On Saturday, a proposal to give the Arbitrum Foundation control of 750 million ARB tokens, worth $1 billion, sparked controversy among the holders of Arbitrum’s governance token. The tokens would fund a ‘special grants’ program designed to foster growth on the Ethereum layer 2 blockchain that only recently began distributing its ARB token. However, the AIP-1 proposal did not include provisions for ARB holders to have a say in how the Foundation allocates its nearly $1 billion sum, as the centralized entity would be exempted from having to put such decisions through full on-chain governance.
The Arbitrum Foundation’s proposed backdoor stands in stark contrast to other core components of AIP-1, which emphasize the importance of token holders in governance. One section of the proposal read: “As Arbitrum is intended to be a public good, it is only right that governance over it should be governed by those for whom such public good is intended for.” Although the vote currently underway is only in its preliminary stages, concerns are being raised regarding how the proposed $1 billion grants program will be administered.
One anonymous Arbitrum community member expressed their worries: “Having seen other governance examples where large treasuries got basically drained for community pet projects, this is pretty concerning.” Lemma Ltd, the organization responsible for submitting the proposal, has yet to comment on the matter.
Arbitrum token ARB decline to about 7% in the last 24-hours, according to CoinGecko.
