Community Rejects Return of 700 Million ARB to Arbitrum DAO Treasury

Arbitrum community, by a large margin, rejected the proposal to return 700 million ARB tokens to the Arbitrum DAO treasury.

Against adoption of AIP 1.05, 118 million ARB voted — 84.01% of participants. Holders of 21 million ARB, or 14.57%, supported it.

In early April, the initially proposed AIP raised a number of concerns among users. They mainly concerned the transfer of control of 750 million ARB to the Arbitrum Foundation. It was proposed that the foundation would independently use these funds to award grants to develop the ecosystem.

The transfer of funds occurred without the community’s approval.

According to the authors of AIP 1.05, it is necessary to return funds from the fund to the Arbitrum DAO treasury as a ‘symbolic gesture’. This would serve as confirmation that holders of governance tokens are the ultimate authority in the project.

Some community members said that the issue of control over the allocated funds is already addressed by AIP 1.1. Under the proposal, the Arbitrum Foundation would send assets to a smart contract with vesting rights, which the DAO can configure.

because aip-1.1 already addresses this issue, the foundation is going to send the tokens to a smart contract with vesting (which the DAO can modify) — 1.05 simply adds extra bureaucracy + would have to wait for another proposal to transfer those tokens back to the foundation…

— cattin (@Cattin0x) April 14, 2023

AIP 1.05 potentially added bureaucracy, says a user going by the handle cattin. The authors of the proposal do not deny the need to fund the foundation for the project’s development; however, reallocation of funds from the DAO under a new decision would take at least 30 days.

The distribution of governance tokens started on March 23 and caused network issues. The total ARB supply will be 10 billion.