Arbitrum's first governance proposal sparks controversy with $1B at stake

A connection to money the Arbitrum Foundation with 750 cardinal ARB tokens — astir $1 cardinal — raised contention successful the ARB assemblage implicit the weekend, arsenic the Foundation announced that it was lone ratifying a determination that had already been made. 

The struggle comes aft a fewer days the layer-2 protocol airdropped its governance token.

According to the AIP-1 connection connected Arbitrum's DAO, the 750 cardinal tokens would beryllium utilized to screen "Special Grants, reimbursing applicable work providers [...] and covering ongoing administrative and operational costs of The Arbitrum Foundation."

Among tokens holders, implicit 70% are against the determination astatine the clip of writing.

Screenshot: AIP-1: Arbitrum Improvement Proposal Framework. Source: Arbitrum DAO. 

After facing backlash from assemblage members, the Foundation said successful a forum post connected April 2 that AIP-1 was a ratification, not a proposal. It besides noted that portion of the tokens were already sold for stablecoins. In different words, its billionaire fund and allocations would not beryllium taxable to an on-chain governance process.

The Arbitrum Foundation claims the symbolic archetypal governance effort failed owed to connection problems and decisions that were "clearly not articulated correctly":

"One of the mistakes successful the drafting of AIP-1 was a nonaccomplishment to enactment astatine the outset that this connection was intended to enactment arsenic a ratification of the archetypal setup of some the Arbitrum DAO and the Foundation that has been created to service the DAO. [...] the constituent of AIP-1 was to pass the assemblage of each of the decisions that were made successful advance."

Commenting connected the governance forum, members of the assemblage pointed out that Arbitrum's squad "has been dumping tokens that were initially informed to the assemblage arsenic locked tokens," claiming that "all tokenomics leafage shows lone User airdrop + DAO airdrop tokens arsenic unlocked" with remaining "tokens to unlock successful March 2024."

— Eden Au (@0xedenau) April 2, 2023

Others highlighted that nether the United States securities laws, the anticipated merchantability would beryllium considered fraud, and that U.S. citizens who person bought ARB tokens oregon claimed the airdrop "are eligible for ineligible remedies."

"I volition beryllium pursuing this with my lawyers and expect to record a securities fraud suit successful the adjacent fewer days. [...] Immediately, the Arbitrum Foundation is advised to halt each amerciable income of the token that are being done without immoderate authorization and against the provisions of the law," said a assemblage member.

Arbitrum's blockchain holds 65% of the Ethereum furniture 2 marketplace share, shows information from the layer-2 analytics tract L2Beat. The highly anticipated motorboat and airdrop of its autochthonal governance token took spot connected March 23, with hundreds of thousands of eligible users and DAOs claiming ARBs. Overwhelming idiosyncratic request led the airdrop assertion leafage to crash soon aft its launch, Cointelegraph reported.