Arbitrum's governance system is structured around the Arbitrum DAO and the Security Council. The DAO, formed by ARB token holders and their delegates, holds overarching governance responsibilities, including the power to modify or dissolve the Security Council. The Security Council, consisting of 12 members elected by the DAO, focuses on ensuring the security and performance of the Arbitrum Rollup protocol.
There are several key responsibilities of Arbitrum’s governance system:
- Upgrading Core Contracts: The governance system is tasked with upgrading Arbitrum chains’ core contracts for reasons such as system improvement, vulnerability fixes, or addressing significant ecosystem changes.
- Authorization of New L2 Chains: The DAO is responsible for authorizing the creation of new Layer-2 chains.
- Chain Ownership: The DAO governs both Arbitrum One and Arbitrum Nova, with the power to change protocol aspects, such as upgrading core smart contracts and setting system parameters.
- Validator Ownership: Validators, crucial for confirming the valid state of Arbitrum chains, are selected by the DAO.
- Sequencer Ownership: The Sequencers, who manage transaction ordering, are currently centralized but subject to selection by the DAO.
- Data Availability Committee (DAC) Ownership: Applicable to AnyTrust chains like Arbitrum Nova, the DAC is responsible for data storage and is governed by the DAO.
Arbitrum will be the first L2 to implement "self-executing governance," ensuring that governance occurs entirely on-chain, eliminating the need for manual intervention by the core team.
Additionally, Arbitrum is establishing the "Arbitrum Security Council," a 9-out-of-12 multisig mechanism that will possess the authority to modify the rollup in case of security emergencies. The DAO will determine the composition of the Security Council. Token holders will also control the rights to Arbitrum's intellectual property, as DAO governance has the power to approve the creation of other L2s that settle on Ethereum, built using Arbitrum's technology.
These L2s can either be governed by ARB holders (a governed chain) or have their own independent governance system (an ungoverned chain). It is important to note that DAO governance does not need to approve the creation of L3s that settle to Arbitrum itself.
Arbitrum DAO
The Arbitrum DAO, a decentralized autonomous organization on Ethereum, empowers ARB token holders with governance over the Arbitrum ecosystem. Utilizing ARB tokens, members propose and vote on Arbitrum DAO proposals (AIPs), influencing decisions about the organization and its technologies. Its governance structure includes a treasury system for funding development and a Security Council responsible for urgent security actions. The council members are elected semiannually by the DAO. Token holders can also delegate their voting rights to active participants, enhancing community-driven governance.
Security Council
The Security Council, established by the Arbitrum DAO's Constitution, consists of 12 members elected biannually by DAO members. Responsible for addressing critical risks in the Arbitrum ecosystem, the Council's role is to manage emergency situations, ensuring the protocol's security. Council members serve one-year terms, with candidacy open to DAO members backed by a minimum token threshold. Election rules and member removal processes, which can be revised by DAO members, emphasize impartial representation and conflict-of-interest avoidance, ensuring the Council aligns with the DAO's values and technical needs.
