the above proposal across different time zones:

Assuming all goes well, we will aim to put a vote up on Snapshot for 12th June 2025 to enact the above changes with a non-constitutional Quorum.

6 Likes
2

We’ll reply in more detail later, but this seems like a total rewrite of the purpose of OpCo. The whole point of OpCo was to be a ministerial, not decision-making, arm of the DAO. It was to take action on behalf of governance.

Many of the restrictions noted above are not very restrictive if OpCo sticks to its mandate of

  1. executing DAO-approved strategies and directives
  2. proposing to the DAO a new strategy or directive it could be used for

More generally, why did the current OAT members choose to stand for election if they did not find the OpCo mandate appropriate? We already have the Foundation for independent action. It’s not clear why OpCo needs to have the capacity and freedom to pursue independent action.

What kinds of tasks are the OAT members envisioning OpCo doing that AF cannot do? That would help to understand why such a drastic revision to the core mandate is being made.

5 Likes
3

This is described as a restriction for which “a fix” is proposed, which seems to imply it is an oversight or an unfortunate consequence of some other requirement. Looking back at the proposal as passed, this seems very intentional and is explicitly stated to be the intent.

I think it’s misleading to label this “a fix”. This proposal suggest to rewriting, even rendering moot to some extent, very clearly stated parts of the passed OpCo proposal. We ought to apply all scrutiny due to such an endeavor, not just greenlight it as a small adjustment to fix some oversights.

2 Likes
4

First off, thank you to the OpCo team and the OAT Council for the transparency and foresight in surfacing these early-stage challenges.

Identifying these operational bottlenecks and proactively suggesting amendments is a strong signal of commitment to DAO maturity and efficiency.

That said, several of the proposed changes raise material governance and fiduciary considerations that merit thoughtful safeguards. Below is a breakdown of key themes and recommendations:

1. Service Provider Engagement — Necessary, But Needs Guardrails

Empowering OpCo to independently engage third-party contributors is a logical step toward agile execution. However, unchecked discretion can invite risks.

Suggested Improvements:

  • Define a spending cap for engagements without prior DAO approval (e.g., <$50k).
  • Maintain a public registry of signed contracts (updated quarterly).
  • Require OAT sign-off for engagements involving affiliates or exceeding budget thresholds.

2. Discretionary Treasury Usage — Proactivity with Accountability

Allowing OpCo to deploy surplus funds toward promising initiatives fits its proactive mandate — but discretion must be counterbalanced with transparency.

Suggested Improvements:

  • Introduce a Discretionary Funding Policy outlining acceptable use cases and scope limits.
  • Cap discretionary spending (e.g., max 10–15% of total allocation).
  • Require briefings to the DAO on funded initiatives, even post-facto.

3. Compensation Structure — Modernized, But Clarify Terms

Updating compensation to include token vesting and performance-based bonuses aligns with standard Web3 employment practices, but clarity is crucial.

Suggested Improvements:

  • Publish a Compensation & Bonus Framework detailing performance KPIs, vesting timelines, and total allocation structure.
  • Ensure alignment with contributor classification norms and relevant tax regulations.

4. Council Eligibility — Better Balance, But Enforce Transparency

Relaxing the eligibility criteria is a smart adjustment to avoid losing quality candidates. However, it’s critical that the new policy doesn’t dilute accountability.

Suggested Improvements:

  • Enforce a “one seat per entity” policy without exception.
  • Publicly disclose rationale for disqualification of candidates.
  • Allow the DAO to challenge disqualification decisions via non-constitutional quorum vote, as proposed.

5. Conflict of Interest Disclosure — Private Review Isn’t Sufficient

Shifting all potential conflict disclosures to internal-only review may reduce unnecessary noise but also undermines transparency.

Suggested Improvements:

  • Continue requiring public disclosure of all material potential conflicts, in line with norms seen in other DAO councils (e.g., Arbitrum Security Council).
  • Maintain a DAO-facing conflict registry where recusal events are logged.

6. Mandate Expansion — Keep it Flexible, But Scoped

Expanding the OpCo mandate to allow proactive work in new areas (e.g., governance, grants) is sensible but mandate creep must be avoided.

Suggested Improvements:

  • Define a “sandbox scope” for new verticals with capped budget/duration.
  • Require DAO ratification before full adoption of any new mandate area.

These amendments reflect a DAO that’s becoming more operational and forward-thinking. That said, flexibility without structure risks backfiring. The OpCo must have room to execute, but its authority must remain transparent, scoped, and ultimately accountable to the DAO.

