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Core Test Proposal

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# [OLD] AIP-1.1 - Lockup, Budget, Transparency

*Note: Due to an incorrect vesting date, this proposal has been replaced by [a new version of the same proposal](https://www.tally.xyz/gov/arbitrum/proposal/70545629960586317780628692755032548222173912190231545322320044688071893662480)*

## Abstract
tl;dr: AIP-1.1 proposes (1) a lockup, (2) a budget and (3) transparency reporting regarding the 7.5% of the $ARB tokens distributed to the Foundation’s “Administrative Budget Wallet”.

The Administrative Budget Wallet will be used for covering ongoing administrative and operational costs of The Arbitrum Foundation, payment of service providers, and for the purpose of fostering the growth and development of the Arbitrum ecosystem. In respect to the 7.5% that has been distributed to the Administrative Budget Wallet, a transparency report regarding the 0.5% that has already been transferred is available here 163.

The remaining 7% of tokens will not be used until the approval of a budget, such as the one proposed in this AIP. The proposed budget is in-line with the Foundation’s strategic needs to represent and service the DAO and the allocation is smaller than initial allocations to peer foundations. This AIP proposes placing the 7% outstanding distribution in a smart contract-controlled lockup – linearly unlocking over 4 years – alongside transparency report structures to allow the DAO to periodically monitor expenditures and other activities of the Foundation.

The Administrative Budget Wallet will be used in pursuit of the Foundation’s mission statement as set out in the bylaws 24, which includes financing technical improvements and operations of the Arbitrum network, fostering ecosystem growth through grants to align with partner projects and educational initiatives with in-person and online events.

## Motivation
On March 16, 2023, the Arbitrum networks (Arbitrum One and Arbitrum Nova) were decentralized and given to the newly formed Arbitrum DAO. Included in this transition were:
- Control of the upgradeability and technical future of the chains
- Control over the DAO treasury
- Control over net fee revenue - i.e. the net difference between fees collected by on-chain operations and L1 fees paid by the Sequencer
- All Arbitrum social media platforms and accounts
- Ability to elect and, if deemed appropriate, remove the Security Council and Directors

Full responsibility of the chain’s technology, future, and fee revenue were given to the DAO directly. With the DAO assuming those rights and controls, the DAO also assumed the responsibility to fund the ongoing operations of the chains and the costs of running critical chain infrastructure, including RPCs, the Sequencer, and third-party vendors and service contracts.

While there are many activities that the DAO can do directly on-chain, several of its responsibilities require a representative that can engage, maintain and enter new agreements with service providers to run infrastructure that’s critical for the ecosystem (e.g. servers, RPCs, block explorers, data feeds and analytics platforms, and tooling), and ensure that both the chain and the ecosystem have the support they need to continue to thrive. In order to ensure a smooth transition to the DAO without any interruption of services, it was necessary to create an organization that would be ready to service the DAO immediately from launch.

The Arbitrum Foundation was created to fill this need, with its mission and scope outlined across the Foundation Bylaws 24. Prior to the launching of the DAO, The Arbitrum Foundation assumed responsibilities for funding and running chain infrastructure. However, in an arrangement that appears to be unique amongst Arbitrum’s peers, the Foundation does not receive or control the net revenue from transaction fees as this is given directly to the DAO treasury.

The DAO is also tasked with fostering and developing the Arbitrum ecosystem, where the DAO may seek to partner with companies or organizations that either cannot or will not publicly negotiate collaborations or partnerships due to confidentiality and other operational requirements. Often, large enterprises negotiate partnership opportunities in private without public processes, where these relationships can only be disclosed after they are agreed upon. Having a well-funded Foundation empowered to represent the DAO in this arena, alongside peer foundations, is in the best interests of the DAO to further develop the growth of the Arbitrum ecosystem.

## Rationale
While the need for the Foundation to exist and represent the DAO is well-motivated, it became clear through community discourse around AIP-1 that it was important to have additional insight and restrictions on the Foundation’s initial funding. This AIP-1.1 proposes a detailed set of controls and initiatives to achieve that goal.

1. Smart Contract Lockup:

The remaining 7% of ARB tokens in the “Administrative Budget Wallet” will be subject to a four year lockup schedule, unlocking on a continuous linear time basis commencing from the date of the Snapshot approval of AIP-1.1 by the DAO (i.e., a total of 175m $ARB released over each year for 4 years). The lockup will be enforced on-chain through a smart contract which will designate a multisig wallet controlled by The Arbitrum Foundation as the beneficiary. The lockup contract will be configured in a manner that allows the DAO to adjust future funding and/or modify the unlock schedule.

2. Operating Budget:

Below is a proposed annual operational budget for the first year of the Foundation. While the operational costs are denominated in USD, the expectation is that approximately half will be paid in USD and half will be paid in locked $ARB tokens.

As this will be the first year of the Foundation’s operation and as the Foundation is still young at the time of this AIP, it goes without saying that these are estimates with the expectation that this will be an upper bound on the operational costs for the first 12 months. The transparency reports described in the next section will be an opportunity to track the actual expenses against the budgeted categories and keep the community informed.

- Operating Budget: Cost ($USD)
- General and Administrative: $16,000,000
- R\u0026D: $9,000,000
- Technical Infrastructure: $5,000,000
- Events, Marketing \u0026 Communications: $6,000,000
- Total - Next Twelve Months: $36,000,000
- (50% $USD/50% $ARB)

*The General and Administrative line-item includes personnel, contractors, legal, insurance and other operational costs. As of the date of this AIP, the Foundation currently has five full-time contributors, 8 contractors, and the Security Council engaged to support the Arbitrum ecosystem. The Foundation’s budget anticipates the need to hire an additional 15 full-time contributors across technical, growth and community functions over the course of this year.

This operating budget presents best-faith estimates of the Foundation’s anticipated budgetary needs which may be subject to change.

3. Ecosystem Growth Initiatives

Any additional funds released in compliance with the lock-up schedule above will be made available, but not necessarily deployed, to opportunistically pursue ecosystem growth opportunities and strategic partnerships on behalf of the DAO. The expectation is that the vast majority of ecosystem growth funds will be paid in tokens, and thus will not require the Foundation to sell any tokens. Wherever reasonable, the Foundation will include additional lockups and/or vesting when making distributions in tokens.

The Mission Statement in the Foundation’s bylaws 24 highlights the varied nature of the opportunities the Foundation intends to pursue, and a set of KPIs that can track all of these opportunities being developed. The basis of those KPIs will stem from a focus on onboarding and growing both the developer and user base of the Arbitrum ecosystem, attracting best-in-class infrastructure providers to the network, expanding across various industries, use-cases and scope of projects that engage with Arbitrum technology. The ultimate goal of the Foundation is to continue to foster the development of the technology and expand the Arbitrum ecosystem globally.

In addition to the Foundation’s processes for selecting grants, it is important to note that the DAO maintains control over the 3.527 billion $ARB and has the ability to distribute any additional grants as it sees fit. Additionally, should the DAO choose, it has the ability to trigger the inflation of the total supply of $ARB which will supplement the on-chain DAO treasury with 2% growth of the total supply of $ARB each year.

4. Transparency Reports

The Foundation understands and agrees that the community should have oversight across how these funds are being utilized to gain comfort that spending is in the interest of the community. In furtherance of this goal, the Foundation is committed to providing a comprehensive annual report and a semi-annual progress update. This will provide the community with a better understanding of the Foundation’s expenditures, balance sheet and its pursuit of ecosystem growth opportunities alongside partnership developments, as well as the various internal and external committees and stakeholders that are involved in the decision making process.

The Foundation is continuing to build out its internal personnel to service grant requests and has already engaged a DAO service provider to assist with the administrative components of servicing grants. The Foundation is also talking with a number of different external service providers to assist in both the review and diligence processes.

The financial element of these transparency reports will include a breakdown of operational costs incurred while running the Foundation, including infrastructure spending for the Arbitrum chains, events, community building efforts, grants, etc.

In addition to the aforementioned reports, the Foundation is providing an initial transparency report alongside this AIP covering all major actions and decisions the Foundation made during set-up, including the costs incurred up until now, which can be found [here](https://docs.arbitrum.foundation/foundational-documents/transparency-report-initial-foundation-setup).

Links:
- Snapshot temperature check: [https://snapshot.org/#/arbitrumfoundation.eth/proposal/0x7203289844e807781e8d2ec110d4b97a79a29944cae06a52dbe315a16381a2ae](https://snapshot.org/#/arbitrumfoundation.eth/proposal/0x7203289844e807781e8d2ec110d4b97a79a29944cae06a52dbe315a16381a2ae)
- GitHub PR: [https://github.com/ArbitrumFoundation/governance/pull/44](https://github.com/ArbitrumFoundation/governance/pull/44)
- Forum discussion thread: [https://forum.arbitrum.foundation/t/proposal-aip-1-1-lockup-budget-transparency/13360/1](https://forum.arbitrum.foundation/t/proposal-aip-1-1-lockup-budget-transparency/13360/1)

# [UPDATED] AIP-1.1 - Lockup, Budget, Transparency

## ATTENTION:

This is an updated version of a similar proposal that has been put up for a vote a day prior to this one. We have discovered that the target vesting contract in the previous proposal had an incorrect \"start\" date. A more detailed explanation is provided below. Please do not vote on the other proposal and vote on this proposal instead.

