Entropy Advisors: Exclusively Working With Arbitrum DAO

Description

Abstract

This proposal aims to secure funding for Entropy Advisors to continue its work exclusively with the Arbitrum DAO for one year. During this period, we will deliver strategic proposals, guide key partners through the DAO processes, and align the priorities of essential stakeholders for the betterment of Arbitrum. We will also expand our efforts to include a small set of additional verticals by hiring skilled contributors in areas where the DAO needs support, such as data analytics, technical proposal creation, marketing, or any other needs that may arise.

With a budget of $2.47M for the year paid in monthly installments and stored with the Foundation for DAO-clawback capabilities, along with an optional up to 1.5 million ARB for performance-based bonuses voted on by the DAO near the end of the term and put in a 3-year vesting contact to ensure long-term alignment, we will continue to build a dedicated team focused solely on enhancing the Arbitrum DAO’s success. The primary goal of our work is to help Arbitrum DAO continue its path toward efficient and effective operations and execute its long-term vision of becoming a sustainable entity with diversified revenue streams. We believe that over the coming years, Arbitrum DAO has the potential to generate hundreds of millions of dollars per year while maintaining its status as the leading Ethereum scaling solution with an ever-growing base of users and developers. All of Entropy Advisors’ employees will work full-time towards achieving this goal.

Motivation and Rationale

Arbitrum DAO is set up to prosper with its cutting-edge technology stack that will soon support numerous coding languages, a vibrant community of users and developers, abundant resources in the DAO treasury, and the ecosystem’s commitment to scaling the most decentralized and secure L2 on Ethereum. Despite our belief that Arbitrum holds a strong position in the market today, there is a lot of work to be done over the next 3-5 years to ensure Arbitrum maintains and advances its position. We have diagnosed some key areas in need of improvement that we feel well suited to take on:

1. Designing, drafting and executing proposals that benefit Arbitrum.
2. Strengthening overall governance processes and providing feedback to other DAO contributors, unlocking efficiencies and ensuring redundant work is avoided.
3. Acting as a mesh layer between key stakeholders, e.g., active delegates, development teams such as Offchain Labs, and the Arbitrum Foundation.
4. Helping potential 3rd party strategic partners navigate the DAO to attract high-quality companies and individuals within the ecosystem and RFP applicant pools.
5. Attracting/retaining top talent working full-time, professionally on behalf of Arbitrum DAO.
6. Improving the ability of the DAO to spend money effectively and support a long term sustainable future for Arbitrum.

Today the Arbitrum DAO faces friction executing across all of the aforementioned tasks. Many times those creating proposals have known or unknown ulterior motives and incentives at play. It is difficult for aspiring contributors and partners to navigate the DAO. No one is incentivized to bolster RFP applicant pools. Communication is fragmented with no entity in place to tie perspectives together, and operations/goals often overlap across initiatives. There are numerous proposals that are consensus to move forward but do not progress because there is no financial incentive to do so. There is inadequate accountability over and transparency into DAO funded programs. The problems are ever-evolving and growing, and the Arbitrum DAO needs an entity that only has the DAO’s best interests in mind to fill the gaps.

Our team (@swmartin19, @mattonchain, and @pruitt) brings an extensive network as well as experience in research, governance, brand building, and project management to the Arbitrum DAO, having led well-known brands in the space such as Blockworks Research and 404 DAO. We have all been involved in the DAO since the beginning, starting with Blockworks Research’s entry into the DAO by highlighting flaws in the DAO’s very first proposal, AIP-1. We are not afraid to push against the status quo if we believe it helps Arbitrum achieve its goals.

Entropy Advisors was extremely fortunate to receive a grant from the Arbitrum Foundation. As such, we have been able to use the past few months contributing full-time to Arbitrum DAO to further showcase our value in the community. We have hosted bi-weekly 1-on-1 calls with a cohort of large delegates, with the foundation, and with OCL, and feel that we have a strong hold on various stakeholder’s interests, strategic goals for Arbitrum, working initiatives, etc. When paired with our experience and networks within the industry, we believe that we are uniquely positioned to help Arbitrum achieve its long-term goals with all stakeholder perspectives in mind. With exclusivity meaning no official or unofficial engagements with any other client, Entropy Advisors can serve Arbitrum DAO with no ulterior motives or conflicts of interest.

