The Arbitrum Foundation has reversed its decision on a contentious proposal and approval process that granted it authority over a significant portion of tokens. After encountering opposition from token holders in the community, the Ethereum layer 2 solutions provider Arbitrum has withdrawn its governance voting system.
The Arbitrum Foundation announced on April 2 that their initial governance proposal, AIP-1, is unlikely to be approved. They also mentioned their willingness to consider the feedback received from the community. As a result, the team plans to divide the controversial governance package into smaller parts. The team noted:
“AIP-1 is too large and covers too many topics. We will follow the DAO’s advice and split the AIP into parts. This will allow the community to discuss and vote on the different subsections.”
The foundation faced criticism from the community over the weekend for its “ratification” vote on decisions that had already been made, and as a result, it has reversed its decision. The proposed plan would have granted the foundation control over 750 million Arbitrum (ARB) tokens worth approximately $1 billion. Still, critics, including Chris Blec, a decentralized finance and decentralization proponent, claimed that the proposal was merely a show of decentralization.
The organization announced that they would use the 750 million tokens they received in their own AIP. They are considering ways to increase accountability, such as implementing a four-year vesting period for the tokens. Additionally, the tokens held by the foundation will not be eligible for voting. They will also introduce a budget proposal that includes transparency reports to keep the community informed about using funds over time.
According to the foundation, the Special Grants program lacks involvement from DAO and is not clearly defined. Therefore, the program will be renamed the “Ecosystem Development Fund,” and more information will be provided on how the funds will benefit the Arbitrum ecosystem. The foundation also stated that the new Arbitrum Improvement Proposals would be released at the beginning of this week.
The value of ARB tokens experienced a significant drop during the weekend, decreasing by 18% from its highest point of $1.40 on April 1 to $1.15 during the Asian trading session on April 3, as reported by CoinGecko. This represents a considerable decline of 86% in ARB’s price since the airdrop on March 23.