- Arbitrum Foundation faces backlash over $1 billion token allocation.
- Over 70% token holders oppose the controversial move.
- Foundation admits communication failure, clarifies AIP-1 ratification.
Arbitrum Foundation, the organization behind the layer-2 protocol, faces a storm of controversy following a $1 billion token allocation decision. The uproar began when the Foundation confirmed that it was merely ratifying a decision that had already been made, angering the ARB community.
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The conflict ignited shortly after the layer-2 protocol airdropped its governance token. The AIP-1 proposal on Arbitrum’s DAO detailed that the 750 million tokens would fund special grants, reimburse service providers, and cover ongoing administrative and operational costs. However, the majority of token holders, over 70%, vehemently oppose the decision.
In an effort to quell the backlash, the Arbitrum Foundation addressed the situation in a forum post on April 2. The post clarified that AIP-1 was, in fact, a ratification and not a proposal. Additionally, the Foundation revealed that a portion of the tokens had already been exchanged for stablecoins. This means that the billion-dollar budget and allocations would not undergo an on-chain governance process.
The Arbitrum Foundation acknowledged that the first governance attempt faltered due to communication issues and poorly articulated decisions. Community members on the governance forum accused the Arbitrum team of selling tokens that were initially communicated as locked. They argued that the tokenomics page displayed only user airdrop and DAO airdrop tokens as unlocked, with the remainder set to unlock in March 2024.
As the Arbitrum Foundation scrambles to regain the trust of its community, the future of its governance remains uncertain.
In other news, in a recent interview with the Wall Street Journal, Ambre Soubiran, CEO of Paris-based institutional crypto market data company Kaiko, suggested that the United States’ increasing assault on cryptocurrencies could accidentally help Hong Kong achieve its objective of becoming a prominent crypto hub.
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