Investors Reject Arbitrum’s Proposal to Return 700M ARB Tokens to DAO Treasury

Arbitrum, a new Layer-2 scaling solution for the Ethereum blockchain, had published a proposal to return 700 million ARB governance tokens to the DAO treasury.

However, on April 15th, the proposal was shut down by a significant number of governance votes.

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The controversial proposal, AIP-1.05, was put forward after the Arbitrum Foundation moved funds without the approval of the Arbitrum's community last month.

The AIP-1.05 was rejected by an overwhelming majority of 118 million votes, equivalent to 84% of the total votes. In contrast, the proposal received approximately 14.5% of the total votes.

The proposal noted that the return of tokens would be a "symbolic gesture to demonstrate that the governance holders ultimately control the DAO, not the Arbitrum service provider nor the Foundation."

One of the whales with 4.8 million ARB tokens on the governance forum called the proposal a "power play" that would only add an "unnecessary step" and delay the foundation's plans to grow the Arbitrum ecosystem. According to the whale, the move would only disrupt the process.

Another whale who voted against the proposal claimed that balance is essential for promoting decentralization and the ecosystem.

There is a balance that we need to try to accomplish between advocating for decentralization and preventing progress in the ecosystem. I believe that decentralization on its ideal form is nowhere to be seen in this industry yet.

Arbitrum's community and foundation have been in conflict over the governance proposal AIP-1, which offered to invest almost $1 billion worth of ARB tokens in its operations.

Aiming to fix its relationship with the community, on April 5th, Arbitrum Foundation introduced new proposals. However, at that time, when commenting on the controversy, Arbitrum noted:

The Foundation will not move any of the remaining 700M tokens in the Administrative Budget Wallet until an acceptable budget and smart contract lockup schedule have been approved by the DAO.

At the time of writing, Arbitrum (ARB) token retails for $1.60, recording a 0.85% decrease in the last 24 hours.

by Gile K. - Crypto Analyst, BitDegree

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• Source: https://www.bitdegree.org/crypto/news/investors-reject-arbitrums-proposal-to-return-700m-arb-tokens-to-dao-treasury