Arbitrum, a vendor of Ethereum layer 2 solutions, has reversed course on its governance voting mechanism in response to token investors’ protest. The Arbitrum Foundation tweeted on April 2 that its initial governance suggestion, AIP-1, “is unlikely to be adopted” and that it is “dedicated to addressing audience input.”
The action will divide the contentious administration program into smaller portions. “AIP-1 is overly large and encompasses numerous topics,” the team observed. We will adhere to the DAO’s recommendation and divide the AIP into sections. This will permit the community to talk about and decide on the various subsections.”
The reversal reflects a weekend of community opposition to the foundation’s “ratification” approval for choices it had already made. The plan would have granted the foundation, a centralized organization, dominion more than 750 million Arbitrum (ARB) tokens with a market value of approximately $1 billion. Chris Blec, an advocate for decentralized finance and decentralization, and others argued that the suggestion was “decentralization drama.”
The foundation indicated that the 750 million tokens it obtained would be put to a vote within its own AIP. It declared, “We’re contemplating alternatives to add additional transparency, such as a four-year freezing period.” Moreover, the Foundation’s tokens cannot be utilized for vote.”
A budgeting plan will also be included, in which the foundation will offer disclosure statements “to make community members aware of the manner in which the funds are utilized over a period of time.
I just want to clarify:
There is NOTHING decentralized about Arbitrum or Optimism.
Just because you can use a network without permission doesn’t mean it’s decentralized.
Both can halt the chain, modify any code, censor any transaction, freeze any wallet, or steal from the DAO.
— Chris Blec (@ChrisBlec) April 2, 2023
The Special Grants program is ambiguous and does not have DAO participation, according to the foundation. It will be dubbed the “Ecosystem Development Fund” with an explanation of how the cash will be utilized for developing the Arbitrum environment. The foundation decided that the fresh Arbitrum Improvement Proposals will be released “early this week.”
As noted by CoinGecko, ARB token values took a significant blow over the weekend, falling 18% from a peak of $1.40 on April 1 to a low of $1.15 during the Asian trading session on April 3. The price of ARB has decreased by 86% since its airdrop on March 23.
