The Arbitrum Foundation has recently come under fire from the crypto community over the allocation of 750 million ARB tokens as it plans to launch the Arbitrum DAO. The Foundation responded to the backlash and published a detailed post and Twitter thread explaining its actions.
1/ There’s a very lively discussion on the Arbitrum governance forums regarding AIP-1. Decentralized governance is working as intended. We are all one community and fierce public discourse will yield the best outcomes.
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— Arbitrum (????,????) (@arbitrum) April 2, 2023
The Foundation released the Arbitrum Improvement Proposal (AIP-1) last week and asked its community (token holders) to vote on several governance decisions, including the allocation of ARB tokens and the appointment of twelve signatories of a multi-sig wallet as a Security Council. The proposal also aimed to engage the community about initial decisions and ultimately have token holders signal their support.
However, the community did not agree with the allocation of 750 million ARB tokens, which represents 7.5% of the total supply of 10 billion tokens, to the Foundation. A Twitter user, @Cringe accused the Foundation of moving the amount of tokens mentioned earlier on March 16 and sending the funds to Binance on March 23, 2023.
1) Today I looked into what’s happening at Arbitrum and what I have found was not very encouraging to say the least.
(As someone who holds 1.4mil $ARB)1. The team moved out 750,000,000 $ARB on the 16th of March
2. The team then proceeded to send out funds to Binance on the 23rd pic.twitter.com/PVYaDOcs52— Cringe.eth (@Cringe) April 2, 2023
In its response, the Arbitrum Foundation argued the allocation of ARB tokens was in line with other projects run by Polygon, the Starknet Foundation, and Optimism. It also claimed that Arbitrum would not be able to compete with other ecosystems without a certain degree of centralized decision-making.
The Foundation stated:
“The goals of AIP-1 were to engage the community about initial decisions and ultimately have token holders signal their support by ratifying the initial decisions and framework via DAO voting, and we’re grateful for community feedback.”
The Foundation also admitted that it could have clarified that the AIP-1 was a ratification. The Foundation stated that engaging with the community before launching the DAO was necessary to ensure a decentralized decision-making process.
The Foundation conceded that AIP-1 “likely will not pass,” and is committed to addressing the community’s concerns. The project will follow the DAO’s advice and split the AIP into parts to allow the community to discuss and vote on the different subsections.
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