5

I am going to go point by point here having followed the proposal closely from the beginning.

First a general introduction: I do understand how a proposal that was ideated in eth denver 2024, started a proper discussion in bruxelles at ethcc in 2024, that was voted on snapshot in december 2024 and in tally in february 2025, with elections coming a few months ago, might need updates.

A lot changed in the last year, including the political panorama, how OCL and AF wants to interact with the DAO and broader ecosystem etc. This whole premise to say: it can make sense to put forward a discussion to change a few points that are now deemed by the OAT as too restrictive.

I’ll be honest at the time it didn’t make too much sense to me how opco would not be able to interact with service provider. Let’s assume the normal path:

  • the DAO wants to engage in a certain activity
  • it tasks the OpCo to do so
  • but neither the DAO nor other AAEs have the expertise to put forward this initiative
  • at the same time, OpCo has to manage the initiative in that set of strategic and operational details that requires 90% of the effort
  • the DAO goes through a procurement process to find a third party (and likely assigns to opco to manage this procurement process? who deals with that?)
  • the DAO choose a provider with an election based process.

I do get that the ability to elect a service provider is something the DAO wants to retain. At the same time, looking at the past, I do find difficult to see how the DAO can do a better choice compared to the OpCo and the OAT, knowing already the OAT composition and knowing that they will (hopefully) find the right people to work in it.
At the same time opco managing this choice means we remove a lot of friction from any process.

This could be one of the most controversial point for the DAO: basically using funds allocated initially only for people of OpCo and for the ops strictly for OpCo, to be used to fund also initiatives instead.
I am unsure if this is a positive or negative thing right now. It might create a natural tendency to spend maybe a bit less on people because there will always be the back idea of allocating funds to initiatives. I also see this being contested by delegates who are advocating for putting in circle less arb as possible, and so we are potentially saying that all budget could be utilized even if not all on people. I don’t necessarily care about this last point knowing that few have hundreds of millions of unlocks and so this is mathematically speaking a small amount; I do care instead about the process behind, from Opco, saying “we spend X on this initiative” vs “dao has to put X for this initiative”. And the fact that there might be a disagreement on what X should be, and how OpCo would approach the decision of onboarding the capital cost if below a certain threshold, or outsource to the DAO if above.
This is probably a nuance at this point in time; as long as the reasoning of deciding on internalizing vs asking to the DAO is made clear in each situation, I think it could be ok. But I would like to avoid a situation in which, in an entity that should have had almost $8M earmarked to pay people, we end up spending instead $1M and put aside $7M for initiatives. Is not about overspending on people, but having opco being a real force operating on behalf of the DAO.

This is one of the thing that makes the most sense. As of today opco can’t offer equity nor anything that is “really” appealing in a world in which you can get stock options, carry etc. We need to make the company attractive.

This was probably a big oversight to begin with, and I wonder how many people have not run in the elections due to this very strong limitation. I am one of the few for example. Another point that I strongly support.

Focusing on the public side of job positions, and disclosing privately to the OAT what could be seen as a potential conflict for other to evaluate, is likely for the best.
We live in a tokenized world. Do I have a conflict of interest if I have OP tokens in my portfolio, or if I particpate to the Echo Coinbase group? Unlikely. Does it make sense to disclose this to peers for the sake of transparency and for them to evaluate if there could be any strange situation? Yes.

This is another critical point.
I do see how enlarging the scope can make sense. We don’t want OpCo to be a black hole of initiatives; it will likely not be looking at the budget that will rather large is not infinite, even through external requests.
The main point is for the OpCo to evaluate, in good faith, if they deem themself up to the task of properly ideating, executing and managing certain strategies, without internalizing for the sake of control and for the sake of being capital efficient.
It will fall in the same framework posted above: each time there is a meaningful decision, clearly explain to the DAO and other AAEs why it should fall into OpCo, why alternatives are not necessarily advised, and how OpCo should potentially be a better executor.

On one side, I do see OpCo managing intiatives outside the initial “ecosystem growth” and “financial” verticals. Looking at people currently in the OAT, we are indeed on the right path to have a very good team, well interconnected in the ecosystem. At the same time we don’t want to

  • have OpCo onboarding any initiatives that can’t be executed by AF, OCL, Entropy, AGV because there are “no alternatives”
  • have the DAO assign to OpCo any initiatives that can’t be executed by AF, OCL, Entropy, AGV because there are “no alternatives”.