### What happened?

The way this proposal works is that there is a special AIP smart contract (AIP1Point1Target) that references the location of the vesting vault for the Foundation Administrative Budget Wallet. The on-chain action that the proposal is executing is changing of the “passed” parameter on this AIP smart contract from false to true, documenting DAOs approval for the Foundation to use this referenced vesting vault, after the vote the Foundation will move 700M ARB tokens that are subject of AIP 1.1 to this contract and will be able to retrieve the vested amount to the Foundation’s multisig. 

One parameter of this setup is a “start” timestamp, which determines the point in time from which the vesting schedule is being calculated. According to the text of AIP-1.1: “…ARB tokens in the “Administrative Budget Wallet” will be subject to a four year lockup schedule, unlocking on a continuous linear time basis commencing from the date of the Snapshot approval of AIP-1.1 by the DAO…”. So this timestamp should be set to 1681754400, which translates to Monday, 17 April 2023 18:00:00 GMT, the date of the Snapshot approval. However, in the vesting contract that was subject to the original vote, it has been wrongly set to the date of the ARB Airdrop (1679590871, which translates to Thursday, 23 March 2023 17:01:11 GMT). This means that the smart contract configuration did not reflect the text of the AIP and would result in the effective unlocked vested amount being too large.

### Resolution

Since we cannot cancel the vote at this point (it could be canceled by the Security Council, but only after the vote has passed), after thorough discussion, we have decided to create a new proposal with the correct smart contracts that are referenced in the vote. We recommend that the DAO ignore the other AIP-1.1 vote, and instead vote on this one.

If you’d like to check the parameters are set correctly this time, you can check (for example using Arbiscan) the AIP smart contract referenced by this vote: [https://arbiscan.io/address/0x9E43f733Da0445b35f038FB34a6Fb8C2947B984C#code](https://www.tally.xyz/gov/arbitrum/proposal/79904733039853333959339953965823982558487956291458141923259498272549038367575). In the Contract tab you can go to the Read contract sub-tab and check that the arbitrumFoundationWallet parameter references smart contract at [0x15533b77981cda0f85c4f9a485237df4285d6844](https://arbiscan.io/address/0x15533b77981cda0f85c4f9a485237df4285d6844), which is the vesting vault. You can now go to this smart contract and, again, go to the Contract tab, and Read as Proxy sub-tab to see that the “start” parameter is set correctly to 1681754400. 

We hope that this resolution will cause as little confusion as possible among delegates. We plan to publish \"lessons learned\" from this case at a later date to elaborate on this case and suggest certain procedures to be implemented in the future to minimize the chances of such mistakes happening again. 


***


Category: Non-constitutional

### Abstract

tl;dr: AIP-1.1 proposes (1) a lockup, (2) a budget and (3) transparency reporting regarding the 7.5% of the $ARB tokens distributed to the Foundation’s “Administrative Budget Wallet”.

The Administrative Budget Wallet will be used for covering ongoing administrative and operational costs of The Arbitrum Foundation, payment of service providers, and for the purpose of fostering the growth and development of the Arbitrum ecosystem. In respect to the 7.5% that has been distributed to the Administrative Budget Wallet, a transparency report regarding the 0.5% that has already been transferred is available here 163.

The remaining 7% of tokens will not be used until the approval of a budget, such as the one proposed in this AIP. The proposed budget is in-line with the Foundation’s strategic needs to represent and service the DAO and the allocation is smaller than initial allocations to peer foundations. This AIP proposes placing the 7% outstanding distribution in a smart contract-controlled lockup – linearly unlocking over 4 years – alongside transparency report structures to allow the DAO to periodically monitor expenditures and other activities of the Foundation.

The Administrative Budget Wallet will be used in pursuit of the Foundation’s mission statement as set out in the bylaws 24, which includes financing technical improvements and operations of the Arbitrum network, fostering ecosystem growth through grants to align with partner projects and educational initiatives with in-person and online events.

### Motivation

On March 16, 2023, the Arbitrum networks (Arbitrum One and Arbitrum Nova) were decentralized and given to the newly formed Arbitrum DAO. Included in this transition were:

- Control of the upgradeability and technical future of the chains
- Control over the DAO treasury
- Control over net fee revenue - i.e. the net difference between fees collected by on-chain operations and L1 fees paid by the Sequencer
- All Arbitrum social media platforms and accounts
- Ability to elect and, if deemed appropriate, remove the Security Council and Directors

Full responsibility of the chain’s technology, future, and fee revenue were given to the DAO directly. With the DAO assuming those rights and controls, the DAO also assumed the responsibility to fund the ongoing operations of the chains and the costs of running critical chain infrastructure, including RPCs, the Sequencer, and third-party vendors and service contracts.

While there are many activities that the DAO can do directly on-chain, several of its responsibilities require a representative that can engage, maintain and enter new agreements with service providers to run infrastructure that’s critical for the ecosystem (e.g. servers, RPCs, block explorers, data feeds and analytics platforms, and tooling), and ensure that both the chain and the ecosystem have the support they need to continue to thrive. In order to ensure a smooth transition to the DAO without any interruption of services, it was necessary to create an organization that would be ready to service the DAO immediately from launch.

The Arbitrum Foundation was created to fill this need, with its mission and scope outlined across the Foundation Bylaws 24. Prior to the launching of the DAO, The Arbitrum Foundation assumed responsibilities for funding and running chain infrastructure. However, in an arrangement that appears to be unique amongst Arbitrum’s peers, the Foundation does not receive or control the net revenue from transaction fees as this is given directly to the DAO treasury.

The DAO is also tasked with fostering and developing the Arbitrum ecosystem, where the DAO may seek to partner with companies or organizations that either cannot or will not publicly negotiate collaborations or partnerships due to confidentiality and other operational requirements. Often, large enterprises negotiate partnership opportunities in private without public processes, where these relationships can only be disclosed after they are agreed upon. Having a well-funded Foundation empowered to represent the DAO in this arena, alongside peer foundations, is in the best interests of the DAO to further develop the growth of the Arbitrum ecosystem.

### Rationale
While the need for the Foundation to exist and represent the DAO is well-motivated, it became clear through community discourse around AIP-1 that it was important to have additional insight and restrictions on the Foundation’s initial funding. This AIP-1.1 proposes a detailed set of controls and initiatives to achieve that goal.

1. Smart Contract Lockup:

The remaining 7% of ARB tokens in the “Administrative Budget Wallet” will be subject to a four year lockup schedule, unlocking on a continuous linear time basis commencing from the date of the Snapshot approval of AIP-1.1 by the DAO (i.e., a total of 175m $ARB released over each year for 4 years). The lockup will be enforced on-chain through a smart contract which will designate a multisig wallet controlled by The Arbitrum Foundation as the beneficiary. The lockup contract will be configured in a manner that allows the DAO to adjust future funding and/or modify the unlock schedule.

2. Operating Budget:

Below is a proposed annual operational budget for the first year of the Foundation. While the operational costs are denominated in USD, the expectation is that approximately half will be paid in USD and half will be paid in locked $ARB tokens.

As this will be the first year of the Foundation’s operation and as the Foundation is still young at the time of this AIP, it goes without saying that these are estimates with the expectation that this will be an upper bound on the operational costs for the first 12 months. The transparency reports described in the next section will be an opportunity to track the actual expenses against the budgeted categories and keep the community informed.

- Operating Budget: Cost ($USD)
- General and Administrative: $16,000,000
- R\u0026D: $9,000,000
- Technical Infrastructure: $5,000,000
- Events, Marketing \u0026 Communications: $6,000,000
- Total - Next Twelve Months: $36,000,000
- (50% $USD/50% $ARB)

*The General and Administrative line-item includes personnel, contractors, legal, insurance and other operational costs. As of the date of this AIP, the Foundation currently has five full-time contributors, 8 contractors, and the Security Council engaged to support the Arbitrum ecosystem. The Foundation’s budget anticipates the need to hire an additional 15 full-time contributors across technical, growth and community functions over the course of this year.

This operating budget presents best-faith estimates of the Foundation’s anticipated budgetary needs which may be subject to change.

3. Ecosystem Growth Initiatives

Any additional funds released in compliance with the lock-up schedule above will be made available, but not necessarily deployed, to opportunistically pursue ecosystem growth opportunities and strategic partnerships on behalf of the DAO. The expectation is that the vast majority of ecosystem growth funds will be paid in tokens, and thus will not require the Foundation to sell any tokens. Wherever reasonable, the Foundation will include additional lockups and/or vesting when making distributions in tokens.

The Mission Statement in the Foundation’s bylaws 24 highlights the varied nature of the opportunities the Foundation intends to pursue, and a set of KPIs that can track all of these opportunities being developed. The basis of those KPIs will stem from a focus on onboarding and growing both the developer and user base of the Arbitrum ecosystem, attracting best-in-class infrastructure providers to the network, expanding across various industries, use-cases and scope of projects that engage with Arbitrum technology. The ultimate goal of the Foundation is to continue to foster the development of the technology and expand the Arbitrum ecosystem globally.

In addition to the Foundation’s processes for selecting grants, it is important to note that the DAO maintains control over the 3.527 billion $ARB and has the ability to distribute any additional grants as it sees fit. Additionally, should the DAO choose, it has the ability to trigger the inflation of the total supply of $ARB which will supplement the on-chain DAO treasury with 2% growth of the total supply of $ARB each year.

