Due to miscommunication, the Arbitrum Foundation sparked a controversy when setting up the DAO. We take stock of this event, where the project did not take into account the opinion of the community.
The Arbitrum Foundation triggers a controversy
While the first Arbitrum Improvement Proposal (AIP-1) meets with an unfavorable vote from the community, the Arbitrum Foundation sparked a controversy by going against this opinion.
The purpose of this AIP is to establish the functioning of the decentralized autonomous organization (DAO) which ensures the development of the network, by recording in particular the fact that the Arbitrum Foundation is the entity representing ArbitrumDAO in the real world.
Among the many elements detailed in this proposal, one of them is debating: the allocation of 750 million ARB tokens to the foundation for miscellaneous operational and administrative expenses, i.e. 7.5% of total supply.
If the vote is not over yet, it is currently wiping a negative reception of 82.9%.
Even so, the Arbitrum Foundation reported that AIP-1 was actually a ratification rather than a proposal, and only meant to expose what was about to happen. Poor communication would therefore have led to the assumption that the implementation of the various elements exposed required the opinion of the community.
Thus, the Arbitrum teams take the famous chicken and egg paradox as an example, explaining that before being able to allow decentralized decisions, a centralized entity must first define a framework.
👉 To go further — Learn more about Layer 2 Arbitrum (ARB)
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Miscommunication
What is curious, however, is that from its first sentence, AIP-1 comes as a proposal :
“This document (“AIP-1”) proposes the structure of a decentralized autonomous organization called ArbitrumDAO that would be governed by ARB holders […]. »
Yet the Arbitrum Foundation cleared itself later by evoking this miscommunication :
“Nothing here is intended to minimize that there has very clearly been a lack of communication. One of the mistakes in writing AIP-1 was not noting from the outset that this proposal was intended to ratify the initial setup of the DAO Arbitrum and the Foundation that was created to serve the DAO , this was clarified at the end of AIP-1 in the “Implementation Steps” section, but it should have been clarified earlier. »
So, while the vote is not over, 10 million ARB tokens have been sold, or about $12 million right now. As explained in a thread on Arbitrum’s Twitter, this is to cover various running costs, including $3.5 million to cover the creation of ArbitrumDAO:
The Foundation is a separate entity to Offchain Labs and it was established with no funds. The 10m ARB tokens were sold to fiat to fund pre-existing contracts and to pay for near-term operating costs. For example, the $3.5 million setup costs outlined in AIP-1.
— Arbitrum (💙,🧡) (@arbitrum) April 2, 2023
In addition, the foundation reconsiders the 7.5% allocated to cash, indicating for example that this value is lower than in other competing networks. According to advanced data, it would be more than 10% at Polygon (MATIC), and 50.1% on the side of Starknet.
While it is true that some centralization is necessary to launch a project, this communication error risks to affect community confidence for the future.
👉 Also in the news — According to Vitalik Buterin, zkEVMs can be used to verify the validity of Ethereum blocks
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Sources: AIP-1, Governance Forum
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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