July 24, 2024
Latest News

Arbitrum Proposal to Return 700 million ARB Fails by Overwhelming Majority

AIP 1.05, a contentious Arbitrum Improvement Proposal aimed at returning 700 million ARB governance tokens, was defeated by an overwhelming majority.

118 million ARB voted against the idea or 84.01% of all votes cast. In contrast, 21 million ARB voted in favor of the proposition, accounting for 14.57% of the entire vote. 2 million ARB voted no.

AIP 1.05 was originally reported to fail by The Block. Yesterday, 83% of the overall vote was cast against it. Arbitrum’s governance token has gained over 8% in the last 24 hours. It is presently worth about $1.66.

The Arbitrum governance proposal, titled “AIP 1.05: Return 700M $ARB to the DAO Treasury [REAL],” claimed that the unauthorized and premature allocation of 700 million ARB tokens, valued at more than $1 billion, constituted a significant overstep of authority — and was not indicative of truly decentralized governance.

The crisis began in early April, when the Arbitrum Foundation shifted its position on AIP-1, a critical governance initiative. This contentious proposal sought to transfer 750 million ARB tokens to the Foundation, stating that the tokens would be used to fund investment initiatives utilizing Arbitrum’s technology.

Despite not gaining clearance from token holders – the decentralized autonomous entity in theory responsible for managing Arbitrum — the activity had already taken place. Token holders have overwhelmingly voted against it.

According to AIP 1.05, it “serves as a symbolic action to demonstrate that the governance holders, rather than the Arbitrum service provider or the Foundation, ultimately possess authority over the DAO.”Notable token holders who voted against AIP-1.05 include “0x0eB5,” olimpio.eth, 0xBbE9, galxe.arb, chainlinkgod.eth, and blockworksres.eth, all of whom voted with millions of ARB tokens.”

The perception that more-minor voters are primarily concerned with increasing the value of Arbitrum’s governance token, while larger holders — primarily delegates — prioritize the platform’s long-term viability and the Arbitrum Foundation’s capacity to distribute tokens could be one of the reasons for voting against the proposal.

Furthermore, some people may have viewed the proposed forced repurchase as an extreme step designed more for publicity than as a viable solution.

Furthermore, others say that AIP-1.1 already addresses the issue of the controversial money because the Arbitrum Foundation wants to transfer the tokens to a smart contract with vesting that the DAO may change. As a result, AIP-1.05 may have made the situation more complicated.