The crypto scene witnessed a new battle recently with the Arbitrum Foundation’s DAO Treasury Refund Proposal. The Arbitrum Foundation, otherwise known as ‘Arb’ is a Layer-2 scaling solution that works in tandem with Ethereum. Earlier in March, the layer2 protocol dropped 750 million tokens which stirred up quite a bit of commotion in the community. The tokens were meant to fund the application’s admin and operational costs.
But many in the community were not too happy with the idea of the tokens being allocated without any voting or consent from them. Consequently, the Arbitrum Foundation decided to submit a new proposal, titled AIP-1.05. This proposal stated that the first “AIP-1 was a clear overreach of the DAO’s power of treasury resources” and begged the return of the allotted funds. However, the voting process initiated to decide the fate of the proposal has resulted in conflicting opinions among members. As of now, 55.38% of the votes support the proposal while 42.1% are against it, as per a snapshot.
Even though 2020 saw a rise in the crypto industry, the decision to exchange 10 million ARB tokens for stablecoins in March met with criticism from the community. They argued that such a move was not in the spirit of decentralization, and demanded the funds to be returned to the DAO Treasury. Unfortunately, the proposal to do so has had the opposite effect on the value of the ARB token, with the token dropping by 3.26% in the last 24 hours, according to BeInCrypto data.
But the situation hasn’t deterred ARB from witnessing an increase in its transaction volume. Activity on the network has been high; with Arbiscan data indicating that the 1 million mark has been crossed multiple times in the last week. Reports from blockchain analytical firm Messari also verified this, stating that the Arbitrum network has closed the gap between it and Solana post-airdrop.
At the moment, discussion regarding the AIP-1 proposal continues to divide the community. While some are up in arms against the buyback clause that implies “financial and legal consequences”, the founder of Project LendX PG addressed the situation differently. He said that “Nobody had a problem when the foundation airdropped hundreds of millions worth of tokens and injected BILLIONS of TVL into the chain”. He also furthered that if the community really wants Arbitrum to succeed longterm, it “DO[ES] NOT starve the foundation”.
It appears that the dispute is yet to be settled as the voting period for the proposal is set to end on April 14th. Nevertheless, ARB holders maintain a ‘no-funds-until-of-DAO’ position, vehemently asserting that funds should not be moved without the permission of the DAO and its governing body. As the drama surrounding the proposal continues, so will the debate about the Arbitrum Foundation’s expenditure, and the fate of the ARB token, remain uncertain.