4. Transparency Reports

The Foundation understands and agrees that the community should have oversight across how these funds are being utilized to gain comfort that spending is in the interest of the community. In furtherance of this goal, the Foundation is committed to providing a comprehensive annual report and a semi-annual progress update. This will provide the community with a better understanding of the Foundation’s expenditures, balance sheet and its pursuit of ecosystem growth opportunities alongside partnership developments, as well as the various internal and external committees and stakeholders that are involved in the decision making process.

The Foundation is continuing to build out its internal personnel to service grant requests and has already engaged a DAO service provider to assist with the administrative components of servicing grants. The Foundation is also talking with a number of different external service providers to assist in both the review and diligence processes.

The financial element of these transparency reports will include a breakdown of operational costs incurred while running the Foundation, including infrastructure spending for the Arbitrum chains, events, community building efforts, grants, etc.

In addition to the aforementioned reports, the Foundation is providing an initial transparency report alongside this AIP covering all major actions and decisions the Foundation made during set-up, including the costs incurred up until now, which can be found [here](https://docs.arbitrum.foundation/foundational-documents/transparency-report-initial-foundation-setup).

### Links:

Previous version of this proposal with misconfiguration issue: [https://www.tally.xyz/gov/arbitrum/proposal/79904733039853333959339953965823982558487956291458141923259498272549038367575](https://www.tally.xyz/gov/arbitrum/proposal/79904733039853333959339953965823982558487956291458141923259498272549038367575)

Snapshot temperature check: [https://snapshot.org/#/arbitrumfoundation.eth/proposal/0x7203289844e807781e8d2ec110d4b97a79a29944cae06a52dbe315a16381a2ae](https://snapshot.org/#/arbitrumfoundation.eth/proposal/0x7203289844e807781e8d2ec110d4b97a79a29944cae06a52dbe315a16381a2ae)

GitHub PR: [https://github.com/ArbitrumFoundation/governance/pull/44](https://github.com/ArbitrumFoundation/governance/pull/44)

Forum discussion thread: [https://forum.arbitrum.foundation/t/proposal-aip-1-1-lockup-budget-transparency/13360/1](https://forum.arbitrum.foundation/t/proposal-aip-1-1-lockup-budget-transparency/13360/1)

# AIP 4: Update Security Council Election Start Date to Ensure Time for Security Audit

**Category: Constitutional - Process**

-   Disclaimers:

1.  The text changed slightly since snapshot (becuase of L2Beat's forum comment)
2.  This proposal and the attached executable were created by the Arbitrum Foundation *

High Level Overview
-------------------

The ArbitrumDAO Constitution specifies that the first Security Council election should start on the 15th September alongside a specification for the election.

An on-chain implementation of the entire election is still a work in progress. The Arbitrum Foundation has sponsored the implementation of a smart contract suite by Offchain Labs, an extension of Tally's user interface, and the respective audits.

This proposal seeks to revise the ArbitrumDAO Constitution to provide flexibility for the start date of the election. If passed by a Constitutional Vote, the new start date will be on the 15th September or the earliest possible date in which an on-chain election can begin.

The motivation to change the election's start date is to provide time for the implementation to be completed, security audits to be performed, for the community to gain confidence in the quality of its implementation and for the Arbitrum DAO to vote on a separate Constitutional AIP to install an on-chain election system.

The overarching goal is to still allow the election to begin on the 15th September, but it is prudent to provide leeway and ensure all parties, especially the Arbitrum DAO, are confident in the election software's security and completeness.

Path to a Smart Contract Enabled Election
-----------------------------------------

This proposal seeks approval from the Arbitrum DAO that the first and all subsequent security elections should be performed via the on-chain election process.

The activation of the Security Council election is dependent on:

-   Complete implementation for the on-chain smart contracts,
-   Complete implementation of the user interface,
-   Smart contract audit by a highly regarded auditing firm,
-   All parties, including the Arbitrum DAO, have gained confidence in the implementation's completeness and security,
-   Successful Constitutional Vote by the DAO to install the new election software.

A vote on this proposal is approving that the above conditions are mandatory for any election software before it can be installed into the on-chain smart contracts.

Modified Start Date for Election
--------------------------------

The implementation sponsored by the Arbitrum Foundation should be ready for the start date of the 15th September.

Even so, given the naunces of implementation details and the potential security risks to a critical part of the system, we believe it is still prudent to provide leeway and extra time for the Security Council elections to begin some time after the required date set out by The Arbitrum Foundation.

After all, it is not just about having a complete implementation, but ensuring all parties have confidence that all efforts have made been to minimize the risk of bugs in the implementation.

### Revision to ArbitrumDAO Constitution

The revised text focuses on the election beginning at the earliest possible date from the 15th September. Additionally, the election can only begin once an on-chain election system is installed via a separate Constitutional Vote.

All future elections can begin exactly six months after the previous election. As such, the chosen date for the first election will decide the earliest start date for the next election.

For extra clarity in the text, we have renamed "September Cohort" to "First Cohort" and "March Cohort" to "Second Cohort"

Finally, to remove any ambiguity, all security council members are expected to serve the time until the new Security Council members are installed in the respective smart contracts.

### Current text of ArbitrumDAO Constitution:

> The Security Council has 12 members, who are divided into a September Cohort of 6 members, and a March Cohort of 6 members. Every year on September 15, 12:00 UTC, an election starts for the 6 September Cohort seats; and every year on March 15, 12:00 UTC, an election starts for the 6 March Cohort seats.

> This means that the initial September Cohort will serve an initial term of 6 months, whereas the initial March Cohort will serve an initial term of 1 year.

> The initial Security Council Cohorts were determined by randomly splitting the 12 members into two 6-member cohorts - 6 members in the September Cohort and 6 members in the March Cohort. The members of the initial Security Council Cohorts are detailed in a transparency report

### Proposed Revision of Arbitrum Constitution:

> The Security Council has 12 members, who are divided into two Cohorts of 6 members.

> The initial Security Council Cohorts were determined by randomly splitting the 12 members into two 6-member cohorts - 6 members in the 'First Cohort' and 6 members in the 'Second Cohort'. The members of the initial Security Council Cohorts are detailed in a transparency report here.

> The first security election is scheduled to begin on the 15th September 2023 or the earliest possible date. The election can only begin upon the availability of an on-chain election process that was approved and installed by the Arbitrum DAO. This first election replaces the 'First Cohort'. The next election replaces the 'Second Cohort' and so forth.

> The date chosen for the first election will form the basis for all future elections. Every election should begin 6 months after the previous election has started and it will replace its respective cohort of 6 members.

> All Security Council members are expected to serve their term until the election is complete and the new Security Council members are installed.

AIP 4 executable code
---------------------

This document explains how to create a governance proposal, which can trigger an [AIP action contract](https://arbiscan.io/address/0x85792f6BF346e3Bfd3A275318aDd2c44A1058447#code).

The AIP can be created in https://www.tally.xyz/gov/arbitrum/proposal/create

To go through the [governance lifecycle](https://github.com/ArbitrumFoundation/governance/blob/main/docs/overview.md#proposal-lifecycle), the proposal's executable code must first trigger a L2 to L1 transaction through the ArbSys precompile.

For AIP 4, the `Arbitrum Core` should be selected since this is a constitutional proposal.

Target contract address: `0x0000000000000000000000000000000000000064`

Calldata

```
0x928c169a000000000000000000000000e6841d92b0c345144506576ec13ecf5103ac7f490000000000000000000000000000000000000000000000000000000000000040000000000000000000000000000000000000000000000000000000000000026401d5062a000000000000000000000000a723c008e76e379c55599d2e4d93879beafda79c000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000c000000000000000000000000000000000000000000000000000000000000000004508d56e2b8cb6f9dad5f2e980f1abab0d96f7d0f4c5d924ae3fd9e9d98ac6d2000000000000000000000000000000000000000000000000000000000003f48000000000000000000000000000000000000000000000000000000000000001800000000000000000000000004dbd4fc535ac27206064b68ffcf827b0a60bab3f000000000000000000000000cf57572261c7c2bcf21ffd220ea7d1a27d40a82700000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000c000000000000000000000000000000000000000000000000000000000000000841cff79cd00000000000000000000000085792f6bf346e3bfd3a275318add2c44a105844700000000000000000000000000000000000000000000000000000000000000400000000000000000000000000000000000000000000000000000000000000004b147f40c000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000

```

To verify the above the calldata, you can generate it yourself with the code from https://github.com/ArbitrumFoundation/governance/pull/130. To do so, you want to run `scripts/proposals/AIP4/generateProposalData.ts` then encode it as an L2 to L1 transaction to ArbSys, as seen in `sims/arbcore-aip4.sim.ts` from https://github.com/ArbitrumFoundation/governance-seatbelt/blob/117639ff19b3c9a664fd92db4e0f4dbabb2a932b/sims/arbcore-aip4.sim.ts#L19

The deployment can be checked with https://github.com/ArbitrumFoundation/governance/blob/57758a4e203f43566f587a77282e8a078d1a9ce2/scripts/proposals/AIP4/verifyDeployment.ts

The side effects of running the proposal can also be verified with [governance-seatbelt](https://github.com/ArbitrumFoundation/governance-seatbelt)

