Uniswap-Arbitrum Delegate Program (UADP) Communication Thread

AbdullahUmar · August 31, 2024, 11:42pm

August 2024 Voting Updates

ARB Staking: Unlock ARB Utility and Align Governance

Vote: FOR
Type: Snapshot

We voted For this proposal in both the snapshot and onchain phases.

Our team has been monitoring the continual iterations of this proposal by intaking delegates’ feedback, and it has been great to see the progress towards a more conclusive structure.

After the introduction of the unistaker concept, it’s exciting to see the possibilities that can be implemented for introducing some degree of value behind “mere governance tokens”. The initial idea to distribute surplus sequencer fees to stakers is of course difficult since the operating revenue for the DAO is currently limited, and it is an important revenue management decision to consider where and how this capital should be used. We are interested in seeing the new working groups’ research regarding how capital should be directed to stakers. It seems unlikely that the DAO will be able to sustain decent enough yield to stakers from sequencer fees alone. The recent proposal by Karpatkey and Aera regarding “diversifying” the treasury into stables and yield bearing assets would be an interesting way to potentially divert some of this non-operating revenue to stakers. Again, this is a revenue management decision. It could be the case that incorporating this staking setup is good enough for now–and we can in the future turn on this, so to speak, fee switch and begin issuing dividends.

It could also be the case that the yield is turned on for a period of time, like issuing a dividend during a period where we have excess revenue. However, this is difficult since whenever a company issues dividends, investors expect an indefinite dividend. Turning on fees to stakers could also be something that’s implemented during times where we need the price of ARB to perhaps increase to a particular threshold in order to preserve the severity of the treasury. As mentioned, the likelihood and incentive towards conducting a governance attack only increases as the treasury balance sheet is full of more and more non-native tokens.

Deciding who will be eligible for the yield is also a very difficult problem due to the subjectivity surrounding assessment results from groups like Karma. We look forward to seeing the research surrounding this as well.

Overall, this staked governance token setup is very promising in increasing the attractiveness of holding these tokens. I’m sure many large DAOs have seen this and are now contemplating similar practices.

Transparency and Standardized Metrics for Orbit Chains

Vote: Against
Type: Snapshot

We decided to vote against this proposal since we feel that other data providers will be willing to provide this data without the DAO having to expend funds. To prevent the DAO from spending on initiatives that have a high degree of overlap, this does not yet make much sense. As the Orbit ecosystem expands and as the chain begins to differentiate, it may be worthwhile to begin exploring newer dashboards with more specific or chain-dependent metrics. Generalized metrics are well-addressed by teams like L2Beat and DefiLlama. It may also be worth exploring this initiative through a grant program since the cost isn’t very cumbersome.

ArbitrumDAO Governance Analytics Dashboard

Vote: FOR
Type: Snapshot

Our team voted For this proposal. Data points related to governance activity is very much a hit or miss topic. We’ve personally seen a slew of products released over the past three years regarding this subject matter. Most of them have since been deprecated because nobody wants to pay for these services. The frequency with which delegates review these statistics also varies. They only review such information when conducting a report or review, which means such data only needs to be queried on a periodic basis. That being said, all of this also hinges on one important point: the type of DAO these metrics are being provided for. Dapps usually have smaller delegate bases and therefore don’t need complex datapoints. Most info can be inferred, and the stats are often statistically insignificant. However, with regards to an ecosystem like Arbitrum, we aren’t just dealing with a dapp. There are numerous delegates, lots of votes, various perspectives, and decent dispersion in voting power. The entry for Arb DAO is also lower relative to many other DAOs, so these dashboards are helpful for new folks. To those ends, we are voting For this proposal.

Should the DAO Default to using Shielded Voting for Snapshot Votes?

Vote: Against
Type: Snapshot

We voted against this proposal since we see benefit in being able to see what others are deciding to vote for. Shielding votes during the voting period also means some discourse in the public forums may be suppressed. It’s important to view others’ opinions on proposals. It helps decision makers review their presumptions and question why votes are teetering towards one direction or another. Sure, there can be a bandwagon effect, but the value of signaling in our opinion shouldn’t be understated. For proposals that may see a high degree of contention, we could on an ad hoc basis run shielded elections–but the reason for doing so should be outlined on the forums before moving to a snapshot vote. We do see how shielding elections, however, can be beneficial. But for us to be comfortable with shielded elections, we need assurance that there are more robust systems and agreements around self-voting and COI.

