The first attempt at governance on the Arbitrum blockchain was met with controversy on Saturday over a proposal to give the Arbitrum Foundation control of 750 million ARB tokens, worth nearly $1 billion. The tokens would fund a “special grants” program aimed at promoting growth on the Ethereum layer 2 platform.
However, the proposal, AIP-1, sparked debate among ARB holders as they would not have a say in how the Arbitrum Foundation allocates the nearly $1 billion sum. This is because the centralized Arbitrum Foundation would not need to subject its grant allocations to “full on-chain governance,” bypassing the process through which ARB holders shape the blockchain and its ecosystem.
Controversy Surrounds Proposed Control of $1 Billion in ARB Tokens
The proposed control of 750 million ARB tokens, worth nearly $1 billion, by the Arbitrum Foundation, has sparked controversy among the ARB token holders. The tokens would fund a “special grants” program aimed at promoting growth on the Ethereum layer 2 platform. However, the proposal, AIP-1, stands in contrast to other sections of the proposal that highlight the importance of token holders in governance.
The preliminary vote, which is currently underway before heading to a formal final forum, comes before the Arbitrum Foundation has released details on how it will administer the grants program. The community members are concerned about the allocation of the nearly $1 billion sum as the centralized Arbitrum Foundation would not be subject to “full on-chain governance.”
One community member commented, “We’re talking about $1 billion to start. Having seen other governance examples where large treasuries got basically drained for community pet projects, this is pretty concerning.” The organization that submitted the proposal, Lemma Ltd, could not be immediately reached for comment.
Despite the proposal’s argument that the “special grants” program’s fast track would solve “voter fatigue,” the community members are not in favor of bypassing the due process of governance. One member stated, “News flash: governance is hard. But that doesn’t mean you should circumvent due process. Elections are f****** annoying but democratic nations at least pretend to do them for a reason.”