It means that people in the OpCo (OAT, Chief etc) will not have to be complacent about their role, and have a constant critical thinking about why they are indeed managing or not managing certain initiatives.

This is not a virtue signal: I am cautiously optimistic in enlarging the scope of the OpCo. But in this whole transition we are collectively experiencing, from DAO executed operations to AAEs taking the lead, we want to constantly ask ourself if we are not losing the plot.

Personally, I am quite confident we won’t.

1 Like
6

We appreciate the initiative to update and refine OpCo’s operational framework. While the initial proposal was approved only a few months ago, it’s true that the broader discussions have been ongoing for quite some time. Given how quickly the ecosystem evolves, it’s reasonable to make adjustments to ensure OpCo remains effective and fit-for-purpose.

We’d like to focus our feedback specifically on the financial aspects of the proposal:

1. Engagement with Service Providers

Understandably, OpCo needs the ability to engage service providers directly to execute its mandate. However, this flexibility must be paired with financial accountability. We believe the following principles should apply:

  • Expenses should be transparent and disclosed through regular reporting. Transparency reports—such as those from the Uniswap Foundation (quarterly), kpk’s ENS endowment (monthly), or the dYdX Foundation (semi-annual)—can serve as strong references.
  • Each third-party service provider should have a cap on discretionary spending. Any spending beyond that cap should require DAO approval. This strikes a balance between operational autonomy and community oversight.

2. Discretionary Treasury Spend

We support the idea of OpCo having access to a discretionary budget, provided there are clear guardrails:

  • Spending should be capped at a pre-agreed amount.
  • OAT members should unanimously approve usage.
  • All spending should be transparently reported to the DAO.

The Uniswap DAO’s discretionary budget for the UAC could serve as a useful precedent and as a template for implementation.

3. Employee Compensation

We support revisiting OpCo’s compensation structure to ensure it is competitive and aligned with market standards. That said, any changes should be backed by benchmarking data and presented transparently so the community can understand how these decisions are made.

7

If I understand correctly, the proposal does not imply that only OpCo can propose service providers to the ArbitrumDAO. The proposed fix for the ‘Inability to Interact with Service Providers’ restriction grants OpCo the authority to enter contracts with service providers or individual contributors as needed to fulfill its mandate, subject to OAT oversight, seems intuitive.

Since the proposal neither states nor implies that OpCo is the sole entity allowed to propose service providers, other entities, contributors, or the DAO itself can still propose service providers through existing governance processes. Therefore, I don’t believe there’s a significant cause for concern regarding centralization risks.

Also, are AAEs officially a thing now? just want to clarify where things are at

8

Thanks for big analysis of OpCo’s functions

First of all, I do not see such a mandate explicitly stated for OpCo

Second, I consider this formulation to be extremely vague
In this case, almost any purchase of equipment, services or goods can be written off as a necessity. Buying an expensive massage chair is a necessity, since reading the initiatives from the DAO takes a lot of time and your back gets numb. There are no restrictions in this formulation, so I am against such a clause.
In addition, I would like to have specialists who are able to do at least basic things on their own, given their high salaries

Third, If OpCo is struggling to fulfill its functions and lacks the necessary expert knowledge or experience, I don’t see any problem with approving the expenses through Snapshot by the DAO — it only takes one week

I don’t quite understand the essence of this proposal, since there is already a separate pool of funds for salaries. This pool is only for bonuses.

It’s not entirely clear why there is a need to complicate the system and increase administrative complexity, as well as to separate compensation from bonuses

I don’t like the idea of significantly changing OpCo’s scope of activities after everyone voted specifically for the current version.
However, I don’t see any restrictions right now preventing OpCo from developing any initiatives — this doesn’t contradict anything as long as they fulfill their core functions and have the time to do so.

Like any delegate, OpCo can initiate proposals to improve anything within the DAO
So, I don’t see any need to assign new functions to OpCo

9

These structural changes are creating some accountability gaps while giving OpCo way more authority. I get that operational flexibility is needed, but not by throwing basic governance safeguards out the window.

Letting OAT members keep their service provider relationships while they’re approving discretionary spending? That’s a direct financial conflict waiting to happen. An OAT member could literally approve contracts that benefit their own company, and we’re supposed to trust that “recusal” will handle it. Come on. You don’t have to assume bad faith to see the incentive problems.

