- Layer 2 blockchain DAO is voting on a proposal to form a new governance coalition.
- Some delegates say changes are desperately needed, others say costs are too high.
- Fears are mounting that approval of the Arbitrum Coalition could undermine the DAO’s decentralisation.
As Arbitrum DAO delegates debate and vote on a proposal to create a new coalition to aid the layer 2 blockchain in its governance, one issue has become a lightning rod — the request for $545-an-hour-plus salaries for the proposed coalition’s members.
Critics don’t like that bit at all.
“The payment is very large, larger than what I find reasonable,” Griff Green, an Arbitrum DAO delegate with 12 million tokens, said in a post on the Arbitrum governance forums. While Green said he supports the idea of the coalition in principle, he voted against the proposal.
But supporters of the proposal say the costs are worth paying if it means improving the way the Arbitrum DAO governs itself.
“It’s a very small amount of the supply, which needs to go out somehow anyway,” lito.eth, a pseudonymous delegate with 4.3 million tokens who voted in favour of the proposal, told DL News.
With the poll open until November 10, 56% of votes are in favour of funding the coalition, 42% are against it, and 2% abstained. With several large delegates and token holders yet to vote, it’s unclear which way the vote will swing.
The vote follows an in-depth discussion of the proposal on the Arbitrum governance forums led by delegates — members of the decentralised autonomous organisation elected to represent other token holders.
In addition to the salary issue, sceptics contend that the coalition could undermine the DAO’s decentralisation, and that the proposal lacks a well-defined way to hold the coalition accountable.
But those in favour say the Arbitrum DAO desperately needs such an organisation to help strengthen and improve governance, and cement Arbitrum’s position as the top Ethereum scaling project.
With $1.9 billion in total value locked across its many DeFi protocols and more than 142,000 daily active users, Arbitrum is the biggest Ethereum layer 2 network, according to DefiLlama data.
The debate comes as DAOs struggle to strike a balance between the egalitarian ethos that has long animated DeFi and the imperatives of commercialisation and business.
‘More than I pay for Harvard lawyers’
The coalition proposal requests a little over $2 million split between the coalition’s three main members — crypto research platform Blockworks Research, DAO service provider Gauntlet, and crypto security firm Trail of Bits — as well as one coalition advocate, layer 2 data provider L2BEAT.
In the breakdown of costs, Trail of Bits requests $800,000 for allocating an engineer to review proposals for 32 weeks annually, resulting in a $625 an hour salary — or $1.3 million annually — assuming a 40-hour work week.
Costs are also high for other coalition members. Blockworks Research requested an hourly salary of $375 an hour for an analyst, while Gauntlet requested $545 an hour for a quantitative researcher.
“Can the organisations involved demonstrate their time is worth $650-$1500/ hour,” asked one user on the Arbitrum governance forums posting under the name Karmageddon. “Those are the requested amounts. That seems exorbitant, as in, ‘more than I pay for Harvard lawyers’ exorbitant.”
In response to the criticism, Sam Martin, a research analyst at Blockworks, told DL News that the benefits the coalition aims to bring to the DAO, such as better governance processes, more informed votes, and a better distribution of resources, justifies the cost.
Martin also said that Blockworks had specifically proposed a not-to-exceed price on it and other coalition members’ work to eliminate the possibility of overspending.
“The DAO will have our entire team at its disposal which spans in expertise with a wide array of skills,” he said.
Centralisation of power
Other delegates have cautioned that the coalition could centralise power within the DAO.
“Having the same parties review and provide opinions on proposals, cover those proposals publicly via Media Networks, vote on proposals, review the security concerns of a proposal, and then execute the Arbitrum network upgrades is fundamentally lacking separation of powers,” DK, a pseudonymous delegate with 1.5 million tokens, said on the Arbitrum governance forums.
DK is not the only one to say so. “The political power that comes with this responsibility is immense, and wide reaching,” Green said.
DK told DL News he had requested alterations to the coalition proposal that addressed centralisation issues before it went to a vote. “Blockworks didn’t feel it necessary to change before going to snapshot,” he told DL News.
‘Unquestionably in need’
Despite criticism from influential delegates, many appear to support the coalition proposal.
According to Larva, a pseudonymous delegate with 373,000 tokens, Arbitrum DAO is “unquestionably in need of the Arbitrum Coalition” to improve the efficiency and effectiveness of its governance processes.
He explained that presently, many delegates lack the time and resources to actively participate in discussions and meet voting deadlines.
“Certain delegates find it challenging to fully comprehend highly specialised proposals, which can lead to potential errors in their voting decisions,” Larva said.
The hope is by bringing together Blockworks Research, Gauntlet, and Trail of Bits, these groups will be able to thoroughly vet new proposals, provide research to aid delegates in their decision making, and review the code behind proposal implementations.
While Larva voted in favour of the coalition, he said he also understands the criticisms against it.
“The amount of funds they need is too high, and the proposer themselves has too much voting power, which I am also critical of,” Larva said.
But while salaries in the $500 an hour range have caused some delegates to baulk, they’re a drop in the bucket compared to Arbitrum DAO’s previous spending.
In October, the DAO voted to give away more than $42 million to DeFi protocols through its short-term incentives program.
Tim Craig is DL News’ Edinburgh-based DeFi correspondent. Reach out to him with tips at email@example.com.