The Ethereum Layer 2 Solution Provider Arbitrum has decided to disband its governance voting system following community reaction.
The 2nd of April, the Arbitrum Foundation tweeted that its first governance proposal, AIP-1, “likely will not pass” and added its “commitment to address feedback received from the community.”
The move will break up the contentious governance package into smaller segments. The team noted:
“AIP-1 is too big and covers too many topics. We will follow the advice of the DAO and break the AIP into parts. This will allow the community to discuss and vote on the different subsections.”
The 180-degree turn comes after a weekend of backlash from the community before the vote of “ratification” of decisions already taken by the foundation. The proposal would have given the foundation, a centralized company, control over 750 million Arbitrum (ARB) tokens valued at about $1 billion.
Critics, such as decentralized finance and decentralization advocate Chris Blec, argued that the proposal was a “theater of decentralization”.
I just want to clarify:
There is NOTHING decentralized about Arbitrum or Optimism.
Just because you can use a network without permission doesn’t mean it’s decentralized.
Both can halt the chain, modify any code, censor any transaction, freeze any wallet, or steal from the DAO.
—Chris Blec (@ChrisBlec) April 2, 2023
I just want to clarify: there is NOTHING decentralized in Arbitrum or Optimism. The fact that a network can be used without permission does not mean that it is decentralized. Both can stop the chain, modify any code, censor any transaction, freeze any wallet, or steal from the DAO.
The foundation stated that the 750 million tokens received would be voted into their own AIP. “We are working on options to add more accountability,” he stated, adding, “for example, a 4-year vesting period. Also, tokens held by the Foundation will not be able to be used for voting.”
Also there will be a budget proposal, in which the foundation will propose transparency reports “so the community knows how funds are being spent over time.”
The Special Grants program is vague and lacks DAO involvement, the foundation stated. It will be renamed the “Ecosystem Development Fund” and context will be provided on how the funds will be used to benefit the Arbitrum ecosystem.
The new Arbitrum improvement proposals will be published “earlier this week”, the foundation was completed.
ARB token prices took a hit over the weekend– Dipped 18% from the April 1 high of $1.40 to as low as $1.15 in the morning April 3 Asian session, according to CoinGecko.
The ARB price has fallen 86% since its launch on March 23.
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