“Excess capital that is available can be used on a discretionary basis” - this is exactly the kind of language that lets spending spiral out of control.

And what counts as “benefiting the ArbitrumDAO”? Pretty much anything if you’re creative enough with the justification.

Where’s the Accountability? That’s not how this should work. If you want more authority, you need more accountability, not less.

What Should Actually Happen Start small and earn the bigger authority. Give OpCo like $25K quarterly for discretionary stuff and let them prove they can use it well. If they’re crushing it and creating real value, then we can talk about expanding that authority. But earning expanded power through good performance, not getting it by removing oversight.

I want OpCo to succeed and I understand they need some flexibility to operate effectively. But these changes feel like they’re optimizing for OpCo’s convenience rather than what’s actually good for the DAO.

3 Likes
10

Overall, I support the intention to update the scope and boundaries of the OpCo to better align with the newly proposed Arbitrum Aligned Entities (AAE) structure. As the ecosystem evolves, it makes sense to refine roles and responsibilities to ensure better governance and operational clarity.

However, I’d like to emphasize that the effectiveness of these updates will depend heavily on how well the AAE framework is actually implemented. A clear and enforceable AAE structure is essential not only for shaping a viable execution plan for the SOS objectives but also for defining the operational details of OpCo in a sustainable way. Further thoughts on the AAE framework here.

That said, I have some concerns around how the proposal addresses the issue of conflicts of interest—something that is endemic to DAO governance and must be handled with more rigor. In particular:

  • Restrictions Around Council Elections:

The proposed changes seem to reduce safeguards against conflicts of interest rather than strengthen them. The previous criteria around elections and eligibility were more appropriate in preventing problematic overlaps and preserving independence.
While I recognise the previously agreed terms limit access to valuable contributors, I think the relevance of OpCo within the DAO calls for clear boundaries.

  • Declaring Conflicts of Interest:

The proposal underestimates the potential conflict posed by personal or institutional token holdings. A large stake in a competing project—even if there is no formal working relationship—can significantly bias decision-making. These situations should be treated with the same seriousness as direct employment with a competing project.
I suggest for holdings to be disclosed and considered in the evaluation when they represent more than 25% of one’s portfolio.

11

Thnaks for the proposal/update.

I have a few questions regarding some items.

Inability to Interact with Service Providers

In the current proposal, the following example is provided.

I view the OpCo as operational infrastructure to address the most common demands within the DAO, and evaluating proposal “worthiness” is a core part of this. Therefore, relying on external SPs to fulfil this should be an exception, rather than the rule, and it would need a DAO approval for the request. I’m saying this because I can see a “department” within the “placeholder budget” for internal employees to do exactly that.

While it is not mandatory to follow a 10-employee setup, OpCO should be able to handle its expected tasks with its internal employees. For example, equivalent to PMs to follow all initiatives, and researchers to cover the most common/relevant topics/proposals for the DAO.

That has a direct relationship with most of the other points, so my main questions are: What is the structure the OAT is planning/envisioning for the OpCo? What should/could be handled internally?

Compensation for OpCo Employees and Restrictions Around Council Elections.

I mostly agree with those items, as they will provide more flexibility and position OpCo better when trying to find the right person for the roles. I would like to see a revised set of rules (not only the fixes) for the Council Elections so that the delegates can ratify them.

Regarding the vote

We are bundling several items in this topic. What is the voting strategy you are envisioning for this?

Thank you for the thorough analysis and for suggesting amendments to relevant items before the structure is finalised.

1 Like
12

We’ll wait to listen to the calls before making a final judgement but while we were generally apprehensive about OpCo being formed at first, and these changes specifically, we’ve had some private conversations that make us feel we must vote ‘for’ on this. Only AF and OCL have the context to push the chain forward in an efficient way. However, AF/OCL isn’t always going to share this context with the wider DAO like they might with the other few members on the OAT or future hires for OpCo like the Chief Chaos Coordinator or Chief of Coins. Therefore, any decision making that goes through a wider delegate body will be inherently flawed as a result of issues being seen and understood through a lens of partial information. This obviously should be limited as much as possible, leaving the elected, appointed, and hired individuals free to make as many decisions as they can themselves, only bringing in more delegates when absolutely necessary and when they are willing to share all the relevant context so that a fully informed decision can be made.