Today, virtually no money is spent on operations, while the DAO has spent almost 435M ARB in total with ~95% going towards investments, incentives, and grants (Source: Delphi & R3gen). We believe it is absolutely imperative for the DAO to make an investment in operations, simultaneously ensuring different initiatives across the ecosystem can be set in motion swiftly, fit together seamlessly, and can reach the best talent, while the DAO’s expenditures can be managed in a way that enables long-term sustainability. It is evident that this is becoming a wider-reaching theme within the DAO, but requires a heavy lift (see OpCo proposal from @dkpremia that asks for 25M ARB). We are NOT looking to replace OpCo, but rather drastically reduce the scope and funding request by helping formulate operational procedures until the OpCo is formally stood up. At that point, the DAO can decide what role Entropy Advisors plays as a service provider to the OpCo.

With the budget as outlined, Entropy will be able to hire up to 10 employees with a diverse range of skill sets including governance, data analytics, marketing, and development/engineering. We will be able to hire top talent in our industry who will dedicate their full-time bandwidth to Arbitrum DAO. Regardless of Arbitrum’s current strategic priorities, whether cutting costs or scaling strategies, our team will work to execute the goals of the DAO. Given Arbitrum’s dominance, size, and number of initiatives it is important that we build a well-rounded team at Entropy that can operate as the tip of the spear as a catalyst for change across the many sectors that the DAO operates.

Entropy’s Portfolio

At the beginning of May, we introduced Entropy Advisors to the Arbitrum DAO. We are a governance operations-focused business, working exclusively with Arbitrum. Our initial efforts have already driven several notable initiatives, demonstrating our capability and commitment to enhancing the Arbitrum DAO:

• Worked with @r3gen_Finance to create a proposal that reduces DAO OpEx on multi-sig signers, by establishing the Multisig Support Service.

  • We leveraged our network to ensure a competitive applicant pool, which ultimately resulted in one of the most competent applicant rosters (40 in total) in the DAO’s history despite just a $1,500-$2,500 monthly wage per signer.

  • The proposal is expected to save the DAO almost $400,000 per year.

  • Entropy managed the application process, and will soon host a call with the winning applicants to go over multi-sig best practices.

• Conducted research into Arbitrum DAO’s sequencer margin / transaction fee mechanism, kicking off a conversation that aims to increase the DAO’s treasury value rather than deplete it of resources.

  • Attended/helped drive forward discussions related to DAO budgeting and sequencer revenue through working group calls.

  • Followed up with a formal proposal to increase the L2 minimum base fee on Arbitrum One, with plans to establish a more long-term solution that includes service providers.

  • This proposal, if passed, could bring the DAO an extra $5-15M per year of profit.

  • We also tapped on the ARDC to conduct research into these areas, thereby utilizing existing resources at the DAO’s disposal rather than wasting additional resources.

• Moved quickly to get Hack Humanity, the entity behind GovHack, ample funding to throw an event in Brussels at ETH CC for the Arbitrum community. These events require a substantial amount of lead time to plan, and the event would not have been possible if a few extra weeks had passed prior to getting the event funded.

  • This is a great example of Entropy Advisors helping 3rd party service providers navigate the DAO while also combatting the collective inactive problem mentioned above. Everyone wanted Arbitrum DAO representation in Brussels and Entropy stepped in to get it done.

• Introduced a governance calendar that encourages proposals to start and finish Snapshot and Tally voting on the same day each week, requires some support from delegates before proposals move to Snapshot from the Forum, and a holiday break at the turn of the new year.

  • The goal of this proposal was to reduce delegate fatigue by incorporating a more predictable structure, and ensuring things only go to Snapshot once they have been thoroughly reviewed by the broader community.

PLEASE NOTE THE REMAINDER OF THIS PROPOSAL HAS BEEN CUT OF DUE TO CHAR COUNT BUT CAN BE FOUND IN FORUM