ArbitrumDAO - a System for Resilient Decision Making | Mateusz | ETHWarsaw [4]

And this is a concept introduced originally by AJ Warner uh from Offchain Labs. So if you're interested in that, feel free to go to the arbitrum forum and read more about it. Um we could consider arbitum dao to be a digital sovereign nation or state depending on your definition. Now what makes it that is first of all citizenship. The concept of that is is that arbitum dao is composed of a diverse set of stakeholders from token holders through builders and delegates to large entities such as for example offchain labs and arbitum foundation.

The concept of citizenship is also a concept of belonging which I believe that in the arbitum dao is particularly strong. The second part would be resources. So um there are certain resources that the arbitum dao fully and autonomously controls. Um so for example the treasury and protocol being the two main ones. Uh following David Eastens who was a Canadian political scientist uh his definition of a political system what happens within one is that there is an authoritative allocation of value which in the arbitum dao uh certainly also happens.

Lastly we have economy. Um the arbitum stack allows for unprecedented creation of economic zones of opportunity. Uh since it inherits its security properties from Ethereum, the system can capture value and reinvest it into the platform or or build business lines on top of it. And this is particularly interesting as that's uh something where the value in contrast to to L1's that do need to incentivize um validators for example the value can be fully captured and reinvested back into into the platform. Moving on um to the second part of of of the topic of my presentation.

What is resilience? and especially speaking in the context of decentralized decision-m um it has certain characteristics that I'll try to go through here um it's you know a long discussion to be had on each of them I'll try to break them down uh the first one would be the ability to withstand external influence um so to give an example here let's say we have a large web two company that is trying to exert influence um whether by you know trying to capture the chain itself or by trying the decision-m process which then in turn can capture um the chain. Uh there are several characteristics that the arbitrum dao exhibits that prevent this from happening. Number one, there is a staggered governance framework. So one where multiple stages of governance need to play take place before a a proposal is um is is mostly socially considered to be valid.

Um it all starts with with a forum post. Most likely the proposal is then discussed and presented by offers on on a governance call. Uh that then turns into an off-chain temperature check on snapshot where token holders vote. Uh and then lastly uh an onchain vote happens where again it's a it's a purely onchain uh framework. So the the changes can be executed uh directly and without a middleman.

Secondly, we have the social fabric of the DAO. So that is uh very important and something where community truly comes into play which is um what is what is considered to be to be valid is determined largely by the uh usual processes and guard guard rails that the DAO has put in place. Um, so you have a set of established actors, ones that do treat their reputation very seriously and as such become part of the DAO and in in ways that you would not see in a um, you know, web 2 orc. Thirdly, we have the forkability um, which is based on social consensus, something that uh, is is unique to to decentralized tech in general. There is the ability to fork which is um essentially if there ever was a chain capture the the community could fork the uh the chain and basically have the users the infra providers and and all the other ecosystem actors determine which of the uh chains is is canonical.

And lastly, we have a multitude of parties, meaning that there is a a wide array of of teams and folks, individuals who are uh invested into the arbitum DAO um both financially and emotionally I would say um that do have the ability to prevent this type of external capture and they have the ability to spot it quite quickly, I would say. Let me see if I can There we go. The second ability is to function with no single point of failure. Uh and that quality can be broken down into two aspects of it. The first one being a decentralization of actors.

Uh I've already mentioned the community and I'm going to mention it throughout my presentation. Uh but a robust community of stakeholders and decision makers ensures livveness. So imagine a scenario where uh a large entity such as for example the arbitum foundation goes down from one day to another. There aren't many ecosystems who could withstand that. Um and I would say that arbitrum is one of them.

You have a multitude of of different parties that could potentially take up the role uh if needed. Now is it easy? No. Uh is it possible? Uh absolutely I would say it is.

And the second one is decentralization of control. Um so a highly decentralized set of economically aligned decision makers i.e. the token holders holds all of the cards. And I think this is the most fundamental thing about Dows is that you have the widest set of uh stakeholders holding all of the cards um granting legitimacy to decisions that are being made.