We know this might be seen with some wariness by other delegates but OpCo already exists and the OAT has been formed with its elected individuals. If those individuals don’t feel like they can do their best work with the OpCo as it is in the iteration that was voted through initially, it should be reshaped such that they can. The alternative is having a team that feels like they are being forced to work through constraints that hinder their abilities, which we don’t think is a good spot for the DAO to be in.

Our only suggestion is similar to the one we had with the adjustment of quorum. We don’t expect this to be the last time this kind of conversation comes up. It is more than likely that OpCo and OAT will run into more restrictions they will wish to lift in the future. To avoid repeating this kind of discussion, which we believe can become contentious quickly, we would encourage the OAT to make sure that any changes here err on the side of giving OpCo more freedom than they think they might need, even if it means expanding this proposal more.

13

Thank you all for your comments, feedback, and for joining the call.

Here you can find the recording and the notes.

I’ll address each of the concerns raised one by one.

According to the approved proposal, the OpCo has a dual mandate: to support the operations of DAO-approved proposals, and to proactively identify opportunities that could benefit the DAO:

This proposal does not change the scope or purpose of the OpCo. Rather, it aims to offer more flexibility in engaging service providers and utilizing available funds to develop proposals that may benefit the DAO. The key of having an operational entity is to enable frictionless execution

The points identified by the OAT and proposed as modifications refer to restrictions that would prevent this mandate from being carried out smoothly, which is ultimately the very reason the entity was created.

As illustrated by the given examples, the intention behind these modifications is to enable agile funding of groundwork needed to prepare proposals that will be submitted to the DAO. This aligns with the overarching goal of reducing friction in order to fulfill the approved mandate.

OpCo should only kickstart initiatives and ideas when it recognizes a potential advancement, in line with the initial proposal, while any significant expenses such as carrying out larger initiatives to fully execute a proposal will always need to be approved by the DAO, since the OpCo does not have funding for that.

The OpCo will be the entity responsible for executing the operations approved by the DAO. That has not changed, so the final decision will always remain with the DAO.

Thank you for the feedback. At the OAT, accountability is a top priority, so there will definitely be regular transparency reports.

Regarding caps, the approved proposal already includes them:

The rationale behind this is to equip the OAT with the tools needed to negotiate compensation with OpCo employees. Our vision is to establish a compensation structure that includes token vesting, ensuring incentive alignment with Arbitrum’s long-term success.

The goal of the proposed policy is to ensure that talented individuals, who are capable of adding value and have a genuine interest in Arbitrum’s success, are able to apply. In any case, the DAO will always have the final say through the vote.

In its dual role as the entity executing operations and proactively identifying new opportunities, or evaluating those that arise, as you mentioned, we envision the OpCo having access to a budget to collaborate with contributors or service providers in preparing robust proposals for the DAO.

The goal is to reduce friction and enable the OpCo to operate smoothly and remain adaptable to emerging needs. In any case, such expenditures would need to be approved by the OAT, the body elected by the DAO to represent it.

We will aim to put a vote up on Snapshot for 12th June 2025 to enact the above changes with a non-constitutional Quorum. The options will be For, Against or Abstain.

Update to the proposal:

Based on the feedback received during today’s call, we’ve added an update to the proposal to clarify that if an individual is elected on behalf of an organisation, then it is tied to them and the position cannot be rotated by the organisation.

Thank you all for the feedback, and just a reminder that there will be a new call next Monday to discuss the matter further. Feel free to leave any additional questions or feedback on the proposal.

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Before getting started, we appreciate that despite the complex legal and governance nature of this structural update, the proposal has been presented in a clear and systematic manner. We understand the goal of creating a more agile operational structure within the DAO and agree that this process needs to be made more efficient. However, we believe that the increased executive power gained through this transition must be balanced with transparency and community oversight. While operational speed is improved, accountability must not be compromised. At the same time, we have concerns that this update may give rise to conflicts of interest. We are of the opinion that measures should be put in place to prevent any potential abuse.

We support the general direction of the proposal and view the effort to enhance the DAO’s operational capacity positively. However, to ensure this increased capacity does not weaken DAO sovereignty, we recommend that the proposed structure operate within a stronger feedback loop with the community.

We thank the proposal authors for their constructive contributions and wish to express our continued support for Arbitrum DAO’s development toward a more transparent and inclusive structure.

ITU Governance, @talha

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I appreciate the structure of this proposal, where you detail each problem separately.

