Arbitrum (ARB) token price plunges nearly 12%, Here is why?

Arbitrum Foundation sold 50 million ARB tokens without community approval, which resulted in a negative outcome for ARB token trade price.

Arbitrum is the third biggest layer-2 Ethereum scaling network. On 23 March 2023, Arbitrum team airdropped ARB tokens and allocated 750 million ARB tokens (7.5% of the total supply) for its team to use for future development plans. For now, the initial supply of this token is $10 billion.

Recently under the Arbitrum Improvement Proposal (AIP-1), the Arbitrum foundation allegedly sold 50 million ARB tokens for fiat. People noted that 70% of community members were against this decision but still they sold without the completion of the vote outcome.

Arbitrum Foundation Sold ARB (Source: Etherscan)

The price of ARB token plunged by 11%. At the time of writing this article, the trade price of this token is $1.21 & down by 4.81% over the last 24 hours trade price.

Later Arbitrum foundation released a dedicated report on this matter and confirmed that out of on-chain transfer of 50 million ARB tokens, 40 million ARB were allocated as a “loan to a sophisticated actor in the financial markets space”, while 10 million ARB tokens were sold for fiat for the company’s operational cost. 

Patrick McCorry of Arbitrum foundation explained that the AIP-1 proposal was a mandatory step go ahead with setting up a DAO

Further, McCorry’s explanation noted AIP-1 was not a voting proposal, but instead information for the community & that was necessary for the DAO. In short, AIP-1 was more similar to a blank check for the Arbitrum foundation.

Read also: UK-based Banks stepping away from the crypto sector

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• Source: https://bitcoinik.com/arbitrum-arb-token-price-plunges-nearly-12-here-is-why/