A proposal to fund the Arbitrum Foundation with 750 million ARB tokens (almost $1 billion) sparked controversy in the ARB community over the weekend after the foundation announced that the vote was only to ratify a decision that had already been made. taken.
The conflict comes after a few days the layer 2 protocol Airdropped your governance token.
According to Arbitrum's AIP-1 DAO proposal, the 750 million tokens would be used to cover "Special Grants, reimbursing applicable service providers [...] and covering the ongoing administrative and operating costs of The Arbitrum Foundation.” More than 70% of the tokens that took place in the vote had been issued against the measure at the time of this writing:
After facing backlash from community members, the foundation saying in a forum published on April 2 that AIP-1 was an endorsement, not a proposal. He added that some of the tokens have already been sold for stablecoins. In other words, its multi-billion dollar budget and allocations would not be subject to a chain governance process.
Nearly 50 million ARB tokens have moved on-chain in the past few days. The foundation said that 40 million tokens had been allocated as a loan to a sophisticated player in the financial markets space, while 10 million tokens had been converted to fiat currency for operating costs.
6/ Regarding on-chain transfers of 50M $ARB tokens, 40M $ARB the tokens have been loaned to a sophisticated player in the financial markets space. The remaining 10 million was converted into fiat money and dedicated to operating costs.
— Referee (,) (@arbitrum) April 2, 2023
The Arbitrum Foundation said the first token attempt at governance failed due to communication problems and decisions that were "clearly not articulated correctly", writing:
“One of the mistakes in the drafting of AIP-1 was not to note from the outset that this proposal was intended to act as a ratification of the initial setup of both the Arbitrum DAO and the Foundation that was created to serve the DAO. . [...] the goal of AIP-1 was to inform the community of all the decisions that were made in advance.”
Commenting on the governance forum, community members he pointed that the Arbitrum team “has been downloading tokens that were initially reported to the community as locked tokens”, stating that “all tokenomic pages show only user + DAO airdrop tokens as unlocked” with the “tokens remaining to unlock in March 2024".
Others highlighted that under US securities laws, the early sale would be considered fraud and that US citizens who purchased ARB tokens or claimed the airdrop "are eligible for legal remedies."
The Arbitrum foundation made a proposal (AIP-1) to allocate 750 million ARB tokens for administrative and operational costs, but $ARB the incumbents voted against
Now they said the vote was just a formality, and they have already spent 50.5M (6.7%) of the proposed 750M $ARB
your vote is not a vote pic.twitter.com/lvhBbBesum
— Eden Au (@0xedenau) April 2, 2023
"I will be looking into this with my lawyers and hope to file a securities fraud lawsuit in the next few days. [...] Immediately, the Arbitrum Foundation is recommended to stop all illegal sales of the token that are being carried out without any authorization and against the provisions of the law,” said a community member.
Decision Blockchain holds 65% of Ethereum's layer 2 market share, according to data from layer 2 analytics site L2Beat. The highly anticipated launch and airdrop of its native governance token took place on March 23, with hundreds of thousands of eligible users and DAOs claiming ARB. Overwhelming demand from users made the airdrop claim page fail shortly after its launch, Cointelegraph reported.
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Update (April 2, 21:03 UTC): This article has been updated to insert information about 50 million ARB tokens moved on-chain.
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