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Non-Constitutional Abstract This proposal builds on the ideas and concepts introduced by @dk3 in the initial Operation Company (OpCo) proposal. The OpCo is a legal entity that delegates and key stakeholders can leverage to achieve DAO-defined goals, principally by forming an operational mesh layer and assigning internal employees or negotiating and entering into agreements with service providers and individual contributors to facilitate initiatives. OpCo’s mission is to negate identified frictions affecting the DAO’s strategy execution, such as allowing for the establishment of more operational roles for the DAO, facilitating efficient and competitive contributor and service provider negotiations and information flow between these parties, creating clear responsibilities for carrying out initiatives, and helping ensure the continuation of programs the DAO depends upon. OpCo is also required to be proactive, meaning that if the entity has the bandwidth and recognizes a potential advancement that could be made within its mandated focus areas, it can work on and propose a strategy through which the entity would address the identified frictions.

As it currently stands, the Arbitrum DAO is generally unable to move swiftly when it requires specialized contributors to execute a strategy, for which there isn’t a straightforward and low-friction approach, with these processes typically requiring a vast amount of effort from the supply side instead of being driven by the demand side. Moreover, many initiatives, especially more complex and wider-reaching ones, lack clear owners in charge of ensuring a holistic approach to execution and initiatives’ continuation, meaning that in the unfortunate case that a service provider decides/is forced to disengage from its duties, there aren’t always accountable individuals or entities that would push the initiatives forward. OpCo’s goal is to function as the entity the DAO can leverage to remedy these limitations and move forward in areas that require a more structured approach.

To cover OpCo’s operating expenses over the first 30 months, including full-time staff appointed internally, setup and other admin costs, as well as the DAO-adjacent entity’s oversight committee, this proposal suggests earmarking 22M ARB (subject to change in either direction if market conditions change notably between the Snapshot and Tally votes) for the initiative:

4M ARB allocated to a bonus pool for internal employees and OpCo’s oversight committee (3M reserved for internal employees and 1M reserved for the committee). If bonuses are paid out, they must be denominated in ARB and have a vesting structure attached, with internal employees’ payouts additionally being performance-based. Of the remaining 18M ARB, tokens will be liquidated until $12M worth of cash equivalents has been attained. At ARB’s current price of $1, this would require roughly 12M ARB. The liquidation will occur over up to 3 months immediately following the proposal passing Tally at the discretion of the liquidating party (the Arbitrum Foundation together with a provider of their choice for asset liquidation) with a mandate to minimize price impact. After subtracting the bonus allocation and the liquidation is complete, the remaining ARB of the earmarked 22M token allocation will be immediately transferred back to the DAO treasury. ARB Liquidation.png

OpCo will be able to utilize the $12M in cash equivalents as follows:

$2.5M worth of stable assets released upfront. Once OpCo has officially operationalized, the entity can draw up to $500K of cash equivalents each month. If a monthly drawdown exceeds $500K but is below $1.5M, the executive-equivalent employees must get approval from the OAT before accessing the funds. If a monthly drawdown exceeds $1.5M, OpCo must seek approval from the DAO through a Snapshot vote. Motivation Presently, most DAO programs operate in silos, leading to, among other things, redundant efforts and non-existing cross-initiative resources. The DAO also generally depends on a single initiative leader for the continuation of a successful program, while some initiatives don’t even have clear owners, which adds significant friction to strategy execution. DAOs are also inherently disadvantaged when evaluating and swiftly engaging individual contributors or service providers, and Arbitrum is no exception. This proposal aims to provide the DAO with the capabilities to nullify the abovementioned frictions by creating a DAO-adjacent legal entity—OpCo. Among other things, the DAO may choose to leverage OpCo to manage:

Operational support & project planning, Project management of DAO initiatives, Negotiations with service providers, Allocation of resources across contributors & DAO-approved projects OpCo will grant the Arbitrum DAO better capabilities to bootstrap initiatives and secure the continuation and execution of them, while also expanding the total addressable contributor and service provider base as certain sensitive negotiations and deal terms don’t necessarily have to be disclosed publicly. Moreover, the DAO-adjacent entity will function as the operational mesh layer for individual contributors and service providers, streamlining communications and knowledge sharing across engaged entities and individuals.

Overall, the DAO’s past, current, and likely upcoming initiatives can be divided into 5 high-level categories: Governance Frameworks, Financial Management, Investments, Ecosystem Support, and Grants. The initiatives, their respective owners, and into which of the 5 categories they fall are visualized below.

Current Initiatives.png

It is of utmost importance that Arbitrum DAO maintains a decentralized and bottoms-up system for bootstrapping new projects, DAO contributors, and setting strategies, including creating and steering the DAO’s vision, mission, and purpose, as well as approaches to achieve the goals and decision-making. As such, OpCo will be focused on the Ecosystem Support and Financial Management initiative categories, but note that with the exception of the Investments category and any emerging future categories wherein other, new DAO-adjacent legal entities are set to operate, the mandate can be expanded into any current/future initiative category if the DAO so chooses through a Snapshot vote (simple majority with at least 3% of all votable tokens voting either “For” or “Abstain”).

The entity’s main focus is to increase the efficiency of strategy execution through operational optimization and, in particular, activating and recruiting the optimal stakeholders, contributors, and service providers. For the avoidance of doubt, the DAO would always have ultimate authority over OpCo, with the entity purely being a helpful resource focused on streamlining wider-reaching and complex initiatives that require a more structured execution framework as well as helping push the DAO forward within areas where the entity identifies shortcomings. We want to stress the importance of ensuring that one of Arbitrum DAO’s key differentiators—enabling new participants to join the ecosystem and make an impact, growing into well-established contributors—is conserved. Without Arbitrum DAO empowering its contributors and delegates, the DAO might sacrifice one of its core strengths, and we believe that entities such as SEEDGov, Entropy Advisors, Tally, etc., are present within the ecosystem exactly because of this empowerment.

Arbitrum has one of the most active and engaged DAOs within the industry, combined with help from the Arbitrum Foundation and robust programs for bootstrapping and fostering growth within the ecosystem. Although there is always room for improvement, these factors have enabled the DAO to allocate grants with positive results, sustaining a vibrant and welcoming ecosystem. Having said that, if the DAO wishes to, it can expand