Arbitrum, the Ethereum Layer 2 solution provider, has decided to backtrack on its governance voting system after facing backlash from the community.
In a tweet on April 2, the Arbitrum Foundation stated that its first governance proposal, AIP-1, would likely not pass and that it was committed to addressing the feedback received from the community.
The proposal had faced criticism from token holders, who argued that it was centralized and would give the foundation control over 750 million Arbitrum (ARB) tokens worth around $1 billion.
The proposal had also faced criticism from decentralization advocates such as Chris Blec, who called it “decentralization theatre.”
In response, the foundation has decided to break up the proposal into smaller segments, allowing the community to discuss and vote on the different subsections. The foundation acknowledged that AIP-1 was too large and covered too many topics.
The foundation has also stated that it will work on adding more accountability, such as a vesting period of four years for the 750 million tokens it would receive, and tokens held by the foundation cannot be used to vote.
The foundation will also propose transparency reports to make the community aware of how the funds are spent over time.
The foundation also stated that the Special Grants program lacked DAO involvement and was vague. It will be renamed the Ecosystem Development Fund, and the foundation will provide context on how the funds will be used to benefit the Arbitrum ecosystem.
The new Arbitrum Improvement Proposals will be issued early this week, according to the foundation. However, the ARB token prices have taken 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. ARB has seen an 86% price decline since its airdrop on March 23.
Arbitrum Foundation
In conclusion, the Arbitrum Foundation’s decision to backtrack on its governance voting system following community backlash highlights the importance of community involvement in decision-making processes.
It also emphasizes the need for more transparency and accountability in the cryptocurrency space. While the foundation’s decision may have negatively affected the ARB token prices in the short term, it could lead to a more robust and decentralized governance system in the long run.