Arbitrum’s Governance Token Return Proposal Rejected

In a bid to re-establish dialogue with the community, Arbitrum’s Foundation introduced a set of improvement proposals after facing community backlash over its governance proposal AIP-1. However, a controversial proposal, AIP-1.05, seeking the return of 700 million ARB governance tokens to Arbitrum’s DAO Treasury, was recently rejected by the community. The proposal was introduced after the Foundation transferred funds without community approval in March.

The rejected proposal aimed to demonstrate that the governance holders ultimately control the DAO, not the Arbitrum service provider nor the Foundation. However, 84% of the total votes received rejected the proposal, with 14.5% of the total votes cast in favor of the proposal and around 2 million ARB tokens abstaining.

The rejection of the proposal has generated mixed reactions from the community. Some believe that the proposal would have added an unnecessary step, thereby delaying the Foundation’s ability to support the growth of the Arbitrum ecosystem. However, others believe that balance is necessary to promote decentralization and progress in the ecosystem.

The rejection of the AIP-1.05 proposal comes amidst a dispute between the Arbitrum community and its Foundation over the governance proposal AIP-1. The latter called for the investment of nearly $1 billion worth of ARB tokens to fund its operations. However, after facing community backlash, the Foundation clarified that AIP-1 was a ratification, not a proposal. It also noted that some of the tokens were already sold for stablecoins.

Arbitrum’s community and Foundation are now at a critical juncture, and it remains to be seen how they will navigate the challenges ahead. With the rejection of the AIP-1.05 proposal, the community has sent a strong message that it is not willing to relinquish control over the DAO’s governance tokens. The Foundation will need to take a collaborative approach and engage in constructive dialogue with the community to address its concerns and promote the growth of the Arbitrum ecosystem.


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