Arbitrum, an Ethereum layer 2 blockchain, has found itself in the spotlight due to a recent proposal to grant the Arbitrum Foundation ownership of 750 million ARB coins, valued at over $1 billion. The tokens are intended to fund a special awards program to encourage development on the network. However, the proposal has raised concerns among ARB holders who fear that they will have no control over how the tokens are distributed. The issue was brought to light when the community discovered that the Arbitrum Foundation had sent 50 million ARBs to Binance and 500,000 ARBs to Gnosis Safe at the time of the listing.
Arbitrum Proposal to Grant Foundation Ownership of $1B ARB Tokens
Coinbase Conor defended the move, stating that the tokens were sent for liquidity risk management. The DAO had already spent 50.5 million ARBs of the intended $750 million, leading some to question the purpose of the vote.
Despite the concerns raised by ARB holders, the voting has already taken place in an informal initial forum, with the proposal passing. The plan states that the fast track for the special awards program will prevent grant submissions from the government and prevent voter apathy.
However, some members of the community remain skeptical about the proposal and fear that the Arbitrum Foundation may use the funds for their pet projects. They have pointed out that there have been instances in the past where huge treasuries were emptied for community projects. They have raised questions about governance and transparency.
Arbitrum Responds to the Issue with a detailed Answer
The lack of transparency was creating a feeling of uneasiness among some investors. Understanding the situation, Arbitrum has tweeted with a much-needed answer to the question. As per Arbitrum’s tweet, 40M ARB tokens (out of the 50M in question) have been allotted as a loan to an undisclosed entity. The rest of the 10M tokens have been converted to fiat currencies to cover the operational costs.
The controversy surrounding the proposal highlights the need for more transparent governance on blockchain networks. Investors and users alike are calling for greater transparency and accountability from blockchain foundations. They will ensure that funds are being used in the best interests of the community. As the blockchain industry continues to evolve, it will be interesting to see how governance models adapt to meet the changing needs of users and investors.