The Arbitrum community is demanding the return of 700 million ARB tokens to its DAO Treasury after the Arbitrum Foundation transferred the funds without receiving the community’s approval in March. The transfer of the tokens caused significant concern among ARB holders, leading to a proposal for the return of the funds.
According to the proposal, the foundation should only proceed with its budget plan after returning the tokens. “This is a symbolic gesture to demonstrate that the governance holders ultimately control the DAO, not the Arbitrum service provider nor the Foundation,” said a community member. The proposal has gained support from 55% of voters, with 42% opposing it and 2% abstaining. Voting will end on April 14.
The dispute between Arbitrum’s foundation and its community started at the end of March, following the foundation’s first governance proposal (AIP-1), which called for funding its operations with 750 million ARB tokens – worth nearly $1 billion. However, this proposal faced significant backlash from community members, who were concerned about the foundation’s ability to handle such a large amount of tokens.
In response to community concerns, the foundation clarified that AIP-1 was a ratification, not a proposal. The foundation noted that some of the tokens were already sold for stablecoins and acknowledged that its first governance attempt failed due to communication problems and decisions that were “clearly not articulated correctly.”
A few days later, the Arbitrum Foundation released a set of new improvement proposals aimed at restoring community dialogue. The new proposals included AIP-1.1, which covered a smart contract lockup schedule, spending, budget, and transparency. The other, AIP-1.2, tackled amendments to current founding documents and lowered the proposal threshold from 5 million ARB tokens to 1 million ARB “to make governance more accessible.”
However, the efforts did not resolve the issues with ARB holders. As the proposal for the return of the 700 million ARB tokens indicates, “The foundation has unilaterally been allocated $750M tokens from the DAO that was not approved by the governance tokenholders. Any funds must be returned until it has been properly allocated by the DAO and the DAO only.”
This situation highlights the importance of communication and transparency between blockchain project teams and their communities. The success of a decentralized project depends on the active participation of its community members, who are ultimately the ones with the power to govern the project’s direction. It remains to be seen how this dispute between the Arbitrum Foundation and its community will be resolved, but it is clear that community support and engagement are essential for the success of any decentralized project.
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