Arbitrum proposal to return 700 million ARB tokens is likely to fail

SNEAK PEEK 

• The Arbitrum proposal represents mechanisms to develop the DAO but the community believes they will lose their voting rights.
• AIP-1.05 looks quite extreme, impractical and based on short-term price jumps to some.
• Large holders or delegates believe in long-term supportable development.

Just one day is left for governance votes to be cast, and Arbitrum Improvement Proposal 1.05 is expected to fail by a massive majority. The proposal intends to return 700 million ARB tokens that have been unlawfully allocated to the Foundation from the DAO. 

Currently, 113 arbitrum governance tokens that represent 83% or more of the overall vote have voted against the proposal. While 20 million ARB tokens have voted in favor of the proposal, 2.2 million have refrained. 

The Arbitrum governance proposal is titled “AIP 1.05: Return 700M $ARB to the DAO Treasury [REAL]” and claims that both the pre-emptive and unauthorized issuance of 700 million ARB tokens, whose value is $1 billion plus, was a clear overreach of the power of the treasury resources of the DAO.  

It all began in the first weekend of April, when the Arbitrum Foundation reverted on AIP-1, a major governance proposal, and decided to send 750 million ARB tokens to itself. It was told that the money would be used to support investment initiatives that are developed through  Arbitrum’s technology.

The proposal moved ahead with token holders who voted against it not approving it. AIP 1.05 asserts that this is a symbolic action to show that the DAO is controlled by governance holders rather than the Foundation or the Arbitrum service provider. 

0x0eB5, chainlinkgod.eth, Olimpio.eth, galxe.arb, blockworksres.eth, and 0xBbE9 are the key token holders who voted against AIP-1.05 and voted with millions of ARB tokens.

Major reasons behind voting against the proposal are a belief that small voters might be solely interested in increasing Arbitrum’s governance token price to the highest possible level. On the other hand, large holders who are major delegates focus on long-term sustainability besides the potential of the Arbitrum Foundation to distribute tokens.

As far as others are concerned, they might view the proposed forced buyback as an “extremist approach” that calls attention but is not a real option. 

Then there are those who claim that AIP-1.1 acknowledges the problematic fund concern since the Arbitrum Foundation is looking forward to sending the tokens to a smart contract with vesting and the DAO might modify it. It is for this reason that AIP-1.05 could possibly increase the complexity of the issue.

Be it anything, DAO governance, as a whole, will always be a hot topic for the predictable future.

Research analyst Arnold Toh believes it to be impactful and explained that the heated debate shows the consequences of the unsolicited actions of Arbitrum will consistently penetrate their governance for the foreseeable future. 

Arbitrum is the largest Optimistic Rollup in terms of valuation and total value locked, which means that how its governance turns out will be an example for other rollup communities. 

During the last 24 hours, the price of Arbitrum’s governance token has increased by 24.4% and is now trading at more than $1.50 per token. 

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• Source: https://investorbites.com/arbitrum-proposal-to-return-700-million-arb-tokens-is-likely-to-fail/