# Proposal to Backfund Successful STIP Proposals

**Empowering STIP to measure the impact of incentives for new builders**

[<img height="500" width="500" alt="STIP_Backfund_Opportunity" src="https://global.discourse-cdn.com/standard17/uploads/arbitrum1/optimized/2X/3/394a4797e0b4068e1290ae30aaf14db7e8b7ff72_2_500x500.jpeg" />STIP\_Backfund\_Opportunity3374×3374 884 KB](https://global.discourse-cdn.com/standard17/uploads/arbitrum1/original/2X/3/394a4797e0b4068e1290ae30aaf14db7e8b7ff72.jpeg "STIP_Backfund_Opportunity")

**Call to Action for Arbitrum ecosystem**

This proposal represents a critical opportunity for our community to:

* Support diverse, emerging builders and make Arbitrum a welcoming environment for new projects
* Double the sample size and diversity of stages and categories in the STIP data set
* Uphold constitutional values of Inclusion vs Exclusion
* Avoid potentially irreversible harm of crushing small, high potential builders

**Notes:**

* This proposal draft has been prepared by the Arbitrum STIP Inclusion Working Group following a series of community calls and workshops involving various stakeholders. As a preliminary document, it seeks input from both the Arbitrum DAO and the Liquidity Working Group.
* This proposal frequently cites AIP-9.
* For all of our resources see here: svy.gg/stip-backfund 

# Abstract

This proposal outlines a one-time backfund to all "approved but not funded proposals’’ from Arbitrum STIP. The proposed AIP increases the total budget by 21.4M to 71.4M while increasing the total participating protocols by 26, for a total of 56 funded projects. The program plans to allocate DAO-owned ARB towards incentives while leveraging distribution systems, consensus, and delegate diligence already created from STIP 1.

This program is designed to backfund approved protocols while maintaining the timelines and systems of STIP 1:

* Timeline: The program is scheduled to commence and conclude concurrently with STIP 1, or within a similar timeframe, starting from the first week of November and running through January 31, 2024.
* KYC: The program will utilize the same KYC system as STIP 1.
* Reporting: Participating grantees are required to self-report data, maintain dashboards, and regularly summarize grant performance

# Considerations

Before this proposal was drafted, a working group was formed to gauge sentiment, gather key data points, and outline the proposal’s structure. The working group collaborated with delegates and projects affected by the STIP, engaging in multiple calls—including sessions with the creators of the STIP and the Incentive Working Group—to solicit feedback and refine the proposal accordingly.

Key concerns discussed include:

### Why not just push towards a round 2 and go through voting for all proposals again?

First and foremost, we believe that the successful execution of this Backfund proposal will, in time, serve as a crucial catalyst for future grant structures, including a successful STIP round 2. Why? This opportunity will unify the Arbitrum ecosystem by addressing key weaknesses in the original STIP 1 structure by quickly providing approved projects and other stakeholders with the resources/data needed to design and support future programs.

Key issues associated with delaying an immediate backfund and moving towards a round 2 include:

* Proper design and execution add considerable time delay to a highly competitive environment within Arbitrum and other L2s
* Requires teams with limited resources approved already for STIP 1 to spend significant time lobbying delegates
* Removes attention away from new Round 2 proposals
* Adds additional burden to delegates that should be focused on long-term design improvements and new STIP grants not yet approved
* Removes key data for STIP experiment analysis by skewing learnings towards larger, well-established projects
* Delays the alignment of the STIP with the Arbitrum constitution values of inclusivity and diversity
* Negatively impacts new builder sentiment towards Arbitrum at a critical time in the L2 Wars

### The budget set aside was 50M, and the DAO decided that was the acceptable spend for a short-term incentive.

While the budget was set at 50M, the original working group proposed 75M so that:

> “The budget was raised to 75M ARB to accommodate larger protocols (Pinnacle Grants) without compromising smaller applications.” [tnorm, September 3rd 2023.](https://forum.arbitrum.foundation/t/arbitrums-short-term-incentive-program-arbitrum-improvement-proposal/16131/12)

Excess demand was a significant possibility due to the high interest in STIP and the absence of a cap for Pinnacle grants. Voters lacked the data to ascertain whether the initial 50M would be adequate to achieve the objectives of STIP.

Noteworthy is that, in the event of excess demand, measures including backfunding were already outlined as potential options.

Proper design and fulfillment of a Round 2 or similar future funding programs may take time to develop. Meanwhile, projects that received approval but no funding have immediate initiatives requiring support. Our opportunity is to fund these initiatives, level the competitive playing field, and enhance the data available for the STIP process.

[<img height="285" width="624" src="https://global.discourse-cdn.com/standard17/uploads/arbitrum1/optimized/2X/3/3698b8811ac5887c127ab2bbfc94d7f6dcbd554a_2_624x285.jpeg" />**1600×733 150 KB**](https://global.discourse-cdn.com/standard17/uploads/arbitrum1/original/2X/3/3698b8811ac5887c127ab2bbfc94d7f6dcbd554a.jpeg)

[<img height="356" width="624" src="https://global.discourse-cdn.com/standard17/uploads/arbitrum1/optimized/2X/8/8487c56a2a8f7c7f6dd102ad36e9a20b7459b041_2_624x356.png" />**1458×832 92.8 KB**](https://global.discourse-cdn.com/standard17/uploads/arbitrum1/original/2X/8/8487c56a2a8f7c7f6dd102ad36e9a20b7459b041.png)

### Voting behaviors for a 50M proposal shouldn’t carry over to a proposal that includes the additional backfunded amounts.

During our consultation process, we engaged in numerous discussions that brought forth questions about backfunding. Despite the criticisms, backfunding remains the most straightforward method to address the current STIP’s skewed sample size. We advocate that backfunding is the optimal approach to achieve the STIP’s intended outcomes—specifically, to examine the impact that incentives have on the growth of the Arbitrum ecosystem.

Furthermore, if the STIP continues without rectifying the issues with its sample, the analysis will be compromised by a significant methodological flaw. Backfunding is not just the “best” option; it is essential for preserving the integrity of the STIP overall.

Voting behavior might have differed if the budget cap were set at 75M or 100M. The only way to determine this would be to repeat the experiment with a raised cap (an option that is unfeasible as time travel has not yet been realized).

It’s helpful for us to remember the original objectives of the STIP:

* To provide incentives to a diverse and inclusive group of Arbitrum projects.
* To quickly establish an incentives program that is in harmony with Arbitrum’s values and constitution.
* To generate robust, meaningful data to shape the future design of Arbitrum grants for projects of all types and sizes.

# Motivation

> Motivation - A statement on why the Arbitrum community should implement the AIP.

How can Arbitrum create an incentives structure to grow the ecosystem? STIP started when the community began investigating creative uses for incentives. A short-term program was devised to act quickly, collect data about how incentives are used by Arbitrum protocols, and learn from the results to design new programs and grow the Arbitrum Ecosystem.

An unexpected budget problem caused many successful STIP applications to receive no funding. The real-world consequence of this mistake caused the STIP sample to be cut in half - but not at random. To determine the final STIP cohort, the applications were sorted by approval, which inadvertently skewed the sample towards incumbent protocols. This sampling bias is most egregious for collecting data about the smallest protocols; over 70% of Beacon grants were rejected due to the sorting algorithm that was used. Consequently, STIP may not be collecting sufficient data about new builders on Arbitrum.

This AIP seeks to achieve STIP’s original motivations by:

1. nearly doubling the sample size;
2. adding protocols across a broad array of industry categories; and
3. including protocols at different stages of development.

This AIP will ensure an important builder population is included in the study, while increasing the validity of the STIP results.

One of the most important questions facing Arbitrum today is how to grow the ecosystem and win the L2 Wars. STIP is a novel study on the impact of incentives for growing the Arbitrum ecosystem. In practice, the STIP excluded most new builders from the study, severely limiting the data that will be collected about the early stages of the builder pipeline. This AIP includes a broader range of protocols in the STIP study, ensuring that Arbitrum gets the data it needs about how incentives impact new builders in the Arbitrum ecosystem. It stands to reason that extending incentives to smaller projects could serve to incubate projects that grow into the high-usage dApps of tomorrow. Extending the STIP may not only increase the inclusivity of the program but also incentivize significant growth for the broader Arbitrum ecosystem at a lower cost per project, and this possibility is worth exploring.

# Rationale

`Rationale - An explanation of how the AIP aligns with the Arbitrum community's mission and guiding values`

Arbitrum’s community values highlight the importance of diversity, which increases the fitness of the entire Arbitrum ecosystem by representing the needs of many kinds of participants. The original work to design STIP was careful to consider how both large and small protocols would fare under the framework. However, the unexpected budget cutoff caused the sample to skew towards large protocols, which is at odds with the values of the Arbitrum community. The cost of falling short of this ideal is that STIP systematically overlooks the possibility that incentives might be uniquely interesting to small and new protocols. By failing to incorporate protocols at the first stages of the builders onboarding pipeline, Arbitrum will be unsure about how incentives operate among this crucial group of protocols.

The Arbitrum community also values neutrality, which received careful consideration during the STIP design stages. It was well-understood that incumbent protocols were likely to prevail with their STIP applications - but it was hoped this would not preclude smaller participants from also being funded. Unfortunately, this wish for inclusion was not fulfilled and - unintentional though it may have been - funding was nevertheless distributed according to a ranking that was likely to favor incumbents. Again, despite the best efforts of the DAO and the STIP designers, the result was at odds with the values of the Arbitrum community.