Uh which in the case of of arbitum dao is the token holder set. The third ability is to recover from failure. Now while there isn't a single point of failure, failure is an inherent part of of of of system design um and the ability to withstand that or or recover from it is a critical one as well. Now what does the arbitrum dao do? First of all, there are certain checks and balances and this is especially important on the more social layer where you could imagine a team for example going against a proposal that um they were elected based on.

Now what happens in that scenario is that there are multiple um dependencies between actors um to ensure fallback mechanisms. In this case it would most likely be a committee that for example either takes actions them themselves or reports back directly to the DAO uh which then takes takes action um based on on on whatever the recommendation is. Second part and this is very relevant for the more um technical aspects especially the the onchain security contract security we have the security council which is a very unique body in that it is regularly elected by the DAO uh and serves as the last line of defense defense against security threats. does have the authority to enact onchain change. Um and funnily enough, we just started the um election process for September cohort.

So if you are uh interested in participating in the DAO and probably one of the more important roles out there, uh feel free to go to the uh to the forum, check it out and apply also directly in the forum. The election will take place also relatively soon. Lastly, we have the ability to evolve. And this one is somewhat less um less defined in nature, but it it is also very important as it concerns resilience of of DOS and resilience of decentralized systems in general. I believe we are in a industry where you know you can log off for 6 months and basically come back to an environment that is you know drastically different um where the tech that you thought was bleeding edge is is no longer viable because something twice better came along.

Uh what this means for for for um for infrastructure and also the Dows that do govern that infrastructure is that there is a need to uh to constantly evolve to constantly improve uh to find ways on on how the utilization of resources can be made better. um in the context of arbitum da I think a good example of how uh that can be exemplified well it's the new vision right the the new vision for the future of arbitrum um that was posted uh several months ago by the arbitum foundation and the arbitum forum if you haven't seen that and are at all interested in the arbitrum dowo or the arbitum ecosystem I would encourage you to do so um there are several uh main propositions within that vision and I'll um go through them one by one. Uh firstly, we have an operational shift that is being for put forward. Uh the concept of arbitum aligned entities is introduced in order to reinforce operational efficiency. Um arbitum aligned entities um are teams and orgs that are purely focused on arbitum winning.

They are fully arbitum aligned and in fact they do not exist without arbitrum such as for example the arbitum foundation where we would have no job if arbitum um the protocol was not uh was not around. The operational efficiency comes from the fact that you now have experienced teams that are leading executions of initiatives. In fact, they do have mandates to um to to perform and within those mandates, they can on board um service providers to um to help with particular initiatives which is somewhat of a difference to um to the to the model that was around um until now since since DAO's launch where service providers would essentially come directly to the DAO uh with their proposals uh and those proposals would then be executed by them. they would need to also report back to the DAO which as you can imagine is quite difficult to have true accountability towards a set of you know thousands upon thousands active token holders. Um so the idea here is to is to introduce uh the concept of a proper counterparty for those service providers.

Secondly we have the aspect of stakeholder role recalibration. So various roles in the ecosystem are redefined. Um and a good example here are are the delegates um who uh who we see as as naturally shifting towards a more strategic mindset rather than highly operational. So in the absence of proper counterparties uh the delegates would serve as those in the past meaning that you would have service providers who would work directly with them and so they were involved in in those day-to-day operations which made their role quite wide I would I would argue uh and it also somewhat took away from from more of that strategic um thinking mindset which I think could be uh exemplified very well by the uh SOS framework. So it's the strategic objective setting framework that the DAO has been um has been conducting in the in the last couple of months uh which saw many different proposals on how uh the strategy of the arbitrum dowo and the arbitum ecosystem should evolve.

uh and I view that personally as a really great example of what uh what delegates um you know could be doing and probably should be doing um are those strategic discussions on where arbitum is headed instead of focusing on the more mundane operational tasks at hand. Thirdly we have the operations company and the oversight and transparency committee. So the operations company was introduced firstly as an operational mesh layer for the DAO and in the new vision its mandate is is proposed to be um expanded towards u towards becoming a bridge or a connective tissue between the arbitum aligned entities and the DAO itself. Um the oath on the other hand is the oversight committee which as the name implies serves to to oversee the operations of the opco and report back to the DAO. Lastly we have an improved proposal process.

