Arbitrum is cheating? That’s why users are now sounding the alarm
Arbitrum is cheating? This question comes after hundreds of millions of coins were distributed, despite users voting against it. The responsible foundation now wants to give in, but the discussion reveals fundamental problems.
Arbitrum is cheating? That’s why users are sounding the alarm
It was not even two weeks ago that the scaling solution for Ethereum launched its own coin. Many users loved the airdrop, which distributed 1.275 billion ARB to testers.
In fact, the digital asset managed to jump straight into the top 50 cryptocurrencies. ARB currently ranks 39th with a market capitalization of $1.5 billion.
Previously, the project had already proven to be the most popular blockchain in the Ethereum ecosystem. Low fees and good throughput made Layer 2 popular. Publishing your own token should help decentralization.
Arbitrum (ARB) is a governance token. Owners vote on changes to the protocol and can thus decide on its development. Many users took this opportunity to vote on AIP-1 .
AIP-1 contains some guidelines for the procedure of the DAO, but also details on the distribution of 750 million ARB. The distribution of the token was predetermined by Arbitrum developer Offchain Labs .
However, the DAO declined to allocate 750 million ARB to the Arbitrum Foundation for budgeting. The foundation wanted to use this to cover its own costs and purchase any services.
Arbitrum Foundation steals money?
Because so many users voted against providing the Arbitrum Foundation with a budget of 750 million ARB, the AIP-1 proposal is rejected. Despite the rejection, the Arbitrum Foundation accesses part of the funds.
Users notice the transaction on the blockchain and sound the alarm. They believe this is a scam and the foundation is using illegal funds to line its own pockets.
As for the on-chain transfers of 50 million ARB tokens, 40 million ARB were loaned to a sophisticated player in the financial markets space. The remaining 10 million was converted into fiat money and used for operational expenses.
Explains the foundation on Twitter. According to current information, the loan went to crypto exchange Binance.
The procedure raises questions among ARB holders. Why was there a vote at all and why can the Arbitrum Foundation override a joint decision?
In a statement , the Arbitrum Foundation states that the vote did not give a choice of approval or rejection. Instead, it was more about a formal confirmation of the plans that the developers made before the DAO was created.
We believe that much of the negative sentiment surrounding AIP-1 stems from the confusion that AIP-1 is a ratification rather than an application.
It says there. On Twitter, the anger about this approach is great. Users criticize that the DAO pretends to be decentralized, but is in fact a centralized entity.
Voting on token allocation should now take place after all
After an immense outcry, the Arbitrum Foundation now wants to hold a vote on the token allocation. The DAO should also vote on other points summarized in AIP-1.
These votes should take place over the next few days, the foundation explains on Twitter. The unfortunate reputation of being a greedy cutthroat is something they obviously want to shed quickly.
The foundation does not exist to sell tokens. It has only sold enough to fund its ongoing operations and has no near-term plans to sell any more tokens.
Is Arbitrum’s approach peculiar?
As per a recent Twitter post, the Arbitrum Foundation appears to have been disappointed with the user response. There she clarifies:
Arbitrum is the only Layer-2 seeking DAO ratification of initial endowment funding, and that transparency has sparked this important discussion.
In fact, it is not common to give users the decision on token allocation. Many cryptocurrencies use premines, which are for the financial benefit of developers. It is also developers who determine the basic or at least initial functionality of a DAO.
Arbitrum caused an outcry by voting on an issue most developers don’t even allow for debate.