Above all, Arbitrum seeks to create and nurture a thriving ecosystem - and the DAO’s values are designed to provide guiding values that will always trend towards the health of the ecosystem. When the values aren’t met - even unintentionally - it is possible the best interests of the ecosystem aren’t met, either. In the case of STIP, accidentally excluding Beacon grants falls short of the community values - which, in all likelihood, is a critical oversight that Arbitrum would benefit from fixing.

# Key Terms:

* Approved but not funded STIP proposals
* AIP-9
* Backfund
* Extension
* STIP
* STIP Round 1
* STIP Backfunded

# Specifications:

`Specifications - A detailed breakdown of the platforms and technologies that will be used.`

Will approve funding of an additional 21.4M ARB through the end of January 31, 2024.

Please note the STIP Backfund will leverage the multiple sections of [AIP-9 1](https://forum.arbitrum.foundation/t/arbitrums-short-term-incentive-program-arbitrum-improvement-proposal/16131) such as [Specification section](https://forum.arbitrum.foundation/t/arbitrums-short-term-incentive-program-arbitrum-improvement-proposal/16131#financial-proposal-5) and [Outstanding Questions and Concerns](https://forum.arbitrum.foundation/t/arbitrums-short-term-incentive-program-arbitrum-improvement-proposal/16131#outstanding-questions-and-concerns-13) and specifically:

* [Financial Proposal](https://forum.arbitrum.foundation/t/arbitrums-short-term-incentive-program-arbitrum-improvement-proposal/16131#financial-proposal-5)
* [Multisig Setup](https://forum.arbitrum.foundation/t/arbitrums-short-term-incentive-program-arbitrum-improvement-proposal/16131#eligibility-and-evaluation-guidelines-7)
* [Eligibility Requirements](https://forum.arbitrum.foundation/t/arbitrums-short-term-incentive-program-arbitrum-improvement-proposal/16131#what-are-the-eligibility-requirements-6) and [Eligibility and Evaluation Guidelines](https://forum.arbitrum.foundation/t/arbitrums-short-term-incentive-program-arbitrum-improvement-proposal/16131#eligibility-and-evaluation-guidelines-7).
* [KPIs](https://forum.arbitrum.foundation/t/arbitrums-short-term-incentive-program-arbitrum-improvement-proposal/16131#what-are-the-eligibility-requirements-6)

Steps to Implement - The steps to implement the AIP, including associated costs, manpower, and other resources for each step where applicable. For the avoidance of doubt, any AIPs involving transactions with third parties (such as grants) will need to ensure that applicable legal documentation and procedures are also included.\`

NOTE: A 20,000 ARB operational budget for community/project facilitation.

 • 1,000 ARB to [@tnorm](https://forum.arbitrum.foundation/u/tnorm) as retroactive payment for conducting community moderation:

 • Draft and review of multiple iterations of the STIP framework.

 • Moderation of community calls and working group telegram.

 • Coordination individually across dozens of stakeholders and community members over the past three weeks.

 • 9,000 to ARB Multisig Signers (1,000 ARB per Signer).

 • 10,000 ARB to StableLab streamed weekly for organizing and highlighting applications and managing review processes. This includes:

  • Overseeing forum application and review stages.

 • Monitoring progression of applications throughout the application and review process.

 • Monitoring progression of applications throughout the application and review process.

 • Collaboration with the Foundation for forum setup and oversight.

  • Facilitation of Delegate x Grantee Community Calls during review periods.

100,000 ARB Data and Monitoring Budget for Plurality Labs consistent with the specific objectives and requirements outlined in detail in the "RFP - Abitrum Short-Term Incentive Program (STIP) Data Monitoring and Reporting" proposal by Plurality Labs

## Specific Recipients and Amounts for Backfund Proposal

**We used data provided by** [**ARB STIP — raho.me 13**](https://www.raho.me/stip) **to determine which successful STIP proposals did not receive funding. This list is also available** [**via google docs 33**](https://docs.google.com/spreadsheets/d/1e_HagHx883ezMlRKH3E0Ir6K_ZkoEEXzDIxPRHxKTng/)**.**

Which protocols are included in this AIP?

We used data provided by [https://www.raho.me/stip 13](https://www.raho.me/stip) to determine which successful STIP proposals did not receive funding. This list is also available [via google docs 33](https://docs.google.com/spreadsheets/d/1e_HagHx883ezMlRKH3E0Ir6K_ZkoEEXzDIxPRHxKTng/).

[<img height="500" width="641" alt="The 26 Backfunded Builders" src="https://global.discourse-cdn.com/standard17/uploads/arbitrum1/optimized/2X/0/01d44beaa8e7db92f79464c3287d20487f67320d_2_641x500.jpeg" />The 26 Backfunded Builders1920×1497 356 KB](https://global.discourse-cdn.com/standard17/uploads/arbitrum1/original/2X/0/01d44beaa8e7db92f79464c3287d20487f67320d.jpeg "The 26 Backfunded Builders")

**Total ARB for backfund**

* 21.4M ARB
* 26 protocols

**ProjectARB Amount**

WOOFi 1,000,000

Gains Network\[1] 4,500,000

DefiEdge 200,000

Synapse 2,000,000

PancakeSwap\[2] 2,000,000

RabbitHole\[3] 1,000,000

Notional 500,000

Rodeo Finance 250,000

Magpie 1,250,000

Stargate Finance 2,000,000

Savvy 200,000

Tales of Elleria 50,000

Thales 500,000

TIDE 80,000

Solv Protocol1 50,000

Furucombo 59,500

dForce 1,000,000

Sanko GameCorp 500,000

Ramses1, 248,000

Vela 1,000,000

Thetanuts Finance 200,000

JoJo 200,000

Wormhole 1,800,000

Shell Protocol 750,000

Realm 300,000

unshETH 375,000

StakeDAO 200,000

WINR\[4] 38,000

\[1] Gains Network originally asked for 7M ARB, but reduced their ask to 4.5M ARB. See [announcement. 8](https://twitter.com/GainsNetwork_io/status/1712399633790497199)

\[2] PancakeSwap has removed their proposal from consideration because of KYC requirements.

\[3] RabbitHole’s inclusion in backfunding would replace their proposal titled: [“Proposal: Grow Arbitrum & STIP Teams by leveraging Quest Protocol built by RabbitHole” 1](https://forum.arbitrum.foundation/t/proposal-grow-arbitrum-stip-teams-by-leveraging-quest-protocol-built-by-rabbithole/19185)

\[4] Currently, WINR will receive 462,000 of their ask - with backfunding WINR would receive 500,000.

### Overall Cost

`Overall Cost - The total cost to implement the AIP.`

Overall Cost - 71.4M ARB

## Projected Timeline

`Timeline - Relevant timing details, including but not limited to start date, milestones, and completion dates.`

*\*Note: Timeline may change based on option selected or amount of work needed to update and develop. For DAO proposals and voting procedures please see* [*Section 2 in the constitution.* 1](https://docs.arbitrum.foundation/dao-constitution#section-2-dao-proposals-and-voting-procedures)

**PhaseDate / DurationTitleDescription**

**Phase 1 Temp check (1 week)**

Th, Nov 2nd, Draft posted to forum.. Discussion hosted on forum, revisions to draft, broader working group call and revisions to AIP.

Mon, Nov 6th Temp check posted to snapshot by sponsor delegateReconvene in forum to post results and conclude temperature check

**Phase 2: Formal AIP and call for voting (3 days). Weds, Nov 15th**

**Phase 3: DAO votes on AIP, on Arbitrum One (14 days)**

Saturday, Nov 19th Onchain vote begins on Tally. During this Phase 3, the ArbitrumDAO will be able to vote directly on-chain on a submitted AIP. Vote to approve AIP for non-constitutional funding. Tally voting: Quorum ~71.4M ARB; greater than 50% voting in favor.

Saturday, Dec 2nd DAO vote ends, results are final

**Phase 4: L2 Waiting Period (3 days) Waiting period of 3 days; then schedule on-chain txs to disburse ARB**

# [CANCELED] Delegate to Voter Enfranchisement Pool — Event Horizon

*This proposal has been withdrawn by Event Horizon.*

# **Summary**

Event Horizon is a public good. It is a public-access metagovernance block. With the aim of enfranchising the tens of thousands of small voters, this proposal suggests we delegate (not grant) 7,000,000 ARB to a public access-voter block subject to a non-optimistic 1 year renewal. This delegation gets mobilized by Voter Pass and Gitcoin Pass holders functionally giving underrepresented DAO citizens multiplied voting power and therefore more incentive to express their voices. The Gitcoin DAO has [\u003cu\u003erecently passed\u003c/u\u003e](https://snapshot.org/#/gitcoindao.eth/proposal/0xb2094445891a515a6c58d8b44c4c2428e66d2e5f1f1e81a2741036eb97e6d6e8) a proposal supporting Event Horizon, thereby making our Citizen Enfranchisement pool the #6 delegate on Gitcoin. 

We also request a grant of 200k ARB to help the team maintain this public good across this 1 year experiment in addition to retroactively awarding the team for the fully-functional product thus far built out of pocket for the Arbitrum community over the past several months. Further, to ensure community alignment, a 5 member Oversight Committee will be paid a 125k ARB stipend broken up into monthly payments.\u0026#x20;

# **Problem**

Today, typical Arbitrum voter participation rate floats in the low single digits. However, there are thousands of individual voters who participate in each vote despite having effectively no meaningful say. They should be rewarded with a voice. Moreover, there are likely tens of thousands more incredibly talented community members who are very capable of adding to the collective cognition of the ecosystem, but simply lack the capital means to have a voice and are left discouraged from voting at all. Not voting when you only have, say, $500 worth of ARB doesn’t make sense, it’s a drop in the bucket. Sitting out governance proposals is, unfortunately, the rational decision but collectively makes everyone worse off. The strength of the DAO is directly related to the number of participants having their voices heard by the community. The governance platform and vote multiple that Event Horizon gives to these citizens incentivizes greater participation: our average participation rate is 30%.

