Arbitrum Foundation Compromises, Pledges Not to Sell ARB Tokens in the Short Term
The controversy surrounding the Arbitrum Foundation's sale of ARB tokens without community approval is nearing a resolution. The Arbitrum Foundation has decided to compromise, promising to hold an independent vote to determine the future use of the funds.
Arbitrum Foundation Compromises, Pledges Not to Sell ARB Tokens in the Short Term
As reported by Coin68, last weekend saw a significant uproar within the community after discovering a large amount of ARB tokens being moved to centralized exchanges (CEX) without a satisfactory explanation from the Arbitrum Foundation.
Thanks to all the DAO participants and delegates for their feedback on AIP-1. It likely will not pass and we are committed to addressing the feedback received from the community.
— Arbitrum (💙,🧡) (@arbitrum) April 2, 2023
More details in the thread 🧵👇
According to Proposal AIP-1, the Arbitrum Foundation was allocated 750 million ARB tokens (equivalent to 7.5% of the total supply) to support development grants and cover operational costs through sales.
However, it was discovered that 50 million of these tokens had been transferred to Binance or given to the market-making firm Wintermute. The explanation from the Arbitrum Foundation was deemed "vague" and was not accepted by the community.
Facing a massive wave of criticism, the Arbitrum Foundation has finally decided to "compromise," proposing to conduct an independent vote to determine what to do with the 750 million ARB tokens.
Glad to see @Arbitrum listening to the community’s feedback on AIP-1
— Zach Rynes | CLG (@ChainLinkGod) April 2, 2023
Splitting up the omnibus proposal into multiple smaller proposals and providing more transparency/accountability around Foundation spending is a good step in the right direction https://t.co/L2xAE9u3li
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The project's Community Lead posted on Discord:
"AIP-1 was too broad and included too many topics. Therefore, we decided to follow the DAO's advice and split AIP into several parts.
We are exploring solutions to improve transparency in our reporting and accounting."
This move has somewhat eased the discontent among the Arbitrum community, and opposition voices have started to diminish.
One of the most prominent representatives of the Arbitrum DAO, ChainLinkGod, shared:
"The team is listening to the community and genuinely considering our feedback. In my opinion, this is the right move."
The tokens held by the Arbitrum Foundation will not be used in this vote, meaning the outcome will rely entirely on the community's opinion.
Additionally, the Arbitrum Foundation’s grant program has been renamed the "Ecosystem Development Fund," with a commitment to transparent reporting on the fund’s use.
"The purpose of Arbitrum DAO is to lead the project and community in the most decentralized manner possible. While our recent communication was not ideal, we remain committed to achieving our goals."
More importantly, the Arbitrum Foundation has pledged that they do not intend to sell additional ARB tokens in the short term to reassure the community. The price of ARB has dropped nearly 4% over the past 24 hours, currently trading around $1.20.
Chart of ARB/USDT on Binance at 02:30 PM, April 3, 2023
