Camelot proposal for $11m ARB token grant faces rejection in Arbitrum DAO vote

• Arbitrum DAO delegates have voted massively against an $11 million grant proposal by Camelot.
• Supporters of the grant say the opposition is being driven by people with vested interests in rival protocols.

Camelot’s plan to become the first Arbitrum-native protocol to receive a grant from the Arbitrum Foundation will probably be defeated, according to an ongoing DAO vote slated to end on July 21.

Data from Snapshot shows 41% of the votes cast so far oppose the proposal to grant the Arbitrum-native decentralised exchange Camelot $11 million worth of Arbitrum’s ARB native tokens.

A further 39% of votes cast by DAO participants have abstained from supporting or rejecting the proposal, while only 21% have voted in favour of the grant.

The impending failure of the vote comes after a spirited debate both within and outside the Arbitrum DAO forum since the proposal was introduced late last month.

“Camelot submitted an objectively bad proposal, and I wrote the tweet thread to present some data sourced from DefiLlama to call them out on it,” Timeless Finance founder Zephram Lou told DL News.

Lou published a Twitter thread on July 15 arguing against the proposal because it was less efficient that its competitors.

Lou’s thread also argued that the grant would give Camelot an undue advantage against other decentralised exchanges in the Arbitrum ecosystem.

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“I provided facts and numbers, not opinions,” said Lou, who is also a co-founder of NFT trading protocol SudoSwap. “Seeing the popularity of the thread and the massive amount of ‘against’ votes since, it seems that most who read the thread agreed.”

The Camelot team defended its proposal, saying that its protocol efficiency for major trading pairs was the best on Arbitrum. The team added that critics should learn to differentiate between liquidity for major trading pairs and small native tokens, adding: “Growing and supporting an ecosystem isn’t a pure race to efficiency.”

“I welcome criticism but unfortunately that thread was more like clickbait and lacked context [or] facts,” Camelot core contributor IronBoots told DL News.

Vested interest

Lou’s criticism of the proposal received pushback from some who claimed the SudoSwap co-founder was biased.

They claimed his vested interest in Bunni, a Uniswap liquidity protocol recently deployed on Arbitrum, was the reason behind his jaundiced view of the proposal.

“Listen carefully: if you have an interest in a competing protocol it is in your best interest for this grant to go through,” a Jones DAO member called FroyoFren tweeted. “Because chances are, you haven’t done even close to what Camelot has done for the chain, and you’re going to have a hard time when your reasoning is used against you and it actually applies.”

Jones DAO is a DeFi yield protocol with ties to Camelot. The grant proposal directly benefits Jones DAO as a recipient and a wallet associated with the project cast 2.6 million ARB tokens as votes in its favour.

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Lou did not shy away from his association with a competing project as part of his motivation for voting against the grant proposal.

“It’s true that I work on Bunni, a protocol that competes with Camelot, and this did motivate me to write the thread,” Lou said. “If I saw a competitor do something obviously bad for the ecosystem and didn’t say anything about it, then it would not only be immoral but also stupid.”

Lou added that the Camelot team has not been able to refute the points made in his statements against the proposal.

‘Their team members have resorted to making ad hominem attacks: It means they know what I said is true and thus can’t find arguments against it.’

—  Zephram Lou

“Their team members have resorted to making ad hominem attacks: It means they know what I said is true and thus can’t find arguments against it,” Lou said.

Jones DAO voting in favour of the proposal also brought up conflict-of-interest concerns among some Arbitrum DAO delegates.

“It is of my opinion that Protocols should not use ARB they got in their airdrop to vote for themselves or for proposals that directly benefit them,” Arbitrum DAO delegate Olimpio said in the DAO forum. “They should abstain.”

Olimpio voted against the proposal, according to details from Snapshot.

Jumping the gun

Conflict-of-interest concerns are not the only controversial aspect of the vote.

Some Arbitrum DAO members are critical of Camelot’s proposal, calling it an attempt to front-run a comprehensive framework for protocol grants by the DAO.

“I think it’s too early for the DAO to allocate so many resources on one specific project rather than defining what benefits the ecosystem in general,” Arbitrum DAO delegate Max Lomu told DL News.

Those in support say the grant is well deserved and that the DAO should use its treasury to incentivise liquidity for projects in its ecosystem.

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“Most people agree that the DAO needs to use its large allocation to incentivise growth, most people agree that Camelot is best positioned to be one of the first people to do this, and most people agree it would be bearish for the DAO to do nothing for months,” IronBoots told DL News.

Despite these points, the opposition says a lack of clearly defined guidelines to direct the use of the grant is cause for concern.

Some delegates who are against the proposal also raised alarms about the concentration of voting power among a select group of delegates. They urged governance token holders to be cautious in delegating their governance power to prevent DAO capture — a situation where delegates form a voting bloc powerful enough to sway a DAO’s decision-making process.

Debate

The spirited debate concerning this grant proposal is an emerging theme for crypto ecosystem projects like Arbitrum in the current bear market.

Ecosystem projects were keen to dole out funds to protocols to boost their liquidity during the last bull market, but DAOs have since become more circumspect about the utility of such spending.

To share tips or information about DAO governance please contact the author at osato@dlnews.com.