# **Mechanism**

Arbitrum Citizens interested in governance may mint a free, soul-bound Voter Pass which allows them to take part in mobilizing this voter enfranchisement pool subject to an additional Gitcoin Pass requirement to prevent sybil attacks. As detailed further below, this model:

1. Grants a clear and meaningful voice to statistically low capital DAO citizen voters regardless of their financial means
2. Incentivizes participation with additional governance authority, not inflationary rewards
3. Incentivizes participants interested in governance itself, not financial gain

DAOs today rely exclusively on individuals and company entities to serve as network delegates. However, this isn’t the only option. While individual delegates certainly add incredible value to the Arbitrum Ecosystem, so would a governance allotment dedicated to the greater body of smaller citizen participants.

In this regard, Event Horizon slots into the Arbitrum ecosystem in a similar fashion to a standard delegate. However, rather than the block voting based on the decision of one individual, it votes with the collective cognition of hundreds of individual voter pass holders.

This serves two functions:

1. It provides a clear and designated voice for smaller, citizen voters.
2. It drives participation through a game-theoretic process called Implicit Delegation.

One of the greatest barriers to participation is a lack of voice due to lack of capital. Implicit delegation and public access governance changes this. Implicit Delegation is a model by which the full public governance block mobilizes in favor of the consensus of those who *do vote*, thereby implicitly delegating the authority of those who *don’t vote* to those who do.

**When participation is low…** each voter receives a larger slice of the public access pie. This means the fewer people there are voting, the more incentive there is for someone new to come and participate.

**When participation is high…** there are more voters splitting the same pie, however, citizen participation is high, which is a win for the ecosystem.

Implicit Delegation represents an effort to offer a new paradigm around means of influence. A shift from today’s entirely capital-centric to a more citizen-friendly, participation-centric model.

Where Direct Governance allocates influence along the lines of capital, and Explicit Delegation allocates influence along the lines of popularity (which often reflects capital), Implicit Delegation allocates influence to those who care most: people showing up to vote. Because the carrot is governance voice itself, implicit delegation attracts governance-interested citizens, not capital-interested citizens; more on that below.

Because the entirety of the block is always mobilized, those who are most vested are rewarded for their participation by having a larger share of the voting pie. In this regard, Event Horizon’s model leans into a systemic lack of participation to create a solution.

# **Rationale**

**Delegation rationale**

7,000,000 ARB would place the Event Horizon community as around the 15th largest delegate. Based upon significant dialogue with existing Arbitrum delegates and stakeholders, we think this places a fair amount of power into the 3rd pillar of governance, namely citizens (the other two being organizational and individual delegations) without being large enough to flip any typical proposal.

This proposal reflects two of Arbitrum’s core mission values:

1. Socially Inclusive: By constructing a dedicated block of governance authority with lower capital barriers, our community greatly expands who gets a seat at the table.
2. Neutral and Open: By making the thoughts and ideas of this broader swath of individuals heard, we further broaden the spectrum of possibilities for the evolution of our ecosystem.

**Grant rationale**

1. While we initially didn’t want to ask for compensation, several delegates pointed out that doing this magnitude of work for the DAO for free sets a bad precedent for future builders. It sends the wrong message of “do not build here, your work is not valued by the Arbitrum community”. So despite our initial hesitation, and multiple refusals to do so, we now think it important to ask for some compensation. 
2. As for the specific grant amount, LTIPP committees members [\u003cu\u003ewere paid 25k ARB each\u003c/u\u003e](https://www.tally.xyz/gov/arbitrum/proposal/110767177349707239820875764565747830009768307680609166467172874966002003291288) for 7.5 weeks of work, approximately $50,000 on proposal execution day (February 21, 2024). We’re asking for 200k ARB total (roughly $100k at today’s ARB prices) for the work already done + 1 year of work from the four members of the Event Horizon team and all associated build costs and ongoing maintenance expenses. This is not to depreciate the value of LTIPP committee members, but to draw a humble comparison of the value of our engineering and governance labor both already done and yet to come in this next year. In fact, this pricing (adjusting for price action between LTIPP and now) explicitly values the work of LTIPP committee members at nearly 19x that of the Event Horizon team ($6.7k per LTIPP committee member per week vs. $480 per EH team member per week), not counting the previous year of work that went into building the already functioning product.

We will also have to pay for a Snapshot subscription which is $6k / year which will come out of the grant. Further labor expenses can be broken down by categories and priced as follows:

1. Launch pass minting on Arbitrum – 40k ARB
2. Maintain functionality through any changes in Arbitrums governance process – 40k ARB
3. Maintain and further streamline voter onboarding UX – 40k ARB
4. Bi-annual reporting including KPIs such as voters, participation rate, voters above key threshold amounts (say $1k worth of ARB), etc. – 40k ARB
5. Service fee – 40k ARB \u0026#x20;

# **Benefits compared to Token Incentivized Governance:**

While token rewards for participation hold legitimate merit and are an intuitive remedy for low turnout, it has limitations.

1. Misaligned Incentives: Token-based incentives attract returns-interested parties. However, when it comes to governance, participation is most valuable when it comes from those interested in participating not payout. Implicit delegation directly appeals to these individuals as it rewards those who participate, not with capital, but with greater voting power.

*Added Thought Capital: in line with the notion above, there are likely thousands of community members each holding both strong ideas and valuable contributions for the ecosystem, but simply lack enough voice to justify participation. Through Implicit Delegation, any community member of the Arbitrum ecosystem has an opportunity to have their voice heard, bringing thousands more minds and ideas to the surface.*

1. Inflationary: While token rewards drive participation at the expense of inflation, Implicit delegation simply leverages its game theory model to increase incentive to vote in the form of a greater voting share. This does not cost the token any inflation, nor the treasury any ARB.
2. Non-scalable: Token-based rewards are finite and require a constant drain of ARB funds to continue driving participation. As the ecosystem scales, and more participants join, greater and greater sums of ARB will be needed to continue fueling growth. Implicit delegation has no cost, and its balanced game theory functions with no burn. As more citizen voters join, more Arb could be delegated to the community block, however, again, this is not a cost as the ARB tokens are still retained by the treasury.

# **Specification**

**Past Performance**

The above is not just theory. The Event Horizon community is already active on Ethereum providing metagoverning public goods to Uniswap, AAVE, Compound, ShapeShift, and of course, Arbitrum. In fact, in several recent Uniswap votes, the Event Horizon community was the 10th largest voter in the Uniswap Ecosystem. Event Horizon has also recently voted as the 8th largest delegate in recent Aave votes. Gitcoin DAO [\u003cu\u003ejust voted\u003c/u\u003e](https://snapshot.org/#/gitcoindao.eth/proposal/0xb2094445891a515a6c58d8b44c4c2428e66d2e5f1f1e81a2741036eb97e6d6e8) to make Event Horizon the 6th largest delegate in the DAO via delegation. 

While there is still quite a gap between Event Horizon and the larger delegates in the larger DAOs, interestingly enough this position serves as a line of demarcation between individual delegates above, and citizens below. This dynamic does, however, highlight a call to action. Raise the long tail a bit, and bring in more voices. Sure, voting isn’t the full picture of DAO decision making, but it’s a great place to start. Individual, organization AND citizen delegations are all valuable and mutually *inclusive*, three symbiotic pillars for a strong ecosystem.

Since its inception just a few months ago, the Event Horizon protocol has processed nearly 500 metagovernance proposals and placed over $55,000,000 of governance authority and enfranchisement directly into the hands of the citizen voter, a feat not seen anywhere else in the DAO space. This is $55,000,000 of voice amplification for the low-capital, high-conviction citizen which would never have been possible prior to the Event Horizon's product. Across all proposals for which the Event Horizon Community has participated, the community’s cumulative voter footprint is on pace to exceed $55,000,000. Some more metrics worth highlighting:

**Number of Metagovernance Proposals Passed ~500**Our community members have participated in and passed nearly 500 metagovernance proposals, each corresponding to Arbitrum or other DAO proposals.

**Voter Participation: \u003e30%**Over thirty percent of our community members have participated in our metagovernance proposals. Some participants have voted as many as 63 times in under 5 months. Check out the latest info on our leaderboard: EventHorizon.vote/leaderboard

**Average Authority Mobilized per Participating Passholder: \u003e$365,000 (and counting)**For the cost of $3 in gas, each participating passholder has mobilized an average of just over $100,000 in Uniswap and AAVE authority governance authority across all metagovernance proposals passed.

**Average Authority Mobilized Multiple: \u003e121,500x (and growing)**The average pass holder minted their voter pass for ~$3 in gas. When compared to the $365,000 in average authority mobilized, each member has mobilized over 40,000x their gas cost of admission in blue-chip governance authority

# **Steps to Implementation**

Per the recommended process of the Arbitrum Foundation, the DAO moves 7.2m ARB to the Oversight Committee multi-signature wallet (0x15C4edF2cF2f36335e42c19E506Ed6cB16a57D8F) which will then delegate to the Arbitrum Community Governance wallet.

