After receiving pushback from members of the Ethereum community on its proposed governance vote method, Ethereum layer 2 solutions vendor Arbitrum has reversed course.
On April 2, the Arbitrum Foundation tweeted that its initial governance plan, referred to as AIP-1, “likely will not pass,” and added that it was “dedicated to addressing the feedback heard from the community.”
This action will result in the contentious governance package being divided into several smaller parts. The group observed that:
“AIP-1 is too extensive and touches on far too many subjects. In order to implement the recommendation made by the DAO, we will subdivide the AIP. The community will be able to have discussions and cast votes on the various subcategories as a result of this.
After a weekend of community outcry over the Foundation’s “ratification” vote for decisions it had already undertaken, the board of directors made the decision to reverse course. The proposal would hand management of 750 million Arbitrum (ARB) tokens, which together are worth approximately one billion dollars, to a centralized company called the Foundation.
Opponents, including decentralized finance (DeFi) and Chris Blec, an advocate for decentralization, stated that the concept was “decentralization theater.”
The Foundation announced that its own AIP would be used to conduct voting on the 750 million tokens that it had received. It was mentioned that “We’re looking on solutions to add greater accountability,” and then it went on to say that “for example, a vesting term of 4 years.” In addition, tokens that are held by the Foundation cannot be used in the voting process.
There will also be a budgeting proposal, in which the Foundation will propose transparency reports “to make the community aware of how the funds are spent over time.”
The Special Grants program is vague and lacks DAO involvement, it stated. It will be renamed “Ecosystem Development Fund” with context provided on how the funds will be used to benefit the Arbitrum Ecosystem.
The new Arbitrum Improvement Proposals will be issued “early this week,” the Foundation concluded.
ARB token prices took a massive hit over the weekend, slumping 18% from an April 1 high of $1.40 to a low of $1.15 in the April 3 morning Asian trading session, according to CoinGecko.