Um this is also important to know that a lot of those changes if not most um they refer to the social consensus layer meaning they tend to interact more with the best practices that the DAO has put in place and improving them rather than the actual onchain framework for example. Um so the proposals are to be primarily funneled through AEES with adequate mandates uh which would then be facilitated by the OPCO. So uh as I mentioned before each IE should have a mandate that they um that they act within and within that that mandate they can also take on service providers and service providers coming to the DAO would now um come to to AE to to to see if there is u potential for for collaboration with the OPCO serving as a facilitator of those of those relationships. Now that's pretty much it from my end. Uh I want to thank you all for for coming.

Um it's really a full house here which I really appreciate. Uh I also want to add from my end that if you're a builder um a user an ARP token holder or anything else that can be imagined uh the arbitum da is probably the place for you. Uh it's a really unique place to to work in. Uh it's a unique place to build up your skills and it's really something that I would consider an honor to be a part of. Um and it's yeah I I I I I truly believe that that whoever you are and whatever you're doing there is a place for you uh in the arbitum dao.

That's it from my end. Uh I would open it up to questions. Um yeah I don't know if I can pass on the mic or maybe you can ask

uh can you show from the interface perspective some of your actions on in this uh DA environment?

Yeah. Um so to give you an example of what I was mentioning in the uh previously in the presentation um let me quickly close this one. There we go. The offchain signaling for example would take place on snapshot uh where you see I have to say there's all almost always a proposal live uh in the arbitrum dowo which again goes back to to to the very active nature of it. It's not it's not a dead org.

There's always something going on especially as you compare it to to other dows in the space. Um so you can see um you know for example here was a technical uh proposal that um that combined three different Oh no that's the that's the D sorry um yeah that's also a good example that's um that's the delegate incentive program. Uh so this proposal put forward several improvements um to the previously accepted version. Um and so the discussion happened first in the forum which you know uh is is is your regular discourse forum implementation. Um calls happened and then the snapshot temperature check was taken.

Uh after which proposals do uh evolve into into an onchain proposal. Right? So you can see for example the uh the the bundle that I was mentioning uh it's a technical proposal that has three subcomponents um which are listed here as well as the in the proposal text and payload obviously uh this is this is tally which is our uh our our service provider for uh the onchain voting uh flow. Um what you would do is connect your wallet. um it would detect your voting power which you could then use to to vote in this proposal.

You can see that the uh the quorum for for this proposal to be valid was was reached. Um the majority support is overwhelming. Um which also comes down to the fact that this is purely a technical proposal uh interacting with the with the onchain contract framework. Um there is no dispersements [Music] any kind of role in foundation or in this forum or some other related to the arbit.

Um well that's also difficult question right? Yeah.

Yeah. In some cases it's it's you know purely based on on conflict of interest policies. Um I can't really give you one answer here. Uh it will depend on what your role is.

Okay.

Please um you can go ahead and

hey Adam here. Uh I had a I have a question. uh what were the recent uh successes and challenges of arbitrum DA that its ecosystem and also how does it relate to the orbit ecosystems are they one or related

so arbitrum one and arbitrum orbit I would consider them as as part of the same stack uh but they are they are separate right uh if we are talking about recent successes I would probably point to uh the uh the drip launch um which which is called the the D5 Renaissance incentive program. Uh and I'm trying to pull up the uh the tweet, but I can't really find it. But that happened like yesterday. So um feel free to to go to Twitter and just type in drip and you will see some interesting uh interesting updates on that. That's a question.

