Voting Option Clarification: For - Adopt the Arbitrum Treasury Management Council Against - Continue forward with the TMC, GMC, and STEP Committee Mandates.

Abstract

The Arbitrum DAO’s treasury management strategy and execution have become fragmented due to the numerous committees overseeing various initiatives.

We propose phasing out the TMC, GMC, and STEP committees and replacing them with a canonical 3-unit committee (Arbitrum Treasury Management Council) to enhance the cohesion/effectiveness of the DAO’s treasury management strategy.

The new Arbitrum Treasury Management Council comprises:

Voting Body OAT - Approves or denies allocation recommendations from the Execution Body, and, in rare cases, initiates emergency actions that it deems necessary to pull out capital from existing allocations Execution Body Entropy Advisors - Responsible for strategic financial management, data transparency, and procurement Communications Body OpCo (Entropy until entity operationalized) - Ensures council members are delivering with excellence, mandates are met, and relays information between the DAO and the council In addition to the 3-unit council, the following AAEs will serve observatory roles to ensure wider ecosystem alignment and smooth operations as it relates to fund deployment:

Observatory Body Arbitrum Foundation - Manages movement of funds/custody (Note that any of the AF’s deliverables can be moved to OpCo over time through a DAO vote) Offchain Labs - Inform the aforementioned council members of any ongoing BD efforts that may conflict with fund allocations Delegates will approve high-level strategies and capital allocations to the council. More granular decisions suggested by the Execution Body (e.g., reallocating capital across providers, or allocation recommendations) have to be approved by the OAT, which has DAO representation as well as key members from OCL and the AF.

All of the council members have funding sources in place, so there will be no additional overhead related to paying these contributing entities. In terms of the remaining balance to pay the previous councils/committees (TMC & GMC) that currently sits with the AF, this will be repurposed to cover service providers’ costs for specialized deliverables that the new canonical council does not possess competency to fulfil, e.g., granular risk, legal, etc. The roles of each council member are further defined below.

Rationale

The Arbitrum DAO now has 3 separate initiatives related to its treasury management strategy between the TMC, GMC, and the STEP committee. The TMC focuses on ARB and stablecoins, while the GMC focuses on ETH allocations, and the STEP committee focuses on RWAs. The following entities/individuals sit on councils overseeing these initiatives, with their respective pay defined below:

TMC Austin Campbell $20k per milestone, total of $60k earn-able, $20k already claimed Make Markets $20k per milestone, total of $60k earn-able, $20k already claimed Three Sigma $20k per milestone, total of $60k earn-able, $20k already claimed GMC Callen (Formerly Wintermute) $20k per milestone, total of $60k earn-able, $20k already claimed Llama Risk $20k per milestone, total of $60k earn-able, $20k already claimed Entropy Advisors Waived Payment STEP I Committee (mandate completed): Karpatkey, GFX Labs, Steakhouse, Nethermind, North Lakes Legal, Treasury WG Lead (Devansh) 150k ARB, 25K for each member 50k ARB to the Arbitrum Foundation for conducting due diligence/drafting legal agreements Program Manager (mandate ends in September ‘25) Steakhouse original allocation: 100k ARB Faced a shortfall due to fees being denominated in USD. $174K (total fee) - ~$87K (received from ARB liquidation) to be paid from yield earned through the program STEP II Committee (mandate completed) Karpatkey, GFX Labs, Entropy Advisors, Nethermind, North Lakes Legal, Treasury WG Lead (Devansh) 125k ARB in total (Entropy Advisors waived payment, thus 25k ARB less than STEP 1) To summarize, the DAO has ~$581,000 of overhead associated with treasury management activity, assuming an ARB price of $0.285 (realised dollar-denominated spend is higher, as ARB price has fallen since previous payments to contributors). The total AUM amongst all of these programs is approximately $50M, with the total yield earned on the underlying thus far amounting to ~$590k. The DAO has just recently broken even on its treasury management initiatives. However, it is worth noting that not all of the funds have been deployed from the TMC and GMC proposals, which are expected to accelerate passive yield inflows.

Entropy Advisors has been involved in all 3 committees, and we see some areas in need of improvement. Outside of cutting down on the dollar-denominated expenses associated with running these programs in a way that only scales with the size of the programs, the sheer number of people involved in the act of treasury management without clear responsibilities is counterintuitive. It is difficult to coordinate calls across so many teams’/individuals’ calendars, none of the committees actually speak to one another thus resulting in a fragmented strategy for the Arbitrum DAO’s treasury, each committee usually ends up in a state where a minority of members ultimately produce a majority of the work required for execution, communication between applicants and individual committees/their members often becomes fragmented (the applicant may not know who to reach out to in order to discuss certain things relevant to the application process), etc. Additionally, all of these committee members have varying degrees of insight into things in the pipeline for the Arbitrum ecosystem, which often sets these contributors up to make misinformed decisions due to missing context.

With Timeboost officially live, the DAO treasury has again reached >7,500 ETH since the last TM v1.2 proposal passed on Tally, as well as other ongoing initiatives such as the GCP that will generate additional revenue over time, we must be able to deploy some of these assets into yield bearing strategies as they accrue to the treasury. It’s time to reduce fragmentation and streamline the decision-making processes.

Four open discussions on this matter were hosted on April 30, 2025, May 14, 2025, May 28, 2025, and June 11, 2025, with recordings available here, here, here, and here. We recommend watching these, and joining future calls on the topic if you have strong opinions to share.

Specifications

In line with the new vision laid out by the Arbitrum Foundation, we propose that Entropy Advisors serves as the “Treasurer” with the OAT in place to approve/deny usage of budgets allocated to treasury initiatives, with the council including two of the most aligned AAEs, the AF and OCL, as observatory members to help inform and execute on strategy. This will enable the DAO to approve high-level strategies that do not go against Arbitrum’s broader strategy, considering the insight the AF and OCL will have in regards to ongoing BD efforts/opportunities as well as any operational complexities related to deploying and custodying funds. It will also reduce overhead, unify strategy, and empower Entropy to outsource specific needs to service providers with concrete deliverables on an as-needed basis, thus decreasing the principal-agent problem we face under the current structure with fragmented committees.

Entropy Advisors will have the autonomy to make decisions with funds pre-approved by the DAO, but all decisions must be passed by the OAT with ⅗ approval. Any decision that does not receive ⅗ approval from the OAT will be considered denied and no funds will be allocated. This includes reallocating from one asset/strategy to another, thus giving the DAO the ability to respond to changing market conditions and to hold vendors accountable. Any/All fund movements will be accompanied with an update on the forum in order to keep the wider community informed. Again, this process only pertains to funds that have already been approved for allocation by the DAO, but the standard governance process will always be required to earmark funds for deployment. Assets already approved by the DAO for deployment (STEP I&II, TMC, GMC) will be eligible for reallocation, in accordance to the process herein, per this proposal’s passing.

The non-exhaustive, high-level responsibilities of this council and its observers will include:

Voting Body

Allocations Review - OAT

Approve or Deny allocation decisions presented by the Treasurer The OAT will also be able to initiative emergency actions E.g., Alert the custodian to perform emergency withdrawals due to an exploit, or other emergency actions that it deems necessary to pull out capital from existing allocations Execution Body

**Treasurer

... please visit link below to view full proposal

https://snapshot.org/#/arbitrumfoundation.eth/proposal/0xfab795313df4ef1023c5f7f9027857637cc3841d62dc0b54796fbfa5f8096919