Open Dollar's Alignment with the Arbitrum Constitution

ArbitrumDAO’s Constitution, written by the Arbitrum Foundation, and amended and ratified by the DAO, is a foundational document that spells out the rules and processes for governance and lays out the community’s values.

Alignment with The Constitution has become a popular meme within Arbitrum’s community. The values from The Constitution have rapidly disseminated through the community’s collective consciousness, with as much zest as the ecosystem’s ethos of technological advancement and innovation.

Whether it’s deciding which projects to fund with the short-term incentives (STIP program), creating a strategic framework, or fostering a level-playing field for network participants, ArbitrumDAO’s Constitution helps decision-makers stay accountable to the community’s founding values.

This post will start by diving into the details of ArbitrumDAO’s Constitutional values, followed by an exploration of Open Dollar’s values. This post aims to juxtapose the values of these two protocols to show how Open Dollar is aligned with Arbitrum’s community values, including its shared commitment to technological innovation and alignment with Ethereum.

ArbitrumDAO’s Community Values

Section 6 of The ArbitrumDAO Constitution illustrates Arbitrum’s six community values, which are as follows: Ethereum-aligned, sustainable, secure, socially inclusive, technically inclusive, user-focused, neutral and open.

Let's explore each of these values in detail before discussing their practical applications in the next section.

Ethereum-aligned

Arbitrum is part of Ethereum and Ethereum is part of Arbitrum. Arbitrum’s ecosystem and community are seamlessly woven into the fabric of Ethereum, and vice versa. Although the Arbitrum DAO independently makes decisions and pursues its own goals, it is profoundly aligned with Ethereum, constructively participating and contributing to its community.

Sustainable

Arbitrum should be built and operated with a focus on the medium to long term. Decisions about the technology, economics, and resource allocation should prioritize the long-term health and longevity of the protocol, technology, and community, rather than optimizing for the short term.

Secure

Arbitrum places a strong emphasis on security. Careful consideration of the system’s safety is critical when deliberating on protocol changes. Arbitrum One is a legitimate Layer2 rollup chain and derives its security from Ethereum. Any changes made to Arbitrum One must preserve this property.

Socially Inclusive

The community should be open and receptive to anyone who wants to participate constructively. Differences in knowledge, resources, geography, and language, should be seen as opportunities to learn and to grow the community.

Technically Inclusive

Arbitrum’s protocol should not exclude any individual from participating because of hardware limitations. Ordinary individuals with average computer systems should be able to participate fully in the Arbitrum protocol if they want to.

Neutral and Open

Arbitrum’s governance should foster open innovation, interoperation, and user choice,  striving to create a level playing field for network participants, rather than picking winners and losers.

Putting Community Values into Practice

These values are neither a formality nor political theatre, as demonstrated by many references to these values during critical deliberations. The values serve as guideposts for thoughtful and aligned decision-making.

Now, let's look at two instances where these values have been applied.

Example #1: A few months ago, Lido, one of the largest liquid staking providers on Ethereum, submitted an application and requested funding as part of Arbitrum’s short-term incentive program (STIP).

The community found itself divided because, on the one hand, supporting a major player like Lido would, in theory, create tremendous value for Aribtrum, but, on the other hand, prominent members of the Ethereum community have voiced opinions to the contrary.

Ultimately, the DAO delegates rejected Lido's proposal, highlighting potential risks to core values of neutrality, openness, and alignment with Ethereum. Bob Rossi, a leading delegate for Arbitrum, shared his rationale, reflecting the community's concerns:

  • “The stated goal of the project is “maintaining and improving wstETH liquidity on Arbitrum DEXes vs ETH and stables”. With further explanation mostly geared towards a 1-sided benefit to wstETH. The goal of these grants is to use the funds to grow the Arbitrum ecosystem, and I don’t see where a clear benefit to Arbitrum is spelled out in this case.”

  • “WstETH is already the largest liquid staking token on the network. As such, I’m questioning if it really needs further assistance. Any funding will just extend its domination against competitors in its space.”

  • “The request is for 10% of the entire grant fund. The opportunity cost should be considered here. Any benefit to Arbitrum gained by this will not outpace the lost benefits that funding a group of other projects with these same funds can achieve. All these funds going to wstETH is going to be a minor, and temporary, boost mainly to wstETH traders due to how proportionally little this is to what is already being funded. The ROI will be higher taking this type of funding to smaller projects that can have a chance to grow the Arbitrum space.”

