Can Arbitrum’s newly formed DAO recover from its messy week?

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Welcome back to Chain reaction.

This week was pretty bearable as a crypto reporter covering this area. There was less crazy news happening, compared to previous weeks (where we saw a number of US government actions against major crypto companies such as Binance and Coinbase).

Still, there is never a dull week in the crypto world.

In late March, Arbitrum, an Ethereum scaling solution, transitioned to a Decentralized Autonomous Organization (DAO), after airdropping the community’s new token, ARB. DAOs are meant to operate without a central authority, and token holders can vote on decisions to govern the entity. Seems fair right? Well, sometimes it can get messy.

Exhibit A: Over the weekend, Arbitrum got into some hot water after the foundation put forward a proposal to transfer 750 million ARB tokens, worth around $1 billion at the time, to its own wallets. Before the vote was over, the foundation, a centralized entity, already sent the majority of tokens to itself – which backfired when community voters voted against the move.

In an effort to calm the waters, Arbitrum said it would hold replays for voters to decide — drawing mixed reviews from community members. Some saw the company’s decision as positive and an attempt to listen to the community, while others still felt that their move of tokens was an abuse of control over what was supposed to be a now decentralized group.

In response to it all, the Arbitrum Foundation proposed on Wednesday to expand ARB token holders’ budgetary oversight and governance powers, or voting rights. The foundation also said in a Discord post that it “will not move” the 700 million ARB tokens transferred to its “Administrative Budget Wallet” until the community approves “an acceptable budget.” It also said it would propose new actions to make governance of the purported DAO “more accessible.”

Within these proposals, the foundation also plans to allow the DAO to vote on limiting the centralized entity’s powers and increasing community members’ control. Its DAO members will have time to provide feedback on the proposals, and then the two proposals will be open to a week-long vote, according to “eli_defi,” an Arbitrum Foundation community manager on Discord. Whether all these initiatives go through remains to be decided.

The ARB token is down 11% on the week.

Overall, the entire cryptocurrency market was largely unchanged for the week with total crypto market capitalization down less than 1% to $1.177 trillion, according to CoinMarketCap data. At the time of writing, the two largest cryptocurrencies by market capitalization – bitcoin and ether – were respectively down around 2% and up 4% within the same time frame.

This week in web3

US is losing crypto talent as blockchain developers seek safer haven (TC+)

It is usually third world countries that often say they are experiencing a “brain drain” – the bleeding of talent to other countries or parts of the world. But it seems that the US is now the one seeing talent flee to other parts of the world, at least when it comes to blockchain developers.

Hong Kong charts its own web3 path despite China’s anti-crypto stance (TC+)

Hong Kong has an on-again, off-again relationship with crypto: Before China banned all crypto-related business in 2021, the Asian financial hub was the early home of several crypto startups, including the now-defunct FTX, which left for the Bahamas after the ban . Now Hong Kong is once again welcoming crypto businesses, only this time with more regulatory clarity.

Investors not affected by Q1 crypto funding go down (TC+)

Crypto-focused venture capital investors follow suit. Many remain confident in their investment strategies despite a jittery first-quarter market for crypto startup fundraising. Others notice a sharper decline in the rate of investment.

Blockchain developer Ava Labs partners with Korea’s SK Planet to expand Asia footprint

Ava Labs, a company that launched the layer-1 blockchain Avalanche, has partnered with SK Planet, a data management and marketing platform unit of South Korean company SK Square. SK Planet will launch Avalanche Subnet UPTN to provide web3 infrastructure in South Korea. The partnership comes less than a month after the New York-based digital asset firm hired its first new executives in Asia to accelerate its footprint in the region.

Twitter’s new homepage logo is very doge-y

Twitter’s homepage icon is really the doge meme right now. This could just be Musk’s idea of ​​a belated April Fool’s joke, or it could mean something more than that. The price of the meme-driven cryptocurrency Dogecoin rose as a result, although it remains far below its May 2021 peak price.

The last pod

For this week’s episode, Jacquelyn interviewed Arianna Simpson, general partner at Andreessen Horowitz (commonly known as a16z).

Before joining the a16z family, Arianna founded Autonomous Partners, an investment fund focused on crypto. She also helped launch Crystal Towers Capital, which is an early-stage fund that primarily invests in YC companies.

A16z has dug deep into the crypto space, having launched four funds dedicated to the industry, with the latest at around $4.5 billion in May 2022. Some of the portfolio companies include major crypto players we’ve interviewed in the past, such as Alchemy, Avalanche, and Aptos.

We talked about Simpson’s background, how her strategy has changed over the years, what she looks for in entrepreneurs and whether she would launch another VC firm in the future.

We also discussed:

• The current investment climate
• Web3 gaming space
• Where the founders build
• Regulatory landscape
• Advice for entrepreneurs

Subscribe to Chain reaction on Apple Podcasts, Spotify or your favorite pod platform to catch up on the latest episodes, and leave us a review if you like what you hear!

Follow the money

1. Blockchain messaging protocol LayerZero raises $120 million, reaching $3 billion valuation
2. Netherlands-based crypto exchange Finst raises $4.4 million
3. Delphi Labs raised $13.5 million for its web3 accelerator
4. Carbon-backed digital collectibles Ecosapiens raised $3.5 million in a seed round
5. Crypto derivatives exchange Bitget raises $10 million from Dragonfly

This list was compiled using information from Messari as well as TechCrunch’s own reporting.

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