The EventHorizonArbitrum.eth wallet automatically votes in support of the passholder consensus while the Oversight Committee can force an Abstain vote with a ⅗ vote to do so. The five signers are:

1. Michael (Open Zeppelin) 0xBE1d294FD9B71Ae2F6831Eb80777fF73fb73c953
2. Frisson (Tally): 0xb5D8fe0De11e6a95F1c2D217C55dc4f010EAc7c1
3. Jordan (Event Horizon): 0x50c28a42AC91F6E6437A036D320c9242432CCE3F
4. Juanbug (PGov): 0xB8Dcad009E533066F12e408075E10E3a30F1f15A
5. DisruptionJoe (Arbitrum Delegate): 0x01Cf9fD2efa5Fdf178bd635c3E2adF25B2052712

The Oversight Committee members will also receive a monthly stipend of 2083 ARB per month so as to maintain an ethos of “your labor is paid” in the Arbitrum ecosystem. 

After initial delegation from the DAO Event Horizon handles everything from there. Event Horizon will facilitate and maintain all elements of the pool from pass minting to metagovernance. 

Again, this delegation would not be a grant and funds would remain in the DAO-controlled wallet. Consider us a delegate + service provider like any of the other talented delegates and service providers currently supporting the Arbitrum ecosystem.The 200K grant distributions are to be sent to an Event Horizon safe with the 75K ARB direct grant to be retained and the 125K ARB oversight committee payments being emitted to all members by EH in monthly bulk txs.

# **Technical Implementation**

Per the recommendation of the Arbitrum Foundation, the proposal will forego the Franchiser contract approach in favor of a multi-signature wallet structure. With the passing of this proposal, the DAO will transfer 7M ARB to the Oversight Committee multi-signature wallet. The Oversight Committee will then delegate the voting rights to the Arbitrum Community Delegation wallet. Should the DAO wish to recall the delegation, an on chain vote will no longer be required. Instead, a snapshot proposal will suffice. In addition to all previously mentioned rights, the Oversight Committee will be beholden to a community Snapshot vote, and will retain the ability to undelegate and return all ARB to the DAO treasury at any point per the request of the DAO.

*Previous Model for Reference: In order to implement this proposal, it is required that we create a DAO-controlled Franchiser contract. The contract owner would be the DAO timelock and it would allow the DAO the power to delegate and undelegate tokens that it sends from the treasury to the Franchiser. We suggest that the Foundation aids in the creation of this contract in order to create an official and safe implementation, though we can likely fork the Trail of Bits audited Uniswap Labs* [*implementation*](https://etherscan.io/address/0xf754A7E347F81cFdc70AF9FbCCe9Df3D826360FA) *\\[*[*github*](https://github.com/NoahZinsmeister/franchiser)*] of the same concept. If this proposal passes Snapshot, we request that the Foundation take the time to fork the contract and hire an auditor to check the implementation.*

*The contract has simple functions:*

* *Fund: allows the DAO to send tokens to contract and delegate to a single address*
* *FundMany: allows the DAO to send tokens to contract and delegate any amount to multiple addresses*
* *Recall: allows DAO to pull back funds from Franchiser effectively undelegating and returning tokens to treasury from a single delegate.*
* *RecallMany: allows DAO to pull back funds from Franchiser effectively undelegating and returning tokens to treasury from multiple delegates.*

*It is worth noting that all tokens sent to the Franchiser will remain a part of the DAO’s balance sheet as it has full-control over the contract. The delegated tokens never leave the DAO’s ownership.*

*Forking and auditing this franchiser contract would be useful for Arbitrum’s version of* [*retroactive delegation*](https://forum.arbitrum.foundation/t/team-12-empowering-underrepresented-delegates/21533) *(updated version to be posted shortly). Crucially, we view both this proposal (delegating to EH’s citizen enfranchisement pool) and the above retroactive delegation proposal (boosting active delegates in the 10k-1m ARB range) as two sides of the same coin of the* [*community’s call*](https://forum.arbitrum.foundation/t/event-horizon-call-for-creative-uses-of-delegation-to-boost-participation/21235/7) *for creative ways to boost citizen participation and governance decision making processes.*

# **Additional Considerations**

The Arbitrum Event Horizon Oversight Committee: A committee of 5 existing, notable delegates will be voted on by the Arbitrum community to be given the ability to guide the Event Horizon voting pool on matters of Arbitrum metagovernance. A simple 3/5 majority would allow this committee to veto the decisions of the voter pool within the 24 hours between the closing of the Event Horizon proposal, and the underlying DAO’s proposal.

Sybil Considerations: it is important to note that the delegated ARB is by a large margin a minority voter amount. Any potential risk of Sybil influence over the public-access block would under almost all conditions not amount to a sum of authority that would be capable of passing a vote absent incredibly significant broader support from other delegates and the broader Arbitrum ecosystem participants. E.g. a rogue vote is virtually impossible.

That being said, we will be implementing Gitcoin Passport requirements for Arbitrum metagovernance.

# [CANCELED] Upgrade Governor Contracts by Transfering Timelock Roles to the New Governors

*Note: This proposal was withdrawn by its creator.* [*See forum post.*](https://forum.arbitrum.foundation/t/arbitrum-governance-upgrade-rollout-timeline/26462/13?u=frisson)

### **Abstract**

This proposal will transfer the proposer and canceller roles from the current Arbitrum Core Governor and Arbitrum Treasury Governor to newly deployed Governor contracts. This roles transfer is a crucial step in upgrading the Arbitrum DAO's governance infrastructure.

### **Motivation**

This upgrade to the Arbitrum DAO's governance system was initially discussed as part of the 'Expand Tally Support for the Arbitrum DAO' proposal [here](https://forum.arbitrum.foundation/t/expand-tally-support-for-the-arbitrum-dao/22387). The community recognized the need for enhanced governance features, including proposal cancellation and flexible voting mechanisms. As a result of these discussions, new Governor contracts have been developed and deployed with these improvements. To activate these enhancements and complete the upgrade process, we now need to transfer the proposer role to these new contracts.

### **Specifications**

This proposal will:

1. Grant the newly deployed Core Governor and Treasury Governor contracts the 'PROPOSER\_ROLE' and 'CANCELLER\_ROLE' on the timelock contract.

2. Revoke the current Core Governor and Treasury Governor contracts' 'PROPOSER\_ROLE' and 'CANCELLER\_ROLE' on the timelock contract.

### **Technical Details**

* **This proposal has a longer than usual L1 timelock delay of 10 days, so the existing governors can still be used for proposing until the voting period of this proposal has ended.**
* The new Governor contracts have been deployed on Arbitrum One at the following addresses:
    * Core Governor: `0x7796F378B3c56ceD57350B938561D8c52256456b`
    * Treasury Governor: `0x4fd1216c8b5E72b22785169Ae5C1e8f3b30C19E4`

* These new contracts include the following enhancements:
    1. **Proposal Cancellation**: Allows the delegate who submitted a proposal to cancel it during the delay phase, before voting begins.
    2. **Flexible Voting**: Enables delegates to cast rolling, fractional votes, supporting future innovations like voting from Orbit chains and more.

* The new Governors maintain all existing features of the current Governors, including custom relay functionality and fractional quorum calculations.

### **Rationale**

The rationale for upgrading the Governors by granting and revoking roles on the Timelock contract instead of using the proxy upgradeable contract pattern is discussed in detail in [this forum post](https://forum.arbitrum.foundation/t/arbitrum-governance-smart-contract-upgrade-technical-details/24642).

### **Security Considerations**

* The [new Governor contracts](https://github.com/ArbitrumFoundation/governance/pull/310) have been [tested and audited](https://forum.arbitrum.foundation/t/arbitrum-governor-v2-review/26118) by OpenZeppelin.
* This transfer does not move any funds or change permissions on the Timelock contracts.
* Historical governance actions will remain visible and valid.

### **Post-Transfer Actions**

* Immediately after this transfer executes, Tally will update to interface with the new Governor contracts.
* Delegates should use the new Governor contracts for all future proposal submissions.
* The old Governor contracts will remain on-chain but will no longer have the ability to execute proposals.

### **Timeline**

If this proposal passes, the transfer will be executed immediately after the Timelock delay. By approving this proposal, the Arbitrum DAO will upgrade its governance infrastructure, enabling new features and improvements in the governance process.

# [CANCELED] Ethereum Protocol Attackathon Sponsorship

## Abstract

This proposal seeks funding from the Arbitrum DAO to support an Attackathon, a large-scale security audit event hosted by the Ethereum Foundation and Immunefi. The Attackathon will focus on securing the Ethereum protocol with three key phases: education, active bug hunting, and result evaluation. The initiative aims to raise over $2 million, with $500,000 already committed by the Ethereum Foundation. This effort is crucial for ensuring Ethereum’s stability, which is vital to maintaining the reliability of projects on Arbitrum.

## Motivation

As a Layer 2 on Ethereum, Arbitrum is directly dependent on the security of the Ethereum protocol. Given that Arbitrum is EVM-compatible, any vulnerabilities in Ethereum could potentially impact Arbitrum’s ecosystem. This Attackathon is particularly timely given the recent major Ethereum hard forks, which have introduced new code that requires careful auditing.

