The Arbitrum Foundation on Wednesday proposed to expand ARB token holders' budget oversight and governance powers with two motions aimed at turning the page on last weekend's crypto governance meltdown.
In a Discord post, the Arbitrum Foundation said it "will not move" the 700 million ARB tokens that remain in its "Administrative Budget Wallet" until the community approved "an acceptable budget" for the sum. It also proposed actions that would make governance "more accessible."
The twin actions represented a major concession to token holders angry over being asked to "ratify" decisions the Arbitrum Foundation had already made – including the fate of nearly $1 billion in tokens. In a nod to the fracas, Arbitrum Foundation also issued a "transparency report" into how the organization came to be.
The new proposals come after a community-wide protest erupted over the Arbitrum Foundation’s move to quietly transfer 750 million ARB tokens to one of its own wallets last weekend. Arbitrum is an Ethereum scaling system and the fourth-largest blockchain, with $2.24 billion in total locked value, according to decentralized finance-focused data analytics firm DefiLlama.
In response to the backlash, the Arbitrum Foundation, a centralized organization responsible for developing Arbitrum, submitted on Wednesday two new proposals that would curb its own powers and increase those of community members.
The first proposal, AIP-1.1, suggests placing the foundation’s 700 million remaining ARB in a “smart contract-controlled lockup” that will unlock over four years. According to the proposal, the foundation will not be able to use the tokens until community members approve a budget for the tokens’ allocation. A portion of the tokens will fund the Arbitrum Foundation’s operational budget for its first year.
The second proposal, AIP-1.2, aims to amend several governance documents for the Arbitrum ecosystem. One of the proposed amendments is to lower the threshold of the number of ARB tokens needed to post an Arbitrum Improvement Proposal on chain from five million ARB to 1 million ARB.
The decentralized autonomous organization’s members will have three days to provide feedback on the proposals. Afterward, the two proposals will be put up to a week-long snapshot vote, according to Arbitrum Foundation community lead, who goes by eli_defi on Discord.
While the Arbitrum Foundation has conceded to grant its token holders more control over its remaining 700 million ARB tokens, the organization already sold 10 million ARB tokens and loaned a further 40 million to Wintermute.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.