Is governance all it’s cracked up to be? Arbitrum’s first governing vote provides debate
Decentralization and governance go hand in hand. Since Bitcoin’s inception, cryptomaximalists have embraced the core components of decentralization, and while “governance” is not specifically mentioned in the Bitcoin Whitepaper, it is considered one of the biggest elements of decentralized environments throughout the crypto ecosystem.
We’re fifteen years removed from the Bitcoin Whitepaper, and the concepts around governance are certainly as loud as they’ve ever been. But not everything is in unison. One of the hottest chains on the block, Arbitrum, played host to some governance-related drama over the weekend.
Stop and steer
The Arbitrum token (ARB) is less than a month since its public launch (of course, the chain has been around much longer) and is already the focus of drama – a true “crypto moment.”
The chain’s first DAO proposal (or at least what many seemed to perceive as such) was published last week, and community members voted against “AIP-1: Arbitrum Improvement Proposal Framework” with a count of 100 million ARB tokens to 16 million tokens (with 14 million). abstain from voting).
A major point of contention lay in the token allocation mission, which detailed 750 million tokens beginning to be allocated to the Foundation – roughly 7.5% of the total allocation. However, despite the vote not being passed, 750M tokens actually held already been moved to the foundation, which argued that AIP-1 was a “notice” (or as they described it, a “ratification”) rather than a vote. Arbitrum effectively “tells” community members about tokenomics, not “asks” for them – which is actually quite common (well, the tokenomics part)… just not through these means.
Life, death, taxes and yes, disagreements about symbol distribution. But this one had a new twist.
Arbitrum (ARB) has seen relative volatility during community debate around an unusual governance vote. | Source: ARB:USD on TradingView.com
Why it’s not all Doom & Gloom
As our team at Bitcoinist outlined the movement behind the ARB token’s price action earlier in the day on Monday; the token took a ~20% decline and then studied back, which many would argue is a “better than expected” performance. The total value locked on Arbitrum has also gone largely untouched, showing optimism from the defi crowd, which stood at over $2.2 billion at the time of publication.
Beyond just the numbers, the situation around Arbitrum reflects a need for greater communication between foundations and their communities at large; by and large, crypto communities have generally accepted and unprovoked token allocations for foundations with the understanding that there must be some form of capital allocation for promoters to operate.
Regardless of your stance on tokenomics, proper communication with community stakeholders is critical and largely at the root of this situation – but is certainly not “irreparable damage” to the chain.