Additionally, the Attackathon will include an educational program featuring live technical walkthroughs and detailed documentation from Ethereum Foundation, client teams, Solidity developers, and Immunefi. This program will cater to security researchers at all levels, helping to build a stronger security community around both Ethereum and Arbitrum. The increased awareness and participation in Ethereum’s security will ultimately benefit Arbitrum by ensuring a more secure underlying infrastructure.

## Rationale

The Attackathon aligns with Arbitrum’s mission to support a secure and scalable Ethereum ecosystem. By contributing to this initiative, Arbitrum will directly enhance Ethereum’s security, which supports the reliability of Arbitrum. Moreover, the educational component will upskill security researchers, giving them the tools to audit and secure both the Ethereum and Arbitrum ecosystems.

Additionally, Arbitrum will benefit from increased visibility as a proactive participant in Ethereum security efforts, enhancing its credibility and reputation among developers, users, and security researchers. By sponsoring the Attackathon, Arbitrum positions itself as a leader in the ecosystem, contributing to long-term sustainability and security.

## Detailed Financial Justification

The goal of securing $2M in total funding aligns with other major security audits in the blockchain ecosystem. Comparable initiatives include:

* MakerDAO contest on Sherlock: $1.35M
* Euler contest on Cantina: $1.25M
* Uniswap v4 contest on Cantina: $2.35M
* Firedancer contest on Immunefi: $1M

The Attackathon funding goal reflects the importance of thoroughly securing Ethereum’s core protocol. With $500,000 already committed by the Ethereum Foundation, additional sponsorship from Arbitrum DAO will help us reach this $2M target, ensuring participation from top-tier security researchers and maximizing the event’s impact.

## Outcome Metrics

By setting clear goals for participation, reports submitted, and transparency, we can effectively track the impact of the Attackathon. Key outcome metrics include:

* Secure over 100 security researcher signups before the program's launch.
* Achieve participation from over 100 distinct individuals submitting reports.
* Submit more than 150 reports by the conclusion of the Attackathon.
* Publish an audit-style report summarizing findings for the Arbitrum and Ethereum communities.

These metrics will demonstrate the program's effectiveness in attracting top security talent and identifying critical vulnerabilities across both ecosystems.

## Community Feedback Loop

To ensure transparency and alignment with community expectations, we will provide regular updates on the Attackathon’s progress through Arbitrum forums and governance channels. These updates will include detailed reports on fund usage, security vulnerabilities identified, and overall outcomes. Community feedback will be encouraged through these platforms to maintain alignment with the community’s goals and priorities.

## Breakdown of Expenditures

100% of the funds raised from Arbitrum and other sponsors will be allocated to security researcher payouts based on the severity of the bugs they find. Immunefi has waived their usual fees for this event, so all funds will be directly used for researcher rewards. If any funds remain after the Attackathon, they will be rolled over to an audit contest focused on securing the Pecta hardfork.

## Estimated Timeline

* **November 20**: Detailed program announcement and education kickoff
* **November 27**: Attackathon hunting begins
* **January 22**: Attackathon concludes and results compilation begins
* **January 23**: Review period begins
* **Late March**: Results announced

## Overall Cost

The Arbitrum DAO is invited to sponsor the Attackathon with a **$100,000 USD commitment**, payable in ETH, ARB, or USDC. This sponsorship includes:

* 1x Unique NFT with leaderboard rank
* Leaderboard listing on the sponsor landing page
* Mid-roll logo placement on Sponsor and Program Landing Page
* An Arbitrum Boost (Audit Contest) on Immunefi with up to a $100K rewards pool at 100% Immunefi Discount within 180 days of the conclusion of the Ethereum program
* 1x Dedicated Twitter post announcing sponsorship from Immunefi Twitter handle

By supporting the Attackathon, Arbitrum will leverage the event’s findings to ensure its network remains secure and robust. This initiative not only enhances security but also demonstrates Arbitrum’s commitment to the broader Ethereum ecosystem.

## Multi-Sig Address for DAO Deposit

To deposit the funds, the Arbitrum DAO can use the following multi-sig address:
**0x022ec7543BfB377BbEB6676E5ba5Ecf3950dA889**

[CANCELED] CONSTITUTIONAL Register the Sky Custom Gateway contracts in the Router

**Abstract**
SKY has launched support for USDS and sUSDS tokens on Arbitrum. This proposal requests Arbitrum DAO to register the Sky Custom Gateway contracts in the Router contracts to allow users bridging USDS and sUSDS through the official Arbitrum Bridge UI.

**Motivation**
SKY has formally introduced support for USDS and sUSDS tokens on the Arbitrum network, and Spark is set to soon launch Spark Liquidity Layer and Spark Savings (https://spark.fi). The Spark Liquidity Layer will deploy liquidity on Arbitrum to provide slippage-free liquidity for USDC, USDS, and sUSDS tokens natively through a Peg Stability Module (PSM). Arbitrum users will have access to this through Spark Savings (https://app.spark.fi/), enabling stablecoin holders to earn the Sky Savings Rate.

The Arbitrum Ecosystem’s Router contracts maintain a list of gateways used for bridging various L1/L2 tokens to/from Arbitrum. The Arbitrum Bridge UI relies on the routers for gateway information when bridging tokens. Currently, USDS and sUSDS tokens are routed through the default gateways rather than the Sky Custom Gateways. As a result, the Arbitrum team has disabled bridging USDS and sUSDS through the Arbitrum Bridge, creating a suboptimal UX. This means that users will have access to USDS and sUSDS on Arbitrum, and Spark will deploy liquidity there, however, they won’t be able to use the Arbitrum Bridge UI to transfer USDS and sUSDS to Arbitrum.

**Rationale**
This proposal seeks to update the Router configuration to utilize the Sky Custom Gateways for USDS and sUSDS tokens that are live on Arbitrum, ensuring users receive the official token versions when they use the Router contracts through the Arbitrum Bridge UI.

**Sky Custom Gateway**
The Sky Custom L1 Gateway on Arbitrum currently bridges USDS and sUSDS tokens from Ethereum to Arbitrum. Sky Custom Gateways are designed to enable Sky governance to extend support to new Sky ecosystem tokens in the future and also perform essential maintenance operations, such as bridge or token upgrades. Additionally, the Sky Custom L1 Gateway leverages a pre-deployed Escrow contract, which is also used by the DAI token, one of the first tokens bridged to Arbitrum.

**Key terms**
USDS – Stablecoin

sUSDS – Savings USDS (Stablecoin + Yield)

**Specifications**
Current Status
The Sky Custom Bridge, along with USDS and sUSDS tokens, is currently live on Arbitrum and available for end-user access. Additionally, Spark is set to deploy significant stablecoins liquidity (USDC, USDS and sUSDS) through the Spark Liquidity Layer and will launch Spark Savings, allowing Arbitrum stablecoin holders to access the Sky Saving Rate (available at https://app.spark.fi/)

USDS address on Ethereum - https://etherscan.io/address/0xdC035D45d973E3EC169d2276DDab16f1e407384F
sUSDS address on Ethereum - https://etherscan.io/address/0xa3931d71877C0E7a3148CB7Eb4463524FEc27fbD
Sky Custom Gateway on Ethereum - https://etherscan.io/address/0x84b9700e28b23f873b82c1beb23d86c091b6079e
Sky Custom Gateway on Arbitrum - https://arbiscan.io/address/0x13f7f24ca959359a4d710d32c715d4bce273c793
Official USDS address on Arbitrum - https://arbiscan.io/token/0x6491c05a82219b8d1479057361ff1654749b876b
Official sUSDS address on Arbitrum - https://arbiscan.io/token/0xdDb46999F8891663a8F2828d25298f70416d7610
The code for the Sky custom gateways been audited by ChainSecurity and Cantina, more details can be found on the following links https://github.com/makerdao/arbitrum-token-bridge/blob/master/audit/20241009-ChainSecurity_MakerDAO_Arbitrum_Token_Bridge_audit.pdf https://github.com/makerdao/arbitrum-token-bridge/blob/master/audit/20241023-cantina-report-maker-arbitrum-token-bridge.pdf

Additionally, Certora was used to formally verify the code, all the formal verification specifications can be found here https://github.com/makerdao/arbitrum-token-bridge/tree/master/certora

Sky Ecosystem maintains a set of general emergency response procedures to handle urgent situations like exploits. While this document isn’t gateway-specific, you can view the Sky Atlas Emergency Response System, maintained by Powerhouse, here: https://sky-atlas.powerhouse.io/A.1.8_Emergency_Response_System/a1c2d773-f5f9-4e17-9da4-edd82ea4140b%7C0db3

**Deployment Details
**We propose the execution of the setGateways method [1] on the L1GatewayRouter contract [2] on Ethereum for both USDS and sUSDS tokens. This action will register the official USDS and sUSDS tokens along with the Sky Custom Gateway contracts on the Router. Upon approval, the Sky team will collaborate with Offchain Labs to develop and submit an executable proposal for a DAO vote.

[1] https://github.com/OffchainLabs/token-bridge-contracts/blob/5bdf33259d2d9ae52ddc69bc5a9cbc558c4c40c7/contracts/tokenbridge/ethereum/gateway/L1GatewayRouter.sol#L208

[2] https://etherscan.io/address/0x72Ce9c846789fdB6fC1f34aC4AD25Dd9ef7031ef

**Overall Costs
**There are no direct additional costs associated with this proposal. However it requires technical work being done by Offchain Labs and the Sky team. Both entities are aware of this proposal and ready to execute it.

