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As community questions ARB transfer, Arbitrum Foundation takes this step

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As community questions ARB transfer, Arbitrum Foundation takes this step

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  • The Arbitrum Foundation’s community protested the decision to give itself 750 million ARB tokens ($1 billion).
  • On 2 April, ARB’s price fell as low as $1.15, reflecting a fall of 11.5%. ARB was trading at $1.22 at press time.

The Arbitrum [ARB] Foundation has backtracked on its initial decision after the community erupted in protest over giving the Foundation control of 750 million ARB tokens, worth nearly $1 billion.

The Foundation has decided to split its governance package into multiple votes.

Those tokens were supposed to fund a “special grants” program designed to foster growth on Arbitrum, which recently AirDropped its governance token, ARB.

The Arbitrum Foundation previously stated that as per the AIP-1 proposal, ARB holders would have no say in deciding who or how the nearly $1 billion sum is allocated.

This is due to the fact that the centralised Arbitrum Foundation was not required to subject its grant allocations to “full on-chain governance,” the process by which ARB holders shape the blockchain and its ecosystem.

But the Arbitrum community rejected the proposal via voting. Arbitrum Foundation’s step contradicts other aspects of AIP-1 that put emphasis on token holders’ alleged importance, argues the crypto community.

ARB value sinks

With the vote largely turning to negative, the Arbutrim Foundation acknowledged that the proposal “will likely not pass” and pledged to hold redos over each section of its omnibus bill “early this week.”

Arbitrum further clarified:

“The Foundation does not exist to sell tokens, only sold enough to fund its current operating expenses and has no near-term plans to sell more tokens.”

The Foundation’s “special grants” program, which has been the source of contention, will be renamed the “Ecosystem Development Fund.” Arbitrum promised to “provide context on how the funds will be used” and to provide a “transparency report” on the Foundation’s budget.

The Foundation added:

“The objective in setting up the Arbitrum DAO was to lead by example to create the most decentralized rollup, and despite this blunder of communication, we will continue to aggressively pursue this goal.”

On 23 March, Arbitrum airdropped its new ARB token. On 2 April, its price fell as low as $1.15, reflecting a fall of 11.5%. The token had a total market capitalization of more than $1.5 billion. Moreover, ARB was the 38th largest cryptocurrency at press time, trading at $1.22.

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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