Arbitrum Foundation Responds To ARB Holder Criticism With Sweeping Crypto Governance Changes

Key Points:

• Arbitrum Foundation proposes two motions to increase ARB token holders’ budget oversight and governance powers after governance meltdown.
• Foundation to lock up remaining 700 million ARB tokens until community approves budget allocation.
• First proposal suggests a smart contract-controlled lockup to unlock over four years.
• Second proposal aims to amend governance documents, including lowering ARB threshold for posting proposals.

The Arbitrum Foundation has recently proposed two motions that aim to increase the governance powers of ARB token holders.

These proposals come in response to a community-wide protest that erupted after the foundation’s transfer of 750 million ARB tokens to one of its wallets. The first proposal, known as AIP-1.1, suggests that the foundation’s remaining 700 million ARB tokens be placed in a “smart contract-controlled lockup” that will unlock over four years only if approved by the community.

The proposal also states that the foundation will not be able to use the tokens until a budget for their allocation has been approved by the community. A portion of the tokens will be used to fund the 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 one million ARB. The DAO’s members will have three days to provide feedback on the proposals, after which they will be put up to a week-long snapshot vote.

It’s worth noting that the foundation has already sold 10 million Arbitrum tokens and loaned a further 40 million to Wintermute. The foundation’s new proposals represent a major concession to token holders who were angry over being asked to ratify decisions that had already been made by the foundation. In a nod to the fracas, the foundation issued a transparency report that details how the organization came to be. The proposals offer more power to the community members and limit the foundation’s powers, which is a positive step towards decentralization. These changes could potentially lead to a more transparent and accessible governance system for the Arbitrum ecosystem, which could benefit the entire community.

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