Where, as per your analysis, there are 6 problems with the approved setup for OpCo:

  • Inability to Interact with Service Providers
  • Restrictive Treasury Spend
  • Compensation for OpCo Employees
  • Restrictions Around Council Elections.
  • Declaring Conflict of Interest
  • Ecosystem Support or Financial Management only

And for each one of those problems, you’ve suggested a solution.

I believe it’s best, for this offchain vote to be conducted with the approval voting type, where delegates would be able to signal support for each one of the changes individually, with all of their voting power being casted towards each “problem/solution change” they agree with.

In this way, we could agree to consider valid, each voting option, aka., each “problem/solution change”, that the delegates vote in support of, for the options that will gather more than the non-constitutional 3% quorum threshold in voting power support.

I really don’t think we should bundle all of these changes together, in a single For/Abstain/Against vote, since some of these changes are way more impactful than others, and it would force delegates to vote against the whole proposal, if they disagree with just one of the proposed “problem/solution changes”.

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Thanks for the responses. What I’m lacking so far is a vision. We’re debating the details point by point but said details only make sense as a coherent whole. Now, that’s the view of someone not invited to a top delegate’s meeting. So obviously I’m lacking context. And I see little value in throwing a spanner in the works for what has taken a lot of work already.

Where I see I can add more value is nudging towards a couple of points on the vision: the value of operating as an open ecosystem and not as a closed traditional corporation.

For context, I’m not a decentralisation maxi. I have criticised DAO designs since 2018 as rather impractical. Most DAOs today shoot themselves in the foot over and over. They can’t innovate (that is, spot opportunities and execute well towards them). But I also come from 10 years in organisation design and see that traditional corporations are also pretty bad at innovation.

I unpacked the point here https://x.com/_Daniel_Ospina/status/1932303862917955797

For the case of Arbitrum, grounding those ideas means:

  • processes to work with ecosystem partners i.e. entities that can be aligned via partial ownership (arbitrum incubates them or invests in them), LPing, in some cases, exclusivity contracts, etc.
  • enabling potential partners to propose and have high signal conversations (my issues with the AAEs having to approve everything first is that it creates a bottleneck for small experiments, effectively killing most of them unless a mechanism is set to incubate said relationships)
  • clearer scope for AAEs so ecosystem partners know where to propose and where not. And higher transparency from AAEs for the same reason.

There’s a material fear that transparency will expose Arbitrum to competitors. And with the current DAO design I agree that’s an unviable risk. However, with a platform organisation design there’s a lot more to win through transparency than through secrecy, because the capabilities (talent, capital, IP, risk capacity, etc.) of a whole ecosystem can be leveraged. This is at the core how Open Source Software is advancing, the realisation that openness can compound value through the ecosystem. Growign the pie for all as opposed to fighting to keep the bigger slice of a small pie (both in control and upside).

In consequence:

  • The dilution of conflict of interest declaration policy worries me. We need more transparency and accountability, not less.
  • Expanding the mandate of the OpCo… to all areas? let’s not reduce clarity, that cripples the ecosystem. The solution here is sharing the vision for the OpCo. And I know a lot depends on the OpCo CEO but there should be a commitment to the OpCo not becoming a closed-off entity that does everything internally without the ecosystem even knowing. With that countelever, then I’m ok with expanding the mandate. Without it, we move closer towards corporate mediocrity.
  • the OpCo having a budget to collaborate with service providers: great. (Let’s make sure though the OpCo is open minded and not just following directivess top down but also trying new things at a small scale first and snowballing)
  • Compensation structure with all the tools available: sure. I hope this doesn’t become an excuse for bloated compensation, though.
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Concrete example of the issues of the current design and increased centralisation is what happed with Areta as @tnorm mentioned here
https://x.com/t__norm/status/1932859058270449761?s=46

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This a gross exaggeration of the observations made in that thread lol. OpCo will help ensure that the DAO has a competent counterparty to work with vendors

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Sorry, whats the exaggeration you’re referring to?

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AranaDigital supports the changes to OpCo because they will let the team sign service-provider contracts on its own, so good ideas get vetted quickly instead of waiting for a full DAO vote; they free up any extra budget for small pilots, letting us test new plans before asking the DAO for large sums; they turn the 4 M ARB bonus pool into a broader pay-and-bonus pool, making it easier to hire and keep top staff; and they loosen the election rules so more skilled people can serve on the oversight council while still limiting one seat per company. However, to keep OpCo credible, we suggest adding a simple monthly cap on discretionary spending and for OpCo to publish a quarterly report of all contracts, so the DAO can track how funds are used while making OpCo more efficient.