Arbitrum Foundation Faces Community Backlash Over Governance Proposal
Arbitrum, an Ethereum provider of layer-2 solutions, encountered backlash from token holders over its governance voting system. The Arbitrum Foundation had announced on April 2 that its first proposal governance, AIP-1, would likely not be waved off, adding that it was committed to addressing the community’s feedback.
The Proposed Changes
The foundation resorted to splitting the extensive and comprehensive proposal into smaller segments based on advice from DAO. This way, the community could discuss and vote on various subsections of the proposal.
Over the weekend, the foundation faced significant criticism from its community regarding its “sanction” vote. The proposal would have granted the centralized foundations control of 750 million ARB tokens worth approximately $1 billion.
Critics, such as Chris Blec, an advocate for decentralization, argued that Optimism and Arbitrum, another decentralized finance exchange, are genuinely not decentralized as they have centralized authorities capable of censoring transactions, halting the chain, freezing wallets, modifying code, or stealing from the DAO.
Proposed Changes To Arbitrum’s Grants Program And Transparency Measures
In response to criticism, the foundation stated that the 750 million tokens would be open for votes on its AIP. The foundation also makes arrangements to add more transparency and accountability, such as executing a four-year vesting period and providing transparency reports to the community on how funds are spent over time.
The foundation also proposes renaming its Special Grants program to “Ecosystem Development Fund (EDF)” and providing more context on how these funds would benefit the Arbitrum ecosystem. This move is targeted at addressing criticisms from the community that the Special Grants program lacked involvement from the Decentralized Autonomous Organization (DAO) and needed to be more specific in explaining the usage of funds.
The foundation concluded that it would give out reinstated Arbitrum Improvement Proposals early this week. However, the backlash had already taken a toll on the ARB token prices, which tanked 18% from $1.4 on April 1 to $1.15 at the time of writing, as highlighted by CoinGecko data.
Additionally, the Arbitrum native token, ARB, has experienced an 86% decline in price since its airdrop on March 23.
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