“In summary, I simply don’t see much benefit to using such a large portion of the grant funds on an already dominant project like this. I think if Arbitrum is going to commit to growing the ETH Liquidity Token space, or DEX space in general, it should focus on up-coming-projects.”

Example #2: Also related to the STIP program, members of the community voiced discontent that the results of STIP were, inadvertently, unconstitutional. Unintentionally, the program picked winners and losers, which went against the 6th value of the values spelled out in The ArbitrumDAO Constitution: neutral and open. Arbitrum project, Savvy DeFi, led the effort to rally the community and ultimately pass a proposal to backfund projects that were approved, but excluded from receiving STIP funding.

Savvy’s proposal on Arbitrum’s governance forum captures the community’s sentiment and emphasizes how the results of STIP go against the community’s values of neutral and open:

The Arbitrum community also values neutrality, which received careful consideration during the STIP design stages. It was well understood that incumbent protocols were likely to prevail with their STIP applications - but it was hoped this would not preclude smaller participants from also being funded. Unfortunately, this wish for inclusion was not fulfilled and - unintentional though it may have been - funding was nevertheless distributed according to a ranking that was likely to favor incumbents. Again, despite the best efforts of the DAO and the STIP designers, the result was at odds with the values of the Arbitrum community.

“Above all, Arbitrum seeks to create and nurture a thriving ecosystem - and the DAO’s values are designed to provide guiding values that will always trend towards the health of the ecosystem. When the values aren’t met - even unintentionally - it is possible the best interests of the ecosystem aren’t met, either. In the case of STIP, accidentally excluding Beacon grants falls short of the community values - which, in all likelihood, is a critical oversight that Arbitrum would benefit from fixing.

Open Dollar’s Values

Open Dollar’s vision is to expand access to better financial opportunities to all individuals. In the pursuit of this vision, it is innovating technologically with financial primitives such as overcollateralized stablecoins and algorithmically maintained stablecoins using the novel GEB framework, while upholding a set of foundational values that serve as guiding principles for its community.

Open Dollar’s values are aligned with Arbitrum’s community values. Similarly, they are neither a formality nor governance theatre – rather, they are core to the success and health of the Open Dollar community and ecosystem.

Open Dollar upholds the following five values:

Security

Open Dollar is committed to quality and security through regular code reviews, audits, and building in the open. Additionally, governance minimization, a core part of Open Dollar’s system, aims to establish robust security guarantees for platform users and prevent undue influence over the system's operation.

Financial Inclusivity

Open Dollar is building new tools to help more individuals access lending, beyond traditional mortgages. Many of these individuals are currently underserved by traditional financial systems.

Social Inclusivity

Open Dollar welcomes anyone, regardless of social background or geography, who shares its vision, and who wants to constructively participate in helping to build the Open Dollar protocol. It also welcomes any individual to constructively participate in governance and to use the protocol and its tools.

Decentralization

Open Dollar is governed by its collectively owned DAO, which makes all decisions regarding collateral and incentive distribution. Open Dollar is driven by its dynamic community of users and developers and enthusiastically welcomes questions, feedback, and discussions.

Longevity and fairness

Open Dollar envisions a future where DeFi protocols operate autonomously with minimized governance. This approach seeks to minimize human error and biases, thus ensuring the long-term sustainability of the protocol. The DAO can vote to add new collateral types but is otherwise limited and cannot mint new OD tokens or change parameters such as fee distribution.

Conclusion

Open Dollar is proud to be building on Arbitrum, an ecosystem that is known for its ethos of technological innovation, advancement of governance practices, and a strong commitment to the community values set forth in The ArbitrumDAO Constitution.

Open Dollar is integrated into the fabric of both Arbitrum and Ethereum and is working to grow the pie and capture value for both ecosystems. Open Dollar’s values of security, financial inclusivity, social inclusivity, decentralization, longevity, and fairness, are aligned with Arbitrum’s community values of Ethereum alignment, sustainability, security, social inclusivity, technical inclusivity, neutrality, and openness.

Open Dollar is excited about our bright financial future!


Open Dollar is a DeFi lending protocol built on Arbitrum for borrowing against liquid staking tokens while earning staking rewards and providing CDP liquidity with Non-Fungible Vaults (NFVs).

Try the Open Dollar App today and follow us on our socials.

Written by Rika Goldberg

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