Proposal to Temporary Extend Delegate Incentive System.

Vote: For
Type: Snapshot

We voted For this proposal since extending this program by two months would be nice to maintain the momentum that’s been built with the increased level of incentivized delegate involvement. For this program, and for other programs, it’s important to consider buffer periods. An initial proposal that’s meant to last 6-months could actually span for 7 months for the sake of a smooth transition to the next iteration of that program. During that 7th month, v2 of a program can be voted on.

ArbitrumDAO Off-site

Vote: For
Type: Snapshot

We are in favor of exploring an off-site for delegates to discuss topics more intricately. This can be a nice supplement to the GovHacks that occurred during Eth conferences. It would be nice to collaborate with Hack Humanity to lay out a schedule to see which topics should be covered–along with discussions around if there should be communities or councils that separately pop up in different geographic locations, discuss topics, and then converge online.

An (EIP-4824 powered) daoURI for the Arbitrum DAO

Vote: For
Type: Against

A go-to source of truth is a great idea. We are in favor of setting up a platform like this. At Uniswap, we’ve had experience with managing a couple of ENS subdomains under Uniswap.eth. This was initially set in place in order to give additional use grants to certain deployers who would request the DAO for the ability to deploy Uniswap v3 contracts onto a new EVM. This was only required while there was a BSL in place. Since April of last year, we continued similar record management to have a source of truth regarding the “real” Uniswap v3 contracts on each of the 23 chains that we’re deployed on. This has helped from a security and standardization standpoint. Therefore, exploring record management such as this for Arbitrum is beneficial as well.

Unfortunately, due to issues surrounding the procedure, we voted against this proposal. We will vote For a revised proposal though.

Strategic Treasury Management on Arbitrum

Vote: Abstain
Type: Snapshot

A proposal such as this should have taken place prior to others that pulled significant funds from the treasury, like the gaming catalyst initiative. It doesn’t make much sense to issue such a large quantity of ARB to such a risky program. This proposal, however, is for the sake of “diversifying” the treasury into more stable assets, which is important when it comes to funding various DAO-related initiatives. In order to cover the DAO’s runway, we should be pulling at least some of the funds from a reserve of stable assets, instead of fully issuing ARB tokens. And that leads to another important point—we are issuing ARB tokens here, not really pulling from a massive balance sheet. We might as well discount or write down most of the treasury. With a “diversification” proposal, we actually begin bolstering the balance sheet. It’s already clear that the revenue that the dao makes today has been earmarked for initiatives like bootstrapping BOLD, which means operating revenue isn’t simply enough to cover expenses. We have to therefore rely on issuing native tokens.

The real issue here has been a lack of proper procedure laid out months ago by the DAO for approving large investment programs. One of the unsatisfactory precedents has been the first-come-first-serve model. For many programs, an entity proposing a large program has self-selected themselves into managing that program. This is the primary reason why we are abstaining from this proposal. There should be an RFP process for all of these large treasury management and investment proposals. It’s a reckless argument to suggest that–everyone’s been self-electing themselves, so we’ll do the same.

Since the directionality of this proposal is well-founded, we aren’t voting against this proposal. The main contention that we hold is the process by which the counterparties in the proposal are self-elected. We hold a great deal of respect for Karpatkey and Gauntlet, and they may very well be the managers selected for this type of proposal. But an RFP matters.

Should the DAO Create COI & Self Voting Policies?

Vote: FOR: Responsible Voting Policy
Type: Snapshot

Instituting policies surrounding COI and self-voting is very important. We therefore voted for incorporating the Responsible Voting Policy so that delegates cannot outright vote themselves into particular positions in an unfavorable manner. Every DAO with committees and programs where managers are elected should have a socially-unified system where individuals are held liable for their decisions, even if there isn’t a precise legally enforceable mechanism present.