Special Operations Roundtable Pilot Program

Abstract

This proposal seeks to establish a Special Operations Roundtable focused on administering a pilot grant program for projects building within the Arbitrum ecosystem. We are requesting a budget allocation of 75 million ARB from the DAO treasury to fund three quarters of grant allocations to teams and initiatives contributing to Arbitrum's growth. The roundtable will consist of 9 democratically elected stewards who will be responsible for transparently managing and overseeing the pilot grant program.

Motivation

The goals of this proposal are to:

• Support ecosystem growth by strategically funding projects aligned with Arbitrum's values through an efficient and accountable grant program.
• Experiment with different grant distribution models and incentive strategies to uncover optimal approaches that maximize developer activity and user engagement.
• Generate comprehensive data and analytics regarding the performance of funded projects to inform future iterations and improvements to Arbitrum's grant processes.
• Increase transparency and accountability in grant allocation through public dashboards and documentation.
• Develop a framework for community-led governance of ecosystem funding initiatives.

This will allow the DAO to proactively invest resources into accelerating Arbitrum's development during current market conditions when many other protocols have slowed or stopped spending. By taking the lead, Arbitrum can solidify its position as the premier scaling solution for Ethereum.

An ecosystem grant program designed and overseen by elected community stewards will empower the DAO to fund impactful projects and initiatives quickly and effectively. The pilot approach allows the model to be iterated on based on real-world results during the one year pilot period. Clear documentation requirements and comprehensive data collection ensures transparency into how funds are used and informs data-driven improvements to future grant cycles.

Rationale

Arbitrum has established itself as a leading layer 2 scaling solution on Ethereum, powering some of the most used and innovative applications in web3. However, as market conditions have cooled over the past year, there is risk of stagnation as developer activity and user growth slows.

Many other protocols have significantly reduced spending on ecosystem development. With over $3 billion worth of ARB available in the DAO treasury, Arbitrum is in a privileged position to strategically invest in growth despite market conditions. An ecosystem grant program presents a compelling mechanism for putting these resources to use in service of the protocol's continued improvement.

Grants targeted at teams and projects building tools, applications and infrastructure on top of Arbitrum will incentivize development, bringing new users and activity onto the network. Funding community initiatives will strengthen Arbitrum's branding and mindshare. Proactive investment in the ecosystem will allow Arbitrum to increase its lead over competing layer 2 solutions.

The pilot approach provides an avenue to test different grant strategies and incentive models in the real-world, generating data to refine the grant program going forward. For example, grant categories could be iterated on, targeted KPIs adjusted, or new data collection requirements introduced in subsequent cycles based on what provides the highest ROI.

Oversight of the pilot by a council of elected community stewards will ensure grants are allocated fairly and funds are used responsibly, while preventing any centralized control over resources. The steward model has precedent in Arbitrum's governance, through the Security Council's role in administering protocol upgrades.

The stewards would treat projects featuring exclusivity, reinvestment into ecosystem, high transaction throughput, stylus development, etc with special considerations.

Specifications

The Special Operations Roundtable will oversee the administration and governance of the following pilot grant program:

• 9 Total Stewards - There will be 9 total stewards on the Special Operations Roundtable. 8 stewards will be democratically elected by the community to represent diverse perspectives. The 9th steward will be the proposer of this initiative, who will have a tie-breaking vote in the case of a deadlock amongst elected stewards.
• 6 Month Terms - Stewards will serve terms of 6 months. Elections will occur every 6 months allowing for stewards to be re-elected or replaced by the community over time.
• 75 Million ARB Budget - We are requesting a total budget allocation of 75 million ARB from the DAO treasury to fund three quarters of grant allocations. 25 million ARB will be available each quarter.
• Quarterly Cycles - The pilot grant program will run in quarterly cycles. Grants will be evaluated and approved each quarter, with funds dispersed to grantees.
• 500k ARB Operating Budget - An additional 500,000 ARB is requested to cover costs associated with administering the pilot program. This includes software services, legal expenses, incentives for stewards, and other operational overhead.
• Grant Categories - The grant program will utilize a set of pre-defined grant categories with recommended parameters around funding amounts and eligibility. For example, a "Growth Grant" category could support newer projects undertaking initial development work with smaller grant amounts.
• Evaluation Criteria - Grant applications will be evaluated based on criteria such as team, project details, estimated impact and value-add to the Arbitrum ecosystem. Both quantitative and qualitative factors will be considered.
• Legal Compliance - All necessary legal documentation and compliance processes will be required for funded grantees. Stewards will coordinate with the Arbitrum Foundation to ensure proper procedures are followed.
• Public Dashboard - A dashboard will display real-time data on grant allocation and funding status to ensure transparency for the community.
• Data Collection - Comprehensive data will be collected from funded projects to gauge performance and impact. This includes TVL, volume, user growth and other relevant metrics and analytics.

Implementation Timeline

If approved, the following timeline is proposed for implementing the pilot grant program:

• November 2023 - Form the roundtable team and establish operational procedures
• December 2023 - Finalize structure of pilot grant program including categories, requirements, legal protocols etc.
• January 2024 - Begin accepting applications for 1st grants cycle. Approve Service Providers.
• February 2024 - Review applications for independent assessment pods (Work/Integrity)
• March 2024 - Review applications and approve first cycle of grants
• April 2024 - Disperse first tranche of approved grants. Begin data collection and monitoring.
• May 2024 - Open applications for 2nd grants cycle
• June 2024 - Review and approve second cycle of grants
• July 2024 - Disperse second tranche of approved grants
• August 2024 - Open applications for third grants cycle. Make changes based on feedback.
• September 2024 - Review and approve 3rd cycle of grants
• October 2024 - Disperse final tranche of approved grants
• November 2024 - Compile results and data from pilot to evaluate outcomes
• December 2024 - Prepare final changes and raise Constitutional AIP.

The goal is to have the pilot grant program operationalized on this timeline, with 3 full quarters of funding completed within the first year. This will allow sufficient time to gauge results and determine any changes required before potentially expanding the program further.

Budget Requirements

To fund the outlined pilot grant program, the following budget allocation is requested from the DAO treasury:

• 75,000,000 ARB - Total grant funding, dispersed over 3 quarters at 25,000,000 ARB per quarter
• 500,000 ARB - Operational budget

Any ARB remaining from the operational budget at the end of the pilot period will be returned to the DAO treasury.

Of the 75,000,000 ARB grant pool, we anticipate 55-60% will be dispersed in the first 2 quarters, with the remaining 20-25% dispersed in quarter 3 after results have been evaluated. However, the Special Operations Roundtable stewards will have discretion over the pace of funding based on application volume, quality, reoccurring distributions and other factors.

Conclusion

We believe implementing this pilot grant program will provide tremendous value to the Arbitrum ecosystem, allowing the DAO to proactively fund impactful projects and catalyze development despite market conditions. The pilot approach gives latitude to experiment and validate what strategies work best to incentivize activity and growth.

Comprehensive data collection and public accountability will ensure funds are used productively and transparently, building trust in the community. And oversight by elected stewards puts the community in control over the direction and priorities for ecosystem funding.

If the pilot proves successful, the model can be expanded and refined in subsequent iterations, establishing a robust, sustainable grants framework tailored to Arbitrum's needs. But for now, we are focused on thoughtful execution of this initial proposal, and look forward to your feedback on how it can be strengthened.

Please share any insights on how this Special Operations Roundtable pilot initiative could be structured to best serve the Arbitrum ecosystem and its community of builders and users. We believe grants targeted at impactful teams and projects will catalyze development, cementing Arbitrum's position as the premier layer 2 scaling solution on Ethereum.