As community questions ARB transfer, Arbitrum Foundation takes this step
- 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.
We look forward to proposing the new AIPs early this week and participating in an open discussion with the DAO. Arbitrum is the only L2 to seek DAO ratification of the initial Foundation funding and that transparency sparked this important discussion.
— Arbitrum (@arbitrum) April 2, 2023
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.
6/ Regarding the on-chain transfers of 50M $ARB tokens, 40M $ARB tokens have been allocated as a loan to a sophisticated actor in the financial markets space. The remaining 10 million has been converted to fiat and dedicated towards operational costs.
— Arbitrum (@arbitrum) April 2, 2023
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.”
Thanks to all the DAO participants and delegates for their feedback on AIP-1. It likely will not pass and we are committed to addressing the feedback received from the community.
More details in the thread 🧵👇
— Arbitrum (@arbitrum) April 2, 2023
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.
