The Arbitrum Foundation has put forward two new Arbitrum Improvement Proposals (AIPs), assuring it would not move the controversial 700 million ARB tokens until the platform’s Decentralized Autonomous Organization (DAO) passes a budget.
Earlier this week, Arbitrum Foundation, the body responsible for overseeing the decentralized governance system of the Arbitrum network, faced severe retaliation after it sold nearly 50 million ARB tokens without community approval.
The Arbitrum community argued that the proposal gave too much control to a centralized entity and would undermine the decentralization of the network. Following the move, ARB token prices spiraled downwards from over $10 to lows of $1, resulting in a massive sell-off in the market.
What Are The New Improvement Proposals?
Given the backlash, Arbitrum has come forward with new governance proposals against its first proposal, AIP-1. On April 6, the Ethereum (ETH) layer-2 solutions provider took to Twitter to confirm the Arbitrum DAO came to a consensus to incorporate fresh AIPs, and will not move any of the remaining 700 million tokens in the Administrative Budget Wallet until an acceptable budget is approved.
The Administrative Budget Wallet is used for covering ongoing administrative and operational costs of The Arbitrum Foundation. Furthermore, the two new proposals also aim to curb the platform’s powers and increase those of community members.
1/10 With the ArbitrumDAO reaching consensus against AIP-1, it's now time to incorporate community feedback, and move forward with new AIPs and documentation that address key areas of concern.
— Arbitrum (💙,🧡) (@arbitrum) April 5, 2023
According to the official document, the first proposal AIP1.1 covers a smart contract lockup schedule, spending, budget, and transparency. It suggests placing the foundation’s 700 million remaining ARB in a “smart contract-controlled lockup” that will unlock over four years. Moreover, the foundation will not be able to use the tokens until community members approve a budget for the tokens allocation.
Meanwhile, the second proposal AIP1.2 aims to amend several governance documents for the Arbitrum ecosystem. It will also lower the proposal threshold from 5 million Arbitrum (ARB) tokens to 1 million ARB “to make governance more accessible.”
ARB Token Swims in Red
In addition to the new motions, Arbitrum has come up with a “Transparency report about the Foundation’s initial setup”, that describes actions taken to get the DAO up and running. The new motions will be available for feedback for at least 72 hours before a planned week-long snapshot vote. The Arbitrum Foundation further wrote,
“We have heard the feedback, and have worked diligently to address it and make sure the Foundation can represent, and serve the DAO’s best interests with their support.”
The Arbitrum token (ARB) is still reeling under a massive downturn following its airdrop on March 23. According to CoinMarketCap, ARB has declined 3.49% in the last 24 hours to hover at $1.21. On the other hand, the layer 2 digital token is down more than 10% over the past seven days.