The premise is sound, but the execution is terrible. Stop telling us he's got the whole city under his thumb; show us. It's Screenwriting 101!
The season begins with Cayden's Confederacy. There's no strict hierarchy, but it's clear Cayden is calling the shots. He repeatedly but subtly mentions a mysterious "associate" who is always coming through with contacts and supplies. Diaz is introduced as a particularly well-organized drug dealer and gang leader early on. A quarter-way through, he's revealed as a member of the Confederacy along with the rest, and specifically, the guy who can always find or turn a dirty cop or corrupt official, and who is always willing to get his hands dirty in the field.
Again, halfway through, Cayden gets shanked in the interview room, with Diaz pointing out that Cayden is obviously not a people person. It was always him, Diaz, that could get someone under his thumb, so they're loyal to him, not the Confederacy or Cayden himself. In fact, it'll be the same police officer than Diaz provided earlier on that lets him in to the station.
From there, Diaz is portrayed as the usurper of the crumbling Confederacy, and Team Arrow believes he's done half their job for them. They've faced worse than a drug dealer with a Rolodex. Except he'll keep slipping through their fingers, every time because of a contact we've seen once before: a dirty cop, a corrupt ADA, a blackmailed mayoral aide, a frightened judge. Then the tide turns. age on every member of city council. Mayor gets impeached. Without speaking aloud, Team Arrow has to abandon a new legal avenue every episode until they're boxed in.
As for the Quadrant. We learn his in was that he found them some really competent and loyal bodyguards. But that's how he's able to shoot Quadrant leaders with impunity: They'll never shoot him. If the Quadrant members work with him, the guards are loyal. If they're not, they stand idle while Diaz shoves a knife in their throats. Why does the limo bodyguard shoot him in the vest? Because he was instructed to.