Yeah. So with the new vision um in what ways do you see it becoming more decentralized or how is decentralization iterating with the new vision compared to like the classic arbitum because there is kind of like this you know um cloud around

the efficiency and structure of arbitr like their ability to remain centralized and efficient right so curious like has governance between vision how is that iterating

that's a fair question um I would essentially try to distinguish between efficiency and decentralization and the reason why I say that is that at the fundamental layer DA is the token holders right you have arbitum token holders which are you know an extremely diverse and distributed set um they often times not communicate with each other it's it's it's you know it's an environment where you can come in just to tally to vote on proposals and do nothing else. Um, and so that is where the legitimization of any actions further down the line comes from, right? You have a token holder set voting on proposals uh that are then translated into operations, right? You have a day-to-day operations which simply cannot be handled by such a diverse group. Um, you have that role delegated to someone.

So the question is only who do you delegate it to? uh who is the the most efficient and who should be taking up this mandate to to execute right um which this new vision is essentially shifting that towards the AE um who are now tasked with with that with that execution so it does not impact decentralization it only changes how operations functions at the later stage

but like arbitrum adds like a thought experiment at the frontier of like of web pre you know innovation um having an operational company and then having an oversight committee it is more of like structure of a classic corporation. Uh so I think like decentralization here is more just about like the resilience rather than perhaps like the the distri like the difference between like distributive versus decentralized. So um I guess it's operationally more resilient right if you have more um you know service providers and and oversight committee but um I think like the thesis here is kind of that the social element kind of um it can have collusion right given that everyone knows everyone and it's not so decentralized in that way

I would respectfully disagree the entrance to The system is fundamentally open, right? Uh you can buy tokens and you can participate in into in in the governance framework. Now what makes it decentralized is that at any point in time any token holder who has the required amount of tokens can go forward and put an onchain proposal up for a vote, right? You do not need permission from anyone to do that.

That's another that's another question, right? But you have that ability and so the token holders have at the end of the day full control over what happens further down the line. They can you know remove committees at then they can completely restructure the dial. They can also you know implement any change on the protocol level that they wish so or do any type of dispersement from the treasury that they that they choose to do. Uh that's what decentralization fundamentally means in the context of arbit.

So to me that sounds more of like permissionless rather than decentralized. But I guess it's about definitions.

It depends on how how you know define it as you say. But fundamentally I believe like this is what what what makes it what makes the centralized.

Okay. Great.

Well then if there are no other questions then I thank you all for showing up. Um oh sorry maybe just want to have a quick one.

Yeah please do. I'm sure we're already at time so

sorry. Um just curious to to get your thoughts on it because of course there's the average upholder and there are all the chains of course which are which have different expertise involved in the government perspective I would assume has any thoughts been given um how like the average holder versus an audit chain would be treated in governance sense from involvement I guess if it's token based of course it's only how much token you hold in vote on it but just from involvement and discussions and technical discussions and so on. Yeah, I think that's a good point and it also raises some some other sub points so I won't go too long on that. But I think that there's a huge variety of stakeholders that are currently unargeted by uh the arbitrance of participation. Um I would point to also um you know apps that that that function on the on the chain that are an important component like they are the ones who bring in the users.

Um so their opinion should matter right unfortunately they tend to stay on the backline or the sideline uh because Dows are complicated there are complex systems and especially if you add this day-to-day operations uh you know requirement to to whatever role they might be playing it quickly gets overwhelmed like you need someone fulltime to track what's going on in the arbitral D. Um, which is also, you know, one of the positive consequences coming from the new vision that now with a more strategic focus of of those coret participants, you can have them enter more easily. Like the barrier for entry is no longer super high because you need to read like a thousand posts before you have any context of what's happened, right? Um, so that's I what I would say in terms of just other in general actors participating is that they're definitely invited and and and we're trying to make it easier, right? the artist without trying to make.

Okay. Well, then thank you all. Uh I wish you